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National Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
WS NO. 916 OF 2020
BETWEEN
CITIZEN ALLIANCE SECURITY SERVICES LTD
Plaintiff
AND:
COURTS (PNG) LIMITED
Defendant
Lae: Dowa J
2023: 15th March & 12th April
2025: 21st July 2025
CIVIL CLAIM- Contract for security services-variation of contract- variation of contract by conduct of parties- what constitutes a valid contract- Plaintiff has burden to prove liability- where evidence is disputed Court will apply common sense and logic -evidence presented defies common sense and logic-lacking credibility-proceeding dismissed.
Cases cited:
Jonathan Mangope Paraia v The State (1995) N1343,
Nivani Ltd v China Jiangsu International (PNG) Ltd (2007) N3147
Papua New Guinea Banking Corporation Ltd v Jeff Tole (2002) SC694
Yooken Paklin v The State (2001) N2212,
Waranaka v Dusava (2009) SC940
Counsel:
S Sengi, for the Plaintiff
J Munnul, for the Defendant
JUDGMENT
21st July 2025
Brief Facts
2. The Plaintiff is a company operating a security services business in Lae, Morobe Province. On 6th March 2013, the Plaintiff entered a contract with the defendant to provide security services for seven years. The service contract was terminated in June 2019.The Plaintiff alleges that the Defendant breached the terms of the contract by terminating the contract without notice. The Plaintiff alleges that the Defendant underpaid the invoices issued under the contract. The Plaintiff seeks damages for unlawful termination, for the balance of the contract period and for the unpaid component of the invoices.
3. The Defendant denies the claim pleading that the contract of service was lawfully terminated in accordance with the terms of the contract, and all invoices paid in full as per invoices presented. The Defendant pleads further that the Plaintiff has not clearly pleaded the unpaid component of the invoices.
Trial
4. The matter was heard on 12th March 2023. The hearing was conducted by tender of all Affidavits by consent of parties without crossexamination. The matter adjourned to 12th April 2023 for submissions. The parties were directed to file their submissions on 6th April 2023. The Defendant filed its submissions, but the Plaintiff did not. When the matter returned to Court on 12th April 2023, the Plaintiff’s lawyer did not appear, but one Ken Nawas appeared for the Plaintiff. Counsel for the Defendant submitted it will rely on the written submissions. The Court, then directed the Plaintiff to file its submissions by 14th April 2023 and reserved the matter for decision. Up to the date of decision, the Plaintiff has not filed its submissions.
Plaintiff’s Evidence
5. The Plaintiff relies on the following Affidavits:
6. Ken Nawas is the Managing Director and owner of the Plaintiff company. This is the summary of the evidence presented by Ken Nawas for the Plaintiff. On 6th March 2013, the Plaintiff signed an agreement with the Defendant to provide security services. The contract was partly written, partly oral and partly by conduct. The terms of the agreement were:
a. the term was for seven years
b. payments to be made monthly
c.12 guards to be deployed daily for Monday to Saturday and 8 for Sundays
d. One month written notice for early termination
7. Nawas deposed the Defendant breached of the terms of the contract in the following respects:
8. In response to the Defendant's contention that the contract was varied in January 2015 to reduce the number of guards deployed, Nawas deposed that there was no agreement reached to reduce the number of guards engaged.
Defendant’s Evidence
9. The Defendant relies on the following Affidavits:
a. Affidavit of Sheila Sukwianomb filed 14th June 2022 exhibited D1
b. Affidavit of April Rose Santos filed 13th September 2022 exhibited D2
10. This is the summary of the Defendant’s evidence. The contract for security services was signed on 6th March 2013 for a period of seven years. On 19th June 2019 the contract was terminated. The Plaintiff was paid for one month in lieu of notice as per the terms of the contract. The Defendant denies that the contract was terminated unlawfully. The Defendant denies further that the Plaintiff is entitled to the balance of the contract period as the contract allows for early termination.
11. The Defendant denies owing the Plaintiff for any outstanding underpayment of the invoices. The terms of the contract were varied in January 2015 by the reduction of the guards deployed. The Defendant asked the Plaintiff to reduce the number of guards deployed. The Plaintiff did not dispute this and accepted the variation. The Plaintiff invoiced the Defendant based on the reduced number of guards engaged and payments were made accordingly. The parties have agreed to the variation, if not expressly, by their conduct, which is clearly depicted in the original invoices sent and payments made in respect of them. The invoices attached to the affidavit of Ken Nawas, annexures A-E. (Exhibit P2) were not the original invoices sent to the Plaintiff. They are either new or duplicated invoices. The letters, annexures A to D, in the affidavit of Ken Nawas (Exhibit P3) were not sent to the Defendant and are recently done.
12. Furthermore, the Defendants alleged that the statement of claim does not clearly plead the facts and particulars of the claim for the underpayment for the Defendant to respond accordingly.
Issues
13. Based on the pleadings, evidence and submissions, the issues for consideration are:
Burden of Proof
14. The burden of proving the claim rests on the Plaintiff and must discharge the burden on the balance of probabilities. It is not sufficient to make assertions in a statement of claim and hope to be awarded damages claimed. Refer: Yooken Paklin v The State (2001) N2212 and Jonathan Mangope Paraia v The State (1995) N1343
a. Whether the termination of the Plaintiff’s contract was unlawful
15. The Plaintiff alleged that the Defendant failed to give one month notice of termination under clause 6.1 of the Contract. Clause 6.1 provides:
“6. EARLY TERMINATION
6.1 The contractor shall give the security company one (1) full month notice in writing to terminate the Contract Agreement. The Contractor shall be entitled to claim back any funds paid in advance.”
16. The evidence shows the Defendant issued a letter of termination on 19th June 2019. The letter clearly states that the Plaintiff would be paid one (1) month in lieu of notice. Next day, 20th June 2019, the Defendant sent an email to the Plaintiff advising that the Plaintiff’s guards be removed from the Defendant's premises and that the Plaintiff would be paid to the end of July 2019. The evidence shows that the Plaintiff was paid up to July 2019. Payment in lieu of one month notice is sufficient notice under the contract.
17. In the circumstances, I find there is no breach of the contract of service. It follows that the Plaintiff is not entitled to claim for the remainder of the term. This is especially so where the contract expressly provided for early termination.
b. Whether the Plaintiff is entitled damages for unpaid component of the invoices.
18. The Plaintiff pleads it was underpaid for services provided to the Defendant amounting to K 307,557.31.
19. The Defendant denies the claim for two reasons. First the pleadings are insufficient. Second, on the merits, the contract has been varied and the number of guards being reduced and the Defendant has paid up for all services provided and invoiced and nothing outstanding.
Are the Pleadings sufficient
20. I perused the statement of claim and note the pleadings are brief. The relevant pleadings concerning the outstanding underpayment is paragraph 5 of the statement of claim. It states that:
“5. The Plaintiff claims that the Defendant had not paid for part of the services rendered and that invoices remain unpaid and outstanding to date for an amount of K 307,557.31”
21. The Defendant filed a Defence pleading lack of clarity in paragraph 5 of the statement of claim. The Defendant pleaded further that the original terms of the contract was varied by reducing the number of the guards deployed. The Plaintiff in its Reply to the Defence joined issue, pleading that the variation was not agreed to by both parties and that the claim is for reduction of the number of guards to be supplied during the entire term of the contract.
22. The terms of the original contract are clear. However, the pleadings are brief and lacking further facts and particulars. What did the Defendant do result in a breach of contract. If it was a request for the reduction of the number of guards, does it amount to breach the terms of the contract rather than seeking a variation. If a request was made, what did the Plaintiff do., Did the Plaintiff object to the request. Did the Plaintiff supply all the guards as per the original contract and yet was underpaid for services provided. These pertinent facts were not clearly pleaded. More significantly, the particulars of the claim showing the figures for the underpayment were not specifically set out.
23. The law on pleadings is settled in the case Papua New Guinea Banking Corporation Ltd v Jeff Tole (2002) SC694 that ...unless there is foundation in the pleadings of a party, no evidence and damages or relief of matters not pleaded can be allowed.
24. While the Court notes the pleadings are poor, the Defendant will not be prejudiced as it has sufficiently pleaded its denials and called evidence in support of its defence. I am not inclined to determine the claim merely on the lack of pleadings but will proceed to consider the merits of the claim and decide thereafter.
b. Whether the Plaintiff is entitled damages for unpaid component of the invoices.
Variation of the Contract.
25. The Plaintiff claims that it invoiced the Defendant for amounts calculated on the agreed rates and for the agreed number of static guards supplied, but the Defendant did not pay the amounts on each of the invoices.
26. The Defendant denies the claim, submitting that the terms of the contract were varied in January 2015 and the contract was performed on the new terms by conduct of the parties where the number of guards deployed were reduced, that the Plaintiff submitted invoices for the reduced number of guards and the defendant paid for the monthly invoices submitted by the Plaintiff for the reduced number of guards. That the Plaintiff did not object to the reduced number of guards and or payments for its invoices.
27. The considerations to be applied when determining the issue of variation of contract as stated in the case Nivani Ltd v China Jiangsu International (PNG) Ltd (2007) N3147 are:
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 conduct of parties.
28. There is no evidence of a written variation of the contract. The Defendant pleaded in its Defence and presented evidence that the contract was varied at their request of the Defendant and performed by the parties in their conduct. The Plaintiff denied that the contract was varied.
29. The result is, I have before me are two competing versions. The Supreme Court in Waranaka v Dusava (2009) SC940 held that where there are two versions in evidence, it is important to assess and analyse the credibility of the witnesses and their evidence and point out any aspect of the performance of each witness before accepting the evidence. The deponents to the various affidavits were not cross-examined. In the absence of cross-examination to assess the demeanour and credibility of the deponents, the Court will apply common sense and logic based on proven facts.
Invoices
30. The Plaintiff presented a bundle of invoices for the period between 31st January 2015 and 31st July 2019. It also presented a statement for the same period dated 22nd October 2019. The statement shows the amounts paid and recorded against each invoice and the amount recorded as outstanding for the total period. The total amount for the period is K 307,557.31. The Plaintiff has not produced in evidence any previous statements issued before 22nd October 2019 or immediately before the termination of the contract. This is significant to indicate whether there were indeed underpayments.
31. The Defendant on the other hand presented evidence indicating that the terms of the written agreement have been subsequently varied as of 1st January 2015 with the reduction of the guards deployed. The Defendant presented evidence of invoices issued by the Plaintiff of reduced guards denoting the variation of the contract. That is, the Plaintiff accepted the variation by conduct in issuing invoices for reduced number of guards and got paid on those invoices. The Defendant produced a couple of invoices to prove its contention and dispute that the invoices produced in Court by the Plaintiff are recent fabrications.
32. I note the evidence shows instances of double or duplicate invoicing with the same invoice numbers but with different figures.
Following are some examples of double invoicing issued by the Plaintiff.
Invoice presented to the Defendant. Invoice produced in Court
a. February 2019- Inv.10255 K 10,644.48 K 19,353.60
b. June 2019- Inv. No 10259- K 11,408.80 K 20,736.00
b. July 2019- Inv. No 10260- K 11,784,96 K 21,427.20
c. January 19- Inv. No 10254- K 11,784.96 K 21,427.20
d. January 17- Inv. No 10382- K 13,749.12 K 21,427.20
e. Nov. 2017- Inv. No 10408- K 13,622.40 K 20,736.00
33. I compare the invoices presented to the Defendant and those produced in Court by the Plaintiff and note there is huge disparity between them in terms of the figures. The Plaintiff has not explained why two sets of invoices were issued. The Plaintiff has not explained why it issued invoices for reduced number of guards in the first place and got paid. Oblivious to this facts, the Plaintiff presented to Court the same invoices with a different and larger figures than those sent to the Defendant initially. Although the Plaintiff said they deployed the number of guards initially agreed, it is not reflected in the invoices initially sent to the Defendant. In the face of denial by the Defendant, I have grave doubts that the invoices and statements now produced in Court were ever presented to the Defendant. I accept the submissions of the Defendant that the invoices are new and recently produced.
34. The reduction of the number of guards deployed commenced on 1st January 2015. If it was initiated by the Defendant, there is no evidence of the Plaintiff objecting to the variation of the terms of the contract.
Letters
35. The Court notes the Plaintiff produced copies of five letters conveniently for the years 2015, 2016, 2017, 2018 and 2019. The Plaintiff submitted it raised the issues of underpayment in these letters. The Defendant denies receiving the first four letters. I accept the contention by the Defendant that the first four letters were either not sent or don’t exist. First, it is noted that the text of the letters is identical and repeated in the same words including paragraph spacing. The only difference is the date. Secondly, the context of the first four letters differs from the letter issued in January 2019. In the first four letters the Defendant complains about underpayments for services rendered. The letter of January 2019 contains complaints against the Defendants for the reduction of the number of guards. The letters fail to show coherence and consistency. That is, they do no refer to earlier correspondence as to the subject matter, dates, the amount of outstanding underpayment and reference to any mode of communication like email attendances on the issue. What it means and is open for an inference to be drawn, is that the defendant called for the reduction of the number of guards. The Plaintiff obliged the reduction of the number of the guards without objection and performed on the new terms. Reduced number of guards were deployed and invoiced which were paid without fail. The common sense and logical conclusion are that the contract was varied as submitted by the Defendant.
36. In the circumstances, I find the terms of the initial contract of 6th March 2013 was varied by conduct of parties as of January 2015. I also find the parties have performed on the terms of the contract as varied.
Conclusion
37. The Plaintiff has the burden of proof to establish its claim on the balance of probabilities. On the strength of the pleadings and evidence presented, I am not satisfied that the Plaintiff discharged the burden. Although the Court considered the evidence despite the poor pleadings, even the evidence presented became problematic. The evidence could not assist in rectifying the lapse in the pleading. It must be stressed that the facts must exist and original, paving the way for good pleading and easier presentation of evidence. In the present case there are serious doubts, and the case has not been proved and shall be dismissed.
Costs
38. Generally, costs follow the event. The Defendant succeeded in defending the action. I will allow costs in favour of the Defendant.
Orders
39. The Court orders that:
_______________________________________________________________
Simon S Sengi & Associates Lawyers : Lawyers for the Plaintiff
John Peter Munnul lawyers : Lawyers for the Defendant
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