Central Foundation v Iyapeng [2018] PGNC 319; N7408 (22 June 2018)

N7408
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS No. 661 of 2017

BETWEEN
CENTRAL FOUNDATION
First Plaintiff

AND
LOONWAN LIMITED
Second Plaintiff

AND
LEONNIE & PAUL IYAPENG
Defendants

Kimbe: Miviri AJ
2018: 22^nd June

WORDS AND PHRASES – Memorandum of Agreement – interpretation – 5 year rent free grace period – calculation of period — “Commencing business operation” — obligations of parties– compliance or breach — declarations.

CONTRACT – commercial contracts – interpretation of – to be determined objectively – surrounding circumstances known to contracting parties – underlying purpose and object of commercial transactions – summary judgement granted.

Cases cited:

Chief Collector of Taxes v T A Field Pty Ltd [1975] PNGLR 144.
Curtain Brothers (Qld) Pty Ltd and Kinhill Kramer v The Independent State of Papua New Guinea [1993] PNGLR 285;
Misima Mines Ltd v Collector of Customs, Internal Revenue Commission [2007] PGNC 91; N3206

Counsel:

J Kama, for Plaintiff Applicants

D Kari, for Defendant

RULING

10^th August, 2018

1. MIVIRI, AJ: This is the ruling of the court upon a Notice of Motion filed by the First and Second Plaintiff pursuant to order 12 rule 38 (1) of the National Court Rules for summary judgment to be entered for them in the terms of the declaratory reliefs and orders in the originating summons filed the 17^th August 2017. The relevant relief sought in accordance with the material relied before the court are;
   
2. A declaration that the Memorandum of Agreement executed on the 20^th December 2010 between the Second Plaintiff and the Defendants each and severely is valid and effective for all purposes.
   
3. A declaration that the subsequent lease agreement further executed between the Second Plaintiff and the Defendants each and severely on 20^th July 2012 to take effect on 1^st September 2013 on the 20^th of December 2010 is valid and effective for all purposes.
   
4. A declaration that the combined effects of the agreements of 20^th December 2010 and the 20^th July 2012 are that the Second Plaintiff is equitably entitled to hold a lease (tenancy) over the subject land section 61, Allotment 19 Kimbe, West New Britain Province (hereinafter the subject property”), for a period of 20 years commencing on the 14^th January 2014.
   
5. A declaration that of the twenty (20) years period the Second Plaintiff is further entitled to a grace period of five years commencing on January 2014 and expiring on December 2019.
   
6. A declaration that the First and Second Plaintiff are lawfully entitled to hold a valid commercial interest (tenancy) over the subject land section 61, Allotment 19, Kimbe, West New Britain Province (hereafter the subject property”), therefore entitled as of right to occupy and conduct business on the said property, until after the expiry of the agreed term of twenty (20) year period or lawful termination thereof.
   
7. A declaration that the Defendant’s jointly and or severely do not have any right or authority howsoever to interfere with the Plaintiffs occupation, possession and enjoyment of the subject property having sold out any such interest to the Second Plaintiff to hold for twenty (20) years.
   
8. The relief claimed from 7 onwards to 14 are self serving and will fall into place after grant of the above, and therefore will not be separately attended here. There is no major issue in respect of the subject property Section 61 Allotment 19 Kimbe. In any case this court made orders dated the 22^nd September 2017 entered 19^th October 2017 restraining the defendants’ agents, servants, associates including members of the police from interfering with their rights to use, occupy, profit from the subject property, including forcefully and unlawfully evicting or ejecting until full determination of this matter. Effectively maintenance of status quo in the matter until determination of the matter. It effectively takes account of the other relief sought.
9. Going onto Order 12 r 38 of the National Court Rules:

"38(1) Where, on application by the plaintiff in relation to any claim for relief or any part of any claim for relief of the plaintiff:

(a) there is evidence of the facts on which the claim or part is based; and

(b) there is evidence given by the plaintiff or by some responsible person that, in the belief of the person giving the evidence, the defendant has no defence to the claim or part, or no defence except as to the amount of any damages claimed,

the Court may, by order, direct the entry of such judgment for the plaintiff on that claim or part, as the nature of the case requires."

10. There are two elements involved in this rule:
    • (a) evidence of the facts proving the essential elements of the claim; and
    • (b) that the plaintiff or some responsible person gives evidence that in his belief there is no defence.
11. In this case, there is no issue in relation to both elements. But it must be clear that:

“As to the second element, the plaintiff must show in absence of any defence or evidence from the defendant that, in his belief, the defendant has no defence. If a defence is filed or evidence is given by the defendant, as in this case, the plaintiff must show that, upon the facts and/or the law, the defendant has no defence. The plaintiff will not be entitled to summary judgment if there is a serious conflict on questions of fact or law. Whether a case should go to trial on these issues will be determined on the facts of each case. However, the authorities show that the summary jurisdiction should only be invoked in a clear case; see Chief Collector of Taxes v T A Field Pty Ltd [1975] PNGLR 144.

12. The application is not disputed by the defendants, the position now in respect and which is agreed in principle is that the matter revolves primarily upon interpretation of the two memorandums of agreement entered into between the parties. Firstly on the 2^nd December 2010 and secondly on the 20^th July 2012. Both agreements are before the court attached as annexure, “C” for the former and “F” for the latter to the affidavit of Roger Lin sworn 11^th day of September 2017 filed the same day. In my view this is the evidence referred to for the purposes of invoking the application of the rule above. In this regard the first and second Plaintiff’s statement of facts is adopted as setting out the facts relevant in the determination of this matter.
    
13. The relevant clause at the heart is clause 8 in the agreement made 2^nd December 2010 and clause 6 of the Agreement made 20^th July 2012 between the landlords now defendants with second plaintiffs which are as follows, “The tenant is herein allowed a 5 years Grace Period from the date of commencing business operations on the new sub-divided State Lease jointly owned by the Landlord and Tenant”.
    

Issue

14. What is called before the court is whether or not the five year grace period accrues from April 2014 when trading actually started, or on 2013 when the building construction works was completed.
    

Law

15. Fundamentally this wheels upon the terms of contract. And when terms of contract are contained in writing, it is not permissible to allow any evidence to add to, subtract from, vary, or qualify a written contract: Curtain Brothers (Queensland) Pty Ltd and Kinhill Kramer Pty Ltd v The State [1993] PNGLR 285 (9 November 1993). Here is a commercial contract which in my view must be objectively determined which in effect means that the surrounding circumstances within the knowledge of the parties are relevant to determine the underlying purpose and object of the business: Misima Mines Ltd v Collector of Customs, Internal Revenue Commission [2007] PGNC 91; N3206 (22 June 2007).
    

“Commencing business operation”

16. The language used here is, “Commencing business operation” in my view means beginning or starting the business operation, effectively commencement of the business entered into a commercial supermarket. In effect operational in the business of generating revenue for which it sells or commercializes or profits its upkeep as a supermarket and company. The photographs annexure “G” of the affidavit of Roger Lin shows closure of the gate of supermarket by the defendant Leonie Iyapeng. The effect is prevent generation of income and profit to the Supermarket. Therefore the completion of the building for business is not the same as the commencement of business operations. One is the shelter completion thereof and would not necessarily generate revenue to be able to meet upkeep of the business. The commencing of business operation is drawing the life blood to upkeep the business. The is evident from their behaviour pursuant that in accordance with the terms of that memorandum of agreement the defendant Landlord were paid occupation fees to the total sum of K610, 000.00. Further that construction works were completed in 2013 and occupation fee to the full amount on the 3^rd March 2015 were paid off statutory declaration of the defendant Landlord made 3^rd March 2015.
    
17. By this fact in my view the grace period of five years commences to roll. That is from 2014 when construction ceased and was completed. This is the rent free grace period in the twenty years lease of the subject property. It runs to December 2019 when the five years will lapse or expire upon which the second Plaintiff will pay the defendants Landlord rentals at K 5000 per month subject to increase in CPI for the next 15 years. At the expiry of which the second plaintiff would transfer its joint ownership in the new subdivision title to the defendants who retain ownership of the full development and the property.
    

Breaches

18. Having set the five (5) year rent free grace period in place it means the defendant Leonnie Iyapeng breached the agreement when she forced closure of the property on the 4^th August 2017 by locking down the property with a lock. And it follows that the lock down from 15^th to the 25^th August 2017 for non payment of rental was in breach of the Agreement also as rental was not due it being within and in the realm of the five year grace period.
    
19. Because rental was not due as it was within the five (5) year grace period starting 2014 and expiring December 2019. So that any advances or payments made outside of the agreement not defined by the terms of the agreements was in breach of the agreements. So that any payments or advances that the second plaintiff has paid to the defendants have been done so outside the terms of the agreement and must be refunded back as they do not have basis in the agreement for the defendants to hold onto. On this basis the second plaintiff is granted leave to serve the defendants statement of claim for breaches and damages.
    

Declarations

20. The motion sought by the plaintiffs is granted and in accordance with Order 12 r 38 of the National Court Rules the following orders and declarations are made;-
    
    • (i) That it is adjudged and declared that the memorandum of Agreement executed on the 20^th December 2010 between the second plaintiff and the defendants each and severely is valid and effective for all purposes.
      
    • (ii) And further it is adjudged and declared that the subsequent lease agreement further executed between the second plaintiff and the defendants each and severely on 20^th July 2012 to take effect on 1^st September 2013 on the 20^th of December 2010 is valid and effective for all purposes.
      
    • (iii) And it is further adjudged and declared that the combined effects of the agreements of the 20^th December 2010 and the 20^th July 2012 are that the second plaintiff is equitably entitled to hold a lease (tenancy) over the subject land section 61, Allotment 19 Kimbe, West New Britain Province (hereinafter the subject property”) for a period of 20 years commencing on the 14^th January 2014.
      
    • (iv) And it is further adjudged and declared that the twenty (20) years period the second plaintiff is further entitled to a grace period of five years commencing on January 2014 and expiring on December 2019.
      
    • (v) And it is further adjudged and declared that the first and second plaintiff are lawfully entitled to hold a valid commercial interest (tenancy) over the subject land section 61, Allotment 19, Kimbe, West New Britain Province (hereafter the subject property”), therefore entitled as of right to occupy and conduct business on the said property, until after the expiry of the agreed term of twenty (20) year period or lawful termination thereof.
      
    • (vi) And it is further adjudged and declared that the defendant’s jointly and or severely do not have any right or authority howsoever to interfere with the Plaintiff’s occupation, possession and enjoyment of the subject property having sold out any such interest to the second plaintiff to hold for twenty (20) years.
      
    • (vii) Costs will follow the event.
      

Orders Accordingly.

__________________________________________________________________

Jerry Kama Lawyers : Lawyers for the Plaintiff/Applicant

Public Solicitors : Lawyers for the First Defendant