Court rules in Wilex and N.Z. company sale contract dispute

A New Zealand steel beam company has successfully won a civil claim against Wilex Samoa Packaging Solutions Limited over a shipping agreement of steel beam that were shipped to Samoa in 2013, a first case of its kind in the country.

The claim was filed by New Zealand based Alrite Steel company against Wilex Samoa for failing to pay for the goods supplied pursuant to the contract of sale. 

Wilex Samoa through its Managing Director Tagaloa Eddie Wilson entered into a contract of sale of three bundles of steel beams in March 2013 with Alrite Steel. 

The steel beams were intended for rebuilding in the aftermath of cyclone Evan that hit Samoa in December 2012. 

 Alrite Steel claimed that as a result of Tagaloa’s failure to pay for the consignment from New Zealand, he also failed to honour his personal guarantee securing payment of the goods by Wilex. 

The parties entered into a contract of sale of goods and was on an insurance and freight basis or known as cif contract. 

The shipping agreement for the consignment of steel beams has a total price of $27, 582 (NZ$15,535.32)

However the goods were auctioned by Customs after payment for duty to clear the goods were never made. 

In his recent decision, former Chief Justice, His Honour Patu Tiava’asue Falefatu Sapolu ruled in judgment for Alrite Steel in the sum of NZ$25,607.70 ($45,265.67)

The judgment includes principal interest of 18 per annum applied per day up to 12 December 2014.
 Justice Patu said the matter is a first in Samoa on a cif contract and an international sale of goods. 

Tagaloa had claimed that his personal guarantee was issued on the premise that the goods will be physically available for customs clearance and transporation to the factory of Wilex at Lelata. 

Thus when the goods were not physically available for customs clearance and transporation his guarantee ceased to become operable. 

But Justice Patu disagreed.

“Mr. Wilson gave his personal guarantee to Alrite Steel in consideration of Alrite Steel agreeing to permit Wilex to clear the goods from customs and to transport the goods for storage at the Wilex premises at Lelata,” he said.

“So by email of 7 May 2013, Alrite Steel gave instructions to the carrier P.F.L. to release the goods to the defendants.  

“However, the defendants did not clear the goods because they were awaiting approval by government to import the goods as duty free cyclone materials.   

According to the evidence for Alrite Steel, after it instructed P.F.L. on 7 May 2013 to release the goods to Wilex, it was notified by P.F.L. on 27 May 2013 that despite many phone calls and emails the goods were still on the wharf.   

“The response from Wilex was that it was awaiting government approval for its steel beams to be imported duty free cyclone materials.

“So the reason for the non-clearance of the goods from customs was the non-payment of the duty by the defendants and not any action by Alrite Steel.”

Furthermore, Justice Patu made reference to counsel for defence submission that when Alrite Steel terminated the release of the goods on 27 May 2013, the guarantee lapsed.

The Judge does not agree.

“Alrite Steel was willing all along to release the goods to the defendants and instructed P.F.L. to release the goods to the defendants,” he said.

“It was because of the defendants failure to pay the duty that the goods were not cleared from customs.”

A background of the case dates back in April 2013 when the consignment of steel beams were shipped from New Zealand by the MV Southern Lilly operated by Pacific Forum Line to the port at Matautu.

It arrived early on that month.

The total cif price of the consignment of steel beams in New Zealand currency was NZ$15,535.32 ($27, 582)

In terms of the invoice, the price was to be paid “at sight on receipt of the bill of lading copy”.

This means that payment was to be made by Wilex as buyer when the bill of lading was presented to it.

However in early April 2013 Alrite Steel followed up for payment of the steel beams via email. 

In response, Tagaloa requested Alrite Steel to allow it to clear from customs the goods which have arrived and that it would be able to make payment by end of following week as its insurance settlement was being finalised.

 Several other follow ups were made by Alrite Steel via email in April to Tagaloa for payment of the goods. 

Tagaloa had then requested a release of the goods against a personal guarantee from him and advised that his insurance money which was intended to pay for the goods was in the final stages.  

Furthermore, Tagaloa pointed out he could only provide a personal guarantee at the time and it was in order to minimize storage costs and bond fees at Matautu wharf. 

It was in May 2013 that Alrite Steel instructed P.F.L. to release the goods to Wilex. 

But Alrite Steel was notified by P.F.L. on 27 May 2013 that despite many phone calls and emails to Tagaloa the goods were still on the wharf and had not been cleared.  

By an email in May 2013, P.F.L. also notified Alrite Steel that they had spoken on the phone Tagaloa and he was aware of the shipment but was awaiting the government to approve the goods as cyclone materials. 

This would make the goods duty free.

In June 2013, Alrite Steel demanded full payment from Wilex.   

In its amended statement of defence, Tagaloa explained that Alrite Steel was advised that the insurance proceeds intended to pay for the goods were withheld due to a dispute between Wilex and its banker.  

On 28 June, Mr Wilson advised Alrite Steel that he would be clearing the goods from the wharf on Monday and that he had written to his insurer to make payment directly to Alrite Steel.

Alrite Steel provided Tagaloa with an updated summary of the interest on the consignment still being held at the Matautu wharf.

In response to a further request for payment by Alrite Steel on 26 November 2013, Tagaloa advised by email of 9 December 2013 that the insurance claim which was intended to settle the payment of the goods had been postponed again until the outcome of Wilex’s court case.

He also advised in the same email that he was currently working on clearing out the steel beams and store them in Wilex’s yard to find a buyer unless they could settle payment to Alrite Steel earlier.  

Tagaloa reaffirmed in the same email Wilex’s agreement to pay interest on the outstanding invoice.

In March 2014, Alrite Steel learnt that the goods which were still on the wharf had been auctioned by customs.  

The auction was held on 8 March 2014 according to the evidence for Wilex.   

This was after many requests to Tagaloa for payment of the goods.

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