N10995
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
OS NO 128 OF 2024
PUNGA LIMITED
Plaintiff
V
MADANG DISTRICT DEVELOPMENT AUTHORITY 
Defendant
Madang: Narokobi J
2024: 17th and 18th September
SPECIFIC PERFORMANCE– Breach of Contract – Remedy of Specific Performance Sought – Appropriate Considerations before remedy of specific performance can be ordered.
In this proceeding the plaintiff a civil works and road maintenance company has in conjunction with the defendant applied successfully to the National government to fund nine (9) road projects in the Madang District of Madang province. The national government approved the funding, and remitted K5m to the Madang District Development Authority account. The monies were remitted in January 2024 and the plaintiff has written to the defendant to release the monies without success.
Held:
(1)	There was a valid legally enforceable agreement or contract between the plaintiff and the defendant, that was breached by the defendant when it failed to remit the agreed sum of K5m.
 
(2)	An order or decree of specific performance compels the defendant to perform their part of the contract. It is an equitable remedy and is thus granted at the discretion of the court. Unlike damages, it is not available as of right.

(3)	Considerations as to whether the relief of specific performance should be granted include:

•	Whether damages will adequately compensate the plaintiff?
•	Whether the contract involves a service of a personal nature?
•	 Whether the contract requires constant supervision by the court?
•	Where the contract lacks mutuality?

(4)	In this case: a) damages will not adequately compensate the plaintiff; b) the contract is not one personal in nature; c) whilst there is a need for supervision, there is no opposition from the defendant on this aspect; and d) the contract is mutual.

(5)	Discretion should be exercised in favour of granting the remedy of specific performance for the release of the contractual sum of K5m to the plaintiff to commence road maintenance projects stated in the agreement.
Cases Cited:
Papua New Guinean Cases

Augwi Ltd v Xun Xin Xin (2014) SC1616
Fraser & Fraser v Angco [1977] PNGLR 134
Robinson v National Airlines Commission [1983] PNGLR 476

Overseas Cases

Ryan v Mutual Tontine Association (1893) 1 Ch 116

Legislation Cited

Goods Act Ch 251

Materials Referred 
Vergil Los Narokobi, Business Law in Papua New Guinea (Institute of Business Studies, Port Moresby, 2014)
Counsel
B Wak, for the Plaintiff
No appearance for the Defendant 

18th September 2024

1.	NAROKOBI J: In this proceeding the plaintiff a civil works and road maintenance company has in conjunction with the defendant applied successfully to the National government to fund nine (9) road projects in the Madang District of Madang province. The national government approved the funding, and remitted K5m to the Madang District Development Authority account. The monies were remitted in January 2024 and the plaintiff has written to the defendant to release the monies without success.

2.	The plaintiff being aggrieved by the failure of the defendant to release the monies from the National government to them, has filed an originating summons asking the court for the following orders:

1)	An order that the defendant who forthwith pay the plaintiff a sum of K5,000,000. 00 pursuant to section 155(4) of the Constitution and Order 12 rule 1 of the National Court Rules and section 57 of the Constitution.

2)	An order declaring that the defendant’s decision to withhold the monies without any good reasons or justification is unlawful, harsh, oppressive and improper under the circumstances of the case despite directions issued by the Department of National Planning and Monitoring pursuant to section 155(4) of the Constitution and section 57 of the Constitution and section 41 of the constitution.

3)	In order that the defendant pay the plaintiff a sum of K500, 000. 00 or any other amount to be assessed by the court as reasonable compensation for withholding the money without any reasonable justification ohh excuse in law despite directions issued by Department of National Planning and Monitoring pursuant to section 155(4) of the Constitution and Order 12 rule 1 of the National Court Rules and section 57 of the Constitution.

4)	Cost of this proceedings.

5)	Any other orders that the court deems fit and proper. 

3.	The plaintiff relies on the affidavit of Michael Lum filed 29 July 2024 document #3. Mr. Lum is the managing director of the plaintiff. He deposes to the fact that the plaintiff is a registered company with the Investment Promotion Authority. He goes on to say that he had discussions with the Defendant’s officials to carry out road maintenance project in the district. Based on these discussions he engaged a consultant to prepare a submission to the Department of National Planning and Monitoring. On 21 June 2022 the plaintiff entered into an agreement with the defendant to carry out road improvement programs in a contract described as MWC/ MDA - 45/ 2022 between the plaintiff and the defendant. This agreement engaged the plaintiff to carry out maintenance work on nine (9) proposed road projects at a cost of K5m as it was the plaintiff’s initiative to source funds from the National government. On 12 January 2024 the plaintiff was notified by the Department of National Planning and Monitoring that K5m had been remitted to the Madang District Development Authority bank account number #1000878628 on12 January 2024 through cheque #E206027332. A letter dated 16 January 2024 was then sent by the Department of National Planning and Monitoring to the plaintiff’s consultant to confirm the transfer. It is now six months since the funds was remitted to the defendant’s account and the defendant through its CEO has failed to honor the signed contract by releasing the K5m so that the plaintiff can carry out the agreed road maintenance and upgrading in the Madang district.

4.	This matter proceeded as an undefended matter. Despite notice the defendant has shown no interest to participate in the case. The case has proceeded without any input from the defendant. The inference I gather is that there is little for them to dispute with regards to the case of the plaintiff.

5.	The essence of the plaintiff’s submission is that there is an agreement for the defendant to release the money to the plaintiff, and their case is for specific performance. They rely on the case of Augwi Ltd v Xun Xin Xin (2014) SC1616 to support their contention that specific performance is available to compel an unwilling party to perform the terms of an agreement.

6.	In the agreement dated 21 June 2022 between the plaintiff and the defendant, the clause entitled, “Payments,” the following is found:

The Employer will pay the Contractor the accepted amount of Five Million Kina (K5,000,000.00) inclusive of GST. Thereafter to be adjusted in accordance with the Employer’s nominated Superintendent. Such payments will be made within twenty-one (21) days after the last day of the month during the period of this Agreement.

7.	It is clear from the agreement from the clause recited above, that the defendant will pay the plaintiff K5m to conduct road works. 

8.	One issue is whether the agreement has expired as it is supposed to be for a period of 120 days commencing 14 days after the signing of the agreement. From all the evidence that is before the court, it is my view that the agreement is dependent on funding. The plaintiff worked with the defendant to seek funding from the National government for the specified amount of K5m. This funding has now been made available, to achieve the objectives of the agreement between the plaintiff and the defendant, that is to carry out rehabilitation of identified roads in the district. The money should rightfully be remitted to the plaintiff as agreed to.

9.	The non-payment of the money is a breach of the agreement signed between the plaintiff and the defendant. Considering that there is now a breach of the agreement, the question arises as to what is the appropriate remedy that should be granted. The plaintiff says that the remedy should be in specific performance.

10.	In my work titled, Business Law in Papua New Guinea, published by the Institute of Business Studies (2014), the following is said at p 157 on specific performance:

An order or decree of specific performance compels the defendant to perform his or her part of the contract. It is an equitable remedy and is thus granted at the discretion of the court. Unlike damages, it is not available as of right.

Specific performance will not be decreed in the following circumstances:

(a)	Where, in the opinion of the court, damages will adequately compensate the plaintiff. Thus, in most cases of sale of goods, specific performance will not be decreed. However, where the subject matter of the contract of sale is a unique item, for example, a painting, not obtainable in the market, the defendant may be compelled to specifically perform his part of the contract (Goods Act, s 52; Fraser & Fraser v Angco [1977] PNGLR 134; 

(b)	where the contract involves service of a personal nature. Thus, as Andrew J observed in Robinson v National Airlines Commission [1983] PNGLR 476, a servant cannot claim specific performance of the contract of employment;

(c)	where the contract requires constant supervision by the court, for example, a building contract. In Ryan v Mutual Tontine Association (1893) 1 Ch 116, a lease office service flat required that the lesser should provide a Porter who would be constantly in attendance. It was held that the lease could not be specifically enforced on an application by the lessee; and

(d)	where the contract lacks mutuality. Specific performance will not normally be ordered in favor of a party unless the court could order it, if the need arose, against him thus, an infant cannot obtain a decree of specific performance because the same cannot be ordered against him. 

11.	Ultimately a remedy of specific performance is at the discretion of the court. I have considered the following factors as to whether I should exercise this discretion to compel the defendant to perform the agreement:

•	Whether damages will adequately compensate the plaintiff?
•	Whether the contract involves a service of a personal nature?
•	 Whether the contract requires constant supervision by the court?
•	Where the contract lacks mutuality?

12.	In my view, damages will not adequately compensate the plaintiff. The contract is also not one personal in nature. Whilst there is a need for supervision, there is no opposition from the defendant on this aspect. The contract is mutual, that is if the plaintiff fails, the defendant can compel the plaintiff to complete their work.

13.	I am therefore persuaded on the balance of probability that I should make orders for specific performance of the agreement between the plaintiff and the defendant. Whilst the defendant is being compelled to release the money, the plaintiff will also be expected to perform the contract to fix the roads under the agreement.

14.	In consideration of all that has been discussed, I make the following orders:

1.	It is declared that the defendant has breached its agreement with the plaintiff signed on 21 June 2022.
2.	In consequence of the breach of the agreement with the plaintiff, the defendant is to pay the plaintiff K5,000,000. 00 within 30 days from service of the orders made today.
3.	The defendant pays the plaintiff’s costs of the entire proceedings in the fixed sum of K10,000. 00.
4.	The plaintiff is set at liberty to enforce term two (2) of these orders if the judgment sum remains outstanding after 30 days from the service of the orders.
5.	Proceedings are considered determined, and the file is closed.
6.	Time is abridged.

Judgment and orders accordingly.
________________________________________________________________
Bradley & Co Lawyers: Lawyers for the Plaintiff