DC242

PAPUA NEW GUINEA
[IN THE DISTRICT COURT OF JUSTICE]

CASE NO 231 OF 1995

BETWEEN

Mathias Yambunpe
Complainant

V

Joe Chan
First Defendant

AND

PNG Art
Second Defendant

Port Moresby: Bidar, Pm
2000: 15th, 17th & 30th August

Contract - Oral contract - Offer and counter offer - lack of consideration.

Contract - Oral contract - Offer and counter offer - Lack of consideration - Effect of.

Counter Claim - Claim for storage fee - Storage of clay pots - whether defendants entitled to claim.

Cases Cited
The following case is the only case cited in the Judgement 
Leahy -v- Administration (No. 1) No. 124 of 1958.

JUDGEMENT

BIDAR, PM: Complainant’s claim is for breach of contract by defendant to pay for the 89 clay pots air freighted from Wewak to Port Moresby at a given price of K5,311.00. Defendants counter claim against the complainant for storage fees at K50.00 per month from 1st October 1990. This is pursuant to a notice by complainant to the defendant dated 11th September 1990. From the 1st October 1990 to date is almost 10 years. By 1st October 2000, it will be 10 years and the storage fee will calculate to K6,000.00.

This case has a very long history. I will simply state a brief summary of the background to it.

Complainant is a former member of the Parliament, and I think, during his term it was know as the House of Assembly. Sometimes prior to June 1990, complainant sold some artifacts to defendant, apart from selling at Koki and Waigani. These artifacts sold did not include clay pots. Sale in which defendants paid the price offered and some brief discussion took place.

During this brief discussion, the first defendant asked complainant, ‘what else could he sell’. Complainant acknowledged what the first defendant said, and he said ‘he would see what he could do’. According to the complainant, the first defendant told him during the discussion that, there was an order from Germany for 200 clay pots.

Sometime later in or about June 1990, complainant phoned the first defendant from Wewak that he had some clay pots for sale. Defendants usual practice is that, they assist local artifacts dealers with freight costs. Complainant packed 89 clay pots and had them air freighted from Wewak to Port Moresby. The freight cost was K344.68 which defendants paid. During the course of shipment from Wewak to Port Moresby, some 22 clay pots were either badly damaged or slightly damaged. There was no invoice or price list which accompanied the consignment. Defendants took delivery of the consignment. As I alluded to, some 22 clay pots were either badly damaged or partially damaged.

Sometime later complainant arrived at Port Moresby with his price list (see Ex.B). He called at the defendant’s premises and dropped off his price list (marked up prices). Couple of days later he called back at the defendant’s premises, and the first defendant asked him if they could discuss the matter. This discussion was really about the price of the clay pots. Complainant agreed. Before the proposed discussion took place, defendants altered the prices offered by complainant. It was put to the complainant that, some 22 pots were damaged and they offered him K2,800.00 for the whole lot. Complainant refused the counter offer outright and walked out and never returned. Defendants’ were still willing to talk with him and perhaps, amicably settle the issue of price. 

Complainant became angry and infuriated, and did not return but filed this proceedings against the defendants in July 1992. For various reasons the matter was adjourned from time to time. At one stage complainant obtained ex parte orders against the defendants and subsequently warrant of execution was obtained to levy on the property of the defendant.

Thereafter, defendants filed an application to set aside which was refused by this Court. Defendants subsequently appealed against the decision to the National Court.

In the National Court His Honour Justice Woods dismissed the appeal for want of prosecution. In all these proceedings, different lawyers from Public Solicitors Office had carriage of the matter on behalf of the complainant. The defendants appealed against Judge Woods dismissal order to the Supreme Court. The Supreme Court upheld the appeal and remitted the case back to the District Court. From July 1992 to date, it has taken a period of more than eight years for this case to go through the hierarchy of courts and back to where it started from.

Evidence

Complainant’s evidence is that, sometimes prior to June 1990, he came to Port Moresby with artifacts for sale. He sold some at Waigani, some at Koki and he sold one box of artifacts to the defendants. Some discussions took place between the complainant and the first defendant. The first defendant allegedly told complainant that, he had an order from Germany for 200 clay pots. On his return to East Sepik Province, he bought clay pots from local people, particularly from his Chambri Lakes area. He bought 89 clay pots and it seems he did not have sufficient funds to buy more, so he phoned the first defendant for assistance. The first defendant allegedly told him that 89 clay pots were sufficient. Thereupon the pots were packed and air freighted to Port Moresby at the defendant’s expense. The consignment note show amount of K344.68 for 84 packages containing 89 clay pots addressed to PNG Art, P.O. Box 9264, Hohola.

Sometime later, complainant arrived at Port Moresby and handed his marked up prices to the defendants. As I alluded to earlier, as they tried to discuss the price of each clay pot, serious disagreement arose which resulted in complainant walking out on the defendant. One of the reasons they need to talk was the fact that some 22 clay pots were either badly damaged or partially damaged and naturally, the price offered by complainant needed to go down. When the first defendant counter offered K2,800.00 for the whole lot of the pots, complainant refused and walked out and never returned. In 1992, he commenced these proceedings.

Defence case is that, the first defendant Mr. Joe Chan got to know complainant sometimes in 1990, when he (complainant) went to PNG Art to sell some of his artifacts. It was during this time, after the sale of artifacts that, they had some brief discussion, in which the first defendant asked complainant, what else could he sell. Complainant replied, he would see what he could do. Sometime later on or about 18th May 1990, the first defendant received a telephone call from Wewak. 

The call was by the complainant, that he had clay pots for sale. The first defendant told the complainant that for him, defendant would accept consignment of clay pots of up to K500.00 and not more than K700.00.

This restriction was in relation to a circular he issued to all his suppliers on 18 May 1990 (see Exhibit D). The circular informed suppliers included the complainant that, due to overstocking of the shop and decline of number of tourists visiting the country at the time, he had to cut down on the orders. The circular was specific that from 18th May 1990 onwards, each supplier should let defendants know before sending anything on the plane, if any orders are accepted by defendants, than the order has to be under K300.00. As I alluded to, for complainant on that particular supply of clay pots he made an exception of K500.00 to K700.00. When complainant talked with defendant he had not mentioned number of clay pots or their value.

On 26th June 1990 a consignment of clay pots from Wewak was received by defendants. The freight charge was K344.68 which was paid by the defendants. The first defendant realized that consignment was a large one and that there was no invoice on the consignment and that 22 of clay pots were either broken or damaged. After getting delivery of the consignment of clay pots, defendants waited for complainant to show up. Complainant arrived in Port Moresby sometimes in July 1990. On 27th July 1990, complainant and defendant sat down to discuss the consignment and the value. Defendants found complainant’s costing so excessive, as he tried to sell to defendants on retail price, rather than wholesale price, which was the normal practice.

Complainant offered K5,311.00 for the whole lot of clay pots. Due to decline in number of tourists entering the country and fall in his sales, he could not sell his clay pots on a mark-up price as it would be expensive, and that defendants could not sell the clay pots at those prices.

Complainant had made a consignment of over the required limit of K700.00, he was in fact forcing defendants to buy his pots so the defendants counter offered a sum of K2,844.68 to pay for clay pots inclusive of freight charge and taking into account 22 clay pots which were either broken or damaged. The complainant bluntly refused the counter offer of K2,500.00 together with freight charge.

Subsequently on the 11th September 1990, defendants wrote to the complainant to reclaim his clay pots and sell them elsewhere. Complainant was also given notice that if he did not reclaim his clay pots, defendants would be charging K50.00 per month for storage fee, commencing on the 1st October 1990. From that notice to date, the clay pots are still sitting at the defendant’s shop. Complainant had, as I alluded to, resorted to taking court proceedings against defendants for breach of contract. 

Issues

The central issues in my view are these:

(1) Whether or not a valid and binding contract was concluded between the parties.

(2) If so, at what stage was the contract concluded between the parties.

(3) Supposing there was a valid contract between the parties, was there a breach of any of the terms.

The basic idea of contract in common law is that, it is a bargain that binds. (see Context of Contract in Papua New Guinea, D. Roebuck, D. Srivastara and J. Nongorr University Press, 1984). The traditional principle is that there must be an offer which is unequivocally accepted for a consideration.

In Common Law, it is clear that when the parties are in agreement and intend to make a contract, the agreement must be supported by consideration. In Leahy v- Administration (No.1) No. 124 of 1958, the then supreme court found that, the plaintiff had given good consideration by allowing the government officers onto his land to carry out their program of tick eradication. On appeal to the High Court of Australia, the court held that there was no consideration because the entry of the government officers was merely a response to the plaintiff’s request.

The facts of this case show that, complainant phoned the first defendant from Wewak and stated that he had clay pots for sale. Thereupon as usually done to their artifacts suppliers, defendant paid freight and air freighted the consignment of clay pots to Port Moresby. I accept that, there were no numbers mentioned and no price or value of clay pots mentioned. The consignment of clay pots arrived without any invoice or price list. 

I also accept the fact that the usual method of purchase defendants do their business is wholesale purchase and not retail. The complainant arrived with the price list, which had mark up price of individual clay pots. Total amount for the whole 89 clay pots, including damaged ones was K5,311.00 les freight cost. Defendant clearly did not accept the price offered by complainant, but changed the pricing and counter offered an amount of K2,500.00 including the freight, would be K2,844.68. 

Complainant refused the counter offer. I accept that this was a negotiation or bargaining between the parties which neither party accepted the offer made. Objectively speaking, was there a valid agreement between the parties for consideration. I think, not. Was there any, at the time the consignment of clay pots were air freighted? I think not. Complainant’s marked up price for 89 clay pots was K5,311.00 less freight. Defendants usual practice is that, when artifacts are flown in, owners come in for discussion and evaluation of artifacts. 

This is when true negotiations take place as to the price. Dealing with artifacts is a special type of business, and defendants have been in business at the same premises since 1977, and know their market. On some occasions previously, people have sought their assistance to evaluate artifacts. 

Can it be said that, when defendants paid the freight, and took delivery of the consignment of clay pots, they accepted the terms offered by complainant. As I alluded to, and accepted, that no numbers or amount of money was mentioned when complainant phoned, Mr. Joe Chan. Even then the parties reached no agreement as to the fundamental term, which is the consideration. After the negotiations fell through defendants were ready and willing to talk with the complainant with a view to compromise on the price. Complainant blatantly refused any further discussion. To date he had taken no steps to mitigate his loss.

Based on the foregoing reasons, I am not satisfied on the balance of probabilities, that, there was any valid and binding agreement between the parties, which this court can enforce. I would enter judgement for defendants.

The only remaining matter to consider is the counter claim by defendants for storage of clay pots at their premises. A fee of K50.0 per month from 1st October 1990. From 1990 to date is almost 10 years. The evidence is, that the clay pots in question, are still sitting at the defendants’ premises. My calculation is that, by 1st October 2000, the storage fee would be K6,000.00.

The law on counter claim or set-off is provided under s.s 133, 134, 135, 136, 152, 153 and 154 of the District Court Act. S.133 (2) provides that concise particulars of defendants set-off (if any) with dates, items and prices or value shall be endorsed on or annexed to the written notice of the set off. S. 136 provides that sections 134 and 135 with necessary modifications, apply to a set-off as if it were a complaint. S.153 provides that:

"(1) without the permission of the Court, the defendant in a complaint for a debt recoverable before a court shall not

(a) set-off a debt or demand claimed or recoverable by him from the complainant; or

(b) set up by way of defence and claim and have the benefit of illegality, infancy, coverture or a statute of limitations or of his discharge under a law relating to bankrupt or insolvent debtors, unless, a reasonable time before the hearing of the complaint, written notice of his intention to set-off or set up that defence, as the case may be, has been given to the complainant personally or by post or by causing it to be delivered at his usual or last known place of abode or business or at his address for service set out in the summons on the complaint.

(2) ………………………………………………………………….

A notice by letter, dated 11th September 1990 was addressed to the complainant at his address at P.O. Box 223, Wewak, East Sepik Province, which complainant denies receiving it. This letter stipulates a fee of K50.00 each month for storage, commencing on 1st October 1990.

One of the fundamental reasons people come to court is to seek justice. Parties know court is an independent and impartial forum to mete out justice and fairness. Complainant has missed out on the money he could have earned from his clay pots, but that, he had not taken any appropriate steps to mitigate his loss. To order an amount claimed by defendants for storage, will be a double blow to him. The least he can do is to get his clay pots back and perhaps sell them elsewhere, so as to mitigate his losses. In all the circumstances, I would decline to award the defendants’ counter claim for storage fees. I would dismiss the counter claim as well. In these circumstances, I order that, the parties pay their own costs.

Mr Nanu: Complainant
Mr JF Aisa: Defendant