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YHA Hauka Coffee Pty Ltd v Kumul Kopi Export Pty Ltd [1991] PGLawRp 495; [1991] PNGLR 331 (5 September 1991)

Papua New Guinea Law Reports - 1991

[1991] PNGLR 331 - YHA Hauka Coffee Pty Ltd v Kumul Kopi Export Pty Ltd 

[1991] PNGLR 331

N1011

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

YHA HAUKA COFFEE PTY LTD

V

KUMUL KOPI EXPORT PTY LTD AND OTHERS

Lae

Doherty J

5 September 1991

SALE OF GOODS - Performance of contract - Duties of seller and buyer - Payment and delivery concurrent - Uniform purchase contract - Coffee - Knowledge of on-selling - Whether effecting contract - Application of cases under Sale of Goods Act 1893 (UK) - Goods Act (Ch No 251), ss 18, 19.

The Goods Act (Ch No 251), s 19, provides that the seller of goods may reserve the right to dispose of the goods until certain conditions are fulfilled notwithstanding the fact that the goods have been delivered to the buyer or a carrier or other bailee for transmission to the buyer.

Section 18 provides that property in the goods is transferred from the seller to the buyer when the parties, through the contract, intend it to be so transferred and the court is permitted to look to the terms of the contract in ascertaining that intention.

A uniform purchase contract in respect of coffee provided, by cl 15, as follows:

“PAYMENT AND OWNERSHIP

Payment shall be made at the time stipulated in the contract. The coffee remains the property of the seller until it is being paid for in full, even if the seller has already parted with the coffee or with the documents which represent the coffee. Notwithstanding that payment has already been made, the buyer shall be entitled to protest in regard to any claim within the time stipulated in Clause 20 hereof.”

The seller of coffee under a uniform purchase contract, delivered coffee to the purchaser under the contract with full knowledge that the purchaser was on-selling: the seller sued the purchaser to recover payment and sought a declaration as to title to the coffee.

Held

N1>(1)      Notwithstanding knowledge that the coffee was to be onsold, the terms of the uniform purchase contract bound the parties thereto.

N1>(2)      The Goods Act (Ch No 251) applied to the contract.

N1>(3)      Section 19 of the Goods Act permits reservation of specified conditions to be fulfilled, of which a provision as to payment of the price is such a condition.

N1>(4)      Clause 15 of the uniform purchase contract properly reserved the sellers rights as to payment and transfer of property.

N1>(5)      Accordingly, property in the coffee remained with the seller until payment was received.

Cases Cited

Godts v Rose [1855] EngR 822; (1855) 17 CB 229; 139 ER 1058.

Prenn v Simmonds [1971] 1 WLR 1381; [1971] 3 All ER 237.

Summons

This was an application for declarations and consequential orders in relation to title to coffee the subject of a uniform purchase contract.

Counsel

L A Dacre, for the plaintiff.

No appearance for, the first, third, fourth and fifth defendants.

5 September 1991

DOHERTY J: This matter was brought on as an urgent hearing for reasons that will become apparent in the decision. Only the second defendant entered an appearance and the hearing between the second defendant and the plaintiff has been set down for a hearing at a later date.

This is somewhat an unfortunate case inasmuch as no fault can be directly attributed to any of the parties and the events giving rise to the hearing resulted from intervention of another party who is joined in civil proceedings WS 499 of 1991.

Events were as follows. The plaintiff, a small producer of coffee, arranged with the first defendant for the sale of coffee described in the documents of sale as “578 bags x 60 Native Y Grade coffee”, which was 34 tonnes of coffee at agreed price of 1.85 kina per kilo. An agreement referred to as “a uniform purchase contract” from the Papua New Guinea Coffee Exporters Council Inc passed between the plaintiff and the first defendant. In actual fact the first defendant, to the knowledge of the plaintiff was arranging a sale with another party and this had been a practice between them in the past.

The first defendant arranged a sale to the third defendant and the coffee was loaded on a ship through ABCO Transport Pty Ltd for consigning on the ship “Coral Chief” Voyage Number 15 to the third defendant in Sydney, Australia. The third defendant’s registered office is in Singapore. The fifth defendant is the owner or alternatively the person responsible for the running of “Coral Chief”.

The plaintiff anticipated receiving payment for the coffee through the Westpac Bank in Lae. The evidence shows the normal practice had been for the Westpac Bank in Mt Hagen to send payment to Lae; the Westpac Bank in Mt Hagen having operated the account of the first defendant. The third defendant had sent payment for the coffee to the first defendant at his account in Mt Hagen.

From the evidence before me it would appear that the Westpac Bank in Mt Hagen put the payment received into an account and did not, as usual, transfer the proceeds to the account of the plaintiff. As this action is the subject of other proceedings the bank’s reasons have not been made apparent in this Court. As there has not been payment to the plaintiffs for the coffee, the plaintiffs now sue for declarations that title to the goods has not passed from them to any of the other parties and they rely on the provisions of the contract I have referred to above.

I will refer at this point to the application by the plaintiffs to have this matter brought on for an early hearing. I am satisfied on the evidence before me that the goods were of a perishable nature and if the title was not resolved quickly the goods would be destroyed by natural decomposition to the detriment of all parties concerned. For this reason I have agreed to the application by counsel for the plaintiff to have the matter heard at an early date. I note the affidavit of service on all the parties concerned and the affidavit of counsel for the plaintiff, together with further remarks from the bar table concerning her contacts with counsel acting in other matters. I also note the undertaking as to the damages filed in the court. I mention these matters specifically as I am concerned to ensure that no injustice is done by an early hearing to any of the parties, particularly those who are located in other jurisdictions.

His Honour the Chief Justice made orders concerning the shipping documents and title documents but as the coffee had already been shipped and off-loaded it became impractical to implement those orders and the plaintiff now brings this action.

The plaintiff relied on the clauses in the contract and in particular cl 15 which is as follows:

“PAYMENT AND OWNERSHIP

Payment shall be made at the time stipulated in the contract. The coffee remains the property of the seller until it is being paid for in full, even if the seller has already parted with the coffee or with the documents which represent the coffee. Notwithstanding that payment has already been made, the buyer shall be entitled to protest in regard to any claim within the time stipulated in Clause 20 hereof.”

Clause 20 relates to claims in respect of quality and delivery and are not relevant to this hearing.

The contract specifically states “this contract shall be interpreted according to the Law of Papua New Guinea. In order to enforce an arbitration award duly given, direct recourse may be had to the courts of Papua New Guinea”. This particular clause is headed “Jurisdiction”. I consider the clause is clear and unequivocal and that the contract is to be interpreted in accordance with the Papua New Guinean Law and legislation.

The law relating to the sale of goods and the transfer of goods is contained in the Goods Act (Ch No 251).

The interpretation section of the Act defines goods to include all chattels personal other than things in action and money and defines “property” in relation to title to mean general property in the goods and not merely a special property.

The coffee, the subject matter of these proceedings is chattels personal and are not a cause of action nor money and is therefore goods within the meaning of the interpretation section.

Section 3 of the Act envisages contracts being conditional and provides at s 3(4)(b) that if the transfer of the property in the goods is to take place subject to a condition to be fulfilled then the contract is an agreement to sell. It does not become a sale until the conditions are fulfilled (s 3(5)). Section 18 of the Act provides that property in goods is transferred from the seller to the buyer when the parties, through the contract, intend it to be so transferred and the court is permitted to look to the terms of the contract and the contract of the parties in ascertaining that intention (s 18(3)). According to the evidence before me contained in the affidavits of the employees of the plaintiff company the company agreed with the first defendant to provide the 578 bags of coffee to the first defendant who had “on-sold coffee to overseas clients namely Hieng Kei Pty Ltd and Cofi Com Trading both of Sydney”.

None of the defendants has adduced evidence refuting that statement.

The contract I have referred to was headed in the name of the first defendant and the words “Uniform Purchase Contract (1)” on the heading. It states “bought from Messrs Yha Hauka Coffee ...”.

The coffee was duly supplied to the first defendant by delivery to a shipping agency and there is no evidence to suggest that the first defendant refused to accept delivery of the goods or raised any objection to their quality, weight or made any other claim relating to them.

Mrs Dacre, counsel for the plaintiff, has said that it was within the knowledge of the plaintiff that the coffee would be sold and that payment would be received from the second and third defendants and, in due course made to the plaintiff. This statement was made from the bar table and is not the subject of sworn evidence before me; similarly, there has been no evidence adduced by the first, second or third defendant that, despite the terms of the written agreement between the parties, by their past actions and behaviour they are estopped from denying that the terms of the agreement are other than the written terms of the document before me. I consider this aspect important as the second or the third defendant (it is not completely clear which) has made payment for the coffee as I have indicated above.

The law on interpretation of the contracts is settled and, to quote Lord Diplock in Prenn v Simmonds [1971] 3 All ER 237 at 245: “... the principles to be applied in the interpretation of a written agreement, and as to the reasons which underlie the rule that evidence is not admissible of the negotiations between the parties or any purpose which either of them hoped to achieve by it does not appear from the word used in the agreement and the surrounding circumstances.” The terms of the agreement before me show that the buyer was Kumul Coffee Exports Ltd, the first defendant and the seller was Yha Hauka Coffee Pty Ltd, the plaintiff. I find on the facts and documents before me that they were the “buyer” and “seller” within the meaning of the Goods Act.

Since they are the buyer and the seller the question that arises is whether the property has passed from the plaintiff to the first defendant to enable the first defendant to pass title to any of the other parties. I have referred to the provisions of s 18 of the Goods Act dealing with the date or time at which property in the goods passes. The fact that the seller may have handed over physical control of the goods by putting them into the hands of the shipping company does not show that he had transferred the title and the property in the goods.

Section 19 of the Goods Act permits the seller to reserve the right of disposal of the goods until certain conditions are fulfilled notwithstanding the fact that he has delivered the goods to the buyer or a carrier or other bailee for the purposes of transmission to the buyer. I consider transmission to the buyer to include transmission to another party at the buyer’s directive.

I am unable to find any case law in Papua New Guinea on the interpretation of the provisions of s 19 of the Goods Act and counsel, similarly, has been unable to refer me to any case law. I note that the wording of s 19 of the Goods Act is exactly the same wording as the ordinary Sale of Goods Act 1893 (UK). Decisions of the English courts are not binding in this Court in situations where the common law does not apply but it is helpful to look at the attitude of the courts when considering and interpreting these provisions. The learned writers of Chitty on Contracts, vol 11, par 4509 consider that s 19(1) states a general rule, that it is open to the seller to reserve to himself the right of disposal and to list specified conditions to be fulfilled and that the usual condition is payment of the price. If such terms are in place the property does not pass on until that condition is fulfilled even when the goods are delivered to the buyer or a carrier. They go further, to remark that taking goods to a carrier does not amount to an unconditional appropriation so as to pass a property under s 18, r 5. Section 18, r 5 is in similar (but not exact) terms to our s 18(3)(e) of the Goods Act. I note that in the Sale of Goods, 3rd ed (1975) by William T Major the writer considers that the seller may, by the terms of the contract, reserve the right of disposal of the goods until certain conditions are fulfilled. They say “the most usual condition stipulated by the seller in this connection is payment of the price by the buyer. The condition may be agreed at the time of making the contract of sale or it may be in a later stipulation made by the seller at the time of appropriating unascertained goods to the contract”. He refers to the case Godts v Rose [1855] EngR 822; (1855) 17 CB 229; 139 ER 1058 which held such a condition prevents the passing of the property until the terms are fulfilled by the buyer.

I consider these interpretations are equally applicable to our situation in Papua New Guinea and do not conflict with any other laws.

I find on the evidence before me that the parties to this agreement for the sale of coffee were the plaintiff and the first defendant. I find that the terms of the agreement they entered into are clear and unequivocal and that the property in the goods does not pass from the seller to the buyer until the coffee has been paid for. I find that the legislation applicable is the Goods Act (Ch No 251) and it provides that property in the goods does not pass to the buyer until the terms of the contract are fulfilled; such terms include terms as to payment. I am satisfied on the evidence before me that despite the transfer of moneys to the first defendant the seller has never received payment for the goods and the terms of the contract are clear and unequivocal and “the coffee remains the property of the seller until it is being paid for in full”. I find that the property in the coffee remains with the seller and remains his property until it has been paid.

In view of the unfortunate facts of this case and the location of second and third defendants and the unusually early hearing I have considered whether the third defendant may have acquired rights which this Court should consider even though he has not appeared. I note the provisions of s 21 of the Goods Act which provides that if a person who is not the owner sells the goods or sells them without the authority or consent of the owner the buyer acquires no better title than the seller himself had unless the seller is precluded by his contract from denying the authority to sell. From the various interim applications in this matter it is clear that the plaintiff has strenuously endeavoured to maintain his title to the goods.

I order that the 578 bags of Green Y Grade coffee shipped on the “Coral Chief” Voyage 15 be handed over to the custody of the plaintiff or its servant or agents. I make no orders against the second defendant who has entered an appearance in this matter and is to be heard. I order that the plaintiff by its servants or agents may enter upon the premises of the first, third, fourth or fifth defendants or each of them or their servants or agents to recover the said 578 bags of Y Grade coffee. Wording of the order to be settled by the Registrar in Chambers. The order is abridged to 9.30 am on 6 September 1991.

Orders accordingly

Lawyers for plaintiff: Warner Shand.

Lawyers for defendant: Don Sawong and Associates.