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Teachers Savings and Loan Society Ltd v Stocks & Partners Ltd [2024] PGNC 172; N10786 (4 May 2024)

N10786


PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]


WS NO. 25 OF 2020


BETWEEN:
TEACHERS SAVINGS AND LOAN SOCIETY LIMITED
Plaintif


AND:
STOCKS & PARTNERS LIMITED
Defendant


Waigani: David J
2024: 16th April & 4th May


LANDLORD AND TENANCY – claim for outstanding rent and associated charges – express term of lease that tenant liable to pay rent and associated charges upon vacating prior to expiration of term of lease until date of commencement of any new lease agreement or until expiration of the term of lease whichever was sooner – principles of construction - in construction of words used in an agreement, the court is duty-bound to adopt and apply a fair and liberal approach or the plain, natural and ordinary meaning of words used in an agreement with a view to upholding the agreement of the parties.


Cases Cited:


Papua New Guinean Cases
Curtain Brothers (QLD) Pty Ltd & Kinhill Kramer Pty Ltd v The Independent State of Papua New Guinea [1993] PNGLR 285
Odata Ltd v. Ambusa Copra Oil Mill Ltd (2001) N2106
Legu Vagi v NCDC (2002) N2280
Tom B. Gesa v Bernard Kipit [2003] PNGLR 65
Fly River Provincial Government v Pioneer Health Services Ltd (2003) SC705
Papua New Guinea Forest Authority v Concord Pacific Limited, Paiso Company Limited and The Independent State of Papua New Guinea (No.2) (2003) N2456
Igiseng Investments Ltd v Starwest Constructions Ltd (2003) N2498
Anio v Baliki [2004] 2 PNGLR 78


Overseas Cases
Roberston v French [1803] EngR 639; (1803) 4 East 130
Ford v Beech [1848] EngR 10; (1848) 11 QB 852
Bank of New Zealand v Simpson [1900] UKLawRpAC 6; [1900] AC 182
Horsfall v Braye [1908] HCA 85; (1908) 7 CLR 629
Investors Compensation Scheme v West Bromwich Building Society [1997] UKHL 28; [1998] 1 WLR 896


Treatises Cited:
Chitty on Contracts, Volume 1, General Principles, Twenty Seventh Edition
Derek Roebuck et al, Pacific Contract Law, University of Papua New Guinea Press
Sir Kim Lewison, The Interpretation of Contracts, Fifth Edition, 2011, Sweet & Maxwell


Counsel:
Samuel Ahabh, for the Plaintiff
Frederick So, for the Defendant


JUDGMENT

4th May 2024


  1. DAVID J: INTRODUCTION: This is the Court’s decision on the claim by the plaintiff, Teachers Savings & Loan Society Limited (TSLSL) against the defendant, Stocks & Partners Limited (SPL) for outstanding rent and associated charges in the sum of K98,310.29 in relation to the use and occupation of two units namely, Unit 1 and Unit 4 erected upon all that piece or parcel of land described as Allotment 3 Section 215, Hohola, (Kouka Street, Gordon’s), National Capital District and contained in State Lease Volume 39 Folio 9738 (the Property) which is owned by TSLSL pursuant to two separate lease agreements entered into between TSLSL and SPL for the lease of those units.
  2. The relevant pleadings that are to be considered in support of and against TSLSL’s claim are contained in the Writ of Summons endorsed with a Statement of Claim filed on 21 January 2022 and the Amended Defence filed on 12 November 2021. It appears that TSLSL did not file a Reply after the service of the Amended Defence so there is an implied joinder of issue on disputed facts and the allegations contained in the Amended Defence are deemed to have been traversed.
  3. In its Statement of Claim, TSLSL claims that SPL owes it:
    1. the sum of K59,891.68 for invoices issued by TSLSL to SPL for the period between July 2015 and November 2015 pursuant to a Lease Agreement entered into between the parties on 14 November 2014 for the lease of Unit 1 for a term of twelve months commencing on 1 December 2014 (Lease Agreement-Unit 1); and
  4. the sum of K38,418.61 for invoices issued by TSLSL to SPL for the period between October 2015 and December 2015 pursuant to a Lease Agreement entered into between the parties on 27 February 2015 for the lease of Unit 4 for a term of twelve months commencing on 1 February 2015 (Lease Agreement-Unit 4).
  5. TSLSL also claims interest at 8% per annum pursuant to the Judicial Proceedings (Interest on Debts and Damages) Act 2015 and costs of and incidental to the proceedings.
  6. In the Amended Defence, SPL denies liability in relation to TSLSL’s claim for K59,891.68 for invoices issued for Unit 1 under Lease Agreement-Unit 1, but admits liability for TSLSL’s claim for K38,418.61 for invoices issued for Unit 4 under Lease Agreement-Unit 4.
  7. SPL avers that it does it does not owe TSLSL the sum of K59,891.68 as it vacated Unit 1 in late May/early June 2015 on notice to TSLSL’s real estate agent with the knowledge and consent of TSLSL under the following circumstances:
    1. Sometime in early January 2015, rascals broke into Unit 1, stole and ransacked belongings of SPL’s employee occupants which raised serious security and safety concerns for those employees;
    2. The security concerns were not and could not be addressed by TSLSL resulting in SPL’s two employees vacating the unit sometime in late May/early June 2015 with the knowledge, acceptance and consent of TSLSL through its real estate agent; and
    3. The unit was also vacated on notice to TSLSL due to cash flow constraints thus the inability of SPL to maintain two units at the same time or simultaneously.

EVIDENCE


  1. TSLSL relies on and reads on the following affidavits:
    1. Affidavit of Philip Hehonah sworn on 17 May 2022 and filed on 19 May 2022 (Exhibit A); and
    2. Affidavit of Margarett Lamond sworn on 3 August 2023 and filed on 23 February 2024 (Exhibit B).
  2. SPL relies on and reads the following affidavits:
    1. Affidavit of Egi Nauna sworn on 9 October 2020 and filed on 17 October 2020 (Exhibit D1); and
    2. Affidavit of Johnil De Guzman sworn on 9 October 2020 and filed on 17 November 2020 (Exhibit D2).
  3. The evidence contained in these affidavits was not tested by cross-examination.

SUMMARY OF PLAINTIFF’S EVIDENCE
Philip Hehonah


  1. He is the Head of Legal and the Company Secretary of TSLSL.
  2. TSLSL is the registered proprietor of the Property.
  3. Eight residential Units were constructed on the Property. A copy of the Owner’s Copy of the State Lease is annexed to his affidavit as annexure “PH1”.

13. On or about 14 November 2014, TSLSL entered into the Lease Agreement-Unit 1 with SPL. A copy of the Lease Agreement-Unit 1 is annexed to his affidavit as annexure “PH2”.


14. SPL occupied Unit 1 in accordance with the Lease Agreement-Unit 1 for which it was issued monthly rental invoices.


  1. Clause 2 of the Lease Agreement-Unti 1 provided that rental at K10,833.33 per calendar month would be payable in advance on the first day of every month from and including the tenancy commencement date of 1 December 2014 for a period of twelve months with an option to renew.

16. On 27 February 2015, TSLSL entered into the Lease Agreement-Unit 4 with SPL. A copy of the Lease Agreement-Unit 4 is annexed to his affidavit as annexure “PH3”.


17. Clause 2 of the Lease Agreement-Unit 4 provided that rental at K10, 833.33 per calendar month would be payable in advance on the first day of every month from and including the tenancy commencement date of 1 February 2015 for a period of twelve months with an option to renew.


  1. Between July and November 2015, TSLSL’s property manager and agent, Strickland Real Estate (Strickland) issued to SPL pursuant to the Lease Agreement–Unit 1, the following invoices:
    1. Tax Invoice No. 48582 - July 2015 rental K9,618.00
    2. Tax Invoice No. 48954 - August 2015 rental K11,916.67
    3. Tax Invoice No. 49312 - September 2015 rental K11,916.67
    4. Tax Invoice No. 49401 - Recharge - Pom Locksmith K324.10
    5. Tax Invoice No. 49661 - October 2015 rental K11,916.67
    6. Tax Invoice No. 50029 - November 2015 rental K11,916.67
    7. Tax Invoice No. 53154 - Recharge gas bottle exchange K243.10
    8. Tax Invoice No. 53156 - General Maintenace K132.00
    9. Tax Invoice No. 53156 - Cleaning General K220.00
    10. Tax Invoice No. 53157 - Soft furnishing curtains K1,687.40

Total K59, 891.68


  1. True copies of the invoices are annexed to his affidavit as annexure “PH4”.
  2. Between October and December 2015, Strickland issued to SPL pursuant to the Lease Agreement-Unit 4, the following invoices:
    1. Tax Invoice No. 49662 - October 2015 rental K11,916.67
    2. Tax Invoice No. 50030 - November 2015 rental K11,916.67
    3. Tax Invoice No. 50338 - December 2015 rental K11,916.67
    4. Tax Invoice No. 53150 - Gas recharge K243.10
    5. Tax Invoice No. 53151- Cleaning General K1,210.00
    6. Tax Invoice No. 53152 - Soft furnishing curtains K132.00
    7. Tax Invoice No. 53153- General Maintenance K11,916.67

Total K38, 418.61


  1. True copies of the invoices are annexed to his affidavit as annexure “PH5”.
  2. SPL is in breach of the Lease Agreement Unit-1 and Lease Agreement Unit-4 respectively as it has failed and or refused to pay the outstanding invoices and is indebted to TSLSL in the sum of K98,310.29 (the Debt).
  3. On 22 October 2019, TSLSL issued a Letter of Demand to SPL (Letter of Demand) for settlement of the Debt within 14 days from the date of the Letter of Demand.
  4. SPL has failed to respond to the Letter of Demand and the Debt remains due and owing. A copy of the Letter of Demand is annexed to his affidavit as annexure “PH6”.

Margarett Lamond


  1. She is the Property Manager in the employ of Strickland and her role includes managing leased properties for and on behalf of their clients.
  2. In 2015, TSLSL engaged Strickland as property manager of its properties in Port Moresby, including TSLSL’s 8 x 3- bedroom residential units constructed on the Property.
  3. While the Property was under the management of Strickland, TSLSL entered into two lease agreements with SPL namely, Lease Agreement-Unit 1 and Lease Agreement-Unit 4. Copies of Lase Agreement-Unit 1 and Lease Agreement-Unit 2 are annexed to her affidavit as annexures “A” and “B” respectively.
  4. On or about 8 July 2015, Egi Nauna (Egi), who was at that time attached with the Finance Section of SPL advised her by email that SPL was unable to maintain the two units at the existing cost and therefore made known their intention to lease only Unit 4.
  5. On or about 10 July 2015, she responded to Egi’s email advising him that there were binding lease agreements in place for both units with the Lease Agreement-Unit 1 expiring on 30 November 2015 and the Lease Agreement-Unit 4 expiring on 31 January 2016. In that email, she suggested to Egi to find a reputable corporate tenant to continue leasing Unit 1 because according to the Lease Agreement-Unit 1, rent would still be charged to SPL until such a time when a new tenant commenced tenancy or the term of the lease expired, whichever occurred first. Copies of the emails exchanged between herself and Egi are annexed to her affidavit as annexure “C”.
  6. SPL continued occupying Unit 1 from July 2015 to November 2015. On or about 12 November 2015, Egi sent her an email advising that SPL would vacate the unit that week. True copies of the emails exchanged are annexed to her affidavit as annexure “D”.
  7. SPL vacated Unit 1 sometime after 12 November 2015.
  8. Within the month of July 2015 to November 2015 Strickland issued to SPL the following invoices for charges under Lease Agreement-Unit 1:
    1. Tax Invoice No. 48582 - July 2015 rental K9,618.00
    2. Tax Invoice No. 48954 - August 2015 rental K11,916.67
    3. Tax Invoice No. 49312 - September 2015 rental K11,916.67
    4. Tax Invoice No. 49401 - Recharge - Pom Locksmith K324.10
    5. Tax Invoice No. 49661- October 2015 rental K11,916.67
    6. Tax Invoice No. 50029 - November 2015 rental K11,916.67
    7. Tax Invoice No. 53154 - Recharge gas bottle exchange K243.10
    8. Tax Invoice No. 53155 - General Maintenace K132.00
    9. Tax Invoice No. 53156 - Cleaning General K220.00
    10. Tax Invoice No. 53157 – Soft furnishing curtains K1,687.40

Total K59,891.68


  1. True copies of the invoices are annexed to her affidavit as annexure “E”.
  2. Despite being issued the invoices for Unit 1, SPL failed to pay in breach of the Lease Agreement-Unit 1.
  3. SPL also continued occupying Unit 4 until December 2015.
  4. Within the months of October 2015 to December 2015, Strickland issued to SPL the following invoices for charges under Lease Agreement-Unit 4:
    1. Tax Invoice No. 49662 - October 2015 rental K11,916.67
    2. Tax Invoice No. 50030 - November 2015 rental K11,916.67
    3. Tax Invoice No. 50338 - December 2015 rental K11,916.67
    4. Tax Invoice No. 53150- Gas recharge K243.10
    5. Tax Invoice No. 53151- Cleaning General K1,083.50
    6. Tax Invoice No. 53152- Soft furnishing curtains K1,210.00
    7. Tax Invoice No. 53153- for General Maintenance K132.00

Total K38,418.61


37. True copies of the invoices are annexed to her affidavit as annexure “F”.


38. Despite being issued invoices for Unit 4, SPL failed to pay in breach of the Lease Agreement-Unit 4.


  1. On or about 4 February 2016, after SPL vacated both Unit 1 and Unit 4, Strickland sent an email attaching all the invoices issued to SPL for both units and requested to know when SPL would settle the outstanding amounts due and owing to TSLSL. A true copy of the email is annexed to her affidavit as annexure “G”.
  2. It is within her knowledge and she verily believes that SPL owes TSLSL the total amount of K98,310.29 on account of outstanding rentals and related charges under Lease Agreement-Unit 1 and Lease Agreement-Unit 4. The outstanding amount is verified by the tenant’s statements of account for both Unit 1 and Unit 4.
  3. True copies of statements of account for both Unit 1 and Unit 4 are annexed to her affidavit as annexures “H” and “I” respectively.

SUMMARY OF DEFENDANT’S EVIDENCE
Egi Nauna


42. He was employed by SPL as its Finance and Administration Manager at the relevant time.


43. He was responsible for employee accommodation, rental payments and related issues.


44. Sometime in early January 2015, he got a phone call from Margarette Lamond (Margarette) of Strickland during which she said that one of the units SPL was renting at the Property was broken into and he was required to go over to the site to inspect the aftermath of the break in.


  1. Oscar Basat (Oscar) and Joey Magsino (Joey) were the occupants of Unit 1, but were away in the Philippines on holidays at the time.
  2. He picked up his workmate, Station Hegame from his worksite at SP Brewery, Gordon’s and they both went over to Gordon’s 5.
  3. Upon arrival at the scene at the Property, he met up with staff of Strickland, their security guard and others. They showed him the areas where the criminal had gained access into the yard of Unit 1 from and where the criminal had gained entry into the unit. They them led him into the unit to Joey’s room where they noticed evidence that the criminal had gone through Joey’s personal belongings. On inspection, he realised that Joey’s belongings had been ransacked.
  4. Whilst at the unit, he was advised by Margarette that the criminal was known to the police by the nature of the break-in and how the criminal had squeezed himself through the security bars of the door to the unit. This criminal was given a nickname which he cannot recall now.
  5. Entry into the unit was gained by crawling under the fence opposite the Bus Stop located opposite the Australia High Commission along Spoonbill Drive, Gordons. The rascals excavated the soil and crawled through under the fence to enter the unit which is near the fence and road.
  6. He can remember informing Oscar and Joey about the break-in when they returned from the Philippines.
  7. He can vividly remember that Oscar returned from holidays around the early weeks of January 2015, but left again before the end of January 2015 for medical reasons. Joey returned around February 2015 and moved back into the unit, but began complaining about security.
  8. Joey vacated Unit 1 and moved into Unit 4 occupied by Johnil De Guzman (Johnil) sometime in late May or early June 2015.
  9. As Joey was the only one back, due to security issues, their Management decided to move Joey in with Johnil’s family. Oscar returned in about October 2015 and stayed with them as well in Unit 4 until that unit was vacated in November 2015.
  10. Their employees vacated Unit 1 for security reasons.

55. Unit 1 was vacated on sufficient notice given to TSLSL due to inability to afford two Units at the time owing to cash flow constraints. Copies of a bundle of emails he exchanged with Margarette are annexed to his affidavit as annexure “A”.


Johnil De Guzman


56. He was employed by SPL as a Structural Engineer and Project Manager..


  1. In early January 2015, he resided in Unit 4 at the Property.
  2. He did not know about the break-in in Unit 1 until Egi, SPL’s Administration Manager told him about it. He was at the time in charge of the Stanley Hotel Project.
  3. The break-in was noticed by the Day Guard during routine patrol of the Compound that day and raised the alarm.
  4. After Egi called and informed him about the break-in, he went and checked inside to ascertain the loss of property as both tenants were away on holidays in the Philippines.
  5. While he was there, a man from TSLSL and another man were there to replace the keys.
  6. Entry into the unit was gained by crawling under the fence opposite the Bus Stop located opposite the Australia High Commission along Spoonbill Drive, Gordons. The rascals had excavated the soil and crawled under the fence to enter the unit which is near the fence and road.
  7. On inspection, he realised that Joey’s laptop was missing. He took some of Oscar and Joey’s belongings into his unit which is Unit 4.

64. TSLSL changed the locks and gave the keys to Egi.


65. When Oscar and Joey returned from holidays, they moved back into the unit, but complained about security as it was even harder then, especially when the Security Camera only covered the front.


  1. He went to the Philippines for holidays in February 2015. Oscar returned to Port Moresby on 11 or 16 January 2015 and left on or about 26 January 2015 for medical reasons. Joey returned on 9 February 2015 and stayed in Unit 1, but due to security concerns, he vacated it and moved in with him and his family in Unit 4. Oscar was still on holidays at the time. Unit 1 was vacated in late May or early June 2015.
  2. As Joey was the only one back, due to security concerns, their Management decided to move Joey in with his family sometime in late May or early June, 2015. When Oscar returned in or about October, 2015 he also moved in with him in Unit 4 until that unit was vacated in November, 2015.
  3. He recalls that after Joey moved in with him, Unit 1 was occupied by someone else.
  4. Their employees vacated Unit 1 due to security concerns and with the full knowledge, understanding and consent of TSLSL through it’s real estate agent.

ISSUE


  1. The principal contentious issue for the determination and disposition of this matter is whether or not SPL owes TSLSL the sum of K59,891.68 in rental arrears and associated charges for Unit 1 for the period July2015 to November 2015.

SUBMISSIONS
Plaintiff


  1. Mr. Ahabh for TSLSL submits that judgment be entered in favour of TSLSL for K98,310.29 with interest and costs as:
    1. SPL does not dispute the claim of K38,418.61 in relation to Lease Agreement-Unit 4;
    2. Lease Agreement-Unit 1 was binding;
    3. SPL’s contention that its it is not liable for the alleged outstanding invoices issued by TSLSL in relation to Unit 1 totalling K59,891.68 as it employees vacated Unit 1 in late May or early June 2015 has no merit;
    4. Margarette’s affidavit evidence puts to rest SPL’s contention;
    5. When Margarette from Strickland received an email from Egi of SPL on 8 July 2015 that SPL was unable to maintain Unit 1 and Unit 4 at the existing cost and therefore made known its intention to lease only Unit 4, she, by her email of 10 July 2015 responded to Egi’s email that there were binding lease agreements between the parties for the terms agreed and suggested to Egi to find a reputable corporate tenant to lease Unit 1 because according to the lease agreement, rent would be charged to SPL until such a time when a new tenant commenced tenancy or the term of the lease expired whichever occurred first;
    6. SPL continued occupying Unit 1 from July 2015 to November 2015 and on 12 November 2015, Egi sent Margarette an email advising that SPL would vacate the unit that week;
    7. SPL vacated Unit 1 sometime after 12 November 2015; and
    8. SPL is bound by the terms of Lease Agreement-Unit 1 including Clause 18 to pay rent and associated costs for the period between July and November 2015 irrespective of whether the SPL was in occupation of Unit 1 or not until expiry of the lease.
  2. Mr. So for SPL submits that SPL does not owe TSLSL the sum of K59,891.68 on account of invoices issued by TSLSL in relation to Unit 1 for the period alleged as:
    1. The unit was vacated by employees of SPL who occupied it after it was broken into by criminals;
    2. Sufficient notice was given to TSLSL to terminate the tenancy of Unit 1 when Egi communicated with Margarette of Strickland by his email of 8 July 2015;
    3. SPL only occupied Unit 4 between May and November 2015;
    4. Both Unit 1 and Unit 4 were vacated by November 2015; and
    5. SPL should not pay rent and other associated charges for the balance of the term of the Lease Agreement-Unit 1 pursuant to Clause 18 since vacating Unit 1 relying on Fly River Provincial Government v Pioneer Health Services Ltd (2003) SC705 which advances the proposition that the court is duty bound to adopt a fair and liberal construction of words used in a contract with a view to upholding the agreement of the parties.

UNDISPUTED FACTS


73. From the pleadings, evidence before the Court and submissions of counsel, I find that the following facts are not in disputed or have been established on the balance of probabilities:


  1. TSLSL is a company duly registered under the Companies Act 1997.
  2. SPL is a company registered under the Companies Act 1997.
  3. TSLSL was granted a Residence Lease under s.61 of the Land Act 1962 over the Property for a term of 99 years commencing from 6 December 1979 to 5 December 2078.
  4. There are eight residential units constructed on the Property inclusive of Units 1 and 4.
  5. The Property was transferred to Tisa Property Limited on 8 June 2021 as per registration of instrument number s.92955.
  6. The Property inclusive of Unit 1 and Unit 4 was managed by Strickland.
  7. On 14 November 2014, TSLSL entered into a Lease Agreement with SPL for SPL to occupy Unit 1 for a period of twelve months commencing on 1 December 2014 at a rental of K10,833.33 per calendar month payable in advance on the first day of every month from and including the tenancy commencement date of 1 December 2014 with an option to renew and payments were to be made to TSLSL’s agent, Strickland Real Estate (“Lease Agreement – Unit 1”).
  8. SPl occupied Unit 1 in accordance with the Lease Agreement-Unit 1.
  9. SPL’s employees, Oscar and Joey resided in Unit 1.
  10. On 27 January 2015, TSLSL entered into another Lease Agreement with SPL for SPL to occupy Unit 4 for a period of twelve months commencing on 1 February 2015 at a rental of K10,833.33 per calendar month payable in advance on the first day of every month from and including the tenancy commencement date of 1 February 2015 with an option to renew and payments were to be made to TSLSL’s agent, Strickland Real Estate (“Lease Agreement – Unit 1”).
  11. The defendant’s employee, Johnil resided in Unit 4.
  12. Within the month of July to November 2015 Strickland issued to SPL the following invoices for charges under Lease Agreement-Unit 1 totalling K59, 891.68:

(a) Tax Invoice No.48582 - July 2015 rental K9,618.00

(b) Tax Invoice No.48954 - August 2015 rental K11,916.67

(c) Tax Invoice No.49312 - September 2015 rental K11,916.67

(d) Tax Invoice No.49401 - Pom Locksmith K324.10

(e) Tax Invoice No.49661- October 2015 rental K11,916.67

(f) Tax Invoice No.50029 - November 2015 rental K11,916.67

(g) Tax Invoice No.53154 - Gas recharge K243.10

(h) Tax Invoice No.53155 - General Maintenace K132.00

(i) Tax Invoice No.53156 - Cleaning General K220.00

(j) Tax Invoice No.53157 - Curtains K1,687.40

Total K59, 891.68

  1. Between October and December 2015, TSLSL’s agent, Strickland Real Estate, issued to the Defendant pursuant to the Second Lease Agreement – Unit 4, seven invoices totalling K38, 418.61.

TOTAL: 38, 418.61


DISPUTED FACTS


74. From the evidence, pleadings and submissions of counsel, I find that the following facts are disputed:


  1. The unit was vacated by employees of SPL who occupied it after it was broken into by criminals;
  2. Sufficient notice was given to TSLSL to terminate the tenancy of Unit 1 when Egi communicated with Margarette of Strickland by his email of 8 July 2015;
    1. SPL only occupied Unit 4 between May and November 2015;
    2. Both Unit 1 and Unit 4 were vacated by November 2015; and
    3. SPL should not pay rent and other associated charges for the balance of the term of the Lease Agreement-Unit 1 pursuant to Clause 18 since vacating Unit 1.

CONSIDERATION


75. It is a settled general principle of law that generally where parties have reduced their agreement into writing, the document should be allowed to speak for itself to the exclusion of any extrinsic evidence to add to, subtract from, or in any manner vary or contradict or qualify the agreement: Curtain Brothers (QLD) Pty Ltd & Kinhill Kramer Pty Ltd v The Independent State of Papua New Guinea [1993] PNGLR 285; Odata Ltd v. Ambusa Copra Oil Mill Ltd (2001) N2106; Legu Vagi v NCDC (2002) N2280; Tom B. Gesa v Bernard Kipit (2003) PNGLR 65, Papua New Guinea Forest Authority v Concord Pacific Limited, Paiso Company Limited and The Independent State of Papua New Guinea (No.2) (2003) N2456; Igiseng Investments Ltd v Starwest Constructions Ltd (2003) N2498; Anio v Baliki (2004) 2 PNGLR 78, Chitty on Contracts, Volume 1, General Principles, Twenty Seventh Edition at pages 580-582.


76. In the learned treatise, Chitty on Contracts, Volume 1, General Principles, Twenty Seventh Edition at page 580 it was stated.


“The cardinal presumption is that the parties have intended what they have in fact said so that their words must be construed as they stand. That is to say, the meaning of the document or of a particular part of it is to be sought in the document itself: one must consider the meaning of the words used, not what one may guess to be the intention of the parties. However, no contract is made in a vacuum. In construing the document, the court may resolve an ambiguity by looking at its commercial purpose and the factual background against which it was made.”


  1. The parties to a written contract are presumed to have intended to abide by the plain and ordinary meaning of the written words, and parties to an oral contract, by the plain and ordinary meaning of what they said: Derek Roebuck et al, Pacific Contract Law, University of Papua New Guinea Press, 234; Chitty on Contracts, Volume 1, General Principles, Twenty Seventh Edition, 582-586; Fly River Provincial Government v Pioneer Health Services Ltd (2003) SC705.
  2. In Roberston v French [1803] EngR 639; (1803) 4 East 130 at 135, it was held that terms are:

“... to be understood in their plain, ordinary, and popular sense, unless they have generally in respect to the subject-matter, as by the known usage of trade, or the like, acquired a peculiar sense distinct from the popular sense of the same words; or unless the context evidently points out that they must in the particular instance, and in order to effectuate the immediate intention of the parties to that contract, be understood in some other special and peculiar sense.”


  1. The ordinary meaning of a word is its meaning in its plain, ordinary and popular sense, although that sense may be a sense among a particular group: Sir Kim Lewison, The Interpretation of Contracts, Fifth Edition, 2011, Sweet & Maxwell, 211.
  2. Lord Hoffman expounded the rule in Investors Compensation Scheme Ltd v West Bromwich Building Society [1997] UKHL 28; [1998] 1 WLR 896 at 913 where Hid Lordship said:

“The ‘rule’ that words should be given their ‘natural and ordinary meaning’ reflects the commonsense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had.”


  1. In Fly River Provincial Government v Pioneer Health Services Ltd (2003) SC705, at Headnote 9, the Supreme Court held:

“In the construction of words used in a contract, the court is duty-bound to adopt a fair and liberal approach with a view to upholding the agreement of the parties, if the intention of the parties can be ascertained. For the courts are there to uphold the agreement of parties and not to destroy it. In so doing, the court can supply any reasonable term missing from the contract or strike out meaningless words or clause in a contract...”


  1. I am of the opinion that the plain and liberal approach propounded by the Supreme Court in Fly River Provincial Government v Pioneer Health Services Ltd (2003) SC705 is not a departure or substantial departure from the rule that words be given their plain, natural and ordinary meaning as the real purpose in applying them is to ascertain the intention of the parties when interpreting the provisions of their contract.
  2. Therefore, where the agreement in writing is breached, any claim for relief that flows from the breach should be determined in accordance with the written agreement.
  3. Extrinsic evidence however could be admitted to help resolve any ambiguity in a written document or record: Bank of New Zealand v Simpson [1900] UKLawRpAC 6; [1900] AC 182, Horsfall v Braye [1908] HCA 85; (1908) 7 CLR 629. In Bank of New Zealand v Simpson [1900] UKLawRpAC 6; [1900] AC 182, Lord Davey in the Privy Council stated the principle in these terms:

“Extrinsic evidence is always admissible, not to contradict or vary the contract: but to apply it to the facts, which the parties had in their minds and were negotiating about.”


  1. The construction of a document may require the Court to look at the context in which it was made, for example, the usages in the trade or the parties’ previous transactions or the language used in the whole of the agreement: Ford v Beech [1848] EngR 10; (1848) 11 QB 852 at 866; Derek Roebuck et al, Pacific Contract Law, University of Papua New Guinea Press, 231-234.
  2. Lease Agreement-Unit 1 must be interpreted in the light of its own peculiar facts.
  3. I have considered all the evidence presented by the parties before the Court. The Property was managed by Strickland. Unit 1 and Unit 4 were occupied by SPL under Lease Agreement-Unit 1 and Lease Agreement-Unit 4. SPL’s employees resided in the units. Lease Agreement-Unit 1 and Lease Agreement- Unit 4 were binding on the parties. Margarette’s affidavit evidence in particular is critically dispositive of the issue at hand.
  4. Lease Agreement-Unit 1 speaks for itself unless circumstances allow for extrinsic evidence to be considered in its construction. I find no circumstance warranting extrinsic evidence to be considered.
  5. A contract may be ended by agreement.
  6. A contract which contains no express provision for its determination may yet be determined by reasonable notice on the part of one or both of the parties: Chitty on Contracts, Volume 1, General Principles, Twenty Seventh Edition, 631.
  7. Did SPL terminate the tenancy of Unit 1 by Egi’s email of 8 July 2015?
  8. Clauses 17 and 18 of Lease Agreement-Unit 1 are significantly relevant.
  9. Clause 17 states:

“After the end of the term and any option as may be agreed by the parties, the tenancy may be terminated by either party on giving of one month’s notice.” (my emphasis)


  1. Clause 18 states:

“If the Tenant vacates prior to the expiration of the term, the Tenant will pay rent and any other due charges, such as placement fee, in accordance with the existing agreement until the date of commencement of any new Lease Agreement or until the expiration of the term, whichever is the sooner.”


  1. Apart from these two clauses, there is no express provision for the determination of Lease Agreement-Unit 1 prior to the expiration of the term of the tenancy particularly on the question of notice.
  2. I will adopt and apply a fair and liberal construction or in other words the plain, natural and ordinary meaning of the words used in Lease Agreement-Unit 1.
  3. In my view, Clause 17 will only apply “After the end of the term and any option as may be agreed by the parties.” There is no glaring absurdity, ambiguity or uncertainty about Clause 17. None of the events mentioned in the clause occurred when the alleged notice was given by email from Egi to Margarette on 8 July 2015 or even by another email from Egi to Margarette on 14 July 2015. The tenancy was not determined by SPL on either 8 July 2015 or 14 July 2015. Moreover, TSLSL did not consent to the purported determination of the tenancy by SPL on the dates in question or anytime after that.
  4. There is no glaring absurdity, ambiguity or uncertainty about Clause 18 either. By this clause, the parties agreed that if there were to be an early termination of the tenancy prior to the expiration of the term, the responsibility reposed on SPL to pay rent and associated charges under Lease Agreement-Unit 1 would continue until the date of commencement of a new lease agreement.
  5. Unit 1 was the accommodation for Oscar and Joey.
  6. On or about 8 July 2015, Egi, who was at that time attached with the Finance Section of SPL advised Margarette by email that SPL was unable to maintain the two units due to cash flow constraints and therefore made known their intention to lease only Unit 4.
  7. On or about 10 July 2015, Margarette responded to Egi’s email advising him that there were binding lease agreements in place for both units with the Lease Agreement-Unit 1 expiring on 30 November 2015 and the Lease Agreement-Unit 4 expiring on 31 January 2016. In that email, she suggested to Egi to find a reputable corporate tenant to continue leasing Unit 1 because according to the Lease Agreement-Unit 1, rent would still be charged to SPL until such a time when a new tenant commenced tenancy or the term of the lease expired, whichever occurred first. Copies of the emails exchanged between herself and Egi are annexed to her affidavit as annexure “C”. The position taken by Margarette and conveyed to Egi was abundantly clear and it was consistent with Clause 18.
  8. On 14 July 2015, Egi again emailed Margarette that SPL could only maintain one unit namely, Unit 4. The reason given was that SPL’s cash flow constraints at the time did not allow for the occupation of two units.
  9. It is clear from Margarette’s affidavit evidence that SPL continued occupying Unit 1 from July 2015 to November 2015. This neutralises or disproves SPL’s evidence that its employees, Oscar and Joey vacated Unit 1 after it was broken into by criminals. The email from Egi to Margarette on or about 12 November 2015 (annexure D, Margarette’s affidavit) confirmed that SPL would vacate Unit 1 that week. I find as a fact that SPL vacated Unit 1 sometime after 12 November 2015.

104. SPL would have to give reasonable notice to TSLSL to trigger and comply with Clause 18. SPL’s intention to determine the tenancy of Unit 1 was demonstrated by Egi’s emails to Margarette on 8 and 14 July 2015. There is however no credible evidence to show that Unit 1 was leased by another tenant other than SPL from July 2015 to November 2015 to absolve SPL from liability for the outstanding invoices issued by TSLSL to SPL for Unit 1 pursuant to Clause 18.


105. I am satisfied on the balance of probabilities that in breach of Lease Agreement Unit 1, SPL failed to pay the outstanding invoices issued for and on behalf of TSLSL as claimed. Despite being demanded by TSLSL to settle the outstanding rent and associated charges, SPL has refused, failed, ignored or neglected to pay as demanded. SPL is liable to pay TSLSL the sum of K59,891.68 in rental arrears and associated charges for Unit 1 for the period July 2015 to November 2015.


106. In the result, SPL is liable to pay TSLSL for the outstanding invoices issued in relation to both Unit 1 and Unit 4 totalling K98,310.29.


ORDER


107. I make the following orders:


  1. Judgment is entered against the defendant, Stocks & Partners Limited in the sum of K98,310.29.
  2. Interest at 8% per annum pursuant to the Judicial Proceedings (Interest on Debts & Damages) Act 2015 shall be calculated on the judgment debt from the date of service of the Writ of Summons endorsed with a Statement of Claim to the date of the judgment.
  3. The defendant, Stocks & Partners Limited pay the plaintiff, Teachers Savings & Loan Society Limited the costs of and incidental to these proceedings, which shall be taxed, if not agreed.
  4. Time for the entry of these orders is abridged.

Judgment and orders accordingly.
_____________________________________________________________
In-house Lawyers: Lawyers for the Plaintiff
Ketan Lawyers: Lawyers for the Defendant

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