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 given.  (See Shell PNG Ltd v Speko Investment Ltd (2004) PGSC 16 and Steven Naki v AGC (Pacific) Ltd (2005) PGNC 163).    An offer is an expression of willingness to contract made with the intention that it shall become binding on the person making it, as soon as it is accepted by the person to whom it is addressed.  

26.	Under the Goods Act:

(a)	Section 3 – A contract of sale of goods is a contract where the seller agrees to transfer the property and goods to the buyer for a money consideration. 

(b)	 Section 11 - Whether or not any stipulation as to time is of the essence of the contract, depends on the terms of the contract.  

(c)	Section 12 (4) - Where a contract of sale is not severable, and the buyer has accepted the goods, or the contract is for specific goods the property in which has passed to the buyer, the breach of a condition to be fulfilled by the seller can only be treated as a breach of warranty, and not as a ground for rejecting the goods and treating the contract as repudiated, unless there is an express or implied term of the contract to that effect. 

(d)	Section 35 – The buyer is deemed to have accepted the goods when they have been delivered to him and he does an act inconsistent with ownership by the seller.  

(e)	Section 53 - If there is a breach of warranty by the seller, the buyer is not entitled by reason only of the breach of warranty, to reject the goods, but he may either set up against the seller the breach of warranty in diminution of the price, or maintain an action against the seller for damages for breach of warranty.  

27.	It is clear that under the Goods Act, in the circumstances set out in those  sections of the Act, the breach of a condition or warranty by the seller, can only be treated as a breach of warranty for which damages are payable, and not as a ground for rejecting the goods and treating the contract as repudiated.  

28.	If there had been a contract for sale between the Plaintiff and First Defendant, the “newness” of the crane could have amounted to a warranty, the breach of which could have given rise to a claim for damages but not to a right to reject the goods or treat the contract as repudiated.   

29.	In summary:

(a)	On the basis of statements made by the Plaintiff and by the First Defendant, the First Defendant made a written offer to sell a specific vehicle to the Plaintiff, on specific terms.

(b)	The Plaintiff made known to the First Defendant that he would not be the buyer, and the Plaintiff did not accept the offer to buy the vehicle.

(c)	Instead, the Plaintiff asked the Second Defendant to buy the specific vehicle and then lease that vehicle to it.

30.	In relation to these matters:

(a)	there was uncertainty about the statements made by both the Plaintiff and the First Defendant relating to what was meant by the vehicle being “new”; with each party having a different meaning.

(b)	there was no  intent to create legal relations when the Plaintiff did not have capacity to  enter into the contract and did not intend to be the buyer of the vehicle; 

(c)	there was no consideration, as the Plaintiff did not pay the purchase price.

31.	Having failed to establish these essential elements of a contract, I find that there was no contract for sale between the Plaintiff and First Defendant.  

32.	As the Plaintiff was not the buyer and there was no contract for sale between the Plaintiff and the First Defendant, the Goods Act did not apply to the Plaintiff’s dealing with the First Defendant.  

33.	There is therefore no basis for alleged breaches of the Goods Act or of a contract of sale between the Plaintiff and First Defendant.  

Pleadings and Evidence Re Second Defendant
	
34.	After accepting delivery, the Plaintiff commenced using the vehicle, but found the control levers too low.    The First Defendant paid Hargy to relocate the controls in June 2011.  A tail gate hinge came off and this was also repaired by Hargy at the First Defendant’s cost.  

35.	On 5 July 2011 the oil seals broke, so that the crane could not be used.  The Plaintiff informed the First Defendant of this on 6 and 7 July 2011.   The Plaintiff requested that the repairs be carried out quickly, and the First Defendant confirmed that it would pay for the repair costs as the crane was under warranty.  

36.	By 20 July 2011 the First Defendant had ordered new oil seal kits to be sent from Australia.  Around this time, the Plaintiff, First Defendant and Hargy Oil Palm each had correspondence and telephone calls with the manufacturer of the crane, Palfinger.  

37.	In July and August 2011 Palfinger advised Hargy that it was possible for seals to deteriorate when a crane has been sitting idle, it is very rare on new cranes, and that seals can leak either when the crane is not being used, or when it is being used.  Palfinger advised that the remedy was to replace the seals.  In response to further enquiries from the Plaintiff, Palfinger informed the Plaintiff that in relation to the leaking seals, this type of problem was normal for a crane of its age, and that the type of work and environment the crane is working in, all needed to be also considered.  

38.	This was consistent with the evidence of Steven Patiken from Hargy, who stated that in his lengthy experience at Hargy, leaking seals were the most common problem with cranes, and it happened with both old and new cranes.   He said that this was why Hargy had a workshop on site in which Hargy could repair the leaking seals and get the trucks back to work as soon as possible.  

39.	By 2 August 2011 the First Defendant had the seals ready to replace in the vehicle.

40.	Without informing the Second Defendant, on 8 August 2011 the Plaintiff returned the vehicle to the First Defendant, but refused to allow the First Defendant to repair the seals under warranty.  Instead, the Plaintiff requested that a new truck and crane be provided.  

41.	In response, the First Defendant said that if the Plaintiff did not wish the vehicle to be repaired free of charge under warranty, they would reduce the price of the crane, and refund the difference.   The Plaintiff rejected this.  The First Defendant then said that they would accept the return of the vehicle, and make a refund of the full purchase price.  The Plaintiff rejected this.  

42.	In relation to the vehicle, when the oil seals broke, the First Defendant immediately agreed to replace the seals under warranty.  It ordered new seals from Palfinger.  These seals would have been replaced by Hargy at its workshop, as Hargy had done on many prior occasions with other vehicles, at the First Defendant’s cost.   If this had been done, the vehicle would have been repaired and able to return to work within a few weeks.  

43.	In early September 2011 the Plaintiff had correspondence with Hargy in which the Plaintiff said it wanted to renew the contract on expiry, and Hargy confirmed that it would very likely be renewed.  

44.	Despite this, in late September 2011, the Plaintiff wrote to Hargy saying it could not perform the contract, and on 3 October 2011, Hargy terminated the contract.

45.	There was a written contract between the Plaintiff and the Second Defendant, set out in the Lease Agreement. The Plaintiff admitted that this was for the Lease of the vehicle, and did not allege that it was a contract for sale.   Pursuant to the express terms of the Agreement, the Plaintiff was obliged to satisfy itself that the vehicle to be purchased by the Second Defendant was the actual vehicle which the Plaintiff wanted, and that it complied with all the Plaintiff’s requirements.   In particular,  the Agreement provided:

Clause 2.2 – the taking of delivery of the vehicle by the Plaintiff is an acceptance of delivery, and conclusive proof as between the Plaintiff and the Second Defendant that the vehicle is satisfactory to the Plaintiff.  

Clause 3.1 (An essential term) – the Plaintiff’s obligations to pay the Second Defendant are absolute and unconditional, and will not be affected by anything including a defect in the vehicle.

Clause 4.4 (An essential term) – the Plaintiff will maintain the vehicle in good repair and condition, and furnish all the proper parts for this purpose.  

Clause 5.2 – the Plaintiff assumes all risk and liabilities for the vehicle and its use, maintenance and repair.
  
Clause 6.1 (a) – the Second Defendant gives no condition, warranty or representation to the Plaintiff as to the vehicle including its age, quality, description or condition of the vehicle, or its suitability or fitness. 
 
Clause 6.1 (b) - Before requesting the Second Defendant to lease the vehicle, the Plaintiff must satisfy itself on all the matters in clause 6.1 (a) and get from the supplier any warranties or conditions which may be required by the Second Defendant.

Clause 6.1 (c) - If the Second Defendant has any liability, it is limited to replacement or repair of the vehicle, at its option.

Clause 7.1 – 7.4 – A breach of an essential term is an act of default, entitling the Second Defendant to terminate the Agreement, obliging the Plaintiff to return the vehicle to the Second Defendant, and if not returned entitling the Second Defendant to repossess the vehicle.

Clause 7.6 – After return or repossession of the vehicle, the Second Defendant must submit it for sale in such time and manner as it think fit, and has no duty as to the price achieved.

Clause 8.12 – The Plaintiff confirms that it has not entered into the Agreement relying on or as a result of any statement or conduct of any kind made by or on behalf of the Second Defendant, including any advice, warranty or representation, and the Second Defendant is not obliged to do anything including disclose anything, except as expressly set out in the Agreement.

46.	In summary:

(a)	The Plaintiff asked the Second Defendant to buy a specific vehicle which the Plaintiff had identified, and then lease that vehicle to it.

(b)	The Plaintiff entered into a written Agreement with the Second Defendant, to lease that specific vehicle.

(c)	The Second Defendant bought that specific vehicle from the First Defendant, which was subsequently delivered to Plaintiff.

47.	There was never a contract of sale between the Plaintiff and Second Defendant, there was only a Lease Agreement between them, whereby the Second Defendant always remained the owner of the vehicle.  

48.	The Plaintiff gave evidence that “I assumed Westpac was leasing me a brand new truck and crane”.

49.	This evidence was contradicted by clauses 2.2 and 6.1 of the Agreement, whereby the Second Defendant gave no condition, warranty or representation as to the vehicle’s age, quality  or description, that the Plaintiff had satisfied itself on each of these matters, and whereby taking delivery of the vehicle was conclusive proof that the vehicle was satisfactory to the Plaintiff.  

50.	The Plaintiff pleads in paras 9A, 9B and 26A - C  that the Second Defendant performed its obligations under the Agreement to buy the vehicle, on the terms and conditions, assurances and representations made by the First Defendant to the Plaintiff, which became implied as terms of the Agreement, and were breached by the Second Defendant.

51.	None of those implied terms were expressly agreed between the parties.  They could only be implied into the Agreement by custom or usage or by law or by fact (see Halsbury 5th Ed para 634).  None of the terms were necessary to give business efficacy to the Agreement, and in any event, they contradicted the express terms of the Agreement.  There is no room for an implied term which is inconsistent with an express term of the contract.  (See Halsbury 5th Ed paras 367 and 372).  

52.	These allegations of implied terms are contradicted by clauses 6 and 8.12 of the Agreement, whereby it was expressly made the Plaintiff’s obligation to satisfy itself as to the age, quality, description and condition of the vehicle, and its suitability and fitness, before requesting the Second Defendant to buy the vehicle and lease it to it, and that the Second Defendant was not obliged to do anything which was not expressly set out in the Agreement.  

53.	Even if it was accepted that the First Defendant made representations to the Plaintiff, and even if it was accepted that such representations were made on behalf of the Second Defendant, they were not binding on the Second Defendant as alleged by the Plaintiff.  Under clause 8.12 of the Agreement, the Plaintiff expressly confirmed that it had not entered into the Agreement with the Second Defendant in reliance on or as a result of any statement, conduct or representations made on behalf of the Second Defendant.  

54.	Under clause 8.12 of the Agreement, the Second Defendant is not obliged to do anything except as expressly set out in the Agreement.  There was nothing in the Agreement obliging the Second Defendant to do any of the matters pleaded by the Plaintiff.   There was therefore no breach of the Agreement by the Second Defendant. 

55.	The Plaintiff has failed to establish breaches of any contractual or statutory obligations by the Second Defendant.  

Sale of Vehicle by Second Defendant

56.	The final part of the Plaintiff’s claim relates to the sale of the vehicle by the Second Defendant.   

57.	The Plaintiff pleads that it sustained significant loss and damage as a result of the alleged breaches of contract, including the costs of the loan repayments to the Second Defendant and the loss of the contract with Hargy Oil Palm.  

58.	After deciding that it would not have the vehicle repaired and would not continue with the Hargy Oil Palm contract, the Plaintiff lost the income from that contract, and was unable to comply with its obligations to pay the Second Defendant.

59.	Under the Lease Agreement, that was a breach of an essential term, and an act of default.  Under clause 7.1 – 7.6, the Second Defendant was therefore entitled to repossess the vehicle and was then obliged to sell it, with no duty as to the price achieved.  

60.	On or about 8 September 2011, the First Defendant made a formal  written offer to take back the vehicle and repay the full sum of K598,400.00, conditional on the Plaintiff agreeing not to make any further claim against them and signing a Deed of Release to that effect.   The Plaintiff refused, as it wished to retain its right to claim further damages.   

61.	On 9 September 2011 the Second Defendant was one of three parties copied into an email sent by the Plaintiff to the First Defendant.  This email asked the First Defendant to quickly resolve the case, and said that the Second Defendant could be contacted to confirm the Plaintiff’s pending application for three other finance proposals.  It did not refer to defects or any disputes over a specific vehicle.  

62.	On 3 October 2011, the Plaintiff sent an email to the Second Defendant, advising of its dispute with the First Defendant, and requesting advice.  The only evidence of any response is the notices of demand and other correspondence regarding the outstanding lease repayments.   

63.	However, pursuant to the Lease Agreement, the Second Defendant was not obliged to give advice or do anything which was not expressly set out in the Agreement, and it was the Plaintiff which expressly assumed all risks and liabilities for the use, maintenance and repair of the vehicle.  The Second Defendant had no obligation to enter into any dispute between the Plaintiff, First Defendant or any other party regarding the use, maintenance or repair of the vehicle.  

64.	On 3 May 2012, the Second Defendant invited the First Defendant to contact it, if the First Defendant wanted to buy back the vehicle.     No such contact was made.

65.	The evidence was that when the Plaintiff failed to comply with the Second Defendant’s notices of demand, the Second Defendant advertised the vehicle for sale by way of tender on 14 June 2013.  Only one tender was received, in the sum of K100, 000.00.  

66.	On 2 July 2013, the Second Defendant informed the Plaintiff that it was proceeding with the sale of the vehicle for K100, 000.00.  On the same day, the Plaintiff asked the Second Defendant if it could ask the First Defendant if it could “make the offer they made to us, to Westpac”.   

67.	The offer made almost two years earlier by the First Defendant to the Plaintiff was not an unconditional offer.  It was an offer to pay the full purchase price on the condition that the Plaintiff release them from further claims.   Only the Plaintiff was capable of accepting that offer, the Second Defendant could not accept it, and the Plaintiff refused to accept it.  The First Defendant made no similar or indeed any offer at all to the Second Defendant.   Furthermore, pursuant to clause 7.6 of the Agreement, the Second Defendant had no duty as to the price achieved on a sale of the vehicle.

68.	If the Plaintiff had accepted the First Defendant’s first or second offers of repair under warranty and a reduction in price, it would have been able to resume work within a few weeks, and continue performing the Hargy contract.  The Plaintiff would have retained its right to sue the First Defendant for a new vehicle, if it wished to do so.  If the Plaintiff had accepted the First Defendant’s last offer of a full refund, it could have passed on that full payment to the Second Defendant, in discharge of the Lease Agreement.  The Plaintiff would then have been able to arrange with the Second Defendant to buy another vehicle for it, and enter into another lease agreement.   

69.	By refusing to take any of these options, the Plaintiff deprived itself of the use of the vehicle, and made it impossible for it to comply with the Hargy Oil Palm contract.

70.	Instead of asking the Second Defendant for advice in October 2011, it would have been better if the Plaintiff had sought legal advice.  This would have made known to the Plaintiff that the sole responsibility and liability for the vehicle was with the Plaintiff, not with the Second Defendant.  

71.	In relation to the loss of the Hargy contract, the Plaintiff had only just commenced the contract, which still had almost 3 years to run the evidence showed that it was the Plaintiff which repudiated the contract when it effectively invited Hargy Oil Palm to terminate the contract by stating that it was unable to perform it.  If the Plaintiff had asked to extend the contract, the evidence was that Hargy would have done so, as it had done before.  In any event, if the crane had been repaired and returned to work, the Plaintiff would still have been able to continue performing the contract.

72.	Even if the Plaintiff could be treated as the buyer pursuant to a contract of sale with the First Defendant, the Plaintiff was still not entitled to purport to return the vehicle.  The leaking oil seals did not mean that the entire contract was unable to be performed.   It had in fact already been fully performed.  The leaking seals were simply a defect which had not been identified by either the Plaintiff or the First Defendant before delivery, and it was a defect which was easily able to be rectified by simple replacement of the seals.  

73.	Even if the Plaintiff could be treated as the buyer, then it would have always been under a duty to mitigate its loss (Abel Kopen v The State (1989) PGNC 50, and Bromley v Finance Pacific Ltd (2001) PGNC 89).  This would have meant that the Plaintiff was obliged to have the oil seals replaced, resume work in performance with the Hargy Oil Palm contract, and make the lease repayments. 

74.	At the most, if there had been a contract for sale, and if the Goods Act had applied, then as property in the vehicle had already passed to the buyer, the breach could only be treated as a breach of warranty, which would not entitle the buyer to reject the vehicle.  It would only entitle the buyer to either ask for a diminution in price or claim damages.

75.	Further, even if there had been a contract for sale, and even it had not been fully performed, and even if the Plaintiff had been entitled to repudiate it, the result would have been that the parties should have been restored to the position they were in, prior to the contract, with the Plaintiff returning the vehicle, and the First Defendant refunding the purchase price.  

76.	That is in fact what the First Defendant offered to do.  It offered a diminution in price, and then to take the vehicle back, and refund the full price.  However, the Plaintiff refused.

77.	Even if the Plaintiff was to be regarded as the buyer, the Plaintiff did not pay the purchase price for a new vehicle to be supplied by the manufacturer in Australia and shipped up to Papua New Guinea.  The Plaintiff only ever agreed to pay the purchase price of the specific identified vehicle which had already been sitting in Lae for some time.  The Plaintiff was therefore never in a position to have a damaged vehicle replaced by a new vehicle.  The Plaintiff was only ever in a position of being able to claim as damages the cost of restoring the vehicle to the condition it was in, when it was bought by the Plaintiff.  

78.	The First Defendant offered to fix the vehicle and thereby restore it to its previous condition, then offered a diminution in price, and finally offered to take the vehicle back and refund the full purchase price.  The Plaintiff rejected all three proposals, in the mistaken belief that he was entitled to a new vehicle to be supplied from Australia and shipped up to him.  

79.	Notwithstanding these matters, as there was no contract of sale between the Plaintiff and Second Defendant, and as the Plaintiff has not established any breaches of the Lease Agreement by the Second Defendant, it follows that no loss or damage could be sustained by the Plaintiff as a result of any of the alleged breaches.  

80.	In view of the findings that there was not in fact any contract for sale between the Plaintiff and First Defendant, or the Plaintiff and Second Defendant, and no breaches by the Second Defendant of the Lease Agreement with the Plaintiff, the Plaintiff has failed to establish breaches of any contractual or statutory obligations by either the First or Second Defendant.  It follows that it has failed to establish that it suffered any loss or damage as a result of the alleged breaches.

Claim Re Freezing of Account

81.	The Plaintiff alleged in paras 26 E, F and H that on 16 August 2012 the Second Defendant, at the Plaintiff’s request, froze the Plaintiff’s loan account, thereby varied the Lease Agreement by suspending enforcement, and failed to give notice to the Plaintiff that it would lift the freeze and sell the vehicle. 
 
82.	Nothing further was pleaded as arising from this.  There was no pleading that this was in breach of an express or implied term of the Lease Agreement, and any such pleading would have been in contradiction of the express terms of the Agreement, in particular clauses 7.1 – 7.6 and 8.12.   The evidence showed that any freeze of the account had been lifted before 26 October 2012 when the Second Defendant sent a letter of demand for the full amount of the loan repayments, and giving notice that if not paid, the Second Defendant would take action to enforce payment.  The Plaintiff itself gave evidence in December 2012 that the Second Defendant was pressing it urgently to repay the full loan.

83.	As nothing is pleaded as arising from these matters, no findings can be made.  

Cross-Claims by Second Defendant

84.	The Second Defendant has filed a cross-claim against the Plaintiff, for the outstanding amount of the Lease payments plus interest.

85.	The Second Defendant has established, and it was not disputed, that the Plaintiff breached an essential term of the Lease Agreement whereby its obligation to make the lease payments was absolute, unconditional, and unaffected by anything including a defect in the vehicle, and had not made the lease payments, which still remained outstanding.  

86.	The Second Defendant gave evidence that the outstanding principal as at 6 August 2013, about 18 months after these proceedings were issued, was K340,479.10.  Interest was then calculated from 6 August 2013 to 28 March 2019 at the rate prescribed in the Lease Agreement of 15.2%.  The Plaintiff criticized the Second Defendant’s witness who tendered the calculations, and she was far from impressive.  Nevertheless, those calculations were merely a matter of arithmetic whose accuracy was not challenged by the Plaintiff.    

87.	The total of the principal and interest as at 29 March 2019 was K650,280.14.    In its written submissions, the Second Defendant said that the amount being sought was actually K625,757.67, and sought judgment for that amount. It appears from the calculation sheet that a sum of K24,522.47 may have been deducted, for some reason.  In the circumstances, I will use the figure of K625,757.67.  

88.	The Second Defendant has established that it is entitled to judgment against the Plaintiff in the sum of K625,757.67.  

89.	The Second Defendant has also filed a cross-claim against the First Defendant.  However, as no liability has been established in the Second Defendant, there is no entitlement to indemnity by the First Defendant.  

90.	For these reasons, I make the following orders:

(1)	The Plaintiff’s claims against the First and Second Defendants, are dismissed.

(2)	The Second Defendant’s cross-claim against the First Defendant is dismissed. 

(3)	Judgment is entered for the Second Defendant against the Plaintiff in the sum of K625,757.67.

(4)	Each party is to pay its own costs.

______________________________________________________________
Niuage Lawyers:            Lawyers for the Plaintiff
Gileng & Co. Lawyers:  Lawyers for the First Defendant
Allens Lawyers:            Lawyers for the Second Defendant