Keam Investments Limited v Toyota Tsusho (PNG) Limited trading as Ela Motors And Westpac Bank (PNG) Ltd (2019) N7859

• Jurisdiction: Papua New Guinea
• Court: National Court
• Judge: Thompson J
• Judgment Date: 10 May 2019
• Citation: (2019) N7859
• Judgment Number: N7859
• Year: 2019
• Docket Number: WS No. 136 of 2012

Full Title: WS No. 136 of 2012; Keam Investments Limited v Toyota Tsusho (PNG) Limited trading as Ela Motors And Westpac Bank (PNG) Ltd (2019) N7859

National Court: Thompson J

Judgment Delivered: 10 May 2019

N7859

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS No. 136 of 2012

BETWEEN:

KEAM INVESTMENTS LIMITED

Plaintiff

AND:

TOYOTA TSUSHO (PNG) LIMITED trading as ELA MOTORS

First Defendant

AND:

WESTPAC BANK (PNG) LTD

Second Defendant

Waigani: Thompson J

2019: 16 April, 10 May

CONTRACT - Purchase of vehicle by finance company – Subsequent lease of vehicle to customer – Whether or not contract of sale between customer and supplier of vehicle – Whether or not representations by supplier binding on finance company – Whether or not customer is buyer – Whether or not Goods Act applies.

Counsel:

Mr G Lau, for the Plaintiff

Mr G Gileng, for the First Defendant

Mr D Hill, for the Second Defendant

10th May, 2019

1. THOMPSON J: The Plaintiff is claiming damages against the First and Second Defendants, arising out of the sale of a truck with crane in June 2011.

2. The causes of action against the Defendants are not entirely clear, but include some contracts which are alleged to have been breached.

3. The proposed amendment to para 26 D of the Claim, relating to the Fairness of Transactions Act, was refused. This paragraph should have been deleted from the copy of the Amended Amended Amended Writ of Summons filed on 12 April 2019.

Pleadings Re First Defendant

4. In paras 5 – 8 of the Amended Amended Amended Statement of Claim (“the Claim”), the Plaintiff pleads that it negotiated a sale in early June 2010 in that it made its requirements known to the First Defendant, and the First Defendant offered to supply the Plaintiff with a new truck and crane and have it delivered to the Plaintiff within 3 months.

5. In para 10, the Plaintiff pleads that the First Defendant did not deliver the truck and crane within the 3 months.

6. In paras 16 – 17, the Plaintiff pleads that in about June 2011 it discovered certain facts about the age of the truck/crane which had not been disclosed by the First Defendant.

7. In paras 23 - 26, the Plaintiff refers to a contract of sale, without identifying the parties to the contract, refers to the Goods Act, and pleads that the First Defendant breached implied conditions of a contract that the vehicle would be brand new and reasonably fit for the purpose as required by the Goods Act.

8. In para 27, the Plaintiff pleads that by reason of the First Defendant’s breach of contract, he has suffered loss.

9. The combined effect of the pleadings in paras 5 – 8 and 23 – 26, is that the Plaintiff is alleged to have entered into a contract of sale with the First Defendant. No other cause of action is pleaded.

Evidence and Chronology Re First Defendant

10. On 25 June 2010 the Plaintiff entered into a three year cartage contract with Hargy Oil Palm, which required him to supply a duly registered Hino truck with crane, for use in transporting oil palm fruit. There was no requirement for the truck to be new. The Plaintiff did not have such a vehicle, and could not commence performance of the contract.

11. On 16 July 2010 the First Defendant gave a written quote addressed to the Plaintiff, offering a new Hino FS 1 ERPA-CC6F4 truck for K308,000.00, a hoist for K40,000, a bin for K65,000, and a PK950, which is said to be a crane, for K115,000.00 (“the vehicle”). Together with other charges, the total quoted price was K598,400.00. The quote said that delivery was to be after the sale, and gave a warranty for 12 months.

12. After the quotation was provided, the Plaintiff made preliminary enquiries with the Second Defendant about finance, informed the First Defendant that finance would be approved, and informed the First Defendant that he would take the vehicle but wanted the control levers to be re-located and the crane to be attached at a certain height.

13. The First Defendant then commenced work to carry out these requests. In the eleven months between the quotation and delivery, the Plaintiff and his representatives made at least two and possibly more trips to Lae to inspect the work which was being carried out on the truck in Lae. The Plaintiff said that the truck and crane looked new. On 9 February 2011, the Plaintiff informed the First Defendant that as a result of his inspection of the truck, there was further corrective work which needed to be done.

14. On 15 March 2011 the work was completed, and the First Defendant asked the Plaintiff to attend and inspect it. This was done, and the First Defendant then agreed with the Plaintiff to deliver the vehicle to him in Kimbe.

15. On 13 April 2011 the Plaintiff asked for and obtained an extension of one year for his contract with Hargy, because he had not yet commenced performance of the contract.

16. By this time, the Second Defendant’s initial finance approval had expired, and the Plaintiff was required to reapply. On 25 May 2011 the Second Defendant approved the finance.

17. On 1 June 2011 the Plaintiff signed a Lease Agreement with the Second Defendant.

18. On the same day, the Second Defendant paid the purchase price to the First Defendant, the First Defendant then delivered the vehicle to the Plaintiff in Kimbe, and the Plaintiff took possession of the vehicle on or about 8 June 2011.

19. It later transpired that the crane, without the truck, had been bought by the First Defendant from the manufacturer in 2006, and had been stored without being sold by the First Defendant until the Plaintiff approached them in 2010.

Claims Against First Defendant

20. The Plaintiff alleges that it was an implied condition of the contract of sale that the truck/crane would be new. The First Defendant does not deny that the Plaintiff made it known to them that the truck and crane must be new. However, they say that the truck/crane which they provided, was new.

21. The First Defendant said that, in response to the Plaintiff’s enquiries, they gave him a choice of ordering a new vehicle from the manufacturers overseas which would take time and be more expensive, or taking a new vehicle which was already there in Lae, but had been sitting there for some time. The Plaintiff partly agrees that the First Defendant gave him those options (see his email to the First Defendant of 24 July 2011), but denies that he was told that the existing crane was aged or old. It was apparent from the parties’ evidence that by “new” or “brand new” the Plaintiff meant “not old”, while the First Defendant meant “not used”.

22. The First Defendant’s evidence was that because the crane was aged, they had given a significant discount to the Plaintiff, reducing the price from K149,000.00 to K115,000.00, The Plaintiff disputed this, because he said that the manufacturer had sold it to the First Defendant for K100,650.00. However, the manufacturer had said that on top of this price, the First Defendant had been obliged to pay the customs duty, clearance costs and other expenses including the cost of subsequently installing the crane onto a vehicle. The Plaintiff also said that a discount had not been given, because it had not been shown on the quotation. The First Defendant’s evidence was that discounts were sometimes shown, and sometimes not shown, on quotations, there was no fixed practice.

23. There was no requirement in the Plaintiff’s contract with Hargy Oil Palms for the truck/crane to be new. After having been given a choice of ordering a new vehicle from overseas or taking a new vehicle which was already there and had been sitting there for some time, the Plaintiff knew that he was not getting the latest and newest model. The only ambiguity was to know exactly how old the model was.

24. The Plaintiff alleges that the First Defendant agreed to deliver the goods within 3 months of 25 June 2010. The First Defendant denied this, and said that the Plaintiff only saw them in early July 2010, and said that they agreed to deliver the truck and crane after payment of the purchase price. The written evidence was the actual quotation provided by the First Defendant dated 16 July 2010, which stated that delivery would be “subject to prior sale”, which could only mean “delivery after the vehicle was sold”. The vehicle was sold on 1 June 2011. The Plaintiff did not establish that it was a term of any alleged contract that delivery be within three months of 25 June 2010.

The Law

25. To determine if there was a contract for sale between the Plaintiff and First Defendant, the Plaintiff must establish three elements – that there was agreement between the parties, a mutual intention to create legal relations which includes the element that each party must have the capacity to enter into the contract, and support of the agreement with consideration (see Chitty on Contracts, 27th Edition, 1994). To establish if these elements exist, the Plaintiff has to show that one party made an offer which was clear and precise in its terms, which was unconditionally accepted by the other party, and valuable consideration was...