Lawrence Win v General Auto Centre Limited and Ringo Sim (2009) N3680

• Jurisdiction: Papua New Guinea
• Judge: Cannings J
• Judgment Date: 25 June 2009
• Court: National Court
• Citation: (2009) N3680
• Docket Number: WS NO 915 OF 2005
• Year: 2009
• Judgement Number: N3680

Full Title: WS NO 915 OF 2005; Lawrence Win v General Auto Centre Limited and Ringo Sim (2009) N3680

National Court: Cannings J

Judgment Delivered: 25 June 2009

N3680

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS NO 915 OF 2005

LAWRENCE WIN

Plaintiff

V

GENERAL AUTO CENTRE LIMITED

First Defendant

RINGO SIM

Second Defendant

Kimbe: Cannings J

2009: 20 March, 23 April, 25 June

JUDGMENT

CONTRACTS – sale of goods – whether a notice printed on invoice/receipt that goods are non-refundable forms one of the conditions of the contract – Goods Act – Section 14: condition as to correspondence with description – Section 15: condition as to fitness for purpose and merchantable quality – Fairness of Transactions Act, Section 5 – whether cause of action in breach of contract established.

DAMAGES – for breach of contract – need to provide financial records re loss of business.

A customer purchased an auto part – a starter motor – which did not fit his vehicle. He returned the part to the supplier and requested a refund of the purchase price of K1,735.37, which was refused. The supplier relied on a notice on the invoice which stated “All electrical goods sold are not returnable. Goods sold are not returnable after 14 days. Returns must be in a new condition and in the original packing”. The customer claimed that the refund notice did not apply and was not one of the conditions of the contract of sale and that implied conditions that the starter motor correspond with the description given to it and that it was fit for the purpose for which it was required had been breached. Further, that the contract should be reviewed under the Fairness of Transactions Act. He sued the supplier, claiming damages of K197,584.46.

Held:

(1) The refund notice on the invoice did not form part of the contract as it was not expressly included as a condition of the contract and was not brought to the customer’s attention until after formation of the contract. It was simply a display of the supplier’s refund policy.

(2) The first defendant breached two conditions of the contract of sale implied under the Goods Act: the condition as to correspondence with description under Section 14(1) and the condition as to fitness for purpose under Section 15(2)(a).

(3) The Fairness of Transactions Act did not apply as the court was not satisfied that the contract was not genuinely mutual or manifestly unfair to the plaintiff.

(4) The plaintiff succeeded in establishing liability by proving a cause of action in breach of contract.

(5) Damages were assessed at K6,357.46 and the plaintiff was awarded interest of K2,034.39, making the total judgment sum K8,391.85.

Cases cited

The following cases are cited in the judgment:

Albert Baine v The State (1995) N1335

Cheong Supermarket Pty Ltd v Pery Muro [1987] PNGLR 24

Jonathan Mangope Paraia v The State (1995) N1343

Kopung Brothers Business Group v Sakawar Kasieng [1997] PNGLR 331

L’Estrange v Gaucob [1934] 2 KB 394

Livingston v Raywards Coal Co [1880] 5 App Cases 25

Misac Pokonoming v Jeffery Simiri, WS No 1596 of 2005, 26.10.07

Niugini Civil & Petroleum Ltd v West New Britain Development Corporation Ltd (2008) N3292

Obed Lalip and Others v Fred Sikiot and The State (1996) N1457

Peter Wanis v Fred Sikiot and The State (1995) N1350

Rabaul Stevedores Ltd v Benedict and Nancy Seeto [1984] PNGLR 248

Rabtrad Nuigini Pty Ltd v Abco Pty Ltd [1990] PNGLR 155

Thornton v Shoe Lane Parking [1971] 2 WLR 585

Yooken Paklin v The State (2001) N2212

STATEMENT OF CLAIM

This was a trial on liability and assessment of damages for breach of contract.

Counsel

G Linge, for the plaintiff

L Tunian, for the defendant

25 June, 2009

1. CANNINGS J: The plaintiff, Lawrence Win, runs a PMV business in Kimbe. He purchased a new starter motor for his truck at the General Auto Centre, the first defendant, in Lae. He brought the starter motor back to Kimbe and tried to fit it to his truck but it was the wrong part. He sent it back to Lae and asked for a refund of the purchase price of K1,735.37 which was refused. The defendants pointed out that a starter motor is an electrical part and relied on a notice on the sales invoice which stated:

All electrical goods sold are not returnable. Goods sold are not returnable after 14 days. Returns must be in a new condition and in the original packing.

2. The plaintiff claimed that when he bought the part, the sales representative, Ringo Sim, the second defendant, assured him that it would fit his vehicle and that if it did not fit he could return it and get a refund. He maintains that the failure to refund the purchase price amounts to a breach of the contract of sale which has caused him considerable losses. He has sued the defendants, claiming damages of K197,584.46.

THE ISSUES

1 Did the refund notice form part of the contract?

2 Was there any breach of contract by the defendants?

3 Does the Fairness of Transactions Act apply in favour of the plaintiff?

4 Has the plaintiff succeeded in establishing liability?

5 If liability is established what damages is the plaintiff entitled to?

1 DID THE REFUND NOTICE FORM PART OF THE CONTRACT?

3. Mr Linge, for the plaintiff, submitted that the refund notice did not apply for two reasons. First, it was not proven that a starter motor is an electrical part. Secondly, the notice was waived by Mr Sim when he sold the part to the plaintiff.

4. I reject the first submission as there was evidence before the court in the form of an affidavit by Mr Sim that a starter motor is an electrical item. That evidence was not rebutted by the plaintiff. In any event, it is a self-evident fact that a starter motor, also called a self starter or starter, is an electrical motor that initiates rotational motion in an internal combustion engine before it can power itself. It is an integral part of the electrical system of any modern motor vehicle.

5. As to the second submission the plaintiff gave sworn evidence at the trial that Mr Sim convinced him that the starter motor would fit his Hino truck. If it didn’t fit, according to the plaintiff’s evidence, Mr Sim assured him that if he returned it within 14 days – which he did – he would get his money back.

6. I have difficulty accepting all of the plaintiff’s evidence as the allegation that Mr Sim waived the notice was not set out in either the statement of claim or the plaintiff’s affidavit. It was an important question of fact, which has only been asserted during the course of the trial. The plaintiff carried the onus of proving this fact on the balance of probabilities. The onus has not been discharged. I find that the notice was not waived by Mr Sim.

7. However, there is a threshold issue concerning the refund notice that must be considered: was it one of the conditions of the contract of sale?

8. Ms Tunian, for the defendants, submitted that it was an important condition of the contract that had the effect of making it an absolute, as distinct from a conditional, contract.

9. I do not accept that proposition. The notice was akin to an exemption clause – exempting the supplier from liability for something for which they might otherwise be liable. At common law, such clauses are interpreted strictly. Only if they are expressly included in a signed written contract or the purchaser is given adequate notice before the contract is formed are exclusion clauses regarded as part of the conditions of a contract (L’Estrange v Gaucob [1934] 2 KB 394; Thornton v Shoe Lane Parking [1971] 2 WLR 585; Rabaul Stevedores Ltd v Benedict and Nancy Seeto [1984] PNGLR 248; Rabtrad Nuigini Pty Ltd v Abco Pty Ltd [1990] PNGLR 155).

10. Here there was no signed written contract incorporating the refund notice. The notice was on the sales invoice which doubled as a receipt. That document was generated by the contract that was formed when the plaintiff paid for the starter motor. The refund notice was not brought to the plaintiff’s attention until after formation of the contract. I therefore find that it was not one of the conditions of the contract. It was simply a display of the first defendant’s refund policy, which remained at all times subject to the conditions of the contract.

2 WAS THERE ANY BREACH OF CONTRACT BY THE DEFENDANTS?

11. Mr Linge submits that there were two implied conditions of the contract that were breached:

· the condition that the starter motor corresponded with the description given to it;

· the condition that the starter motor was fit for its required purpose and of merchantable quality.

Implied condition in sale by description

12. The first condition can arise under Section 14(1) of the Goods Act, which states:

Subject to Subsection (2) where there is a contract for the sale of goods by description, there is an implied condition that the goods correspond with the description.

13. To prove that this condition formed part of the contract of sale the plaintiff had to prove that he specifically asked for a starter motor for his particular model of Hino truck or that it was sold bearing that particular description, and that the starter motor supplied to him did not correspond with that description.

14. I am satisfied on the evidence that the plaintiff asked for a starter motor for his particular model of Hino. There was an implied condition that the starter motor would correspond with that...