PNG Law Reports 1994
[1994] PNGLR 410
SC468
PAPUA NEW GUINEA
[SUPREME COURT OF JUSTICE]
HIGHLANDS TRUCKING CORPORATION PTY LTD
V
MMK TRANSPORT PTY LTD
Waigani
Kapi DCJ Brown Doherty JJ
27 June 1994
2 September 1994
CONTRACT - Offer and acceptance evidenced by writing - Variation by subsequent oral negotiations - Enforceability of amended agreement.
Facts
The appellant and respondent entered into negotiations to sell and purchase certain vehicles. The trial judge found there was no dispute that there was an agreement for sale of two vehicles at K120,000, but went on to find that there was uncertainty as to the terms of the agreement and dismissed the claim and cross-claim.
Held
1.       The trial judge erred in assessing the evidence in relation to the existence of the agreement.
2.       The evidence which established the price of one vehicle and the sale of the second vehicle was not contested.
3.       The trial judge erred in concluding there was no agreement.
4.       The appeal was allowed, judgment entered for the appellant for K25,000, respondent to pay appellant's costs of the appeal.
Counsel
P Dowa for the appellant.
D Kombagle for the respondent.
2 September 1994
KAPI DCJ BROWN DOHERTY JJ:  The plaintiff (hereafter, the appellant) claimed for the balance of monies due and owing pursuant to an agreement to sell some vehicles. The offer to purchase certain vehicles was made by the defendant (hereafter, the respondent) in a letter dated 3 January 1991, as follows:
"Subject: Agreement to purchase of trucks
We refer to our discussions on 03/01/91 and confirm in this letter our offer to purchase the following fleet of trucks from your company including the current sub-contract agreement with ABCO Transport Pty Limited:
Truck Type	Reg No	H/way Lic No	Value K	
1 x Prime-Mover Kenworth w/trailer	AFI 360	12	80,000	
1 x Prime-Mover Isuzu w/trailer	AMA 460	11	45,000	
1 x Twin-Steer Isuzu	AFM 101	3	30,000	
 	 	Total	K155,000	
Our offer to purchase the above trucks for K155,000 is subject to the bank finance being made available and our physical inspection of the trucks."
This offer was accepted by the appellant in letter dated 4 January 1991.
This agreement was subsequently changed on further oral negotiations by the parties to sell only:
1 x Prime-Mover without/trailer	AFI 360	K90,000	
1 x Twin Steer	AFM 101	K30,000	
 	 Total	K120,000	
The appellant's cause of action was based on the amended agreement for sale of two vehicles for a total of K120,000. The respondent admitted the agreement in paragraph 3 of it's defence. The respondent further pleaded the same agreement in paragraph 2 of its cross-claim. The respondent's cross-claim was based on an implied term and condition that the vehicles were workable and fit for the purposes for which they were purchased.
The original statement of claim pleaded that the Prime-Mover was sold "with the trailer". The appellant amended the statement of claim at the commencement of the trial so that the claim was for sale of Prime-Mover "without the trailer". The respondent did not make any consequential amendment to paragraph 3 of its defence. 
Therefore, it is clear from the pleadings that there was no dispute that there was an agreement for sale of two vehicles at the price of K120,000. In fact, the trial judge stated this in his judgment, "The defendant admitted that there was an agreement for the sale of 2 vehicles for a total of K120,000.00".
Nevertheless, the trial judge concluded that there was uncertainty as to the terms of the agreement and dismissed the claim. As the cross-claim was based on the same agreement, he also dismissed the cross-claim.
The trial judge dismissed the claim in the following terms:
"At the commencement of the trial the plaintiff sought to amend the Statement of Claim to change the description of the Prime Mover Kenworth to be without Trailer. The defendant objected to this amendment. This immediately starts to create uncertainties as to what was the original agreement.
The officer of the plaintiff company explained in evidence that the trailer was to be sold as a separate item.
So with this I must note that there is then no agreement as originally noted in the pleadings over what was the subject of the agreement.
The evidence of what was the agreement comes from the officer of the plaintiff company. Mr Nixon Koi refers to letters dated 3 and 4 January 1991 to purchase 3 vehicles, two of which were trailer. However, he then goes on in his evidence to refer to only 2 vehicles, those which were referred to in the Statement of Claim. So whilst the letter refers to 3 vehicles the evidence now seems to be only about 2 vehicles. And the amounts for the vehicles in the letters are different to those referred to in the pleadings.
There is no evidence as to how and when any payments were to be made. Mr Koi gave evidence of payments up to K95,000 being made and claims a balance of K25,000. There is evidence of a cheque for K45,000 being paid over and then not being met at the bank although I am not sure where that cheque comes in this matter now before the court. Although I note that the letter refers to a Isuzu prime mover with trailer for K45,000. There is a letter in evidence from the defendant referring to an outstanding K15,000 being payable when the trucks were working.
Any further evidence suggests a rather vague discussion to purchase, no clear verification of the price and terms, the transfer of the vehicles and the registration papers by other parties who may have been actually operating the vehicles, and complete uncertainty by any of the parties as to actually what was happening...
There is insufficient evidence before me to find the terms of any arrangement for the sale and purchase of the subject vehicles. I therefore dismiss the claim and the cross-claim."
The appellant appealed against the dismissal of its claim, and the respondent cross-appealed against the dismissal of its cross-claim.
At the hearing, the respondent abandoned the cross-appeal. The appeal proceeded.
The relevant grounds of appeal are as follows:
"(a)     The learned trial judge erred in both law and fact in holding that there was insufficient evidence to establish the existence of a contract for the sale of two vehicles as there was more than sufficient evidence before His Honour to make such a ruling.
(b)      The learned trial judge erred in law and in fact in holding that the terms and the conditions for the sale of the two vehicles was ambiguous as there was sufficient evidence before His Honour to arrive at a conclusion in favour of the appellant.
(c)      The learned judge erred in dismissing the appellant's claim even after the evidence showing admission by the respondent of it's indebtedness to the appellant.
(d)      The trial judge erred in law in dismissing the appellant's claim even after the appellant established his claim on the balance of probabilities.
(e)      The trial judge erred in law in rejecting the appellant's evidence which was not rebutted by the respondent."
The appellant submitted that there was sufficient evidence which was not contradicted and which established the claim on the balance of probabilities.
In our view, the trial judge fell into error in assessing the evidence in relation to the existence of the agreement. The trial judge concluded that when the appellant amended the statement of claim:
"This immediately starts to create uncertainties as to what was the original agreement.
The officer of the plaintiff company explained in evidence that the trailer was to be sold as a separate item.
So with this I must note that there is then no agreement as originally noted in the pleadings over what was the subject of the agreement."
Mr Nixon Koi, the managing director of the appellant company, gave evidence by affidavit and was called to give evidence of the agreement at the trial. He gave evidence that the original agreement was for sale of three vehicles in a package (see record page 19). This agreement was confirmed in the letter of offer and acceptance (see record pp 26 and 27). This agreement was subsequently changed by the parties through further oral negotiations. The following appears from the evidence of Mr Nixon Koi:
"Q.      They made offer and you accepted offer?
A.       We had a lot of trucks, 3 big and 2 small trucks and I wanted to sell all those together in a package. After discussions they did not want to buy 2 small trucks. I listed down prices for each truck. When they went down to Lae to inspect they only wanted to buy 2 trucks and not 3rd one. We agreed and they agreed and bought big truck for K90,000 it's new price was K162,000 but it was now 18 months old."
Apparently, Mr Koi explained that the original price of K80,000 for the Prime-Mover was changed to K90,000 when he could not sell all the vehicles in a package.
Mr Koi also gave evidence on the trailer:
"Q.      In documents Annex 'A' and 'B' it says that agreed to buy with trailer?
A.       When I wrote these documents it included trailer but after I told them it was without trailer as they were separate prices.
Q.       In negotiation did Chris want trailer?
A.       We did not talk about trailer only about the trucks.
Q.       Did you tell Chris and Masket Iangalio trailer not part of sale?
A.       At that time we did not talk about trailer, only about the trucks.
Q.       In May 1991 4 months after did Chris talk to you about the trailer?
A.       No.
Q.       Did he tell you ABCO invoiced him on use of trailer and he not happy with it and he came to see you?
A.       No"
This evidence clearly established that the price of the Prime Mover was agreed at K90,000 without the trailer on further negotiations. At no stage did the respondent contest the sale of the other vehicle, Twin-Steer Isuzu, for K30,000. The respondent admitted the amended agreement in paragraph 3 of its defence. In consequence of this agreement, the respondent made payments of K20,000 on 1 February 1991, K20,000 on 1 March 1991, and K55,000 on 9 April 1991 (see record page 24). The respondent also acknowledges the debt owing under the agreement (see record page 29).
The trial judge, therefore, fell into error in concluding that there was no agreement.
We would allow the appeal, quash the decision of the trial judge, and enter judgment for the appellant for K25,000. We further order that the respondent pays the appellant's cost of this appeal.
Lawyer for the appellant: Paulus M Dowa
Lawyer for the respondent: Pato Lawyers