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National Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
WS NO. 1794 OF 2019
BETWEEN:
PNG SUSTAINABLE DEVELOPMENT
PROGRAM LIMITED
Plaintiff
V
RONALD COEHN
First Defendant
AND
WESTERN FDR LIMITED
Second Defendant
Waigani: Anis J
2023: 14th & 20th June
2024: 3rd June
CLAIM FOR POSSESSION OF VALUE OF VEHICLE – Service agreement signed between the parties – vehicle provide as per the term of the agreement – agreement ended – vehicle taken away as lien over alleged outstanding payments - whether vehicle was wrongfully possessed – tort of detinue – whether the defendant should be liable for other damages sought therein
CROSS-CLAIM – claim for outstanding monies purportedly due under the agreement – whether there was breach of contract - whether the defendants are entitled to monies sought under the agreement for the services rendered including ex-gratia payment and reimbursement request – consideration and ruling
PRELIMINARY ISSUE – whether both claims pursued in the wrong forum and jurisdiction – whether proceedings should have been filed in the Courts of Queensland, Australia as per the term of the agreement – consideration – ruling
Cases Cited:
Baiya Local Level Government v. Gordon Wimb (2009) N3717
Samuel Rapura v. David Lingen and Ors (2023) N10319
Lihir Mining Area Landowners Association and Ors v. Mark Basani and Ors. (2018) N7077
Yooken Paklin v The State (2001) N2212
Albert Baine v The State (1995) N1335
Kopung Brothers Business Group v Sakawar Kasieng [1997] PNGLR 331
Peter Wanis v Fred Sikiot and The State (1995) N1350
Yange Lagan v The State (1995) N1369
Jonathan Mangope Paraia v The State (1995) N1343
Kolaip Palapi v Sergeant Poko (2001) N2274
Counsel:
Ms. Nigs with Ms. Kalu assisting, for the Plaintiff
Mr. Mol with Ms. Koroka assisting, for the Defendants
JUDGMENT
3rd June 2024
1. ANIS J: This was a trial on both on liability and quantum in relation to a service agreement that was entered between the parties on 13 October 2017 (the Agreement). The trial was conducted on 14 and 20 June 2023. I reserved my ruling thereafter to a date to be advised.
2. This is my ruling.
BACKGROUND
3. The Agreement was signed by the plaintiff and the second defendant. Both parties refer to the Agreement in regard to their claims. The Agreement constituted or was a hatchery service agreement. It had a term of 1 year and commenced on 13 October 2017 to 13 October 2018. The defendants were tasked to provide services to rehabilitate the plaintiff’s fish hatchery project on Daru Island in the Western Province. As for the plaintiff, it makes one main claim in this proceeding. It claims that under clause 6.4 of the Agreement, that it had provided to the defendants a second-hand vehicle to use, but that after the tenure of the Agreement, the defendants have refused to return the vehicle. It therefore seeks in this proceeding the equivalent value of the vehicle, which is a red Nissan Navara double cab with the registration no. BEO 833 (Nissan Navara), costs incurred, general damages, interest, and costs of the proceeding.
4. The plaintiff’s cause of action is to seek damages for wrongful possession, or to be precise, is in the tort of detinue. See cases: Baiya Local Level Government v. Gordon Wimb (2009) N3717 and Samuel Rapura v. David Lingen and Ors (2023) N10319.
5. The defendants filed their defence and cross-claim in response. They do not deny the existence of the Agreement. Their main disputes concerning the Agreement relate to their claims that the Agreement had been extended to 15 July 2019 and for outstanding payments they say are owed to them. I refer to their Cross-Claim where they seek various relief. First, they argue that they are entitled to K52,049.08 which was for ex-gratia payment which they claim remains due and outstanding. Secondly, they seek re-imbursement of K100,000, which they say constituted an expense they had incurred to obtain plumbing materials for the Hatchery project. Their third main relief sought is general damages for stress, distress, and frustration. Fourthly, they seek a sum of K313,043.90. They say the sum represents the balance of their final invoice of K595,604.76, which they had issued to the plaintiff on 9 July 2019 to settle for services rendered under the Agreement. Of that, the plaintiff has already paid K282,560.86, so they are seeking payment of the balance.
6. The defendants also seek interest and costs of the proceeding.
7. In general, the parties do not dispute the existence and validity of the Agreement.
EVIDENCE
8. The plaintiff tendered a total of 3 affidavits which were given exhibit numbers, that is, Exhibits P1 to P3. The defendants tendered 1 affidavit which was marked as Exhibit D1.
9. The parties had waived their rights to any cross-examinations before the trial commenced.
PRELIMINARY ISSUE
10. At the hearing, counsel for the plaintiff drew the Court’s attention to clause 10.3 of the Agreement, which reads:
“10.3 Governing law and jurisdiction
(a) the laws applicable in Queensland govern this agreement.
(b) the parties submit to the non-exclusive jurisdiction of the courts of Queensland and any courts competent to hear appeals from those courts.”
11. The plaintiff’s submission is 2-fold. First, it submits that its claim is merely a recovery action to recover the Nissan Navara which had been issued to the defendants under the Agreement but which the defendants continue to wrongfully keep after the Agreement ended. It submits that references made to the Agreement is to show how the vehicle has come to the possession of the defendants. Therefore, it submits that the Agreement and Clause 10.3 have no application in regard to its cause of action; that the action is properly before this Court, and that the claim is not subject to the jurisdiction and laws of Queensland. Secondly, the plaintiff argues that the term “non-exclusive jurisdiction” used at clause 10.3(b) means that by the said provision, the plaintiff is not precluded from commencing its action outside the laws of Queensland like in this instance.
12. The defendants’ counsel appears to be caught off by surprise with this preliminary matter. But in summary, counsel submits that the plaintiff is before the wrong forum and requests that the proceeding including the Cross-Claim be dismissed.
13. I note the submissions of the parties.
14. I uphold the first leg of submission by the plaintiff. The plaintiff’s cause of action is not premised on the Agreement where, by virtue of clause 10.3, would subject its claim to the laws of Queensland. Rather, the claim is for wrongful possession or tort of detinue. It is a separate claim outside of the Agreement. It is not disputed that the Agreement ended in 2019. The defendants, despite not admitting in the pleadings that the Nissan Navara was owned by the plaintiff, conceded at trial that the vehicle was owned by the plaintiff. There was also evidence adduced by the plaintiff to establish ownership. As a matter of fact, I find that the Nissan Navara is owned by the plaintiff.
15. Having ruled in favour of the plaintiff in regard to its first leg of submission, it is not necessary for me to consider the other arguments.
16. This then brings me to the Cross-Claim, and I ask myself whether it is premised on the Agreement. I refer to the pleadings, that is, the defendants’ Amended Defence and Cross-Claim filed 25 November 2021. Under their Cross-Claim, I observe that relief (b), (c), (d) and (e) are premised on the Agreement. In other words, these claims are made premised on assertions or breaches alleged under the clauses of the Agreement. I also observe that breaches alleged in the Agreement are also deposed to in the evidence of the first defendant, that is, in Exhibit D1.
17. Relief (b) alleges reimbursement of K100,000, which was money claimed to have been paid by the defendants to one John Bige for alleged supply of plumbing materials. This claim falls under clause 4.4(e). According to the clause, such payment would have to be verified with appropriate invoices before payment may be made by the plaintiff. The process for vetting, which is not disputed, is that the plaintiff would forward the invoices to its nominated accountant Sinton Spence Chartered Accountants (Sinton Spence) who would assess and confirm whether the sums claimed for are appropriate sums for payment under the Agreement or otherwise. So, this is a claim for relief premised on clause 4.4. And this claim is denied by the plaintiff in the pleadings which means that the Court is expected to consider whether the claim was submitted as per the requirement under clause 4.4 and whether there was a breach or failure by the plaintiff to make payment, and if so, make an award in favour of the defendants. In summary, it constitutes a dispute under the Agreement by the parties. The claim for this sum is premised on the Agreement so I find that, pursuant to clause 10.3 of the Agreement, this claim is sought in the wrong forum and jurisdiction, and I dismiss it.
18. Before I address relief (c) in the Cross-Claim, let me address relief (d). The defendants are making a claim that is directly premised on the Agreement. They are claiming that the plaintiff has failed to fully pay its invoice of K559,604.76 which was for services allegedly rendered under the Agreement. Premised on clause 4.4, the invoice was vetted by Sinton Spence, and a final sum of K282,560.86 was approved for payment. It is not disputed that the plaintiff has already paid the said sum to the defendants. The defendants, by this Cross-Claim, are seeking the balance under the said invoice for a sum of K313,043.90. The claim and relief, in my view, constitute disputes for the payment of monies that are allegedly due under the Agreement. For the same stated reasons as my findings under relief (b), I dismiss this relief.
19. I now address relief (c). This concerns claim for damages for alleged distress, frustration and hardship caused by the plaintiff in its actions to not settle the debts, which the defendants claim, are still owed to them under the Agreement. The relief appears consequential to claims for reliefs (b) and (d). This claim and relief are therefore premised on the Agreement. So, for the same stated reasons above, I dismiss it.
20. The only remaining main relief in the Cross-Claim now is relief (a). The plaintiff is alleging a payment that is outside the Agreement described as ex-gratia payment of K52,049.08.
21. I ask myself this. Is there any merit to this claim by the defendants? I first turn to the pleadings. Paragraph 10(a) states:
(a) The ex-gratia payment of K52,049.08. By letter dated 1 October 2019, the plaintiff denied payment.
22. Considering the evidence, the defendants have not adduced evidence of the letter dated 1 October 2019 as they have alleged in their Cross-Claim. However, in the submissions, they point to admissions of the said sum by the plaintiff in its pleadings. Paragraph 1 of the plaintiff’s Reply and Defence to Cross-Claim filed 10 June 2020 (Reply) states:
(a) the sum of K52,049.08 was an ex-gratia amount not part of the terms of the Hatchery Agreement and payment of that sum was subsequently revoked by the Plaintiff/Cross Defendant
(i) the ex gratia amount of K52,049.08 was verbally offered in good faith by the Plaintiff/Cross Defendant to the Defendant/Cross Claimants on the condition that the Defendant/Cross Claimants exit the Hatchery project site after the lapse of the Hatchery Agreement without causing any issues as there had been tensions between the Plaintiff/Cross Defendant and the First Defendant/Cross-Claimant over the course of the term of the Hatchery Agreement in relation to the Defendant/Cross-Claimants’ mismanagement of funds allocated by the Plaintiff/Cross Defendant for the Hatchery Project pursuant to the Hatchery Agreement.
(ii) it was when the Defendant/Cross-Claimants left the Project site and illegally took the Vehicle with them, that the Plaintiff/Cross Defendant then subsequently revoked the offer for the ex-gratia amount.”
23. And when I consider the written submissions of the defendants, at paras. 40, 41, and 42 the defendants submit as follows:
24. The burden of proof in this regard first rests with the defendants as this is their claim. When I consider the evidence, the defendants did not adduce evidence of the alleged letter of 1 October 2019, again, as they have alleged under para. 10(a) in their Cross-Claim. They then, as it appears, switched their claim to rely on the Reply by the plaintiff that the offer was verbally made to them as the plaintiff has pleaded. That aside, I note that there is no evidence adduced by the defendants in their evidence namely Exhibit D1 where it states that the defendants accepted the offer. This requirement, in my view, is crucial to the claim. But that aside as well, and consistent with the plaintiff’s pleadings, the plaintiff has adduced evidence to show that the said offer had been orally made but later revoked. Evidence of that is provided in its letter dated 16 July 2019 to the defendants which is marked as LWFK7 to Exhibit P1.
25. Paragraph 3 of the said letter reads:
Considering your recent conduct (commandeering the Hatchery vehicle and personal threats you made to me) a decision was taken to revoke our earlier offer for a one-month ex-gratia payment which we proposed in good faith assuming no issues would be encountered with your exit.
[Underlining mine]
26. With these, I have reached a conclusion for this issue. I firstly find that the defendants fell short of establishing its claim for this relief for the burden of proof to shift to the plaintiff to disprove the claim. If I am wrong in that regard (which I say otherwise), I also find that the verbal ex-gratia offer that was made by the plaintiff to pay the defendants a sum of K52,049.08, was later rejected. There is evidence of the said rejection which was adduced by the plaintiff. I also find no evidence that the offer had been accepted by the defendants before it was rejected.
27. The final claim and relief which is sought by the defendants shall also fail.
28. As such and in summary, I dismiss the Cross-Claim in its entirety.
NISSAN NAVARA
29. The Nissan Navara is owned by the plaintiff. Exhibit P2 of the plaintiff’s evidence contains evidence of ownership. Again, this fact is now not disputed by the defendants, that is, despite what they have stated in their pleadings. I note that I have already made this finding of fact above.
30. The only real issue here for the claim by the plaintiff on liability is whether the defendants have wrongfully taken and possessed the Nissan Navara.
31. The defendants argue that they are keeping the Nissan Navara as lien over purported outstanding payments that are due to them. In light of this Court’s ruling dismissing their Cross-Claim, there is no legal basis for the defendants to continue to rely on lien as a defence against any monies that may be owed. I also find that it would also be unfair for the plaintiff to continue to be kept out of its personal property whilst the defendants may try to figure out how to commence proceedings to recover its purported claims. The cause of action arose in 2018, and the defendants ought to have commenced proceedings without delay, pursuant to the terms of the Agreement, in Queensland, Australia. Instead, they waited and included their Cross-Claim in this proceeding which was commenced by the plaintiff. The third consideration I take into account is the plaintiff’s financial capability to pay its debts including the alleged claims of the defendants. As revealed in annexure LWFK2 to Exhibit P1, the plaintiff is a solvent company which is capable of paying its debts. It has net assets that are worth over USD 1 Billion. The defendants have not called any evidence to suggest otherwise or disprove this fact which would support their claim to hold the Nissan Navara as a lien.
32. I therefore find that there was no proper or legal basis for the defendants to continue to keep the Nissan Navara after the Agreement ended on 13 October 2018 or thereabouts. I find the action of the defendants wrongful. I find that they have wrongfully possessed the plaintiff’s personal property and that they continue to do so.
ASSESSMENT OF DAMAGES
33. In Lihir Mining Area Landowners Association and Ors v. Mark Basani and Ors. (2018) N7077, Cannings J refers to Yooken Paklin v The State (2001) N2212, Albert Baine v The State (1995) N1335, Kopung Brothers Business Group v Sakawar Kasieng [1997] PNGLR 331, Peter Wanis v Fred Sikiot and The State (1995) N1350, Yange Lagan v The State (1995) N1369, Jonathan Mangope Paraia v The State (1995) N1343, and Kolaip Palapi v Sergeant Poko (2001) N2274, and sets out some general considerations for assessment of damages, which I adopt herein as follows:
34. In the pleadings, the plaintiff is not seeking the return of the Nissan Navara but rather its equivalent value as at the time the Agreement ended in October of 2018. So, the query I have is this. Can such a claim be made, or should the Court only order the return of the vehicle to the plaintiff? In my view, the Court’s power when it comes to assessment of damages is discretionary. The Court can exercise discretion but of course premised on what or how a relief is pleaded. In the present case, the plaintiff does not wish the return of the vehicle but its value as at the date when the Agreement ended. I am minded to grant this relief in the manner as suggested by the plaintiff. I find the approach reasonable and less complicated given the circumstances of the case.
35. The plaintiff has adduced evidence in regard to the market value of the vehicle which is contained in Exhibit P2. From the period 31 January 2019 to 31 January 2020, the vehicle was valued by the plaintiff’s insurer QBE Insurance (PNG) Limited at K89,000. The Nissan Navara was wrongfully taken and possessed by the defendants at the material time. Premised on the pleadings, that is, at para. 10A of the plaintiff’s claim, the defendants left the Hatchery project site with the Nissan Navara in July of 2019.
36. The defendants submit that the value of the vehicle was not pleaded and as such, no award should be made by the Court. I have considered the submissions of the parties in this regard. I reject the defendants’ submission. The plaintiff, in my view, has sufficiently pleaded the facts relevant to say that the vehicle was second hand and was with the defendants at the material time when the defendants left the Hatchery site in July of 2019. And in its relief, the plaintiff says it wants the Court to award its replacement or market value. As to what the replacement or market value is would have to be established by adducing evidence. In this case, the plaintiff has provided evidence to support its’ claim for the market value of the vehicle. The defendants, on the other hand, have not provided any evidence to counter the plaintiff’s evidence on the subject matter except to say that the vehicle is in good condition and is kept at the first defendant’s residence in Daru Island (para. 18 to Exhibit D1).
37. I am minded to and will regard K89,000 as the market value of the Nissan Navara at the time when the vehicle should have been released to the plaintiff. I find the evidence of the plaintiff credible on the subject matter, and I am minded to accept the assessment that was made of the vehicle by the plaintiff’s insurer QBE Insurance (PNG) Limited. I will award this sum to be paid by the defendants as the replacement cost or value of the Nissan Navara.
38. The plaintiff also claims, as damages, costs it says were incurred for being deprived of the Nissan Navara. This claim may also be termed as special damages. For this damage to be awarded, I will require actual proof of the losses that have been suffered. In Exhibit P2, the plaintiff attaches evidence of payments it had made to third parties to hire vehicles in Daru for its purpose and use related to the Hatchery project. The total payment made is about K6,000. The defendants repeated their submissions made in regard to their earlier claim that the Nissan Navara was in good condition, and also the claim that no specific sums were pleaded in the pleadings by the plaintiff. For the same reasons I gave above, I reject the submissions of the defendants.
39. As for these costs, I am minded to award K6,000 in favour of the plaintiff. I, however, decline to follow the calculation estimates submitted by the plaintiff. The plaintiff is not operating a hire-car business where its losses may be calculated in the manner as submitted, that is, at a rate of K1,000 per hire per day multiplied by the number of days per year and so forth. The said calculation may be relevant for calculating loss of business or profits or future loss of business. If the plaintiff had hired other vehicles for use at its Hatchery site in Daru at the material time, then it must provide invoices or proof of payments like what it had done for the hire of the 2 vehicles. Without these, I am only minded to award the sum of K6,000 for associated costs incurred or as special damage.
40. The plaintiff also claims general damages. I note that very little submission was made in regard to this head of damage by the plaintiff. Pain, suffering, and distress by the plaintiff for being kept out of its second-hand Nissan Navara? Is that a reasonable damage to seek particularly (or an example) given the fact that the plaintiff is a multi-million kina company? Also, I consider the fact that I have already awarded the plaintiff the replacement market value of the vehicle, and further, costs that it had incurred at the Hatchery site at the material time.
41. For these reasons, I decline to make any award for general damages.
INTEREST
42. The plaintiff seeks interest at an appropriate rate under the Judicial Proceedings (Interest on Debts and Damages) Act 2015.
43. Interest rate awards and their computation of time are discretionary matters for Courts to determine. I am minded, in this instance, to award interest on the judgment sum at a rate of 8% per annum. In regard to the plaintiff’s replacement value of the vehicle which is K89,000, interest will accrue from the date when the vehicle was wrongfully possessed which was in July of 2019 to 2 June 2024, the latter which is the final day before the date of judgment. And interest shall accrue at this same rate after a month from today if the defendants fail to fully settle the judgment sum until the judgment sum is fully settled.
44. The defendants gave evidence that it vacated the Hatchery project site with the Nissan Navara on 8 July 2019. I will accept that as the date when the vehicle was wrongfully taken away by the defendants, and I will compute interest to commence from the said date. So, 8% of K89,000 is K7,120 which is the interest rate per annum. I divide K7,120 by 365 days and get K19.51 as interest per day on the principal sum of K89,000. From 8 July 2019 to 2 June 2024, is a total of 4 years and 10 months (i.e., as at 8 May 2024), and I add the 23 days in May 2024 plus the 2 days of June 2024, to get a total of 25 days. So, I then multiply K7,120 by 4 years and get K28,480. I also multiply K19.51 by 30 days per month (which is estimated), and get K585.30. I multiply K585.30 by 10 months and get K5,853. And finally, I multiply K19.51 by 25 days and get K487.75.
45. The total interest I award and add to the judgment sum is K34,820.75.
46. In regard to the award of K6,000 for costs or special damages, these are general expenses, so I make no award of interest for them.
SUMMARY
47. In summary and in general, I uphold the plaintiff’s claim whilst I dismiss the defendants’ Cross-Claim.
COST
48. An order for cost is discretionary. I am minded to award cost to follow the event. I am also minded to award cost using the party/party cost scale. I do not believe, given the circumstances of the case, that I should award cost using a higher cost scale.
ORDERS OF THE COURT:
49. I make the following orders:
The Court orders accordingly
________________________________________________________________
Dentons PNG: Lawyers for the Plaintiff
Warner Shand: Lawyers for the Defendants
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