N6707

PAPUA NEW GUINEA 
[IN THE NATIONAL COURT OF JUSTICE]

W. S. No.1425 of 2014
	
BETWEEN
DELTA KIKORI LIMITED
Plaintiff

AND:
ANDQ TRADING LTD
Defendant 

		Waigani: Kandakasi, J.	
2017: 19th April
3rd, 17th and 19th May		

CONTRACT – Verbal agreement for carriage of goods by sea – Claim of invoices rendered and not fully paid for – Request for copies of bills of lading and shipping notices to verify and make payments – Failure to meet request – Failure to produce neither original nor any copies of documents requested – No explanation provided for failure – Critical evidence missing - Evidence called failing to establish claim – Claim dismissed.

EVIDENCE –Documentary evidence - Best evidence rule – Exceptions – Onus on party wishing to rely on secondary or tertiary evidence to explain the whereabouts of original or inability to adduce it – Failure to – Verbal assertions - No case made out to accept same – Evidence rejected.  

SEA CARRIAGE OF GOODS – Bills of lading –Carrier to issue upon receipt of goods for shipping – Carrier failing to give evidence concerning the issuance and keeping of records of – Mere assertions of the existence of a bill of lading insufficient – Failure to produce original or copy into evidence fatal – Sections 2, 4 and 5 and Article III (1), (3) and 4 of Sea-carriage of Goods Act (Chp. 261).

Papua New Guinea Cases cited:
Toba Pty Ltd v Poole [1984] PNGLR 94.
Ilimo Farm Products Pty Ltd v. General Accident Fire and Life Assurance Corporation Ltd [1988-89] PNGLR 342

Other sources cited:

Sea-Carriage of Goods Act (Chp.261) (Act)
Halsbury’s Laws of England, 4th Edition, Volume 43
Cross on Evidence, 2nd Australian Edition

Counsel:

P. Ame, for the Plaintiff  	
R. Mulina, for the Defendant  

19th May, 2017
1.	KANDAKASI J:  Delta Kikori Limited (DKL) is seeking to recover an alleged debt of K156, 720.00 for shipping of cargo services to ANDQ Trading Limited (ATL). In its defence, ATL denies being indebted to DKL.  It pleads further that it paid K61, 611.40.  As for the balance of K95, 108.60, it has and is still prepared to pay that amount upon the provision of the copies of the relevant bills of lading and shipping notices.  Requests for their production remains outstanding to date.  At the trial, DKL failed to produce copies of the requested documents.

Parties Arguments

2.	The main and critical argument in this case revolves around DKL’s failure to produce copies of bills of lading and shipping notices supporting its claim.   DKL argues that, pleading and providing copies of some of the invoices citing the relevant bills of ladings numbers is sufficient. Accordingly, it argues, its claim should be upheld.  On the other hand, ATL argues DKL’s failure to produce the documents in question is critical and the claim should be dismissed on that account.

Relevant Issues

3.	These arguments and this case present a number of issues for the Court to consider and determine.  These are as follows:

(1)	Has DKL as the plaintiff established its case on the required standard of prove?

(2)	Whether the failure to produce the relevant bills of ladings and shipping notices in evidence is fatal to the plaintiff’s claim?

(3)	Whether the mere verbal assertions and quoting of the purported numbers allegedly of bills of lading sufficient evidence?

4.	The first question is both a question of fact and law which needs to be answered by reference to the evidence or lack of evidence before the Court as well as the law on point.  The last two questions are questions of law. I will therefore have these questions answered first.

Need for Documentary Evidence

5.	Despite two adjournments granted on 19th April and 3rd May 2017, to enable the parties to research and address the questions presented, DKL’s lawyer did not make any helpful submissions.  He maintained his submissions that were handed up to the Court at the trial on 19th April 2017.  These submissions are not helpful. They only say a mere verbal assertion and quoting of the relevant bills of lading is sufficient.  On the other hand ATL’s submission usefully refers to the Sea-Carriage of Goods Act (Act) and a passage from Halsbury’s Laws of England. 

6.	Section 2 of the Act, states in clear terms that the Rules contained in the Schedule to the Act applies to “the carriage of goods by sea in ships carrying goods” to and from ports within and outside the country.  Section 4 of the Act specifically provides for bills of lading and stipulates that:

“Every bill of lading or similar document of title issued in the country that contains or is evidence of any contract to which the Rules apply shall contain an express statement that it is to have effect subject to the provisions of the Rules as applied by this Act.”

7.	Section 5 then provides that:

“A bill of lading issued in accordance with Article III.(3) of the Rules shall for all purposes be deemed to be a valid bill of lading…”

8.	Article III (1) of the Schedule to the Act provides that a “carrier is bound, before and at the beginning of the voyage, to exercise due diligence” in terms of taking due and proper care of the goods entrusted to the carrier’s hands.  Paragraph 3 of the same article requires the carrier, its master or agent to issue the shipper a bill of lading after receiving the goods into his charge.  Based on the information supplied by the shipper, the bill of lading should show amongst others the “leading marks necessary for identification of the goods” and the “number of packages or pieces, or the quantity or weight” received for shipment.  Paragraph 4 of the same article states in clear terms that “[a] bill of lading is prima facie evidence of the receipt by the carrier of the goods as described in the bill.”

9.	The importance of a bill of lading has been highlighted in a number of cases in PNG already.  In Toba Pty Ltd v Poole, a vehicle was supposed to be shipped as a “containerized” good.  The shipment was contrary to that requirement and damages were caused to the vehicle.  The carrier was held responsible.  A similar situation in respect of certain goods was the case in Ilimo Farm Products Pty Ltd v. General Accident Fire and Life Assurance Corporation Ltd.
 
10.	From this position at law, it is clear to me that when there is a dispute over the shipment or none shipment of goods and payment for such services, adducing a bill of lading into evidence would be critical.  It would help answer all of the questions that might arise from the point of receiving the goods for shipment, having them delivered to their destination, all matters in between and the payment or discharge of all other relevant duties and responsibilities.  

11.	Now specifically turning to the question of, in what form should the evidence of a bill of lading come, I turn to Cross on Evidence, at paragraph 21.1 which states:

“A party relying on the words used in a document for any purpose other than that of identifying it must, as a general rule, adduce primary evidence of its contents. This is often spoken of as the most important survival of the best evidence rule, although it ante-dates by several centuries.  The typical example of the primary evidence in this context is the original….The rule is subject to important exceptions for which the most notable relates to public documents, the contents of which may be proved by the production of a copy.”

12.	At paragraph 21.6 the same learned authors of the text book, point to a number of exceptions to the best evidence rule without limiting the list. These would occur in cases in which the:

(1)	original is in the possession or control of the opponent of the party wishing to rely on the document and the opponent fails to produce it after receipt of a notice requiring him to do so;

(2)	original document is in the possession of a stranger who lawfully refuses to produce under subpoena;

(3)	original document cannot be found after due search;

(4)	production of the original is for practical reasons not possible; or

(5)	production of the original would be highly inconvenient because say for example it is with a bank as is the case of a bank loan security.

13.	It is apparent from a consideration of this authoritative work, a case has to be made out before the secondary evidence or something falling short of the original or a genuine copy of a document can be accepted into evidence.  The burden lies with the party who wishes to adduce and rely on evidence such evidence for the Court to then allow such evidence in and be relied upon.

14.	In the case before me, the reason why this matter has not settled is because of DKL’s failure to produce neither the original nor a copy of each of the relevant documents.  The relevant documents are the bills of lading and shipping notices corresponding to each of the invoices rendered and allegedly outstanding.   ATL made it clear, it would settle the claim if these documents can be produced to enable it to cross check and verify DKL’s claims.  DKL had more than enough time to look for the documents and produce them. The defence filed by ATL formally made this clear on the Court’s records on 6th February 2015, if not earlier done.  Despite that, DKL has adduced no evidence explaining why it cannot produce neither the original, nor the copies of the relevant bills of lading and shipping notices.  This was not a difficult problem to overcome for DKL.  As the carrier or its agent by law, it was required to issue a bill of lading for each consignment of goods it received for shipment from ATL.  If the original went to ATL as the shipper, DKL could have retained a copy for its own records.  Similarly, notice of the shipments would have originated from DKL. Hence, if the original went to ATL, DKL would have retained a copy for its own records.  All it required therefore, was a production of the copies of the bills of lading and shipping notices kept by itself in the absence of the originals. What became of its copies of these documents, is not explained at all by Mr. Carven’s affidavit evidence or even in the submissions for DKL.  Similarly, there is a complete lack of evidence explaining why even the copies of the documents in question could not be produced.  

15.	In these circumstances, no case has been made out for DKL to rely on and succeed only on its verbal assertions quoting the relevant numbers of the bills of lading. This is critical especially when it is contested.  For we can never know if goods were received from ATL for shipment by DKL, they were shipped and received by ATL without the documentary evidence in question.  Consequently, I answer the second question set out at paragraph 3 of this judgment in the affirmative and the third question in the negative.  On these basis alone, this proceeding should be dismissed. 

16.	There is however a further reason to have this proceedings dismissed.  DKL pleads more number of invoices than the number supported by the evidence brought in to support the claim.  I will thus get into a consideration of the evidence before the Court and make findings of the relevant facts which is the subject of the first issue.

Evidence, finding of the relevant facts 

17.	The trial was by affidavit based on earlier Court orders and directions.  An affidavit by a Fred Carven sworn and filed on 31st May 2016 was the only affidavit filed.  The deponent is the shipping manager of DKL.  The appropriate notice to rely upon this affidavit was filed and served on ATL who did not respond with a notice of objection or notice requiring cross-examination.  On the day of the trial, Mr. Mulina of counsel for ATL sought leave to appear without first having his practicing certificate.  I declined that application and the trial proceeded ex parte. However, Mr Mulina was permitted to sit in Court if he wished and take notes, which he did.

18.	At the conclusion of the trial, Fred Carven’s evidence stands unrebutted. Base on this evidence, there is no dispute that, DKL is a shipping company, which provides shipping services in Papua New Guinea.  On the other hand, ATL owns and runs a supermarket business selling general goods, merchandise and groceries in Kerema, in the Gulf Province.  By a verbal agreement between DKL and ATL the DKL agreed to provide and the ATL agreed to use DKL’s freighting services to freight its goods from Port Moresby to Kerema by sea in the period 1st January 2010 to 20th February 2011.  

19.	There is a mention of a person of Chinese origin namely a Win, who is the manager of ATL being a difficult person to deal with at times.  Win kept on saying he had paid DKL’s invoices. At the same time, there is a reference to ATL’s debt levels increasing by the end of 2012 without any explanation as to how that happened.  Following a review of what was owing, DKL confirms invoice number BU-989 for a sum of K17, 922.30 was paid.  Accordingly, DKL adjusted what was owed to it and put the total owing at K95, 108.60.  Copies of 5 invoices are given in evidence which I set out in the following table:

Date	Invoice  No.	Voyage No.	B/Lading No.	Amount	
9/10/10	BU821			K15,942.60	
4/03/11	BU913	DKLBU-1403 &DKLBU-1404	0081(A) Out	
 29,500.50	
4/03/11	BU914	DKLBU-1405	0081 (B) In	      980.00	
6/04/11	BU947	DKLBU-0084 (A) Out		 27,201.80	
6/04/11	BU948	DKLBU-1440	0084 (A) Out	   3,561.40	
Total	K77,186.30	

20.	Copies of a further 6 invoices are given in evidence for what appears to be interest calculated at various rates.  These are set out in the following table. 

Date	Invoice No.	Description	Amount	
30/10/12	IC001	3% Interest for K88,151.25 	K 2,644.53	
10/11/12	IC002	3.5% Interest for 60 days 	K 2,657.76	
31/12/12	IC003	4% Interest for 90 days	K 2,671.05	
31/01/13	IC004	4.5% Interest for 120 days	K 2,684.41	
28/02/13	IC005	5% Interest for 150 days 	K 2,697.83	
31/03/13	IC006	5.5% Interest for 180 days	K 2,711.30	
Total	K13,422.0	

21.	As can be seen from the first table, the total amounts allegedly owing does not match the amounts allegedly owing.  Also, as can be seen from that table, two different invoices for the same day were issued for 4th March 2011 and 6th April 2011, respectively.  The first invoice for the 4th of March 2011 appear to relate to two different bills of lading.  How and why that was necessary and came about requires an explanation. But none has been provided. Then for the first invoice issued on 6th April 2011, it gives a bill of lading number that is the same for the second invoice’s voyage number.  Again an explanation as to how and why this was necessary and came about is required.  But again, there is no such explanation.

22.	For the various invoices for interest, the foundation for this appears to be the following statement in the invoices:

“This invoice should be settled within trading terms of 30 days. Unable to do so will attract a monthly interest charge of 3%. Additional 0.5% will be added for invoices accumulating to 60 days, 90 days and + 120 days”

23.	This statement does not say, either directly or by necessary inference that, the interest so calculated will be added onto the principle amount owing and will become part of the principle for the purposes of calculating the total owing and the next interest chargeable.  There is no evidence on this point. Instead, this statement states the rate of interest to apply for each stated period of delay in paying an invoiced amount.  That is to say, if delay in payment comes within the 30 days period it will be 3%.  But if the delay goes beyond that period the interest payable is increased by 0.5% for each block of 30 days until payment or the final period of 120 days is reached.  Going through the invoices set out in the second table appears to confirm that interest on the first stated principle of K88,151.25 were re-calculated at the different blocks of 60 days, 90 days and finally 120 days at 5.5%.    The end result of this would be the interest payable which is the last amount calculated. In this case, it was K2, 711.30 rather than each invoice for interest payables being added separately.  If however the opposite was the case, DKL had to explain how that was possible.  There is no evidence providing any such explanation. Further, separate invoices were issued at different times.  Hence, the calculation of interest and the amounts due would vary or be different for each outstanding invoice.  However, DKL appears to have lump together the total owing and applied the interest rates to it.  How that was possible and DKL was entitled to do that, requires an explanation. There is no explanation in the evidence.

24.	At paragraph 12 of his affidavit, Mr. Carven says the balance owing as at 31st March was K104, 218.13.  Then at paragraph 14 he speaks of a further K14, 066.88 which gets added to the K104, 218.13 to produce the sum of K118, 284.43.  How these figures were arrived at is not clearly explained in the evidence.  My calculation of the final sum due reveals the final amount of K118, 284.43 claim is wrong.  The correct final figure should be K118, 282.01.   In any case, the evidence as given by Mr. Carven does not properly add up to the amounts claimed.  It is very obvious there are serious unexplained errors and omissions in Mr. Carven and therefore DKL’s calculation of what is owing.  

25.	Additionally, there is no evidence on when the first and last shipments took place per the parties’ verbal agreement. There is also no evidence disclosing and confirming the total number of shipments and the corresponding number of bills of lading issued with their respective numbers, the voyage numbers, shipping notices, the invoices rendered and the amounts due under each of the invoices.   Similarly, there is no evidence clearly showing, which of the invoices were paid and which of them are outstanding.  Further, none of the bills of lading, and shipping notices or evidence of actual freighting of ATL’s goods and the corresponding invoices is before the Court.   This was a critical part of the trial and the whole reason why this matter is in Court.  As already noted, there is not a single evidence on this point, let alone any explanation as to why they could not be produced.

26.	The end result of all of this is this, DKL as the plaintiff had the burden to establish its case on the required standard, which it failed to do.  Having regard to this and the answers to questions (2) and (3) I have no difficulty in coming to the conclusion that the first question should be answered in the negative.   Consequently, I order a dismissal of this proceeding.  Costs are ordered in favour of the Defendant to be taxed, if not agreed.  

______________________________________________________________
Ame Lawyers:  Lawyers for the Plaintiff 
Mordelai & Associates Lawyers: Lawyers for the Defendants