Vibac S.P.A. v. A.C. Tape & Packaging Ltd. [1999] IEHC 99 (9th February, 1999)

JUDGMENT of O'Sullivan J. delivered the 9th day of February, 1999. 1. The Plaintiff claims some 75.9 million odd lire (a little more than £30,000) for goods sold and delivered between April, 1991 and May, 1993. 2. The goods in question are sticky tape and the Defendant's business was to impress thereon the name and logo of its Irish customers before selling them on. 3. The parties had been trading together for some five years before their present difficulties arose; the Defendant experienced an unfortunate fire in its Dublin premises on Friday the 13th March, 1992 which destroyed all their stock and virtually all their paperwork. This event is of significance because the terms of trading between the parties are agreed as they applied before this fire namely the Defendants were entitled to a 3% discount on all invoices paid within 7 days of delivery. The disagreement relates to the terms and conditions which applied between the parties since the time of the fire or shortly thereafter, the compliance or otherwise of the Defendant with those terms, and problems in relation to allegedly defective goods. 4. It is common case that Mr Aidan Corless for the Defendant agreed new terms with Mr Benito Mocci for the Plaintiff shortly after the fire on the 13th March, 1992. 5. An issue arose, however, as to the precise terms of the new discount, Mr Mocci claiming that it was increased to 5% but on the basis of payment in advance, whereas Mr Corless claimed that it was 5% on payment within 10 days. 6. Secondly, a commission (also referred to by Mr Mocci as a bonus) was agreed but the terms relating to it are in dispute. Mr Mocci says that it was a 5% bonus or commission payable on all amounts paid up to the end of June, 1992 provided all other terms of trading were kept, and that it applied only to polypropylene but not to PVC or any other products; Mr Corless claimed that it was a commission payable on all monies paid at any time after the fresh terms were agreed, and not just prior to the end of June, 1992, that it was payable on all goods supplied and not just polypropylene and that it was not contingent on adherence to the other terms and conditions of trading. 7. In addition to the foregoing issues there is a dispute in relation to faulty goods delivered in November and December of 1992, which I will detail later in this Judgment, together with some minor items of claim some of which have been agreed in the course of the proceedings before me. THE DISCOUNT 8. This was agreed between Mr Corless and Mr Mocci. They were the only two present. An issue arose as to whether Mr Mocci had power to agree terms and conditions without reverting to the Plaintiff company. This issue arose because in an Affidavit sworn by Giovanni Di Marco on the 19th November, 1994 it is sworn that Mr Mocci had no such powers. This position was, however, abandoned at the hearing before me and whilst it was the subject of justified criticism by Counsel on behalf of the Defendant, it became clear that the Plaintiff dealt with the Defendant on the basis that Mr Mocci did have such powers. 9. Mr Mocci says that he started work with the Plaintiff in March, 1990, he was the export manager for Ireland and the UK and had powers to negotiate terms and conditions. Prior to the fire in March, 1992 the terms were that the Defendant was entitled to a 3% discount on payment of all invoices within 7 days from date of delivery. After the fire he met Mr Corless and agreed to a 5% discount provided payment was made in advance. He said that this meant that the payment would be made before delivery took place. He would receive an order from the Defendant, give the go-ahead to his production department and when the order was ready communicate with the Defendant who had to pay before the product left the factory. There was no question of a discount being paid if the money was received within 10 days. He accepted that he wrote a letter on the 10th November, 1992 where he said "... you were granted a 5% discount for payment in advance or on delivery of the goods" and also that this was different to payment in advance. This may have arisen due to the accountancy position which I took to be a reference to the financial difficulties of the Defendant. He said that this letter represented a concession in November of 1992 and did not apply from the beginning of the altered terms of trading. He did not agree that the actual system as it appears on the accounts, was that the discount was allowed if payment was made within 10 days. 10. On this issue Mr Corless agreed that the pre fire conditions were that his company was entitled to a 3% discount provided payment was made within 7 days of delivery. The receipts from the Plaintiffs show this with the words "direct remittance - 7 days receipt goods" or similar. He said the fire burnt the whole factory, machinery, stock and everything except some files from his office of little relevance to this case. Mr Mocci arrived to see him shortly after the fire when he was in rented accommodation. Only himself and Mr Mocci were present. He disagreed that Mr Mocci appeared concerned about their account and said he appeared very sympathetic and offered to help. Because of the depletion of stock he was going to get increased orders. Around then competitor suppliers were offering more favourable terms. He agreed to a 5% discount and his memory was that it was on invoices paid within 10 days of delivery although he did refer to checking documents which suggested that it was within 7 days of delivery. There were competing offers along the same lines from other companies. He also said he told Mr Mocci at that stage that he might be late in making payments for some time due to the fact that he was expecting monies from the insurance company arising out of the fire and that this might mean that he would be delayed in making payment. He still wanted the discount on this relaxed basis for a reasonable period and Mr Mocci had no problem with that. The meeting was friendly and casual and for some time after that the account payments were late and he did get the discount. He said that they were two reasonable people and that this concession on the agreed terms should be applied for a reasonable time until the insurance monies came through. He accepted on cross-examination that there was not one invoice that indicated these terms. On the contrary the invoices stated that the 5% discount was for payment in advance. 11. On this issue I find that the terms agreed were 5% on payments in advance, amended by way of concession to payment on delivery in November, 1992. 12. The invoices stated this clearly; there is no instance of an invoice indicating the terms contended for by Mr Corless. I accept that the account operated to a significant extent on the basis that 5% discount was paid notwithstanding that invoices were not paid in advance. The evidence was, however, that this discount was deducted before payment was made. The account was, indeed, operated by the Plaintiff on this basis for a number of months after the new terms had been agreed but I do not consider that this implies that the terms and conditions had been altered. The Plaintiffs operated the account, in my view, on a concessionary basis but at no stage did they agree to a formal change to entitle the Defendant as a matter of agreement to a 5% discount provided payment was made within 10 days of delivery. The closest they came to that was in a letter of 10th November, 1992 when Mr Mocci alluded to the terms being "... 5% discount for payment in advance or on delivery of the goods". 13. With regard to the associated issue as to whether the Defendant complied with the terms, the entire case was run by the Defendants on the basis that they complied with a regime which entitled them to a 10% discount provided they paid within 10 days of delivery. No attempt was made to assert that there were any payments that were made in advance although there was one reference to a small amount on invoice 20765 dated the 14th May, 1993 which was actually paid in advance, but in relation to this Mr Corless told me that the payment was made in advance because at that point in time they were having problems with the account and needed to pay in advance to secure deliveries. Accordingly, I hold that the Defendant did not pay in such a way as to entitle it to the discount claimed. COMMISSION 14. Again there was a dispute between the parties as to what were the terms relating to this commission. Again, also, it is common case that whatever the terms were, they were agreed between Messrs Corless and Mocci at the same meeting after the fire. 15. Mr Mocci says there were pressures on the Defendant after the fire and there was aggressive marketing from his (that is the Plaintiff's) competitors on the Irish market. He conceded a commission in response to this pressure. He agreed to pay an extra 5% commission on all payments in relation only to polypropylene tape and not on PVC tape or on any other material supplied for printing. The commission was to be payable on all payments between March, 1992 and the end of June of that year. It was to be paid back towards the end of June provided all terms of trading were adhered to by the Defendant, including the payment for all consignments in advance less 5%. When it came towards the end of May or June of 1992 he became concerned about the Defendant's account. Documentation and faxes passed between the parties which included a faxed letter from Aiden Corless to himself dated 30th September, 1992 where Mr Corless claimed inter alia commission due to him of 50 million lire. On the copy produced in Court this was written as 15 million lire and Mr Mocci said that that was his writing. This appeared to reflect a discussion on the telephone between these two parties whereby Mr Mocci insisted that the commission was not payable with reference to PVC/Printy products which were included in Mr Corless's claim. There was also some confusion, which subsisted (as he himself acknowledges) in Mr Corless's evidence at the trial, as to whether the 50 million lire claim included in part a claim for discount. 16. Mr Corless, on the other hand, gave evidence that the 5% commission was payable on all payments including payments for PVC/Printy products, made at any time after his meeting with Mr Mocci and that it was not conditional on the Defendant complying with the other terms and conditions of their agreement. 17. In a letter of the 9th November, 1992 Mr Corless wrote to Mr Mocci and dealt, in part, with the latter's claim that the 5% commission applied only to polypropylene products. In this context he wrote, in part, "I know what you are saying but this is not what I believed in March. ... the last fax I sent was on the 30.09.1992 and it is only now that the commission details have been explained differently. The question relates to the 50 million credit so I propose splitting the difference as an answer." 18. The rationales given by these two witnesses for their separate contentions were also different; Mr Mocci said that his company was not a producer of PVC/Printy products and it was obvious to Mr Corless that they could not give a commission on these products and that they had no interest in promoting them. Mr Corless, on the other hand, said that the commission was a commercial response to competitive offers on the Irish market across the board and in this context it made no sense to confine it to only one type of product. 19. It may well be that the specifics were not explicitly addressed at all between these two witnesses and each was left to his own inference. If so, the parties would not have been ad idem ; in any event, I consider that a commission of 5% was agreed but that it attached only to polypropylene products, as this latter qualification is supported in documentation. 20. I do not consider that this commission was made contingent on compliance by the Defendant with the other terms of trading, specifically payment in advance. 21. I consider, further, that it is unlikely that Mr Mocci specified that it would expire on payments made after the end of June, 1992. In this context I note a letter by his colleague Mr Scagliotti who was commercial director of the Plaintiff at all material times, dated the 23rd November, 1992 which dealt with the account between the parties. With regard to what he describes as the "situation at 21.7.92" (where an amount of 261.9 odd million lire were due) he appears to accept 5% commissions on PP tape. This conflicts with Mr Mocci's evidence that the commission was granted for a limited time to be paid "within" the end of June 1992. On the other hand it is consistent with Mr Corless's evidence that the commission was not so time constricted. Accordingly, I hold with regard to the 5% commission that the Defendant is entitled to a credit for 5% commission on all payments for polypropylene made following the agreement referred to and this has been calculated by Mr Mocci at some 14,957,172 million lire as at 10th November, 1992. 22. I hold that that sum is the amount of credit to which the Defendant is entitled in respect of commission as of that date, together with 5% commission on any subsequent payments. CREDITS Faulty Goods 23. The evidence from Mr Corless in this context was that a container of goods was delivered in November, 1992 which was faulty. Another was delivered in December of that year which was also faulty. Some 372 rolls were returned and it is common case that the Plaintiff gave credit to the Defendant for these returned goods. The further claim made by the Defendant in these proceedings related to the second container probably delivered in December 1992 together with two loads of four pallets each. All of these contained faulty goods. Mr Corless gave evidence that he paid 75% of the price for the first load and sought credit of 25% thereof being some 8.5 million lire. He said he paid 25% of the second load and claimed 75 % of the value thereof being some 22 million lire. He claimed 8 million in respect of the further rolls for which he paid 50%. 24. Despite some confusion on the paper work Mr Corless claimed a total credit in respect of these faulty goods amounting to 38.5 million lire. He acknowledged that he got credit for the first returned goods, said that he was in telephone conversation with the Plaintiffs in Italy to explain that because the Plaintiffs were the only supplier of this product he could not wait for a new consignment of correct rolls and had to re-use the faulty ones which were returned by his customers (the problem arose because the tape would not accept ink; he overcame this problem to some extent by running his printing machines slowly and his claim did not include any amount for this or lost profits), rather than risk losing the customers altogether and suffering consequential losses. He said that the Plaintiff only responded by visiting his premises in February, 1993 when he had re-used these rolls but his claim in the above amount related only to defective goods delivered which were not re-used by him. Mr Scagliotti for the Plaintiff acknowledged that they received 372 rolls (for which it was common case credit was given to the Defendants) but he was not prepared to give them any further credit or allowance. 25. I consider that it was reasonable in all the circumstances for the Defendants not to hold the defective goods to await the visit of a representative of the Plaintiff but rather to re-use them in an attempt to keep their customers, pending an anticipated later supply of satisfactory goods. 26. On the other hand I am left with an uneasy feeling about the accuracy of the amount claimed by the Defendants in this context which is an estimate, albeit substantiated by Mr Corless in his oral evidence. I consider that the Defendants have suffered some loss by reason of defective goods. I note that the problem of defective goods appears to have been accepted on behalf of the Plaintiff in correspondence. In my view the Defendant is entitled to a credit of 15 million lire under this head. OTHER ITEMS. 27. It was agreed that the Defendant is entitled to a credit of 1 million lire in respect of an advertisement published by them after the fire and also a further matter of adjustment in the sum of 1,094,000 lire. 28. There is a final small item of 245.064 lire where the Defendant has claimed credit (notwithstanding the invoice amount for goods admittedly delivered) on the ground that the price is overstated. Mr Corless satisfied me that the unit price rate shown on the pro forma invoice dated the 26th February, 1993 was out of line with the pricing policy of the Plaintiff and I consider the Defendant entitled to the small adjustment in its favour involved being 245,064 lire. 29. In summary the Defendants are entitled to the following credits:- 14,957,172 lire in respect of 5% commission together with commission on any subsequent payments; million lire in respect of faulty goods; million lire agreed advertisement credit; 1,094,000 lire agreed adjustment for faulty tape delivered to England and 245,064 in respect of over-pricing for 25mm tape. 30. The Plaintiff is entitled to Judgment on the sum claimed, namely 75,981,232 lire together with interest at the Court rate until the date of judgment minus the sum of the afore-mentioned credits. The appropriate calculations should be completed in lire up to today's date and the result converted into Irish punts. © 1999 Irish High Court BAILII: Copyright Policy | Disclaimers | Privacy Policy | Feedback | Donate to BAILII