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Tui International Ltd v Nasilai [2005] TOLawRp 14; [2005] Tonga LR 270 (17 May 2005)

IN THE SUPREME COURT OF TONGA

Tui International Ltd

v

Nasilai

Supreme Court, Nuku'alofa
Ford J
CV 235/2003

9-11 May 2005; 17 May 2005

Contract law – unpaid invoices – defendant liable to pay Costs – plaintiff failed to provide all evidence in timely manner – awarded against defendant on a three-quarters basis

The plaintiff company was in business in Tonga as an importer and supplier to the wholesale and retail market of meat products and other goods. The defendant was a bingo operator and used meat products supplied by the plaintiff as prizes at his bingo site. The plaintiff alleged that the defendant did not pay the invoices for the last three deliveries of meat products. The plaintiff sued the defendant for $2219.88. The defendant admitted that the meat was supplied to him but he claimed that it was paid for at the time.

Held:

1. The defendant did not produce any evidence to support his claim that the invoices had been paid. The plaintiff produced invoice and receipt books which convincingly established the plaintiff's case. The plaintiff succeeded and was entitled to judgment in the sum of $2219.88 together with interest at 10% from 17 January 2003 until the date of payment.

2. Even though a defendant has a right to defend an action brought against him, he should be aware that if he abused that right by persisting with an obviously worthless defence then the Court's disapproval was likely to be reflected in the terms of its costs award and may lead to an award of costs on a solicitor/own client basis.

3. However, the plaintiff's receipts and invoice books should have been produced and exchanged at least by the time of the pre-trial conference but they were not. They were only produced at the behest of the Court.

4. The Court was not prepared to award costs to the plaintiff on a solicitor/own client basis. The plaintiff was entitled to costs which were to be fixed in the sum of three-quarters of the amount allowed upon taxation.

Cases considered:

Fonua v MBf Bank Ltd [2000] Tonga LR 319 (CA)

Practice Direction No. 1/2004

Statute considered:

Evidence Act (Cap 15)

Counsel for plaintiff: Mr Fakahua
Counsel for defendant: Mr Kengike

Judgment

The Issues

The plaintiff company carries on business in Tonga as an importer and supplier to the wholesale and retail market of meat products and other goods.

The defendant describes himself as a planter, bingo organiser and flea market operator. He is sued in his capacity as a bingo operator. It is alleged that he failed to pay the plaintiff for three deliveries of meat products used for prizes at his bingo site. The deliveries are detailed in three separate invoices:

Invoice No. 7286 --dated 01/11/2002 = $590

Invoice No. 7570 --dated 20/12/2002 = $705

Invoice No. 7646 --dated 03/01/2003 = $924.88

The total amount claimed is $2219.88. Unfortunately, that sum falls just outside the $2000 upper limit prescribed for the jurisdiction of the Magistrates' Court in civil cases.

The Evidence

The defendant admits that the meat was supplied to him but he claims that it was paid for at the time. His case, in essence, is that there are no amounts outstanding because he had only a limited credit arrangement with the plaintiff which made it impossible for him to ever be in an arrears situation. He maintains that the arrangement he had with the plaintiff was that he would order the meat prizes on the morning of the bingo event and pay for them that same afternoon either when the meat was delivered to the bingo site or by delivering the money to the plaintiff's office.

The defendant told the Court that under the arrangement he had with the plaintiff, he was not able to obtain a fresh order of meat if his account was in arrears and that he never allowed it to get into that situation. He said that he has been a bingo operator now for in excess of 10 years. He has been conducting bingo events every Friday, Saturday and public holiday.

The plaintiff's evidence was that although the defendant was supposed to pay cash for the meat produce when it was delivered, the reality was that he paid later but, because they trusted the defendant and obviously valued his business, the plaintiff's management staff were satisfied with that unwritten, informal arrangement. The plaintiff's Accounts Clerk told the court that when he initially confronted the defendant about the first unpaid invoice he did not deny the allegation but asked if he could make the payment later. At the same time he placed another order for more meat produce.

Unfortunately for the defendant, the invoice and receipt books produced by the plaintiff did not support his contention that the orders were paid for on the day of delivery. A reconciliation statement (referred to during the hearing as a "debtor's card") showed that for the four-month period between September 2002 and January 2003 during which the defendant obtained his meat supplies from the plaintiff, none of the orders were paid for on the day of delivery. Almost invariably, the orders were delivered on either a Friday or Saturday and paid for the following Monday or Tuesday. It is clear from the documentation produced that the plaintiff maintains a proper systematic and accurate record of all its business transactions.

The defendant, on the other hand, freely admits that he keeps no records whatsoever relating to his business activities. He was asked by Mr. Fakahua in cross-examination what records he kept for Inland Revenue purposes. He answered that when he obtained his bingo licence from the police he was told that he did not need to file anything with the IRD.

Findings

Against that background, the defendant was in a hopeless position and he should never have been advised to defend the case. He was unable to produce even a scintilla of evidence in support of his claim that the amounts in question had been paid.

I was impressed with the witnesses called on behalf of the plaintiff. The defendant, on the other hand, was a less than convincing witness. I have no doubt that he was fully aware at the time that he owed the plaintiff for the invoices in question but he believed, or rather vainly hoped, that because of the frequency and quantity of his orders, he would be able to confuse the plaintiff into accepting that there were no arrears. His defence, however, failed to raise even a doubt about the matter.

The plaintiff succeeds, therefore, and is entitled to judgment in the sum of $2219.88 together with interest at 10% from 17 January 2003 until the date of payment.

Costs

I turn now to the question of costs. As I have indicated, the invoice and receipt books maintained by the plaintiff company are well kept and they convincingly establish the plaintiff's case. Had they been produced in a timely way then I would have given consideration to awarding costs to the plaintiff on a solicitor/own client basis. The case, as I have indicated, should never have been defended.

In Fonua v MBf Bank Ltd [2000] TOCA 13; [2000] Tonga LR 319, the Court of Appeal approved the principle of awarding costs on a solicitor/own client basis when a plaintiff pursues a thoroughly worthless action. The same principle applies to a defendant. Even though a defendant has a right to defend an action brought against him, he needs to be aware that if he abuses that right by persisting with an obviously worthless defence then the Court's disapproval is likely to be reflected in the terms of its costs award.

In Fonua the Court stated that solicitor/own client cost orders would be awarded only in exceptional cases.

The circumstances in the present case, however, are different from those in Fonua because here the plaintiff itself is not free from fault. Indeed, it may well have contributed to the situation in that it failed to comply with the rules relating to the production of documentary evidence.

Under Practice Direction No. 1/2004, the plaintiff's receipts and invoice books should have been produced and exchanged at least by the time of the pre-trial conference but they were not. The only document disclosed by the plaintiff at that stage was a handwritten individual debtor card which appeared to have been compiled in preparation for the Court hearing.

Under section 62 of the Evidence Act (Cap 15) the contents of documents must be proved by primary evidence. In this case, that means by production of the original invoice and receipt books. At the hearing, however, the plaintiff proceeded to produce a copy of each of the three invoices in question but it still did not produce the invoice or receipt books. Instead, the plaintiff sought to rely upon the handwritten entries in the debtor card. It was only at the behest of the Court that the invoice and receipt books were eventually produced.

I am prepared to give defendant's counsel the benefit of a doubt and accept that the unsatisfactory production of the plaintiff's documentary evidence may have influenced his advice to his client regarding the conduct of the case. He may well have been misled, in other words, into thinking that the plaintiff held no contemporary documentation to support its allegation that the three invoices in question had never been paid.

For that reason, I am not prepared to award costs to the plaintiff on a solicitor/own client basis and, indeed, to show the Court's disapproval of the way in which the plaintiff has produced its documentary evidence, I am only prepared to allow costs on a three-quarter scale.

In other words, in addition to judgment in the terms which I have already particularised, the plaintiff is entitled to costs which, failing agreement, are to be fixed in the sum of three-quarters of the amount allowed upon taxation.