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Earthquip PNG Ltd v PNG Transport Holdings Ltd [2012] PGNC 42; N4652 (19 April 2012)

N4652

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 1866 OF 2005

BETWEEN

EARTHQUIP PNG LIMITED
Plaintiff

AND

PNG TRANSPORT HOLDINGS LIMITED
Defendant

Lae: Gabi, J
2012: 19 April

CONTRACT - claim for damages for breach of contract – allegations of mis- delivery of cartage – whether certain clauses of 'Conditions of Carriage' form part of the contract – whether defendant is liable for breach of contract – evidence suggests container being misdelivered - defendant breached contract - Judgment entered for plaintiff with damages, interest and costs to be assessed.

Facts

The defendant was engaged to deliver a container to the plaintiff's yard at China Town but instead delivered it to PNG Readymix yard at China Town. The plaintiff had engaged the defendant on a number of previous occasions and this was the first time the defendant had misdelivered a container belonging to the plaintiff. Upon discovery that the container had been placed in PNG Readymix yard, the plaintiff asked the defendant to move it to its yard at China Town but the defendant failed to do so. While the container was at PNG Readymix yard, it was broken into and a number of items were stolen. The plaintiff claims damages for breach of contract.

Held;

The container was misdelivered and that the defendant breached the contract. Judgment is entered for the plaintiff with damages, interest and costs to be assessed.

Cases cited
Papua New Guinea Cases

Dowsett Engineering (New Guinea) Pty Ltd v Edward and R. E Jordan trading as Jordan Lighting [1979] PNGLR 426
Edward v R.E Jordan trading as Jordan Lighting and Dowsett Engineering (New Guinea) Pty Ltd [1978] PNGLR 273
Lawrence Win v General Auto Centre Ltd (2009) N3680
Rabaul Stevedores Ltd v Benedict and Nancy Seeto [1984] PNGLR 248
Rabtrad Niugini Pty Ltd v ABCO Pty Ltd [1990] PNGLR 155

Overseas cases

L'Estrange v Gaucob [1934] 2 KB 394
McCutcheon v David MacBrayne Ltd [1964] UKHL 7; [1964] 1 All ER 430 at 435
Olley v Marlborough Court [1949] 1 All ER 127
Thornton v Shoe Lane Parking [1970] EWCA Civ 2; [1971] 2 WLR 585

Counsel

P. Ousi, for the Plaintiff
B. Kogora, for the Defendant

JUDGMENT

19 April, 2012

1. GABI, J: Introduction: The plaintiff claims damages for breach of contract. The defendant was engaged to deliver a container to the plaintiff's yard at China Town but instead delivered it to PNG Readymix yard at China Town. The plaintiff had engaged the defendant on a number of previous occasions and this was the first time the defendant had misdelivered a container belonging to the plaintiff. Upon discovery that the container had been placed in PNG Readymix yard, the plaintiff asked the defendant to move it to its yard at China Town but the defendant failed to do so. While the container was at PNG Readymix yard, it was broken into and a number of items were stolen.

2. The defendant's case is that the misdirection was a result of instructions by the plaintiff's employees, particularly Susan Watpore and Augustine Romogiam, to deliver the container to PNG Readymix yard due to unavailability of space in the plaintiff's yard and that the signature of Augustine Romogiam on the delivery docket indicates acceptance by the plaintiff that it had been delivered in accordance with the contract pursuant to clause 7 of the Conditions of Carriage. Even if the container were misdelivered, the defendant is absolved from liability pursuant to clause 5 of the delivery docket, which excludes the carrier from liability.

3. The issues are: (i) whether clauses 5 and 7 of the Conditions of Carriage form part of the contract; and (ii) whether the defendant breached the contract.

4. The trial proceeded by way of affidavit evidence and oral testimonies. The following affidavits were tendered into evidence: (i) affidavit of David Warner dated 13th September 2010 (Exhibit P1); (ii) affidavit of Susan Watpore dated 10th September 2010 (Exhibit P3); (iii) affidavit of Armstrong Suvia dated 12th October 2010 (Exhibit D1); (iv) affidavit of Geoff Baker dated 12th October 2010 (Exhibit D4); and (v) affidavit of Carol Luhan dated 12th October 2010 (Exhibit D5). The deponents of the affidavits also gave sworn oral evidence.

Facts

5. On 4th November 2004, the plaintiff raised a Purchase Order number 782 requesting the defendant to pick up a container from the Lae Port Services wharf and deliver to Earthquip yard at China Town. The description of the job required to be performed written on the Purchase Order was:

"PLEASE PROVIDE SERVICE TO PICK UP 1 x 20 FT CONTAINER (#TRLU2813054) AT WHARF AND DELIVER TO CHINATOWN YARD."

The driver picked up the container and delivered it to PNG Readymix yard, a different location, also in China Town. On delivery of the container to PNG Readymix yard, Augustine Romogiam, an employee of the plaintiff, signed the delivery docket. On realising that the container was delivered to the wrong location, the plaintiff requested the defendant to pick up the container and have it delivered to its yard at China Town but the defendant failed to do so. Whilst the container was at PNG Readymix yard, it was broken into and a number of personal items were stolen.

Evidence

The Plaintiff

6. David Warner is the Managing Director of the plaintiff. In 2004, the plaintiff had a container of assorted goods shipped from Kimbe to Lae. On
4th November 2004, he authorised a Purchase Order to be issued to the defendant to pick up the container from Lae Wharf and deliver it to the plaintiff's yard at China Town. The person authorised to deal with the defendant regarding this matter was Susan Watpore, not Augustine Romogiam or Rachael Malis. The container was picked up and delivered to PNG Readymix yard without authority from either the plaintiff or any of its authorised officers. The delivery docket was signed at 4.15 pm by Augustine Romogiam, who had no authority to sign, and did so without inspecting the container. At the time he signed the delivery docket, Augustine Romogiam was employed by Hydraulics PNG, not by the plaintiff. The defendant had been engaged by the plaintiff previously and this was the first time it had misdelivered goods belonging to the plaintiff. The conditions of carriage at the back of the delivery docket have never been shown to him nor have they agreed to be included as terms of the agreement.

7. Susan Watpore was employed by the plaintiff as the company supervisor at the time the container was allegedly misdelivered. She was answerable to
Mr. David Warriner and corroborated his evidence that Augustine Romogiam was employed by Hydraulics PNG, which was also owned by Mr. Warriner, and had no authority to sign the delivery docket. On 4th November 2004, she called Armstrong Suvia, who was the Transport Supervisor with the defendant, to pick up the container at Lae Wharf and deliver to the plaintiff's yard at China Town. This was followed by the issuance of a Purchase Order before she left the office at 3:36 pm due to illness. Prior to leaving the office she instructed Rachael Malis to follow up the matter. On her return to work on 5th November 2004, Susan Watpore learned that the container was not delivered to the plaintiff's yard but instead delivered to PNG Readymix yard so she rang Armstrong Suvia to pick up the container and have it delivered to the plaintiff's yard at China Town. This was not done so she called Armstrong Suvia again on 6th, 8th, 9th, 10th and 11th November 2004. The container was broken into on 10th and 11th November 2004. It was finally picked up and delivered to the plaintiff's yard at 4.00 pm on 11th November 2004. According to her, there was enough room to place the container at the plaintiff's yard from 4th to 11th November 2004. The conditions of carriage at the back of the delivery docket were never shown to her prior to the formation of the contract.

The Defendant

8. Armstrong Suvia has been employed by the defendant for twenty-one (21) years and at the time of the alleged incident he was the Transport Supervisor. As the supervisor, all the drivers are answerable to him. After each delivery the driver would return the purchase order and the delivery docket to him. In this case, he was told by the defendant's driver, Boni Moses, that the plaintiff's employees, Susan Watpore and Augustine Romogiam, directed him to place the container at PNG Readymix yard because there was not enough space at the plaintiff's yard. He explained that when a client requests delivery, he/she would raise a Purchase Order giving description of the container, where to pick it from and the location to be delivered. When the container is delivered the customer signs the delivery docket after been satisfied that it is in "good order and condition". The delivery comes to an end when the customer accepts and signs the delivery docket. The delivery docket was signed by Augustine Romogiam. When there is a change in the delivery location the customer would call him and advice of the change of location. This would then be entered in the delivery docket. He denied receiving any calls from Susan Watpore to relocate the container.

9. Carol Luhan was engaged as a general clerk in the Hydraulics Department and was at work at the plaintiff's yard at the time of the alleged incident. In her affidavit (Exhibit D5), she deposed that the defendant's driver was told by Susan Watpore, the supervisor at the time, to place the container at PNG Readymix yard and after it was unloaded Augustine Romogiam signed the delivery docket. In her oral evidence, Carol Luhan said that Susan Watpore instructed Rachael Malis and Augustine Romogiam to direct the defendant's driver to take the container to PNG Readymix yard as there was not enough space at the plaintiff's yard and that she saw Rachael Malis and Augustine Romogiam directing the defendant's driver to take the container to PNG Readymix yard.

10. Geoff Baker is the Business Development Manager and has been employed by the defendant since 1993. On 30th March 2005, following the allegations by the plaintiff of misdelivering the container, he prepared a statement after conducting an investigation with the employees involved. The principal employee interviewed was the driver, Boni Moses, who was directed by Augustine Romogiam, an employee of the plaintiff, to place the container at PNG Readymix yard.

Do clauses 5 and 7 of the Conditions of Carriage form part of the contract?

11. Clauses 5 and 7 of the Conditions of Carriage are in these terms:

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

(b) Goods shall be deemed to be in transit notwithstanding that the Carriage of the goods may have been interrupted or the Carrier may have diverted from the usual route for such carriage...

7. The Carrier is authorised to deliver the goods at the address given to the Carrier by the Consignor for that purpose and it is expressly agreed that the Carrier shall be taken to have delivered the goods in accordance with this contract if at that address he obtains from any person a receipt or signed delivery docket for the goods."

12. Counsel for the defendant submitted that the signature of Augustine Romogiam signifies acceptance by the plaintiff that the container had been delivered to the right place, "China Town", as indicated on the delivery docket pursuant to clause 7. Even if there was mis-delivery, the defendant is exempted from liability pursuant to clause 5.

13. Counsel for the plaintiff submitted that clauses 5 and 7 do not form part of the contract of cartage as those terms were not given to the plaintiff nor were the terms agreed to prior to the contract and referred me to Rabtrad Niugini Pty Ltd v ABCO Pty Ltd [1990] PNGLR 155 and Lawrence Win v General Auto Centre Ltd (2009) N3680.

14. In Lawrence Win v 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 Honour 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 [1970] EWCA Civ 2; [1971] 2 WLR 585; Rabaul Stevedores Ltd vs. Benedict and Nancy Seeto [1984] PNGLR 248; Rabtrad Nuigini Pty Ltd vs. Abco Pty Ltd [1990] PNGLR 155)."

15. In Rabtrad Niugini Pty Ltd v ABCO Pty Ltd (supra), 1,321 cartoons 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] UKHL 7; [1964] 1 All ER 430 at 435, by Lord Guest:

'It is, in my view, not legitimate to apply the tests of incorporation of conditions in such cases to a case like the present where there is no contractual document. In the present case it is incorrect to assume that the offer of carriage is made by the respondents on what are described as 'Standard Conditions'. The verbal contract is made by the consignor tendering the goods and by the carrier accepting them. A simple contract of carriage is thereby created. In this situation the respondents, on whom lies the onus to escape liability, would have to show that exempting conditions have been incorporated into the contract. They cannot do this merely by evidence of a previous course of conduct. All that the previous dealings in the present case can show is that the appellant and his agent knew that the previous practice of the respondents was to impose special conditions. But knowledge on their part did not and could not by itself import acceptance by them of these conditions, the exact terms of which they were unaware, into a contract which was different in character from those in the previous course of dealing'."

16. There is no evidence before the court that the defendant had shown or brought to the attention of the plaintiff and its employees the conditions of carriage at the back of the delivery docket before or at the time of the contract on 4th November 2004 nor is there evidence that the parties have agreed to be bound by the conditions of carriage. I find that clauses 5 and 7 do not form part of the contract as they were not expressly included as conditions of the contract and were never brought to the plaintiff's attention until after formation of the contract.

Did the defendant breach the contract?

17. Counsel for the defendant made the following submissions: (i) that the defendant had been engaged previously without any instances of mis-delivery and the defendant had no reason to deliver the container anywhere it wished; (ii) that the driver, Boni Moses, acted on the instructions of the plaintiff's employees, Susan Watpore, Rachael Malia and Augustine Romogiam, to place the container in PNG Readymix yard; and (iii) that paragraphs 4 and 5 of Armstrong Suvia'a affidavit (Exhibit D1) and paragraphs 7 and 8 of Geoff Baker's affidavit (Exhibit D4) should be admitted into evidence and not rejected as hearsay and referred me to Edward v R.E Jordan trading as Jordan Lighting and Dowsett Engineering (New Guinea) Pty Ltd [1978] PNGLR 273 and Dowsett Engineering (New Guinea) Pty Ltd v Edward and R. E Jordan trading as Jordan Lighting [1979] PNGLR 426.

18. Geoff Baker and Armstrong Suvia got their information from the driver, Boni Moses, while Carol Luhan deposed that she heard Susan Watpore direct the driver to place the container at PNG Readymix yard. The driver was not called to give evidence on behalf of the defendant.

19. Augustine Romogiam was not called to give evidence but he provided a statement (see Exhibit "P1" annexure "C"), which I set out hereunder:

"STATEMENT

RE: NIUGINI TRANSPORT

On the 04/11/04 at 4.15 pm I signed for the Niutrans delivery docket.

I thought that the delivery was okay due to Niutrans vehicle was empty. So I went ahead and signed for it as a normal procedure to my understanding.

During that week Susan was sick and I knew that she was not at work. I went ahead and signed the docket and left it on her table for her to check later.

Boss, I thought that the delivery was complete so I went ahead and signed the docket which I know that I did the right thing by signing it.

Thank you and that's all from me.

.....................................

Augustine Romogiam"

20. It is clear from the statement that Augustine Romogiam never directed the defendant's driver, Boni Moses, to place the container at PNG Readymix yard but signed the delivery docket because the container had been delivered and he was asked to sign. Susan Watpore was not in a position to sign as she was away being sick so he signed the docket to show that the container had been delivered.

21. It is not disputed that Susan Watpore was the supervisor and had authority to deal with the defendant regarding the container. On the day in question, Susan Watpore left the office at 3:36 pm and gave instructions to Rachael Malis, not Augustine Romogiam, to follow up the delivery. It is clear that the container had not been delivered when Susan Watpore left the office. Augustine Romogiam signed the delivery docket at 4:15 pm. I find that the container was delivered between 3:36 pm and 4:15 pm on 4th November 2004 and that Susan Watpore had left the office and was not at work when the container was finally placed at PNG Readymix yard.

22. Carol Luhan's evidence was that Susan Watpore left the office at
10:00 am and that she heard Susan Watpore direct the defendant's driver, Boni Moses, to place the container at PNG Readymix yard. Susan Watpore left the office at 3:36 pm and was not at work when the container was delivered. Secondly, I consider that Carol Luhan's oral evidence that Susan Watpore instructed Rachael Malis and Augustine Romogiam to direct the defendant's driver to take the container to PNG Readymix yard as there was not enough space at the plaintiff's yard and that she saw Rachael Malis and Augustine Romogiam directing the defendant's driver to take the container to PNG Readymix yard, to be an afterthought. I do not find Carol Luhan to be a credible witness at all. In fact, I believe she lied. She had a motive to lie because the plaintiff instituted an action against her in proceeding WS No. 1337 of 2005.

23. Geoff Baker's oral evidence was that the driver, Boni Moses, was instructed by Augustine Romogiam and a female employee to place the container in PNG Readymix yard because there was no space in the plaintiff's yard. It is not known who the female employee is. Susan Watpore left the office before the container was delivered in the afternoon. The only female employee in the office that could have instructed the driver was Rachael Malis. According to Carol Luhan, Rachael Malis directed the driver. As I have already indicated earlier, I do not consider Carol Luhan to be a credible or a truthful witness. I reject that piece of evidence.

24. Armstrong Suvia was cross examined about the procedure for change of delivery location. He said the initiator of a purchase order would call him and advice change of location, the information would then be entered in the delivery docket and handed to the driver. In this instance, he never received any calls from the plaintiff about change of delivery location. Here is the evidence:

"Q. What is the company procedure if there is a change in delivery location?

A. Initiator of the Purchase Order will call me and advice of change of location.

Q. If there is a change of location as you say; will the location be changed on the delivery docket?

A. It can.

Q. What is the location on the delivery docket you are holding?

A. Earthquip yard China Town.

Q. Was it changed to PNG Readymix?

A. No."

25. The driver, Boni Moses, was not called to give evidence but Armstrong Suvia and Geoff Baker relied on what he told them. Armstrong Suvia deposed that Susan Watpore and Augustine Romogiam "directed" the driver to place the container at Readymix yard because there was not enough space at the plaintiff's yard. Geoff Baker, on the other hand, conducted an investigation and prepared a report on 30th March 2005 following allegations of mis-delivery of the container. He deposed that the driver was "directed" to place the container at PNG Readymix yard and that Augustine Romogiam signed as evidence of delivery. The evidence is hearsay. Counsel for the defendant, relying on Edward v R.E Jordan trading as Jordan Lighting and Dowsett Engineering (New Guinea) Pty Ltd (supra) and Dowsett Engineering (New Guinea) Pty Ltd v Edward and R. E Jordan trading as Jordan Lighting (supra), submitted that I should admit the evidence as part of res gestae. Counsel for the plaintiff urged the Court to reject it.

26. A hearsay statement made by a bystander may be admitted as part of the res gestae subject to a consideration of the possibility of concoction or fabrication: Ratten vs. The Queen [1971] UKPC 23; [1972] AC 378; Edward vs. R.E Jordan trading as Jordan Lighting and Dowsett Engineering (New Guinea) Pty Ltd (supra); Dowsett Engineering (New Guinea) Pty Ltd vs. Edward and R. E Jordan trading as Jordan Lighting (supra).

27. In Edward vs. R.E Jordan trading as Jordan Lighting and Dowsett Engineering (New Guinea) Pty Ltd (supra), the plaintiff fell to the floor and received injuries when a labourer holding the ladder let go of it to retrieve the fallen pliers. While he was lying injured on the ground he overheard a conversation between the labourer and the other employees working nearby. A carpenter said to the plaintiff "The labourer left the ladder to retrieve the fallen pliers from the ground and upon him letting go it slipped". Following the heated conversation between the labourer and the other employees, the labourer ran away and was never seen again. Within one or two (2) minutes of these events Mr. Saunter, the foreman, arrived on the scene. The employees told the foreman that the labourer had let go the ladder to retrieve the pliers. Andrew J said at 289:

"In the present case the words used were in my view spontaneous. They were spoken before Mr. Saunter appeared at the scene within one to one and a half minutes of the accident. To my mind this discounts the possibility of concoction or fabrication. I regard the words used as admissible. In accordance with Ratten's case the words used, though hearsay, are admissible not only as to the fact of their having been said but as to the truth of the facts they purport to describe. The possibility of concoction is further discounted by the fact that the labourer upon being charged by his fellow employees with having let go the ladder proceeded to run away".

28. On appeal the Supreme Court held that the evidence, though hearsay, was properly admitted as part of the res gestae (see Dowsett Engineering (New Guinea) Pty Ltd vs. Edward and R. E Jordan trading as Jordan Lighting (supra)).

29. Geoff Baker prepared the report approximately five (5) months after the incident and his evidence conflicts with Augustine Romogiam's statement. In cross examination, Armstrong Suvia said that he was informed a week later by the driver, Boni Moses, that Susan Watpore and Augustine Romogiam "directed" him to place the container at PNG Readymix yard. He was not told of the mis-delivery on 4th November 2004 but came to know about it a week later. The driver could not have been "directed" by Susan Watpore as she had already left the office when the container was delivered between 3:36 pm and 4:15 pm. The evidence also conflicts with Augustine Romogiam's statement. The information given to Geoff Baker and Armstrong Suvia were not spontaneous. There was no spontaneity. I am unable to discount the possibility of concoction, fabrication or distortion. The interval of time was sufficiently long to allow fabrication. I reject paragraphs 4 and 5 of Armstrong Suvia's affidavit (Exhibit D1) and paragraphs 7 and 8 of Geoff Baker's affidavit (Exhibit D4). Even if I were to admit the evidence, I would not give it sufficient weight because it conflicts with Augustine Romogiam's statement and Susan Watpore's evidence.

30. I find that the container was misdelivered and that the defendant breached the contract. Judgment is entered for the plaintiff with damages, interest and costs to be assessed.

____________________________

Warner Shand Lawyers: Lawyer for the Plaintiff
In-House Lawyer: Lawyer for the Defendant - Steamships Limited