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National Court of Papua New Guinea |
[1979] PNGLR 34 - Evans, Grey & Hood Ltd v Plantation Supply & Services Co Pty Ltd; Arthur Branwell & Co Pty Ltd v Plantation Supply & Services Co Pty Ltd; British Pepper & Spice Company Ltd v Plantation Supply & Services Co Pty Ltd
N183
PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]
EVANS, GREY & HOOD LTD.
V
PLANTATION SUPPLY & SERVICE CO. PTY. LIMITED
AND
ARTHUR BRANWELL & CO. PTY. LTD.
V
PLANTATION SUPPLY & SERVICE CO. PTY. LIMITED
AND
BRITISH PEPPER & SPICE COMPANY LIMITED
V
PLANTATION SUPPLY & SERVICE CO. PTY. LIMITED
Waigani
Wilson J
22-24 February 1978
27 February 1978
10 February 1979
SALE OF GOODS- Remedies for breach of contract - Measure of damages - Non delivery - No available market - Contract for sale of chillies - Place of available market is place of delivery - Chillies unavailable world wide - Measure is difference between contract and resale price - Loss of anticipated profits - Goods Act 1951, s. 55[xlvi]1.
INTEREST- Recoverability apart from agreement - Interest on damages award - Matter of discretion - Sale of goods - Damages for non delivery - Interest awarded - Law Reform (Miscellaneous Provisions) Act 1962.
JUDGMENTS AND ORDERS- Interest on - Damages - Matter of discretion - Sale of goods - Damages for non delivery - Interest awarded - Law Reform (Miscellaneous Provisions) Act 1962.
In June and July 1976 contracts (which were subsequently varied as to some terms including date of delivery) were entered into between the plaintiff “Evans” and the plaintiff “Branwell” (both English companies) and the defendant, a Papua New Guinea company, whereby it was found that the defendant agreed to sell to Evans and Evans agreed to buy three metric tons of Papua New Guinea Birdseye chillies for the price of £738 sterling per metric ton C.&F. for shipment during February 1977, and whereby it was found that the defendant agreed to sell to Branwell and Branwell agreed to buy ten metric tons of Papua New Guinea Birdseye chillies for the price of £738 sterling per metric ton C.&F. for shipment as to the first five tons during November/December 1976. The defendant having failed to deliver in accordance with either of the contracts, repudiated both contracts on 11th February, 1977, and the plaintiffs sought inter alia damages for breach of contract.
The evidence disclosed that between November 1976 and March 1977, chillies were in such short supply world wide that it could properly be said that there was no available market for the goods, and further that the plaintiffs, acting as agents, had agreed to resell the chillies the subject of the contracts on the London market at £2000 sterling per ton.
Held
N1>(1) The plaintiffs were entitled to damages for non-delivery.
N1>(2) The relevant times for measuring the damages were the times when the shipping documents, despatched with reasonable speed, would have arrived.
C. Sharpe & Co. Ltd. v. Nosawa & Co., [1917] 2 K.B. 814, referred to.
N1>(3) The relevant place of the market (if one was available) was, in the circumstances of the contracts, London, and there was no obligation on the defendant to explore markets in more distant localities.
Lesters Leather & Skin Co. v. Home and Overseas Brokers, [1948] W.N. (Eng.) 437, at p. 437; and Hasell v. Bagot, Shakes & Lewis Ltd. [1911] HCA 62; (1911), 13 C.L.R. 374, referred to.
N1>(4) There being no available market for the goods in question, the measure of damages was the difference between the contract price and the resale price or the loss of anticipated profits.
N1>(5) Semble, were there an available market, the circumstances of the case, (viz., the fact that these were chillies sold on a commodity and produce market, and the fact that the defendant company should have reasonably contemplated a chance of the chillies being resold) justified a departure from the prima facie situation indicated by s. 55(3) of the Goods Act 1951.
C. Czarnikow Ltd. v. Koufos, [1969] 1 A.C. 350, referred to.
N1>(6) Interest under s. 42 of the Law Reform (Miscellaneous Provisions) Act 1962, is a matter for the courts’ discretion and ought to be awarded in the circumstances.
Actions
These were claims for inter alia damages for non delivery of goods namely chillies, bought by the plaintiffs, English import/export companies as purchasers and the defendant a Papua New Guinea company as vendor. The matter is reported only on the aspect of damages awarded.
Counsel
J. Hamilton, for the plaintiffs.
R. Conti Q.C. and G. Evans, for the defendant.
Cur. adv. vult.
10 February 1979
WILSON J: These three actions were tried together and, by agreement between the parties, all of the evidence has been treated as evidence in each of the three actions. The dispute between the parties arose out of certain correspondence and dealings relating to the sale by the defendant company of quantities of Papua New Guinea Birdseye chillies. “Birdseye “ is a variety of hot chilly principally used for making chilly powder; it is generally regarded on the world market as of very good quality and high in grade.
The contracts in question were brought into existence by a firm of international produce brokers, Hale and Son Ltd. of London (hereinafter referred to as “Hales”). They acted as the agents for the seller. The plaintiffs alleged that Hales also acted as agents for the purchasers. A representative of Hales in London dealt with a representative of the defendant company in Papua New Guinea.
The plaintiff Evans, Grey and Hood Ltd. (hereinafter referred to as “Evans”) alleged that by a contract dated 23rd June, 1976, it was agreed that the defendant company would sell and Evans would buy three metric tons of Papua New Guinea Birdseye chillies for a price of £755 sterling or, alternatively, ??738 sterling per metric ton C. & F. (i.e., cost and freight) for shipment during the month of October 1976. It was alleged that the contract was later varied by consent to provide that shipment be deferred until February 1977. Evans further alleged that the defendant company wrongfully failed to deliver any of the said chillies and by its conduct it evinced an intention no longer to be bound by the contract and thereby wrongfully repudiated it.
The plaintiff Arthur Branwell & Co. Ltd. (hereinafter referred to as “Branwell”) alleged that by a contract dated 14th July, 1976, it was agreed that the defendant company would sell and Branwell would buy five metric tons of Papua New Guinea Birdseye chillies for a price of £755 sterling or, alternatively, £738 sterling per metric ton C. & F. for shipment during the months of August/September 1976 and a further five metric tons for shipment during the months of November/December 1976. It was alleged that the contract was later varied by consent to provide that the August/September 1976 shipment be deferred until October 1976, and that the November/December 1976 shipment be deferred until March/April 1977. Branwell further alleged that the defendant company wrongfully failed to deliver any of the said chillies and by its conduct evinced an intention no longer to be bound by the contract and thereby wrongfully repudiated it.
The plaintiff British Pepper & Spice Ltd. (hereinafter referred to as “British Pepper & Spice”) alleged that by a contract dated 16th July, 1976, it was agreed that the defendant company would sell and British Pepper & Spice would buy seven and a half metric tons of Papua New Guinea Birdseye chillies for a price of £755 sterling or, alternatively, £738 sterling per metric ton C. & F. for shipment during the months of November/December 1976. It was alleged that the contract was later varied by consent to provide that shipment be deferred until March/April 1977. British Pepper & Spice further alleged that the defendant company wrongfully failed to deliver any of the said chillies and by its conduct evinced an intention no longer to be bound by the contract and thereby wrongfully repudiated it.
The plaintiff companies in each instance alleged that loss and damage was suffered by reason of the breach of contract by the defendant company.
The plaintiff companies in each instance contended that the respective contracts were upon the terms and conditions of the standard form of contract issued by The General Produce Brokers’ Association of London operative as from 1st January, 1975, cl. 11 of which provides as follows:
“Any question of dispute touching the construction, meaning or effect of a contract or concerning quality or condition of goods, shall (failing an amicable settlement) be referred to arbitration in accordance with the Rules of the Association.”
The plaintiff companies in each instance contended that the matters in dispute between the parties were referred to arbitration on or about the 23rd March, 1977, and that, by awards made and published on the 14th April, 1977, the arbitrators respectively found that the defendant company had not fulfilled the terms of the contracts with the plaintiff companies and were in default and made certain awards in favour of the plaintiff companies. These arbitrations are referred to in more detail later in this judgment.
The plaintiff companies in each of their respective actions sought to enforce the awards, in the same manner as a judgment or order to the same effect, in accordance with s. 16 of the Arbitration Act 1951. Alternatively, they claimed the sums specified in the awards and interest thereon. Alternatively, they claimed damages for breach of contract and interest.
The defendant company contended in defence of each claim that there had never been any consensus as to price between the parties and that, in consequence, there was no contract. As an alternative ground of defence, the defendant company alleged that any contracts that were entered into were between the defendant company as seller and Hales as buyer. In relation to the dealings with British Pepper & Spice the defendant company contended that, in the circumstances of the correspondence that took place, there was no binding contract of sale because, so it was contended, there was “never any final agreement reached as to minimum quantity, because of the defendant’s uncertainty as to availability”.
It was argued on behalf of the defendant company that the arbitrations ought not to be enforced for a number of reasons, and that the proof of the plaintiff’s damages was defective.
[His Honour then went on to deal with the evidence presented in the case concluding:]
I find that by a contract dated 23rd June, 1976, it was agreed that the defendant company would sell and Evans would buy three metric tons of Papua New Guinea Birdseye chillies for a price of £738 sterling per metric ton C. & F. for shipment during the month of October 1976.
I find that the said contract was varied on 19th January, 1977, as to the date of shipment, to be during the month of February 1977.
I further find that the defendant company wrongfully failed to deliver any of the said chillies and by its conduct evinced an intention (on 11th February, 1977) no longer to be bound by the contract and thereby repudiated it.
I further find that pursuant to the terms of the contract Evans pursued certain remedies against the defendant company.
I further find that Evans is entitled to damages for breach of contract. Reference will be made later in this judgment to the matter of the arbitration and my reasons for not enforcing the award that was made.
...
I find that by a contract dated 14th July, 1976, it was agreed that the defendant company would sell and Branwell would buy ten metric tons of Papua New Guinea Birdseye chillies for a price of ??738 sterling per metric ton C. & F. for shipment as to five tons during the period November/December and as to five tons during the period August/September, and I find that the said contract was subsequently varied on 13th September, 1976, as to the date of shipment of the first five tons to be during the month of October 1976.
I further find that the defendant company wrongfully failed to deliver any of the said chillies and by its conduct evinced an intention (on 11th February, 1977) no longer to be bound by the contract and thereby repudiated it.
I further find that Branwell is entitled to damages for breach of contract.
...
The third main argument for the defendant related to the British Pepper & Spice contract. Mr. Conti contended that no binding contract for sale existed. I am persuaded that in that respect he is correct.
I now turn to the question of damages. Having concluded that the defendant company was in breach of both the Evans contract as varied and the Branwell contract as varied, in each instance for non-delivery of the goods, it remains for me to assess the damages.
I should refer to s. 55 of the Goods Act 1951. That section provides:
N2>“55(1) Where the seller wrongfully neglects or refuses to deliver the goods to the buyer the buyer may maintain an action against the seller for damages for non-delivery.
N2>(2) The measure of damages is the estimated loss directly and naturally resulting in the ordinary cause of events from the seller’s breach of contract.
N2>(3) Where there is an available market for the goods in question the measure of damages is prima facie to be ascertained by the difference between the contract price and the market or current price of the goods at the time or times when they ought to have been delivered or if no time was fixed then at the time of the refusal to deliver.”
The relevant times for measuring the damages are the times when the shipping documents, despatched with reasonable speed, would have arrived (see C. Sharpe & Co. Ltd. v. Nosawa & Co.[xlvii]2).
Mr. Philpott testified (and I accept his evidence) that in the period between October 1976 and the end of 1977 chillies were scarce. “(P.N.G. chillies) were more scarce than most — all chillies were scarce.” He also gave evidence that “nothing was available” in the People’s Republic of China, that supplies from Uganda “were disrupted” and that Ethiopian chillies were “not available to (his) knowledge”. The evidence (in Exhibit P7) was such as to indicate that, even on the London market at the relevant time, it would have been doubtful if sufficient quantities (i.e., as large as three tons and ten tons or thirteen tons in all) would have been obtained.
In the light of the statements of the defendant, which presumably the defendant intended be taken seriously, and the evidence of Mr. Philpott I conclude that chillies were in such short supply that it could properly be said that within the period from November till March there was no available market for the goods in question.
That being so, then the measure of damages is the difference between the contract price and the re-sale price or the loss of anticipated profits. Applying that approach to the present case, the damages are as follows:
|
EVANS CONTRACT |
|
|
|
|
£6,600 |
|||
|
Contract price — three tons at £2,214 |
£2,214 |
||
|
Difference or loss of anticipated profit |
£3,786 |
||
|
BRANWELL CONTRACT |
|
|
|
|
£20,000 |
|||
|
Contract price — ten tons at £738 |
£7,380 |
||
|
Difference or loss of anticipated profit |
£12,620 |
||
In case I should be held to be in error in my conclusion that there was no available market for the goods in question then, pursuant to the provisions of s. 55(3) the measure of damages is prima facie the difference between the contract price and the market or current price of the goods at the time when the goods ought to have been delivered. It is to be noted that the section is not mandatory; it contemplates the possibility of departures from the prima facie situation. In this case the circumstances are such to justify, indeed require, a departure from the prima facie situation; and I would therefore affirm that the measure of damages ought to be the difference between the contract price and the re-sale price or the loss of anticipated profit. The circumstances to which I am referring are the fact that these were chillies sold on a commodity and produce market and the fact that the defendant company should reasonably have contemplated that there was a chance or “serious possibility” that the chillies would be resold (see C. Czarnikow Ltd. v. Koufos[xlviii]3 ).
However, even upon the basis of the prima facie approach referred to in s. 55(3.), the measure of damages is the same as has just been calculated by me because the evidence shows that the market or current price of chillies in London at each of the relevant dates, i.e., in March 1977 (Evans contract), in November 1976 (five tons of the Branwell contract) and in January 1977 (five tons of the Branwell contract) was £2,000 per ton. The prices at which the buyers had agreed to resell the chillies, viz., at £2,000 per ton, is more evidence of the market price in London. (See The Arpad [xlix]4).
I am satisfied that the relevant place of the market (if one was available) was in the circumstances surrounding these contracts, London. Lord Goddard C.J. said in Lesters Leather Skin Co. v. Home and Overseas Brokers[l]5 that buyers are “not bound to go hunting the globe”. I am not persuaded that there was any obligation on the defendant to explore markets in more distant localities (see also Hasell v. Bagot, Shakes & Lewis Ltd.[li]6).
Having regard to my conclusions as to the terms and conditions of the Evans and Branwell contracts, it follows that there was no term or condition in either instance for any dispute arising therefrom to be settled by arbitration in London according to the Rules of the General Produce Brokers’ Association of London. It is accordingly unnecessary for me to decide whether the arbitrations, which unquestionably were held, can be enforced. Whatever occurred in London at that time when arbitrations were purported to be held had, in my view no legal effect.
With regard to the question of interest, under the provisions of s. 42 of the Law Reform (Miscellaneous Provisions) Act 1962 the awarding of interest is a matter that is in the court’s discretion.
Section 42 provides:
N2>“42(1) Subject to the next succeeding subsection, in proceedings tried in a court for the recovery of a debt or damages, and in an arbitration for the assessment of compensation for the acquisition of resumption of land, the court or the arbitrator, as the case may be, may, if it or he thinks fit, order that there be included in the sum for which judgment is given, or at which compensation is assessed, interest at such rate as it or he thinks proper on the whole or part of the debt, damages or compensation for the whole or part of the period between the date on which the cause of action arose and the date of the judgment or assessment.
N2>(2) Nothing in the last preceding subsection contained:
(a) authorizes the giving of interest upon interest;
(b) applies in relation to a debt upon which interest is payable as of right, whether under an agreement or otherwise; or
(c) affects the damages recoverable for the dishonour of a bill of exchange.”
In the exercise of my discretion I award each of the two plaintiffs interest at the rate of eight per cent from the date of the issue of the writs herein, viz., I July, 1977, to the date of judgment.
It having been agreed between the parties that the relevant exchange rate for the purposes of these proceedings is K1 = £745 sterling, I award against the defendant company the following damages and interest:
To the plaintiff Evans, Grey & Hood Ltd.:
|
Damages |
£3,786 |
= |
K5,082 |
|
Interest |
£ 488 |
= |
K 658 |
|
Total |
£4,274 |
= |
K5,738 |
To the plaintiff Arthur Branwell & Co. Pty. Ltd.:
|
Damages |
£12,620 |
= |
K16,940 |
|
Interest |
£ 1,628 |
= |
K 2,185 |
|
Total |
£14,248 |
= |
K19,125 |
I will adjourn consideration of the question of costs to a date to be fixed.
I order a stay of execution for a period of eight weeks.
Judgment accordingly.
Solicitors for the plaintiffs: Craig Kirke & Wright.
Solicitors for the defendant: Gadens.
R>
[xlvi]
[xlvii][1917] 2 K.B. 814.
[xlviii][1969] 1 A.C. 350.
[xlix][1934] P. 189.
[l][1948] W.N. (Eng.) 437, at p. 437; 64 T.L.R. 569, at p. 569.
[li][1911] HCA 62; (1911) 13 C.L.R. 374.
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