FC Nichols (Wholesales) Pty Ltd v Simiki [2006] TOSC 31; CV 215 2003 FC (16 August 2006)

IN THE SUPREME COURT OF TONGA
CIVIL JURISDICTION
NUKU’ALOFA REGISTRY

CV 215/03

BETWEEN:

F C NICHOLS (WHOLESALES) PTY LTD
PLAINTIFF

AND:

‘OFA SIMIKI, trading as OSB
DEFENDANT

BEFORE THE HON CHIEF JUSTICE WEBSTER

Heard at Nuku’alofa on 31 May & 1, 2 & 6 June 2006

Counsel: Plaintiff: Mr Kaufusi
Defendants: Mr Tu’utafaiva

RESERVED DECISION GIVEN ON 16 AUGUST 2006

Preliminary

The Plaintiff carries on business in Australia and Tonga as a meat wholesaler and retailer. The Defendant carries on business at a store at Fanga, Nuku’alofa. The Plaintiff claimed firstly for the balance of AUD $54,260.31 allegedly due by the Defendant for a container of meat ordered by the Defendant, shipped from Australia and delivered to the Defendant around 16-17 December 2002. The Plaintiff secondly claimed T$2,000 for breach of contract in respect of a second container of meat allegedly ordered by the Defendant but refused by her when it was delivered but not accepted.

The Defendant claimed that the Plaintiff had no legal status in Tonga. She also said that there was no agreement on price in respect of the first container, or alternatively that she was only liable to pay the prices in the invoice submitted by the Plaintiff to Customs, which had been done. She further denied ordering the second container, so that she was entitled to refuse to accept it; and said that there had never been any claim by the Plaintiff for specific performance; and that there was no evidence for the Plaintiff’s alleged loss of T$2,000.

Evidence and submissions

The Plaintiff led evidence from Mr Frederick C Nichols, a Director and shareholder of the Plaintiff; and Mr Lusio Lausi’i, Registrar of Companies. The Defendant Mrs ‘Ofa Simiki gave evidence herself; and led evidence from her husband Mr Tevita Simiki. Both parties also lodged documentary productions. On completion of the evidence submissions were made by Counsel in support of their cases.

Grounds of decision

Legal status of Plaintiff

As a preliminary point, the Defendant’s Statement of Defence in Para 1 required proof of the allegation in paragraph 1 of the Amended Statement of Claim that the Plaintiff is a duly incorporated company under the Laws of Australia; and has also been registered here in Tonga under part XVIII / XIX of the Companies Act 1995. The Defendant’s Counsel submitted that the Plaintiff had not been proved to be a legal entity, as the photocopies of its Australian and Tongan Certificates of Incorporation (Productions P1-3) were not admissible in evidence under sections 62 and 63 of the Evidence Act, read with section 94.

I have to say that I am not at all sure that it is necessary for a party to be proved to be a legal entity for it to raise an action, as was submitted for the Defendant – no authority was cited for that - though from a plaintiff’s point of view it is important for him to be sure that he is suing a legal entity as defendant if he wishes to have prospects of recovering any monetary award. Any person, natural or artificial, may sue or be sued: see eg Halsbury Vol 37 para 215. In the Interpretation Act “person” is defined as including any body of persons corporate, or unincoporate – which would appear to cover the Plaintiff even if it is not incorporated.

However, even accepting that Productions P1-3 are not admissible, that is not the only way of proving that the Plaintiff was incorporated in Tonga, and the Plaintiff led evidence from the Registrar of Companies, Mr Lusio Lausi’i, whose evidence I found credible and reliable and which I accepted, that the Plaintiff had been incorporated in Tonga in 2003, as an overseas company under Part XVIII – XIX of the Companies Act 1995. Taking into account the presumption of legality, omnia praesumuntur rite et solemniter esse acta (all things are presumed to be done correctly and solemnly) I was satisfied on the balance of probabilities that the Plaintiff is duly incorporated in Tonga, which I consider is all that is necessary to establish that it is a legal person under the laws of Tonga. And finally, among the productions in the case of F C Nichols (Wholesales) Pty Ltd v Sullivan & A J & E Ltd (Case No CV 217/03) the decision in which (dated 10 June 2005) was referred to in submissions by Counsel for the Defendant, there is what appears to be the original Certificate of Incorporation in Tonga dated 4 February 2003, to which I believe I am able to refer. It would also be undesirable for reasons of consistency for me to come to a different conclusion from Thomas J about the legal status of the Plaintiff on essentially the same evidence.

Sections 62, 63 and 94 of the Evidence Act deal with the type of evidence necessary to prove the contents of a document, whereas the basic question here is whether the Plaintiff is or is not incorporated in Tonga, which was established by the evidence of Mr Lausi’i, without the need for reference to the certificate of incorporation.

As the Plaintiff is a legal entity as an incorporated body in Tonga, it is unnecessary for the purposes of its entitlement to raise an action in Tonga to go into whether it is also incorporated in Australia. Even if it had been an unincorporated body in Australia, it could still have formed a contract with the Defendant in 2002 before it became incorporated in Tonga.

That view is reinforced by the Defendant’s Production D2-3, the Customs invoice for the first container obtained and produced by the Defendant, which states clearly that it emanates from “F C Nichols (Wholesale) Pty Ltd”, against which the Defendant made 2 payments to the Plaintiff in Australia totalling T$41,128.78, which indicates that by her actions she herself accepted that the Plaintiff is a legal entity.

I have to add that I consider this point taken for the Defendant to be a particularly arid and time-consuming point, which added little to the Defendant’s case.

First container

A plaintiff who brings a civil claim under a contract must, in order to succeed with the claim, establish that a contract between the parties existed, and the relevant details of the essential elements of the contract.

In this case in relation to the first container the Defendant accepted that she had placed a verbal order for certain meat items and had taken delivery of a container with those meat items: but she said that she had never been told or agreed the actual prices of the meat items. Mr Nichols’ evidence on that was that he believed he faxed her a copy of their price list for November (Production P4), but in cross-examination said there was no hard evidence (such as a fax receipt or written confirmation) that a copy had actually been sent to the Defendant.

This case was remarkable in that there were 2 different invoices for the meat items sent to the Defendant, containing the same items, but bearing completely different prices. One was referred to as the commercial invoice (Productions P5-6) and was sent direct to the Defendant. The other was the invoice presented to Customs for entry of the goods (Productions D2-3), and was referred to as the Customs invoice, being signed by Mr Nichols. The total price on the Customs invoice was T$31,208.52, while that on the commercial invoice was T$86,341.31, ie almost 3 times the price on the Customs invoice.

Strangely neither the descriptions of the items on the alleged price list (Production P4), nor the prices on that price list, corresponded with the descriptions of items or their prices on either the commercial invoice or the Customs invoice, so I could not accept that the alleged price list was the price list on which the prices of the items in the first container had been agreed between the parties.

There was another point also, reinforcing that view. Mr Nichols claimed in evidence that the prices on the commercial invoice were all in prices for delivery to the Defendants’ door, thus including insurance, freight, Customs duties etc, clearance and the cost of delivery in Tonga. But on the alleged price list (Production P4) it was stated that the prices were “Loading port charges paid”. Mr Nichols said in evidence that that meant that all charges would be paid, but I could not accept that, as there was nothing to show that the plain meaning of those words did not apply, ie that only the loading port charges would be paid by the Plaintiff. Thus the very terms of the alleged price list contradicted the other evidence that it was believed to be the price list on which the prices of the meat items were agreed.

The Plaintiff’s claim that the price of the meat items was an all-in price was also not supported by the Customs invoice signed by Mr Nichols, which stated in the box for messages “All prices CIF”.

As there was no agreement on the price of the meat items, nor even an agreement for the parties to fix the prices later, there was therefore objectively no complete agreement between the parties about the first container and so no contract between the parties in relation to it: British Steel Corporation v Cleveland Bridge and Engineering Co Ltd [1984] 1 All ER 504 (QBD).

However as the container was shipped and delivered to the Defendant at her request and accepted by her, she is bound to pay a reasonable sum for it: BSC v Cleveland. I consider that a reasonable sum is the total price given in the Customs invoice, ie T$31,208.52, plus the total duty and port and service tax shown on the Customs Import Entry (Productions D4-5), as carried over, together with other fees and charges incurred at Nuku’alofa, into the Customs Freight Management invoice (Production P7) ie totalling T$14,882.80. Thus the total reasonable sum to be paid for the first container is T$46,091.32 She has already paid T$20,000 on 31 January 2003, and T$21,128.78 on 13 March 2003, as shown in the Plaintiff’s customer deposit statement (Production P20), a total of T$41,128.78. That leaves a balance of T$4,962.54 still due by the Defendant.

The Plaintiff therefore succeeds in relation to the first container, but only to that extent, and I shall make an order for payment by the Defendant accordingly, with interest at 10% from 30 days from the date of delivery to the Defendant of 17 December 2002, ie 16 January 2003.

Second container

There was a dispute in evidence between Mr Nichols and the Defendant as to whether or not she had ordered the 2nd container, which according to the Ports Authority Revenue Receipt/Cargo Clearance (Production P12) was cleared on 9 January 2003. I did not consider the Jets Air Quotation (Production P11) reliable evidence as it referred to a different ship and date.

The Defendant said that the Plaintiff’s former Manager in Tonga, Mr Kevin Hunt, now deceased, phoned her when she was in Auckland to say there was another container on its way to her and it was cheap if she would accept it, but she told him she would not accept it, as she knew the market in Tonga and it would take 1-2 months to sell. While Mr Nichols maintained in evidence that the Defendant had ordered a container when she visited them in Australia, he also said in evidence that he would take the Defendant’s word about what she said about Mr Hunt. That was to some extent supported by the evidence that the Plaintiff had accepted the Defendant’s refusal of the second container. On the balance of probabilities I therefore preferred the Defendant’s evidence about that and found that it was not established that she had ordered the second container.

But in any event there was very little evidence to back up the Plaintiff’s claim for $2,000 for the Defendant’s alleged breach of contract in failing to take delivery of the second container. The Plaintiff had never written to the Defendant claiming such an amount prior to the issue of the Statement of Claim in this case.

Given that after the container was refused by the Defendant it was then taken to the Plaintiff’s factory in Tonga, there would only have been the cost of that extra journey. There was no actual invoice for that, but based on the alleged cost for the delivery to the Defendant of $73.20 (Production P11), Mr Nichols estimated the cost of the extra journey to be $40. While Mr Nichols referred in his evidence to the cost of the interest at 9.76% on the price of the meat items in the container (claimed to be $76,000, though in view of my findings above in relation to the invoices for the first container I would take about one-third of that or say $28,000 as being a more accurate value of the goods) during the time it would take to sell them, plus $1,000 per week for the cost of electricity for refrigerating it during that period, there were no actual invoices relating to the circumstances of those alleged losses produced to the Court, nor eg documentary evidence of the overdraft rate.

I had difficulty accepting the figure of $1,000 per week, as it is difficult to understand why, if refrigeration of the container would have cost $1,000 for 6 weeks, the claim under this head was not made for at least $6,000.

Altogether I regret I found the evidence of how the claim for $2,000 was made up totally vague and unconvincing and I am unable to accept it.

A plaintiff claiming damages must prove its case; and to justify an award of substantial damages he must satisfy the Court both as to the fact of damage and as to its amount. If he satisfies the Court on neither, his action will fail, or at the most he will be awarded nominal damages where a right has been infringed (which was not the case here). (McGregor on Damages (15th Ed) paras 343-4,1779,1791)

"The plaintiff has the burden of proving both the fact and the amount of damage before he can recover substantial damages. This follows from the general rule that the burden of proving a fact is upon him who alleges it and not upon him who denies it, so that where a given allegation forms an essential part of a person's case the proof of such allegation falls on him. Even if the defendant fails to deny the allegations of damage or suffers default, the plaintiff must still prove his loss."

McGregor on Damages (15th ed 1988) para 1779

But it was said by Devlin J in Biggin v Permanite [1950] 2 All ER 859,870 (KBD) & [1951] 2 All ER 191 (CA):

“Where precise evidence is obtainable, the court naturally expects to have it, [but] where it is not, the court must do the best it can.”

Generally difficulty of proof does not dispense with the necessity of proof: Aerial Advertising Co v Bachelors Peas [1938] 2 All ER 788,796 (KBD). Even if it is said that the damage must be proved with reasonable certainty, the word “reasonable” is really the controlling one, and the standard of proof only demands evidence from which the existence of damage can be reasonably inferred and which provides adequate data for calculating its amount: Ashcroft v Curtin [1971] 1 WLR 1731, [1971] 3 All ER 1208, (CA). (McGregor para 344)

In Bonham-Carter v Hyde Park Hotel Ltd (1948) 64 TLR 177,178 (referred to in Ashcroft v Curtin at 1214), Lord Goddard CJ said that:

“Plaintiffs must understand that, if they bring actions for damages, it is for them to prove their damage; it is not enough to write down particulars and, so to speak, throw them at the head of the court, saying: “This is what I have lost, I ask you to give me these damages”. They have to prove it.”

Unfortunately in this case it obviously would have been possible to obtain precise evidence of the amount of damages; and although the existence of some damages might be reasonably inferred, no adequate data for calculating their amount was provided in evidence.

Plaintiffs and their Counsel must understand that at a trial, even according to the lesser standards required under the civil law, the facts necessary to prove their case must be established in court by hard evidence. If that is not done, then a plaintiff will not be able to succeed.

I therefore find that, even if the Defendant was in breach of contract in refusing to accept the second container, there was no adequate evidence to enable the Court to ascertain their amount, so no award could be made.

Costs

Turning to the question of costs, although the Plaintiff has succeeded partially in relation to the first container, and required to bring this action to achieve that, it has failed in the claim in relation to the second container. In the exercise of my discretion I am not obliged to award the Plaintiff full costs and I believe that it would be fair to reflect that result by reducing the Plaintiff’s costs by two-thirds, so awarding the Plaintiff one-third of its costs as agreed or taxed.

16 August 2006

R M Webster
Chief Justice