Taufa v Singh [2002] TOLawRp 6; [2002] Tonga LR 26 (22 February 2002)

IN THE SUPREME COURT OF TONGA
Supreme Court, Nuku'alofa

C 02/02

Taufa

v

Singh anor

20 February 2002; 22 February 2002

Contract law – lay-by agreement – whether a meeting of the minds

The appellant had agreed to buy two items from the respondent. It was agreed the purchase would be on lay-by and she made a deposit of $10 for one item and $5 for the other. Some time later she changed her mind and asked for a refund of her deposit. The respondent refused. The appellant brought an unsuccessful action in the Magistrates' Court for $250 damages for recovery of the $15 and for unhappiness. Her counsel at the hearing, who did not draft the original claim, sensibly proceeded only on the claim for restitution. The appellant appealed the magistrate's decision on the ground that the magistrate did not consider the state of understanding between the parties.

Held:

1. The question of the time of the issue of the invoice with its written conditions of lay-by in relation to the time the agreement was made was also a vital and relevant issue as was the question of whether the possibility of cancellation of the contract was discussed or agreed.

2. The magistrate must state the reasons for and the details of his decision in sufficient detail to allow an appellate court to determine whether it was correct. The judgment was far too brief and failed to mention essential ingredients of the decision. The case was sent back for rehearing by a different magistrate.

Counsel for appellant: Mr Tu'utafaiva
Counsel for respondent: Mr Niu

Judgment

The appellant brought an action in the Magistrates' Court for $250 damages for recovery of a total sum of $15 paid as a deposit for some gold jewellery and for unhappiness. Her counsel at the hearing, who did not draft the original claim, sensibly proceeded only on the claim for restitution.

Briefly, the appellant's case was that she had agreed to buy two items from the respondent. It appears it was agreed the purchase would be on lay-by and she made a deposit of $10 for one item and $5 for the other. Some time later she changed her mind and asked for a refund of her deposit. The respondent refused.

It is clear that the case for each of the parties depended on a different view of the nature of the agreement for lay-by. The appellant told the court that she believed it meant that she would pay a deposit and take the goods, paying the balance over a period of time. The respondent's case was that such an arrangement would have been hire purchase or deferred payment. Under lay-by, the deposit simply secured the goods but they would not be handed over until payment of the full amount had been made.

The respondent produced two documents headed "Lay Buy/Invoice" recording the payment of each of the deposits and the goods towards which they had been paid. At the bottom of each there are printed a number of conditions, the first of which states:

"1. Items of lay buy must be collected within 60 days or deposit will be forfeited".

The magistrate, in a short judgment, found:

"... that the defendant understood the contract on the invoice in relation to the conditions of this lay-buy because the plaintiff and the defendant spoke in English well and signed the contract."

The appellant appeals that finding on the ground that the magistrate did not consider the state of understanding between the parties. Counsel amplified that ground later:

"The issue at the trial ... was whether there was no consensus of the minds of the parties so as to render the contract void because of mutual mistakes. The learned magistrate erred in law and in fact in holding lay-buy sale to be an international way of buying and therefore the Plaintiff is wrong in her understanding of lay-buy sale."

It is clear from his judgment that the magistrate did consider the state of the appellant's understanding and found that she had understood the respondent's terms because they both spoke English. Unfortunately, there was much more to the decision than that. There was a dispute as to what had actually been said, as opposed to the ability of the parties to understand English, and the term actually agreed. The question of the time of the issue of the invoice with its written conditions of lay-by in relation to the time the agreement was made was also a vital and relevant issue as was the question of whether the possibility of cancellation of the contract was discussed or agreed.

This court has said many times that the magistrate must state the reasons for and the details of his decision in sufficient detail to allow an appellate court to determine whether it is correct.

This judgment was far too brief and failed to mention essential ingredients of the decision. In those circumstances, regrettably, I must send the case back for rehearing by a different magistrate.

However, counsel may consider this has already incurred costs far in excess of the sum being sought. As so often is the case, it would appear that the original counsel, by badly advising the appellant that she could claim for unhappiness, misled her and started her on a course that was out of proportion to the likely outcome. A retrial will simply add to the already disproportionate costs of this action but this Court has no alternative.