Unreported National Court Decisions
N976
PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]
WS 129/90
IMAK INTERNATIONAL PTY LIMITED
PLAINTIFF
AND
PACIFIC WHOLESALE FREEZERS PTY LIMITED
DEFENDANT
AND
PACIFIC WHOLESALE FREEZERS PTY LIMITED
CROSS-CLAIMANT
AND
IMAK INTERNATIONAL PTY LIMITED
CROSS-DEFENDANT
Waigani
Jalina J
20 November 1990
26 March 1991
PRACTICE AND PROCEDURE - Summary judgment - Serious conflict in law and fact - Triable issues raised - Issues affecting liability and quantum of damages - Full hearing necessary - Application should be refused - National Court Rules 0.12 r.38 (1).
Cases Cited
Dep International Private Limited -v- Ambogo Sawmill Pty Limited, Unreported National Court Judgment No. N594.
Hornibrook Construction Pty. Limited -v- Kawas Express Corporation Pty. Limited [1986] PNGLR 301.
The Chief Collector of Taxes -v- T.A. Field Pty. Limited [1975] PNGLR 144.
United Timbers (PNG) Pty. Limited -v- Mussau Timber Development Pty. Limited, Unreported National Court Judgment No. N645.
Counsel
E.G. Andersen, for Applicant/Plaintiff.
I. Adrian, for Respondent/Defendant.
Cur Adv. vult.
26 March 1991
RULING ON APPLICATION FOR SUMMARY JUDGEMENT
JALINA J:  This is an application by the Plaintiff for summary judgment pursuant to 0.12 r.38’(1) of the National Court Rules.
The Applicant/Plaintiff’s claim against the Respondent/Defendant which is set out in its statement of claim is based on contract pursuant to which various Bills of Exchange were drawn. Where there is a Cross-Claim the parties would then normally be referred to as Plaintiff/Cross-Defendant and Defendant/Cross-Claimant respectively. However, for convenience, I propose to refer to them as Plaintiff and Defendant which was the position they were prior to the Cross-Claim and this application.
On various dates, during the period from January 1988 to February 1989, the Plaintiff drew various Bills of Exchange for various amounts on various dates upon the Defendant payable to the order of the Commonwealth Bank of Australia on various dates. Particulars of Bills of Exchange are as set out in the statement of claim. I do not propose to recite them in full for the purpose of this application.
Shortly after the respective dates upon which the Bills of Exchange were drawn, the Commonwealth Bank of Australia endorsed and delivered the said Bills of Exchange to Australia and New Zealand Banking Group (PNG) Limited. Shortly after receipt of the said Bills of Exchange, the Australia and New Zealand Banking Group (PNG) Limited presented them and each of them to the Defendant for acceptance and each Bill of Exchange was duly accepted by the Defendant.
On their respective due dates, Australia and New Zealand Banking Group (PNG) Limited duly presented the said Bills of Exchange to the Defendant for payment. Upon such respective presentations, the Defendant dishonoured each of the said Bills of Exchange. Subsequent to the said dishonour, each of the said Bills of Exchange was endorsed and delivered to the Plaintiff.
The Plaintiff claims the total of the said Bills of Exchange being the sum of Australian dollars $1,578,751.53, or the kina equivalent thereof.
The Plaintiff further claims interest at the rate of 21% per annum on the amount of each of the respective Bills of Exchange, calculated to 16 October 1989 as totalling Australian dollars $372,377.07, or the Kina equivalent thereof, and continuing at the rate of Australian dollars $214.24, or the kina equivalent thereof. Particulars of interest in Australian dollars are also set out in the statement of claim.
Further or in the alternative the Plaintiff claims that at all material times, the Plaintiff carried on business in the export and wholesale of meat. During the period from approximately January 1988 to April 1989, it and the Defendant entered into various contracts whereby the Defendant agreed to purchase from the Plaintiff various meat products and payment in respect thereof was to be made by way of the Bills of Exchange referred to above.
It was a term of each of the respective contracts referred to above that the Defendant would make payment to the Plaintiff after delivery of goods and on certain fixed dates as agreed to by the parties.
The goods the subject of the respective sales pursuant to the said respective contracts was ordered by the Defendant and sold and delivered by the Plaintiff to the Defendant on the basis of payment by the Defendant by way of respective Bills of Exchange to be presented for payment at fixed dates being the due dates shown on the respective Bills of Exchange.
In breach of the said term of the respective contracts as referred to above, the Defendant is alleged to have failed to pay to the Plaintiff the said amounts due in respect of the said goods sold and delivered.
The Plaintiff says that there have been various adjustments between the parties in respect of the amounts due to the Plaintiff and in respect of which a net amount of Australian dollars $18,286.96, or the kina equivalent thereof was due and owing by the Defendant to the Plaintiff.
Again Particulars of Adjustments (in Australian dollars) are as set out in the statement of claim. It is also not necessary to recite them in full for present purposes.
The Plaintiff therefore claims:
(1)      The amount of Australian dollars $1,578,751.53, or the kina equivalent thereof converted at the date of judgment in respect of the said Bills of Exchange.
(2)      Interest on the said amount Australian dollars $1,578,751.53, of Australian dollars $372,377.07 to 16 October 1989 and continuing, or the kina equivalent converted at the date of judgment in respect of the said interest, or such other amount or rate as the Court deems fit.
(3)      The amount of Australian dollars $18,286.96, or the kina equivalent thereof.
(4)      In the alternative to the amount in Items 1, 2 and 3, the amount of Australian dollars $1,956,559.50, or the kina equivalent thereof.
(5)      Interest pursuant to the Judicial Proceedings (Interest on Debts and Damages) Act on the amount in Item 4.
(6)      Costs.”
The Defendant has, through its Defence and Cross-claim filed on 10th April 1990, denied the claim saying that under an agreement entered into between Messrs Bux and Brenman on behalf of the Defendant and Mr. Mcpherson on behalf of the Plaintiff in Mr. Bux’s office in Lae in or about late 1986 the Bills of Exchange was not due and payable when presented. It further denied that the Bills of Exchange were dishonoured by it and that it had any knowledge of the said Bills of Exchange being endorsed and delivered to the Plaintiff. It said that under the agreement the Defendant agreed to sell various meat products of the Plaintiff in Papua New Guinea on certain terms and conditions including:
“(a)    The Plaintiff would purchase various meat products in Australia and ones which were requested by the Defendant to the Defendant in Papua New Guinea;
(b)      Upon the arrival of each coontainer in Papua New Guinea the Defendant would arrange for storage of it;
(c)      The Plaintiff would only charge the Defendant the cost the Plaintiff incurred in purchasing the meat products, namely, ex meat packers plus freight;
(d)      The Defendant would not be liable to the Plaintiff for the cost of the meat products until each container of meat products had been sold to third parties;
(e)      The Defendant would not be liable to the Plaintiff for any charges for holding the meat products while the meat products were in Papua New Guinea;
(f)      The Defendant would not charge the Plaintiff for storing the meat products in Papua New Guinea;
(g)      The Defendant would arrange for the sale of the meat products in Papua New Guinea to supermarkets, trade stores and other wholesalers;
(h)      Any profit or loss from the sale of the meat products would be divided equally between the Plaintiff and the Defendant.
In pursuance of the Agreement the Defendant received certain containers of meat products from the Plaintiff during the period 1987 to February 1989. The meat products contained in a number of containers were sold and the monies received for such sales has been paid in accordance with the terms of the Agreement.
The Defendant has also made a Cross-claim against the Plaintiff alleging that in the period January, 1988 to January, 1989 the Plaintiff/Cross Defendant in breach of the agreement supplied meat to the Cross Plaintiff not at cost plus freight but at a higher price. The higher price it said was the wholesale price. It further alleged that in breach of the agreement the Cross-Defendant supplied various meat products which the Cross-Claimant did not order or request. This relates to the supply of Big Country brand products to the Cross-Claimant. There are also other breaches which the Cross-Claimant alleges in its cross-claim which I do not consider necessary for present purposes. They may be necessary for assessment of damages.
Mr. Andersen for the Plaintiff has submitted relying on the affidavit of Andrew McPherson that the Defendant has no defence. He has submitted that the Bill of Exchange is entirely a seperate contract and the Defendant in accepting the various Bills of Exchange without qualification accepted its absolute obligation on the face of the bills. He appeared to me to be making this submission on the basis of the definition of “bill of exchange” in Section 8 (1) and (2) of the Bill of Exchange Act Chapter 250.
“(1)    Subject to this Division, a bill of Exchange is an unconditional order in writing, addressed by one person to another, signed by the person giving it, requiring the person to whom it is addressed to pay no demand, or at a fixed or determinable future time, a sum certain in money to or to the order of a specified person, or to bearer.
(2)      An instrument that does not comply with the conditions specified in Subsection (1) or that order any act to be done in addition to payment of money, is not a bill of exchange.”
He further submitted that since the acceptance by the Defendant was without qualification it was a general acceptance within the requirement of Section 24 (1) and (2) of the Act and that by accepting the bill the defendant has agreed that it will pay according to the tenor of his acceptance (sec 59 (1) of the Act). The defendant cannot merely accept that the bills were presented but dispute the due date on the basis of an underlying contract as it has sought to do here when the face of the bill did not make it subject to the underlying contract. The question of whether the Bill of Exchange has been honoured or dishonoured on presentation was distinct. In this case, he submitted, the Bills of Exchange have not been redeemed because the Plaintiff still had them. They have not been honoured because the Defendant had not presented cash to the Plaintiff and obtained the bills. He relied on an old English case of London and Northern Trading Co. Ltd. -v- Arcos Limited (1933) 38 Comm Cas 242 H.L. where the Court of Appeal’s judgment that bills should have been accepted subject to the provisions of the contract under which they were to be accepted was varied by the House of Lords. Lord Buckmaster stated at p.247 that “such a form of acceptance, if it were possible under the Bills of Exchange Act, would destroy the whole negotiability of the whole document”.
Mr. Adrian for the Defendant has submitted that the Defendant has an arguable defence. The Bills of Exchange were subject to and part of an agreement which was in the form of a joint venture between the parties. They were part of a long term agreement between the parties under which they operated accounts which were similar to a “running account” and as such the Plaintiff should not be allowed to enforce one part of the agreement until all aspects of the Agreement including the Defendant’s allegation of misrepresentation, (although not fraudulent) by the Plaintiff have been considered by the Court. He further submitted that the Bills of Exchange were not treated as bills of exchange in that Notices of Dishonour were not sent to the Defendant in accordance with Section 53 (1) of the Act. The Plaintiff had also made representation to the Defendant that it would not rely upon the terms appearing on the face of the Bills of Exchange.
The principles applicable to summary judgments are stated by Lord James of Hereford in Jacobs -v- Booth’s Distellery Co. (1901) 85 LT 262 a case which involved OXIV of the English Supreme Court Rules which is the equivalent of our O.12 r.38:
“The view which I think ought to be taken of OXIV is that the tribunal to which the application is made should simply determine, is there a issue to go before a jury or a court? It is not for that tribunal to enter into the merits of the case at all. It ought to make the order only when it can say to the person who opposes the order, “you have no defence. You could not by general demurer, if it was a point of law, raise a defence here. We think it is impossible for you to go before any tribunal to determine the question of fact”. The rule is “intended only to apply to cases where there is no reasonable doubt that the plaintiff is entitled to judgment, and where therefore it is not expedient to allow a defendant to defend for mere purposes of delay.”
Although both counsel did not refer me to any cases in PNG relating to summary judgments the general principles (not the case itself) enunciated by his Lordship in Jacobs -v- Booth’s Distillery (Supra) have been applied in a number of cases in this jurisdiction.
In Dep International Private Limited -v- Ambogo Sawmill Pty Limited an unreported National Court judgment No. N594 of Woods, J. dated 12th June 1987 his Honour said:
“Order 12 r.38 allows the Court to direct entry of judgment where there is evidence of the facts on which the claim or part is based and there is evidence by the plaintiff that in the belief of the person giving the evidence the defendant has no defence except as to the amount of any damages claimed.
The principles here are that if a defendant makes admissions sufficient to support the claim against him the Plaintiff may apply for judgment based on the admissions. These admissions may be based either on formal admissions in the pleadings or on informal admissions. For the judgment to be entered under this rule the defendants admissions must be strong and unambigous. However, judgment is not entered on admissions’ where serious questions of fact or law requires consideration”.
In this case the Defendant has accepted the Bills of Exchange and by doing so appears to have admitted that aspect of negotiability but it goes on to say that Notice of Dishonour has not been given to it by the Plaintiff in accordance with Section 53 (but also section 52) of the Bills of Exchange Act. This raises in my opinion both questions of law and fact which no doubt are important questions that require consideration.
In Hornibrook Construction Pty Limited -v- Kawas Express Corporation Pty Limited [1986] PNGLR 301 where the Plaintiff applied to strike out the Defendant’s defence and for summary judgment and the Defendant alleged a promise to forbear which was limited to three weeks; Kapi DCJ held that the promise to forbear being limited to a specifice period which had expired was not available as a ground for refusing summary judgment. In this case the Defendant has alleged that the Plaintiff had represented to it that it would not rely on the terms appearing on the face of the Bills of Exchange. This has not been controverted. It seems to me that what is alleged by the Defendant appears to be more than a mere forbearance (of which there is none here). It appears to be allegeing “estoppel” which may need to be supported by evidence, preferably documentary evidence. Estoppel, if established, may have the effect of defeating the whole or part of the Plaintiff’s claim.
In United Timbers (PNG) Pty Limited -v- Mussau Timber Development Pty Limited an unreported National Court judgment No. N645 of 2nd December 1987 King A.J. said:
“The power to enter summary judgment is one to be exercised sparingly and with great care and only when it is clear that there is no triable issue between the parties.”
In The Chief Collector of Taxes -v- T.A. Field Pty Limited [1975] PNGLR 144 Raine J (as he then was) said at p146.
“The Plaintiff has applied by way of notice of motion for an order under O. XVIII r. 1, namely, that he shoudl be given leave to enter final and summary judgment in the action. In my opinion the summary jurisdiction conferred by the rule should only be invoked in a clear case. Great care should be taken not to shut out a defendant unless it is quite clear upon the facts and/or the law that he has no defence. Summary proceedings in ejectment in New South Wales under the old Rules in that State were only made use of by the Judges of the Court in very clear cases. See Burnstein v. Lynn (1) and Pearch v. Gyucha (2), where Street C.J. said:
“Jurisdiction under this Order does not entitle the Court to deprive the parties of their right to proceed to a hearing before a jury if there is a serious conflict on questions of fact - and that, of course, involves not only the surrounding facts themselves, but inferences of fact to be drawn from the evidence. If there is no such serious question between the parties, then I think that this Court should exercise the power which it has to determine the matter summarily and prevent continuous litigation over a claim which has little or no substance.”
I have considered the submissions in light of the authorities and am inclined to the view that the Defendant has an arguable case. In its Defence and Counter-claim the Defendant has alleged that the Bills of Exchange were part of a long term contract which was in the form of joint venture. It has further alleged misrepresentation by the Plaintiff. These were made well before the Plaintiff made this application. Yet the Plaintiff has not controverted those allegations. These obviously raise the issue as to liability as well as quantum of damages. There is also the issue of whether or not Notice of Dishonour has been given by the Plaintiff to the Defendant in accordance with the Bills of Exchange Act when the Bills of Exchange appear to have been dishonoured by non-payment. They are serious questions. They go to the very root of the question as to liability. The Defendant has therefore raised a number of triable issues in my opinion. I do not think I can dispose of these issues which involve both law and fact in a summary manner. The Plaintiff’s application is therefore refused.
I order that the Plaintiff/Applicant pay the Defendant/Respondent’s costs of and incidental this application.
Lawyer for the Appellant/Plaintiff: Blake Dawson Waldron.
Lawyer for the Respondent/Defendant: Gadens Ridgeway.