Warra Wau Plantation v ANGCO Pty Ltd [1977] PNGLR 134 (6 May 1977)

Papua New Guinea Law Reports - 1977

[1977] PNGLR 134 - Warra Wau Plantation v ANGCO Pty Ltd 

[1977] PNGLR 134

N93

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

MICHAEL IAN DONALD FRASER AND JANET MARY FRASER TRADING AS WARRA WAU PLANTATION

V

ANGCO PTY. LIMITED

Waigani

Frost CJ

10-11 March 1977

6 May 1977

SALE OF GOODS - Rights of seller - Oral contract - Action by seller for damages for non-payment - Buyer’s defence not indebted on sole ground that deliveries in part appropriated by buyer to previous contract - Whether buyer entitled to appropriate deliveries as claimed - Principle to be applied - Seller having initial right to appropriate where separate contracts - Seller entitled to recover damages.

SALE OF GOODS - Remedies of buyer - Oral contract - Action by seller for damages for non-payment - Buyer’s defence not indebted on sole ground that deliveries in part appropriated by purchaser to previous contract - Counterclaim for specific performance of previous contract or damages for partial failure to deliver - Breach of previous contract found - Remedy of specific performance not available - Measure of damages - Goods Act 1951, s. 56(1)[cxl]¹, s. 55[cxli]².

COSTS - Claim and counterclaim - Balance in favour of defendant - Plaintiffs and defendant each succeeding on main issue - Evidence mainly on counterclaim - Plaintiffs to pay one half of defendant’s costs.

On 25th July, 1975, the plaintiffs as sellers and the defendant as buyer entered into an oral contract for the sale and delivery of (as it was found) 20 tons of coffee at 52c per lb. About 11 ˝ tons was delivered and paid for and no further deliveries made under that contract (the 1975 contract).

On 2nd April, 1976 the plaintiffs as sellers and the defendant as buyer entered into a written contract for the sale and delivery of 30 tons of coffee at 75t per lb. and full deliveries were made in 1976, (the 1976 contract).

When it came to payment therefor the defendant as buyer purported to appropriate about 8 1/2 tons of the 1976 consignments to the 1975 contract at the lower price, leaving a balance of K4725.60 unpaid if the coffee was properly attributed to the 1976 contract. The plaintiffs as sellers then took proceedings to recover the sum of K4725.60 for goods delivered in 1976 under the 1976 contract, which the defendant as buyer defended by denying that the deliveries in 1976 were all referable to the 1976 contract, and counterclaimed for specific performance of the 1975 contract to deliver the outstanding 8 ˝ tons or alternatively damages.

Held

(1)      Where there are separate contracts for the sale of goods, the seller has the initial right expressly or impliedly of appropriating delivery to any of the contracts that he pleases, subject to the commercial course of dealings between the parties.

(2)      Accordingly, the plaintiffs as sellers having clearly appropriated all deliveries made in 1976 to the 1976 contract, were entitled to succeed on the claim for K4725.60.

(3)      The 1975 contract, being for unascertained goods by description and not “specific ascertained goods”, specific performance under s. 56(1) of the Goods Act 1951, was not available to the defendant.

(4)      The defendant was entitled to damages pursuant to s. 55 of the Goods Act 1951, to be ascertained by the difference between the contract price and the market price of the coffee “at the time or times when they ought to have been delivered”.

(5)      In the circumstances, the parties plainly contemplated delivery under the 1975 contract from the 1975 coffee crop, and the measure of damages should be the difference between the contract price and the market price of coffee on 31st October, 1975 which on calculation, after allowing the plaintiffs the sum of K4725.60 on the claim (Rules of National Court O. 25 r. 18) left a balance of K3879.12 due to the defendant.

(6)      Accordingly there should be judgment for the plaintiffs on the claim, and for the defendant on the counterclaim, the sums adjudged to be due to each party to be set off so that the defendant recovers K3879.12 from the plaintiffs.

(7)      The plaintiffs and the defendants each having succeeded on a main issue with the main evidence directed to the counterclaim the plaintiffs should pay one half of the defendant’s costs.

Action

This was an action in which the plaintiffs as sellers sought to recover the sum of K4725.60 being the balance of money owing for goods sold and delivered, to which the defendant as buyer filed a defence denying delivery and counterclaiming for specific performance of an earlier contract or alternatively damages.

Counsel

M. J. Wright, for the plaintiffs.

D. Letcher and G. J. Cartledge, for the defendant.

Cur. adv. vult.

6 May 1977

FROST CJ: This is an action for balance of money owing for goods sold and delivered.

The plaintiffs carry on a coffee plantation at Wau and the defendant is a merchant which buys and sells coffee. For several years up to 1975 the plaintiffs sold all their coffee to the defendant. This long-standing arrangement however suffered strains in the 1975 season after a frost in Brazil caused prices to rise, a trend which has since continued.

On 25th July, 1975 it is not disputed that an oral contract for the sale and delivery of coffee was entered into at 52c per lb. The practice had been for the parties not to sign written contracts.

What is in dispute is whether the contract bound the plaintiffs to deliver 20 tons of coffee, as the defendant claims, or whether on the plaintiffs’ case no specific quantity was mentioned. In fact 191 bags of coffee or about 11 ˝ tons were delivered and paid for under a credit note dated 17th August, 1975. But no further deliveries were made by the plaintiffs specifically under that contract.

It is also not disputed that on 2nd April, 1976 a further contract, on this occasion in writing signed by the male plaintiff, was entered into for the sale of 510 bags or 30 tons of coffee at the greatly increased price of 75t “A” grade per lb., and that quantity was delivered during April, May and June 1976.

After references had been made from time to time on behalf of the defendant to the alleged responsibility of the plaintiffs under the 1975 agreement to deliver the balance of 20 tons, the dispute came to a head when Mr. Fraser on 28th June, 1976 indicated that he did not propose to deliver any further coffee under the 1975 contract. The defendant then purported to appropriate 149 bags of the 1976 consignments to the 1975 contract, of course at the lower price fixed in 1975, leaving the balance of K4725.60 unpaid if the coffee was properly to be attributed to the 1976 contract.

The plaintiffs then took proceedings to recover that sum as money due for goods delivered in April to June 1976 under the 1976 contract.

By way of defence the defendant denies that the entire deliveries received during the said period were referable to the 1976 contract. The defendant also sets up a counterclaim whereby it alleges that under the 1975 contract, the plaintiffs were bound to deliver 20 tons, and seeks specific performance of the contract made under the 1975 agreement to deliver the alleged balance of 149 bags, or alternatively damages.

The only question which arises in the action proper is whether the defendant was entitled to appropriate 149 bags to the alleged 1975 contract.

If no specific quantity was agreed under that contract or if the defendant was not so entitled to appropriate, then the plaintiffs are entitled to the sum of K4725.60 claimed. But if the 1975 contract was for a specific quantity of 20 tons then the defendant must succeed upon the counterclaim.

[His Honour then dealt with the evidence, concluding:]

For all these reasons, in my opinion, the contract entered into between the parties in July 1975 took place in Wau, and was for a specific quantity of 20 tons of coffee to be delivered. Accordingly the plaintiffs are in breach of their obligation to deliver that quantity to the extent of 149 bags.

The other main issue upon liability is whether the defendant was entitled, as claimed in the defence and counterclaim, to apply “in accordance with the normal commercial rules and dealings between the defendant and the parties from whom it buys coffee in final satisfaction of the 1975 contract” 149 bags delivered in 1976.

Counsel for the defendant relied upon the law relating to the transfer of property as between seller and buyer, and in particular upon the rules for ascertaining the intention of the parties as to the time at which the property in the goods is to pass to the buyer as stated in the Goods Act 1951, s. 23.

However, if any rule is to be applied by analogy to the very different question of application by the buyer of deliveries of unascertained goods, as in this case, to one contract or another, that rule would seem to require the assent, express or implied, of the other party (s. 23, rule 5).

Counsel for the defendant also relied, presumably also by analogy, on the rule as to appropriation of payments. It is to be found set out in Halsbury’s Laws of England, 4th ed., vol. 9, pp. 349-350.

In the absence of any distinct authority cited to me upon the present issue, the rule applicable, in my opinion, upon analogy with the latter branch of the law, is that where there are separate contracts between the parties, the supplier has the initial right expressly or impliedly of appropriating delivery to any of the contracts that he pleases. Such a rule no doubt would yield to the commercial course of dealings between the parties, but no evidence of this nature was called before me.

In my opinion, it is not necessary to go further back than events in June. It is clear that the defendant’s purported appropriation of the deliveries made in 1976 to the 1975 contract was not communicated to the plaintiffs until the receipt of a letter dated 1st July, 1976. That appropriation was clearly too late because the only inference to be drawn from Mr. Fraser’s refusal on 28th June, 1976 to do anything about the 1975 contract was, both parties accepted, that all the 1976 deliveries had been appropriated by the plaintiffs to the contract made on 2nd April, 1976.

Relating these findings to the pleadings, the plaintiffs are entitled to succeed on the claim which is for the full amount without deduction for the deliveries made under the 1976 contract. But the counterclaim for non-delivery of the balance of coffee due under the 1975 contract succeeds.

The question which next arises is as to the defendant’s remedy upon that counterclaim.

At the hearing it persisted in its claim for specific performance. Under the Goods Act, 1951 s. 56(1):

“In an action for breach of contract to deliver specific ascertained goods, the Court may, if it thinks fit on the application of the plaintiff, by its judgment direct that the contract shall be performed specifically without giving the defendant the option of retaining the goods on payment of damages.”

This provision differs from the corresponding provision in the English Sale of Goods Act 1893, which enables orders for specific performance to be made in actions for breach of contract to deliver specific or ascertained goods, s. 52. Although the meaning of the words “specific ascertained goods” strictly does not arise for decision in this case, the change in language in the Papua New Guinea Act must be taken to be significant. In the present case it is clear that as the contract was for unascertained goods by description, the remedy of specific performance does not lie. So the defendant is restricted to its claim for damages.

Under the Goods Act 1951 the relevant provision is s. 55 which provides as follows:

“55(1) Where the seller wrongfully neglects or refuses to deliver the goods to the buyer the buyer may maintain an action against the seller for damages for non-delivery.

(2)      The measure of damages is the estimated loss directly and naturally resulting in the ordinary course of events from the seller’s breach of contract.

(3)      Where there is an available market for the goods in question the measure of damages is prima facie to be ascertained by the difference between the contract price and the market price or current price of the goods at the time or times when they ought to have been delivered or if no time was fixed then at the time of the refusal to deliver.”

Whatever date is taken under s. 55(3.), the defendant is entitled to compensation because the price at which coffee could be bought to remedy the seller’s default was much higher than at the date of the contract.

The issue between the parties on this point concerns the time when the goods ought to have been delivered.

Counsel for the defendant submitted that the current price should be assessed as at June 1976. Counsel for the plaintiffs submitted that if the case was to go against his clients the relevant date was 31st October, 1975, and certainly before the end of the 1975 season.

In my opinion the parties plainly contemplated that the coffee would be delivered from the 1975 crop. It is true that Mr. Carson continued until June 1976 to call on the plaintiffs to complete delivery, and left the contract open for them to do so. But this is not a case where the time fixed for delivery was postponed at the request of the seller so that the time at which the breach takes place is deferred, with the result that the date with reference to which the damages are to be calculated is also deferred. Ogle v. Vane[cxlii]³. The defendant merely postponed taking action for the relief it became entitled to at the end of the 1975 season in the hope that the plaintiffs would deliver. I would therefore accept the plaintiffs’ submission upon this point.

Counsel have agreed that if damages are to be based on the price of coffee as at 31st October, 1975, then, on mathematical computation, after allowing the plaintiff the sum of K4725.60 on the claim, the balance due to the defendant on the counterclaim is K3879.12.

Under the Rules of the National Court, if a counterclaim is established as a defence against the plaintiffs’ claim the Court may, if the balance is in favour of the defendant, give judgment for the defendant for such balance. (O. 25, r. 18).

The alternative is for the Court to give judgment for the plaintiffs on the claim, if it succeeds, and for the defendant on the counterclaim, in each case for the appropriate sum.

This is the course which is usually taken if the apportionment of costs is to be left to the taxing master. In this case, however, I have been asked to fix the basis upon which the costs are to be taxed. I therefore propose to give judgment in the simple form submitted by the defendant’s counsel, that is for the plaintiffs on the claim and for the defendant on the counterclaim, the sums adjudged to be due to each party to be set off so that the defendant is to recover K3879.12 as against the plaintiffs.

On the question of costs the plaintiffs and the defendant each succeeded on a main issue. It is true the evidence was directed mainly to the counterclaim but issue upon the claim was enmeshed in all the facts, and on the whole 1 order that the defendant recover one-half of its taxed costs.

Judgment for the plaintiffs on the claim, and for the defendant on the counterclaim, the sums adjudged to be due to each party to be set so that the defendant is to recover K3879.12 as against the plaintiffs. The plaintiffs to pay one-half of the defendant’s costs.

Solicitors for the plaintiffs: Craig Kirke & Wright.

Solicitors for the defendant: McCubbery Train Love & Thomas.

[cxl]Infra p. 138.

[cxli]Infra p. 138.

[cxlii] (1868) L.R. 3 Q.B. 272.