Yambaran Pausa Saka Ben Ltd v National Capital District (NCD) Water and Sewerage Ltd (trading as Eda Ranu) [2020] PGNC 522; N10175 (30 April 2020)

N10175

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 1089 OF 2016

BETWEEN:
YAMBARAN PAUSA SAKA
BEN LIMITED
Plaintiff

AND:
NATIONAL CAPITAL DISTRICT (NCD)
WATER AND SEWERAGE LIMITED
trading as EDA RANU
Defendant

Waigani: Hartshorn J
2020: 30^th April

CONTRACT - TRIAL – breach of contract – plaintiff claims for amount in loss incurred due to variation to the contractual terms – issues raised - Whether variations made to the contract from 3 to 1 at the reduced rate of K300/hour on 24th April 2014 and at an amended rate of K850 per day on 24th September 2015 were valid - the parties did not agree in writing in the contract or at all to vary the rate - if there is no provision in the contract that provides for a variation of the rate, it cannot be implied from the conduct of the parties that there was an agreement between them to vary the rate – plaintiff has established liability only on variation to the rate – damages to be assessed

Cases Cited:
Nivani Ltd v. China Jiangsu International (PNG) Ltd (2007) N3147
Bio-Normalizer (PNG) Ltd v. CPL (2009) N3649
Kurumbakari Ltd v. ENFI (PNG) Co Ltd (2012) N4704
Con v. Jant Ltd (2014) N5503
Raikos Holdings Ltd v. G & S Ltd (2014) N5613
Counsel:

Mr. A. Rake, for the Plaintiff
Mr. B. Coomer, for the Defendant

30^th April 2020

1. HARTSHORN J: The plaintiff Yambaran Pausa Saka Ben Limited (YPSB) entered into a contract on 29^th July 2013 with the defendant National Capital District (NCD) Water and Sewerage Ltd trading as Eda Ranu (Eda Ranu) to supply amongst others, backhoe services (contract). The Contract was for, "3 years, renewable annually at the discretion of Eda Ranu."

2. YPSB pleads that Eda Ranu breached the contract and as a consequence YPSB has suffered loss and damages.

3. The parties agreed three issues for trial in a statement of agreed and disputed facts and legal issues. I now consider those issues.

Whether the variations made to the contract from 3 to 1 at:
a) the reduced rate of K300/hour on 24th April 2014;
b) at an amended rate of K850/day on 24th September 2015
were valid.

4. Eda Ranu pleads amongst others, that in the exercise of its authority under the contract, it made variations in consultation with YPSB and that YPSB complied with and was paid accordingly as per the variations. Eda Ranu submits that YPSB was duly notified of the variations and it accepted the variations.

5. The contract provides in clause 2 of the recitals, " ..... provides Backhoe equipment services, machinery and operator on a hire basis (the "Services")". Clause 4.1 provides that Eda Ranu shall pay for the Services at a rate of K400.00 per hour per backhoe (rate). Clause 5 provides that:

"The Parties may at any time during the term of the Agreement, agree in writing to extend or reduce or otherwise vary or modify the Services under the Agreement."

6. Clause 5 only provides for a variation of Services. It does not provide for a variation of the rate. Even if 'Services' could be construed to include the 'rate', a variation is to be agreed in writing by the parties. There is no evidence that YPSB agreed in writing to the variations in rate.

7. Clause 5 also does not provide for a variation in the number of backhoes of YPSB which Eda Ranu is obliged to engage. In this instance however, the contract does not provide that Eda Ranu shall engage a specific number of backhoes. The reference to the number of backhoes is contained in the last sentence of clause 2 of the recitals. That sentence is not part of what is defined as 'Services'.

8. Clause 4.3 of the contract provides that Eda Ranu shall provide the specific instructions and directions to YPSB in relation to the Services to be provided and at required locations and times. To my mind, this wording permitted Eda Ranu to provide specific instructions as to the number of backhoes it required to be used in relation to the Services from time to time. It was not therefore necessary that there be a variation agreed to by the parties in regard to the number of backhoes to be used.

9. I am not satisfied therefore that Eda Ranu made the variations as to rate pursuant to any provisions of the contract. As to the reduction in backhoe numbers, Eda Ranu was entitled to reduce the number pursuant to clause 4.3 of the contract and no variation agreed by the parties was necessary pursuant to the terms of the contract.

10. As to variations of a contract, in Nivani Ltd v. China Jiangsu International (PNG) Ltd (2007) N3147, Lay J held amongst others that:

“a) parties may by agreement, vary a contract made by them,

b) where a contract makes no provision for variation, there must be a contract of variation to bind the parties,

c) a contract of variation can be formed by the conduct of the parties.”

11. Nivani v. China (supra) has been followed by Cannings J in Kurumbakari Ltd v. ENFI (PNG) Co Ltd (2012) N4704, Con v. Jant Ltd (2014) N5503 and Raikos Holdings Ltd v. G & S Ltd (2014) N5613. I also followed Nivani v. China (supra) in Bio-Normalizer (PNG) Ltd v. CPL (2009) N3649.

12. In this instance, from the evidence, I am satisfied that:

a) the parties did not agree in writing in the contract or at all to vary the rate;

b) if there is no provision in the contract that provides for a variation of the rate, it cannot be implied from the conduct of the parties that there was an agreement between them to vary the rate.

13. Consequently in answer to the first agreed issue, the variations referred to as to rate were not valid and the variation in the number of backhoes was permitted under the contract.

14. Given the finding on the first agreed issue, I am satisfied that YPSB is entitled to have judgment on liability entered in its favour but only as to the variation in the rate charged by Eda Ranu for the backhoes as pleaded. As to damages which YPSB seeks, it is appropriate in the circumstances that any such damages should be assessed. Given this it is not necessary to consider the other submissions of counsel.

Orders

15. It is ordered that:

a) Judgment is entered for the plaintiff with damages to be assessed;

b) The defendant shall pay one half of the plaintiff's costs of and incidental to this proceeding;

c) Time is abridged.
__________________________________________________________________
Lomai & Lomai: Lawyers for the Plaintiff
Rageau Manua & Kikira: Lawyers for the Defendant