N6070

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 356 OF 2008

BETWEEN

COCA COLA AMATIL LIMITED
Plaintiff

AND

KUTUBU TRANSPORT LIMITED
Defendant

Lae: Murray, J
2015: 04th September

CONTRACT – breach of contract to deliver goods to its destination

NEGLIGENCE – allegations of negligence by the Defendant – claim for damages for loss of goods as a result of – whether an invoice, with conditions of cartage on the reverse side of it, is a term of the contract - whether Defendant is liable for the loss.
 
Cases Cited:
Papua New Guinea Cases

Lawrence Win vs. General Auto Centre Limited (2009) N3680
Rabtrad Niugini Pty Ltd vs. ABCO Pty Ltd [1990] PNGLR 155
Rabaul Stevedores Ltd vs. Seeto [1984] PNGLR 248
Wong Wuk Cheng & Ors vs. PNG Harbours Board

Overseas Cases

Burnett vs. Westminster Bank [1965] All E.R 81
Chapelton vs. Barry UDC [1940] 1K.B 352
Olley vs. Marlborough [1949] All E.R 127
Parker vs. South Eastern Railway (1877) 2 C.P.D 416
White vs. Blackmore [1972] All E.R 158

Counsel:

Mr. Asigau, for the Plaintiff
Mr. Griffin, for the Defendant

JUDGMENT

04th September, 2015

1.	MURRAY, J: This was a trial on liability and assessment of damages for loss of goods valued at K50, 518.94, belonging to the Plaintiff who claims the loss occurred as a result of the Defendant's negligence.

Back Ground

2.	On 1st March 2007, the Plaintiff engaged the Defendant to transport a consignment of 3024 cases of 330 mls cans of fanta pineapple soft drink valued at K50, 518.94 from Lae to Mt. Hagen. The cases were packed into two (2) 20 foot shipping containers and where attached to the Defendant's prime mover. On 3rd March 2007, during the course of the transportation, the Defendant's truck containing the consignment capsized along the Okuk Highway. The containers where thrown on their side and while in that position, were cut opened and looted by nearby villagers. The truck was driven by Michael Bungai, an employee of the Defendant.

Evidence

3.	The Trial was conducted by way of affidavits.

4.	The Plaintiff relied on the affidavit of Gibson Dandase. In this said affidavit Mr. Dandase stated the following;

Firstly, that the Plaintiff had engaged the Defendant on 1st March 2007 to transport 3024 cases of fanta pineapple soft drinks from Lae to Mt. Hagen. 

Secondly, that on 2nd March 2007, the Defendant sent a tax invoice for the amount of K4, 365.42 to the Plaintiff for the consignment.

Thirdly, the truck carrying the consignment left on 3rd March 2007 and along the Okuk Highway it capsized and whilst it was on the side of the road it was looted by the nearby villagers. 

Fourthly, the police were alerted and attended at the scene but did not recover anything. 

Finally by a letter dated 27th March 2007, addressed to the Defendant, the Plaintiff demanded the Defendant to pay for its loss calculated at K50, 518.94.

5.	The Defendant in support of its defence relied on the affidavit of Andrew Rice. In the said affidavit, Mr. Rice disposed to the following:

Firstly, that he is the Groups Operation Manager of the Defendant Company.

Secondly, the Defendant is in the business of the Haulage Contractors in which it carts freight and goods to and from various destinations in Papua New Guinea. 

Thirdly, that all its carriage of freight and cargo is subject to its standard terms and conditions set out in the condition of cartage which is found at the back of the invoice. 

Fourth, Mr. Rice annexed to his affidavit as annexure A, the invoice from his company to the Plaintiff. 

Lastly, he states, the loss of the Plaintiff's goods was caused by the unlawful conduct of the nearby villagers, then went on to say that, even if the Plaintiff's loss was caused by their negligence, the Defendant cannot be held liable because the Plaintiff had agreed that, the Defendant would not be liable for any loss arising from its negligence.

Submissions

6.	The Plaintiff submits that, the Defendant was negligent by failing to ensure that the containers arrived safely at its destination, and it is immaterial whether the goods were looted by the by-standers. What is relevant is that the goods were in the possession, custody and control of the defendant and the defendant owed a duty of care to it to ensure that no damage was occasioned to the goods. The Plaintiff therefore submits that the defendant failed in its duty of care and is therefore liable for the loss suffered by it.

7.	In response the defendant submitted that, firstly they concede that there was an accident where in, its truck overturned resulting in the containers which held the Plaintiff's goods to capsize. However, they deny that, the goods were damaged by them. Instead they argue that firstly, the goods were stolen by nearby villagers who cut open the containers and stole all the goods and secondly, it was submitted that even if the loss was caused by its negligence, it is entitled to rely on conditions 3(a) of the conditions of the cartage on the reverse side of the invoice issued to the Plaintiff, whereby it states in very clear terms that it has no responsibility for any loss or failure to deliver the goods for any reason what so ever including negligence.

8.	In rebuttal the Plaintiff submits that the exclusion clause relied upon by the Defendant did not and could not form part of the contract between them as it had no notice of that exclusion clause. 

In other words if the exclusion clause contained in the conditions of cartage are to have any effect, the Plaintiff submitted they must in essence first form part of the contract between them.

In this case the Plaintiff submitted that did not happen. That is to say that the Defendant did not at any time prior to the consignment of the containers, ever made an attempt to inform it, that the consignment was subject to conditions of the cartage which is on the reverse side of the invoice.

Issues

9.	From each party's respective argument it is noted that the major issue to resolve is the issue of liability of the Defendant. Is the Defendant liable for the Plaintiff's loss of K50, 518.94? In order to determine that both parties agreed that, the only issue this Court must determine is whether or not the Defendant can rely on the conditions of the cartage as its complete defence to liability. 

Reasons for Decision

10.	There is no dispute that there existed a contract between the parties. The contract was for the Defendant to transport the Plaintiff's goods comprising of 3024 cases of 330 ml cans of fanta pineapple soft drinks from Lae to Mt. Hagen. The said goods were to be transported in two (2) 20 foot shipping containers which were attached to the semi trailer of the Defendant's prime mover. The transportation was to take place on 3rd March 2007. Based on the agreement between the parties as to the only issue for this Court to determine, it is the case that the Defendant also did not dispute either the loss of the goods or the amount assessed by the Loss Adjustors and claimed by the Plaintiff as the amount owed by the Defendant to the Plaintiff for its loss. Given this fact, I would and do find that the Plaintiff did lose its goods and has made a loss assessed at a total sum of K50, 518.94. 

11.	What is in dispute is the exemption clause contained in conditions of cartage which is referred to by the Plaintiff as the "exclusion clause". The Defendant relies on that clause and denies that it is liable for the Plaintiff's loss.

Conditions of Cartage or Exclusion Clause

12.	The clause which the Defendant rely on is in the following terms:

2.	The Carrier is NOT A COMMON CARRIER and will accept no liability as such. All articles are carried or transported and all storage and other services are performed by the Carrier subject only to those conditions. The Carrier shall not be bound by any agreement purporting to vary these condition unless such agreement shall be in writing and signed on behalf of the Carrier by an officer duly authorized.

3.	(a) Unless otherwise expressly agreed in writing, no responsibility in term or contract or otherwise will be accepted by the Carrier for any loss of or damage to or mis- delivery or failure or delay in the delivery of goods either in transit or in storage for any reason whatsoever including negligence.

13. Does these two clauses in particular clause 3(a), exempt the Defendant from liability for its failure to deliver the Plaintiff's goods to its destination as agreed.

14. Mr. Griffin for the Defendant submitted, clause 3(a) was part and partial of the agreement entered into by the parties. It is set out in the invoice that was received by the Plaintiff. Further, there is no ambiguity about what it means. The plain and clear meaning of that clause is that the Defendant will not be responsible for the loss of or failure to deliver goods due to negligence. Mr. Griffin cites the following cases: Wong Wuk Cheng & Ors vs. PNG Harbours Board; Rabaul Stevedores Ltd vs. Seeto [1984] PNGLR 248 and Rabtrad Niugini Pty Ltd vs. ABCO Pty Ltd [1990] PNGLR 155. Of these cases, I find the case of Rabtrad to be the only relevant case.

15. Mr. Asigau for the Plaintiff submitted, the clause did not form part of the contract between the parties as the Plaintiff had no notice of it and referred me to several overseas case: The first one is Parker vs. South Eastern Railway (1877) 2 C.P.D 416. In that case the Court held that an exclusion clause will only become incorporated in a contract if notice of the term has been given and the notice is reasonably sufficient in all the circumstances of the case. 
Other overseas cases cited include: White vs. Blackmore [1972] All E.R 158; Olley vs. Marlborough [1949] All E.R 127; Burnett vs. Westminster Bank [1965] All E.R 81; and Chapelton vs. Barry UDC [1940] 1K.B 352.

16. In White vs. Blackmore, Lord Denning at p.167 said:

"…the Court must be satisfied that the particular document relied on as containing notice of the excluding or limiting term is in truth an integral part of the contract".

17. The English cases cited, all stood for the proposition that, in order for a term or clause to be incorporated into a contract and to be binding, it must be brought first to the attention of the other party before the contract is made.

This was considered and applied in the following Papua New Guinea cases. 

1. Rabtrad Niugini Pty Ltd vs. ABCO Pty Ltd [1990] PNGLR 155 (supra) and 

2. Lawrence Win vs. General Auto Centre Limited (2009) N3680.

18. In Rabtrad Niugini Pty Ltd vs. ABCO Pty Ltd, 1,321 cartons of tinned fish valued at K26, 655.56 belonging to the plaintiff were lost while on the defendant's premises and within the defendant's control. The defendant relied on the terms and conditions printed on the back of the letter dated February 1986 and in particular the following part of clause 3A "The Carrier shall not be under any liability …held in their care, custody or control, or any consequential loss arising therefrom howsoever caused". Doherty AJ said at 158 – 159:

"A standard contract, which imposes terms on a party and purports to reduce liability on a contracting party, must be communicated to the other party and the circumstances must show an intention to be bound by it. This has been held in various cases: Olley vs. Marlborough Court [1949] 1 All ER 127 and, as said in McCutcheon vs. David MacBrayne Ltd [1964] 1 All ER 430 at p 435, by Lord Guest:

19. In Lawrence Win vs. General Auto Centre Ltd (supra), a customer purchased a starter motor which did not fit his vehicle. He returned the part and requested a refund of the purchase price which was refused. The supplier relied on a notice on the invoice which stated "All electrical goods are not returnable. Goods sold are not returnable after fourteen (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. His Honor Cannings J held that 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. He said:

"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 vs. Gaucob [1934] 2 KB 394; Thornton vs. Shoe Lane Parking [1971] 2 WLR 585; Rabaul Stevedores Ltd vs. Benedict and Nancy Seeto [1984] PNGLR 248; Rabtrad Niugini Pty Ltd vs. ABCO Pty Ltd [1990] PNGLR 155)."

20. In the present case, the Plaintiff's uncontested evidence is that: 

The Plaintiff engaged the Defendant on 1stMarch 2007 to transport the containers of soft drinks. The Defendant sent its invoice on 2nd March 2007 and the goods were lost during transit on 3rd March 2007. 

There is no evidence before the Court that the Defendant had brought condition 3(a) or that clause exempting it from liability to the attention of the Plaintiff. This is not denied by the Defendant, but the Defendant argues that it is on the invoice that was delivered to the Plaintiff, and that the Plaintiff ought to have seen it and Taken insurance to cover any loss that may occur. 

21. The question is, is the invoice a term of the contract. An invoice is defined in the Oxford Dictionary to mean: a document setting out a list of goods or work that has been done and how much one has to pay for the goods or work done.
By this definition, an invoice is not a term of the contract, but rather a result of a contract. 

The Plaintiff in the present case received the invoice and knowing what an invoice is attended to it. It is therefore unreasonable for the Defendant to expect the Plaintiff to know that, condition 3(a) or such a clause exempting the Defendant from liability is on the reverse side of the invoice. If the Defendant intended condition 3(a) to be a term of the contract, the law requires that, such a clause be brought to the attention of the Defendant before the formation of the contract, and if accepted by the Defendant, then, it will apply.
That did not happen in this case.

22. I therefore find firstly that, an invoice is not a term of the contract, and secondly, the condition/clause on the reverse side of the invoice is also not a term of the contract as it was not expressly put to the Plaintiff and accepted by the Plaintiff.

23. The next question is, did the Defendant breach the contract:
At the start of the hearing, parties through their respective Counsel had agreed that, the issue of liability depended on the exemption clause. If I find that the exemption clause does not form part of the contract between the parties then, liability is not an issue.

24. Considering my determination on the issue of the exemption clause or condition 3(a) and that I have found that, the Defendant was in possession of the Plaintiff's goods when the loss occurred, it is now not necessary to rule on that question.

25. However, I note that both counsel had made submissions on that issue as well. 
Accordingly, I will consider that aspect as well.

26. The undisputed facts are that, the parties agreed that the Defendant would deliver the Plaintiff's goods from Lae to its destination, in Mt. Hagen. That never eventuated. To my mind the failure to deliver the goods as agreed is a fundamental breach.

27. I agree with Mr. Asigau that, the fact that the nearby villagers looted the containers and stole the goods are irrelevant. What is crucial is that, the minute the Defendant agreed to transport the goods, it owed a duty of care to the Plaintiff, to ensure the Plaintiff's goods reached its destination. That did not happen. The goods were in the Defendant's possession when they were lost, when its truck capsized. The Plaintiff alleged negligence by the Defendant. This is not refuted.In the circumstances, it is safe in my view to conclude that, the Defendant was unable to deliver the goods due to its negligence. Therefore I find the Defendant liable and I order judgment against it in the sum of K50, 518.94.

28. The Plaintiff has also sought interest on the judgment at 13% per annum. There is no evidence by the Plaintiff that warrants interest at 13% per annum. Accordingly, I am not willing to order interest higher than the accepted rate of 8% per annum. I therefore order interest at 8% on the judgment sum of K50, 518.94 from date of issue of the writ (24th April 2007) to date of judgment. I also order costs to the Plaintiff, to be paid by the Defendant to be taxed if not agreed.

___________________________________________________________________
 Pacific Legal Group : Lawyer for the Plaintiff 
Young & Williams Lawyers : Lawyer for the Defendant