KVDC Gold Ltd v Periasomy [2010] PGNC 197; N4270 (28 July 2010)

N4270

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 134 OF 2005

BETWEEN:

KVDC GOLD LIMITED
Plaintiff

AND:

RAJANDRAN PERIASOMY
First Defendant

AND:

MRS LEONARA JUDGE
Second Defendant

AND:

OCEANIC INTERNATIONAL TRADING
& MERCHANDISING LIMITED
Third Defendant

Waigani: Hartshorn J.
2010: 6th April,
: 28th July

Breach of Contract – dishonoured cheque – whether agreement not stamped under the Stamp Duties Act to be admitted into evidence

TRIAL

Facts:

The plaintiff alleges that it entered into an agreement with the defendants for the sale and purchase of gold. Pursuant to the Gold Agreement 2011.91 grams of gold was supplied to the defendants. The defendants made an advance payment of K 87,000 but the cheque was dishonoured. The plaintiff has not received payment for the gold supplied and has commenced this proceeding seeking amongst others, payment for the gold and damages for breach of the Gold Agreement.

Held:

The third defendant is liable for breach of the gold agreement and judgment is entered for the plaintiff against the third defendant with damages to be assessed. The defendants' cross claim is dismissed and the third defendant shall pay costs of the proceeding including the cross claim to the plaintiff.

Cases cited:

Waghi Security Services Pty Ltd v. John Tembon & Anor [1994] 138
Tian Chen Ltd v. The Tower Ltd (2002) N2313
Spirit Haus Ltd v. Robert Marshall (2004) N2630
New Ireland Development Corporation Ltd v. Arrow Trading Limited (2007) N3240

Counsel:

Mr. S. Kende, for the Plaintiff
Mr. D. Dotaona, for the Second and Third Defendants

28th July, 2010

1. HARTSHORN J. The plaintiff, KVDC Gold Limited (KVDC) alleges that it entered into an agreement with the defendants for the sale and purchase of gold (Gold Agreement). Pursuant to the Gold Agreement 2011.91 grams of gold was supplied to the defendants. The defendants made an advance payment of K 87,000 but the cheque has been dishonoured. The plaintiff has not received payment for the gold supplied and has commenced this proceeding seeking amongst others, payment for the gold and damages for breach of the Gold Agreement.

2. The second and third defendants, Mrs Leonora Judge and Oceanic International Trading and Merchandising Limited (Oceanic International) submit that the Gold Agreement was entered into between KVDC and Oceanic International, that only 2kg of gold was given to the first defendant Mr. Rajandran Periasomy by Mr. Casper Musarrow, the Managing Director of KVDC but another amount of 916 grams of gold was not provided as it was supposed to have been pursuant to the Gold Agreement. A cheque of K 87,000 was given on the basis that it was not to be deposited by KVDC until the amount of 916 grams had been provided.

3. Mrs. Judge and Oceanic International have crossed claimed against KVDC for the sum of K44, 359 being the sum of the amounts paid to Mr. Musarrow following alleged demands and threats that he made. KVDC concedes receiving the said sum but says amongst others that it is in part payment of the K 87,000 dishonoured cheque.

4. Mrs. Judge and Oceanic International initially submitted that the Gold Agreement could not be relied upon by KVDC as it was not stamped. As stamping is mandatory under s.19 Stamp Duties Act, it was submitted that the Gold Agreement could not be admitted into evidence. Counsel relied upon the decisions of Waghi Security Services Pty Ltd v. John Tembon & Anor [1994] 138 and Spirit Haus Ltd v. Robert Marshall (2004) N2630 in support of this submission.

5. Section 5 (1) Stamp Duties Act provides that:

"Subject to this Act, stamp duty is chargeable in accordance with the Schedule."

Section 19 (1) Stamp Duties Act which provides amongst others, that an instrument shall not be given in evidence unless it is stamped, is "Subject to this Act."

6. In the Schedule to the Stamp Duties Act it is provided amongst others, that Deeds or Agreements under seal of a kind not otherwise described in the Schedule affecting persons, matters or things in the country, and not otherwise specifically chargeable with duty are subject to Nil amount of stamp duty. As the Gold Agreement does not concern real property or a marketable security, nil stamp duty is payable. I am of the view as a consequence, that the Gold Agreement does not require to be stamped and s. 19 Stamp Duties Act is not applicable.

7. If however the Gold Agreement does require stamping and is not able to be used in evidence, I am satisfied that there is sufficient collateral evidence given of the Gold Agreement and its terms in the affidavits filed on behalf of KVDC, Mrs. Judge and Oceanic International, to permit KVDC to rely on that evidence: Tian Chen Ltd v. The Tower Ltd (2002) N2313, New Ireland Development Corporation Ltd v. Arrow Trading Limited (2007) N3240. The Gold Agreement is also an agreed fact in the statement of agreed and disputed facts.

8. As to the Gold Agreement, Mrs. Judge admits that she signed it as a director of Oceanic International. Mrs. Judge also admits that on 18 October 2004 she wrote a cheque dated 19th October 2004 for K 87,000 to Mr. Musarrow on an account other than the account of Oceanic International. Mrs. Judge deposes that she did this as Mr. Musarrow had not provided her with 916 grams of gold in addition to the 2kg of gold that had been given to the first defendant. Mr. Musarrow's evidence is that it was agreed with the first defendant and Mrs. Judge that the 916 grams of gold was part of the 2011.91 grams given to the first defendant. Mrs. Judge denies this. I note that the Gold Agreement does not state that 916 grams has to be given first before payment of K 87,000 is made.

9. Regardless of whether the 916 grams was agreed to be part of the 2011.91 grams or 2kg of gold given to the first defendant, Mrs. Judge, a director of Oceanic International, admits giving a cheque for K 87,000. Notwithstanding that the cheque was not written on the account of Oceanic International, I am satisfied that Mrs. Judge wrote the cheque on behalf of Oceanic International pursuant to the Gold Agreement, specifically clause 2.

10. It is not disputed that the cheque was dishonoured. Indeed, Mrs. Judge's evidence leads one to the conclusion that she may have known that there were insufficient funds in the account upon which the cheque was drawn. Prima facie, it appears that an offence has been committed pursuant to s. 14 Summary Offences Act, which is a matter of concern.

11. Be that as it may, the intention of Mrs. Judge in giving the cheque was to comply with the obligation of Oceanic International to do so under clause 2 of the Gold Agreement. The fact of the cheque being dishonoured constitutes a breach of that obligation and a breach of the Gold Agreement by Oceanic International.

12. Consequently I find in favour of KVDC on the question of Oceanic International being liable for breach of the Gold Agreement. I do not find the first defendant and Mrs. Judge liable under the Gold Agreement as they are not parties to it. They merely signed as directors of Oceanic International.

13. As to the cross claim, given my finding above and in all of the circumstances, I am satisfied that the payments that were made by Mrs. Judge were made on behalf of Oceanic International in part payment of the sum of K87,000 that was represented by the cheque that was dishonoured.

Orders

14. The orders of this Court are:

a) judgment is entered for the plaintiff against the third defendant with damages to be assessed,

b) the plaintiff's claim against the first and second defendants is dismissed,

c) the cross claim is dismissed,

d) the third defendant shall pay the costs of the proceeding including the cross claim, to the plaintiff.
____________________________________________________
Lomai & Lomai Lawyers: Lawyers for the Plaintiff
Dotaona Lawyers: Lawyers for the Second and Third Defendants