Audela Ltd v National Housing Corporation [2024] PGSC 5; SC2531 (9 February 2024)

SC2531

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA NO. 83 OF 2020 (IECMS)

AUDELA LIMITED
Appellant

V

NATIONAL HOUSING CORPORATION
Respondent

Waigani: David J, Geita J, Shepherd J
2023: 26^th July
2024: 9^th February

DAMAGES – Appeal from National Court’s assessment of damages on undertaking as to damages – no award of damages made by the primary judge – principles relating to assessment of damages on undertaking as to damages given in support of application for interim injunction – distinction between damages for loss caused by interim injunction and loss caused by the litigation – importance of identifying duration of interim injunction when assessing damages pursuant to undertaking as to damages – party seeking to enforce undertaking must show that the damages claimed would not have been sustained but for the interim injunction – evidence must establish that damages sustained were caused by the interim injunction – evidence of alleged loss in this appeal failed to make any causal connection to the interim injunction – appeal dismissed.

Held:

1. The principles on assessment of damages based on an undertaking as to damages include:

(a) The source of the Court’s ability to award damages when an injunction has been granted is the application’s voluntary undertaking which is given as the price for obtaining the injunction.

(b) An undertaking is given to the Court. It is not a contract between the applicant and the respondent to an application for an injunction.

(c) The Court has no power to compel an applicant for an injunction to give an undertaking as to damages but the Court can refuse to grant the injunction if an undertaking is not given.

(d) The Court, upon being satisfied that an interlocutory injunction was not warranted in the circumstances, has a discretion whether to enforce the undertaking but the general rule is that a plaintiff who has failed on the merits should recompense the party who has suffered loss.

(e) The Court has a similar discretion whether to enforce the undertaking where a suit is dismissed for want of compliance with directions or for want of prosecution.

(f) A party is only compensated for loss proven on the civil standard to be the natural consequence of the injunction.

(g) Damages caused by the grant of an injunction are different from damages caused by the litigation. Where an undertaking as to damages has been given, damages are only recoverable where the loss is proven on the civil standard to have been caused by the injunction and not from the litigation generally.

2. The Appellant failed in this instance to establish by credible evidence at trial on assessment of damages that it sustained any financial loss that was causally related to the interim injunction. The primary judge’s decision not to award damages based on the undertaking given as to damages was accordingly affirmed and the appeal dismissed.
   

Cases Cited:

Papua New Guinean Cases
Cheng v Agmark Ltd (2008) N3338
Chief Collector of Taxes v Bougainville Copper Ltd (2007) SC853
Daniel v Air Niugini Ltd (2019) N7820
Gobe Hongu Ltd v National Executive Council (1999) N1920
Minig v Minig (2013) N5327
Mt Hagen Local Level Government v Mark (2018) N7588
Morobe Provincial Government v Tropical Charters Ltd (2011) N4240
National Housing Commission v Yama Security Services Pty Ltd (2000) N1985
Steamships Trading Company Ltd v Magellan Properties Ltd (2023) N10082
White Corner Investments Ltd v Harro (2006) N3089

Overseas Cases
Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd [1981] HCA 75; [1981] 146 CLR 249
Attorney-General v Albany Hotel Co [1886] 2 Ch 696
Smith v Day (1882) 21 Ch D 421
Tucker v New Brunswick Trading Company of London [1890] UKLawRpCh 60; (1890) 44 Ch D 249

Counsel:
Ms P. Tamutai, for the Appellant
Mr M. Saka, for the Respondent

DECISION ON APPEAL

9^th February 2024

1. BY THE COURT: The appellant appeals from the whole of the decision of the National Court delivered on 29 July 2020 in proceeding WS No. 1324 of 2008 whereby after summary dismissal of suit the Court declined to award any compensation to the appellant pursuant to an undertaking as to damages which had been given by the National Housing Corporation at the initial stage of the proceeding.

BACKGROUND

2. The background facts were that on 15 November 2008 the National Housing Corporation (NHC) issued proceeding WS No. 1324 of 2008 in the National Court at Waigani alleging fraud by the National Land Board in connection with the grant to Audela Limited of a State Lease in respect of property described as Allotment 6 Section 43, Hohola, NCD. The NHC asserted it had title to the property and that the property contained improvements consisting of two donga-style accommodation blocks and separate ablution facilities which the NHC had been leasing to tenants. The NHC alleged breaches by the National Land Board of ss. 68 and 69 of the Land Act 1996 in that it was pleaded that there had been no advertisement of the availability of the property for the grant of a State Lease and no exemption from the statutory requirement for such advertisement. The NHC claimed orders, among others, that the State Lease issued by the Registrar of Titles to Audela Limited be revoked and that a new title for the property be issued to the NHC. The NHC also sought general damages for destruction of improvements on the property said to have been caused by Audela Limited, alternatively damages by way of compensation for the assessed value of the land and improvements.
3. Audela Limited was incorporated as a local company under the Companies Act 1997 on 28 June 2005. It later changed its name to Audela Properties Limited (Audela). At all material times Mr Rex Mono was a shareholder and director of Audela. Mr Mono refers to himself as the managing director of the company.
4. On 19 November 2008 the NHC obtained an ex parte interim injunction in WS No. 1324 of 2008 which restrained Audela from evicting the NHC’s tenants from the property. The interim injunction also restrained Audela from any further dealings with the property, including any proposed redevelopment, pending the determination of the substantive proceeding. However, the Court ordered that the NHC’s motion for the interim injunction was returnable on 1 December 2008 for inter partes hearing.
5. The full text of the ex parte interim injunction which the NHC obtained against Audela on 19 November 2008 is reproduced below:

The Court orders:-

1. Leave is granted to the Plaintiff to waive and dispense with the requirements for compliance with the Rules of the National Court relating [to] service of all documents filed herewith upon the Defendants.
2. An order in the nature of interim injunction restraining the First Defendant, its officers, agents and or servants from further conducting eviction of Plaintiff’s tenants and their families from the property known as Section 43 Allotment 06, Hohola at Waigani.
3. An order [restraining] the First Defendant from any further dealing with the property including any proposed redevelopment pending the hearing and determination of the substantive proceedings.
4. An order that the Orders of the District Court dated the 22^nd of October 2008 and all previous and subsequent orders and proceedings are stayed until the hearing and determination of the substantive proceedings.
5. That the documents relied upon in this application and the proceedings substantive be served upon the Defendants within seven (7) days.
6. The matter is returnable on the 1^st of December 2008 for hearing inter-partes.
7. Costs of the application be costs in the cause.
8. Time for the entry of these Orders be abridged to the time for settlement which shall take place forthwith before the Registrar.
   
6. The NHC’s motion for the ex parte interim injunction which was granted by the National Court on 19 November 2008^[1] was supported by an undertaking as to damages signed by a person named David Dambali on behalf of the NHC. The undertaking as to damages was filed on 18 November 2008. The operative text of the undertaking is set out later in this decision.
7. On 25 November 2008 Audela filed the following documents in the proceeding:

(1) notice of intention to defend;

(2) defence to the NHC’s statement of claim which pleaded, among others, that title to the property was initially vested in the Department of Lands and Physical Planning, that the NHC had never had title to the property, that the NHC lacked locus standi to pursue the proceeding and that no fraud had been committed in connection with the grant of the State Lease to Audela;

(3) a motion seeking orders that the NHC be required to pay the sum of K20,000 into Court as security for economic losses “continuously suffered” by Audela, alternatively that the NHC be directed to file an undertaking to pay for those economic losses from date of transfer of lease title to Audela, or from date of issuance of the writ of summons, to the date of the Court’s determination of NHC’s substantive claims.

8. When the ex parte interim injunction returned before the Court on 1 December 2008 for inter partes hearing there was no appearance for the NHC. The matter was adjourned by the Court to 10 December 2008 and then further adjourned to 19 December 2008.
9. On 11 December 2008 the newly appointed lawyers for Audela, Kari Bune Lawyers, filed a further notice of motion for Audela, this time seeking orders that the ex parte interim injunction of 19 November 2008 be lifted or set aside and that the proceeding be summarily dismissed pursuant to Order 12 Rule 40 of the National Court Rules (NCR) for failure to disclose any reasonable cause of action, because the suit was frivolous or vexatious and because the claim was an abuse of process, particularly in view of the NHC’s lack of locus standi. This second motion of Audela also sought an order pursuant to the NHC’s undertaking as to damages filed on 18 November 2008 that the NHC pay “damages to be assessed at a later date.”
10. The transcript of the interlocutory hearing which took place 19 December 2008 states that Ms Elizabeth Bowada appeared as counsel for the NHC on that occasion. Mr Levi Tilto appeared as counsel for Audela. The transcript clearly shows that on 19 December 2008 the primary judge dissolved the ex parte interim injunction of 19 November 2008 but at the same time made a new set of orders which were substantially different from those contained in the ex parte interim injunction of 19 November 2008. The relevant extract taken from p. 17 of the transcript reads as follows: ^[2]

As for the interim injunction, I will lift it but at the same time make an order that neither of the parties are to take any step in relation to these proceedings except to secure the integrity of the premises and at this stage the National Housing Corporation shall take every step to ensure that the property is properly secured, its value ascertained and maintained and that no step is taken to jeopardise or otherwise prejudice the interest and the value of the land until the proceedings are determined.

And for clarity, I will make another order. For clarity, those occupying the premises, if they are the same persons that went to court, in this Court, and up to the Supreme Court, they have no right to insist on continued occupation unless and until they pay their dues to the National Housing Corporation.

11. Thereafter a series of interlocutory steps were taken by the parties during 2009 which culminated in a set of directions being ordered by the Court on 8 October 2009 whereby Audela and NHC were each required to give specific discovery of documents within 14 days, NHC was to file its witnesses’ evidence in affidavit form by 9 November 2009, all defendants including Audela were to file their witnesses’ affidavits by 23 November 2009, and a statement of agreed and disputed facts and legal issues was to be filed by the parties by 27 November 2009.
12. The NHC failed to comply with the Court’s directional order of 8 October 2009.
13. On 1 December 2009 Audela by its lawyers filed a motion seeking an order that the proceeding be dismissed [sic] for want of compliance by NHC with the Court’s order of 8 October 2009 and that judgment be entered against NHC with damages to be assessed pursuant to NHC’s undertaking as to damages filed on 18 November 2008.
14. Audela’s motion for dismissal came on for hearing before the primary judge on 5 March 2010, at which time Mr Levi Tilto appeared for Audela but there was no appearance by counsel for NHC. The primary judge, on being satisfied that NHC had been duly served with Audela’s motion filed on 1 December 2009 and affidavit material in support, granted the motion.
15. The Court’s order of 5 March 2010 is in these terms:

The Court orders that:-

1. The proceedings be dismissed for want of compliance with the Orders made by this Court on 8^th October 2009 and for want of prosecution.

2. Judgment be entered against the Plaintiff with damages to be assessed pursuant to the Undertaking As To Damages filed by the Plaintiff on 18^th December 2008.

3. The Plaintiff pays the 1^st Defendant’s costs and incidental of this application and the costs of the proceedings on a party/party basis.

16. A motion filed by NHC on 25 March 2010 seeking to have the Court’s order of 5 March 2010 set aside was dismissed by the primary judge on 9 April 2010.
17. Two years later Audela followed up with an application that judgment be entered against NHC for its taxed costs at K22,665.50. The application was granted by the Court on 19 March 2012. Contempt charges against NHC were then filed by Audela’s lawyers on 4 May 2012, claiming that NHC had failed to pay Audela’s judgment for its taxed costs for this proceeding. It seems that there was then a partial payment by NHC of Audela’s judgment for taxed costs. It is not disclosed on the material available to this Court in the appeal whether that judgment for Audela’s taxed costs up to the date of the order of 5 March 2010 has ever been fully paid by NHC.
18. The final procedural step taken by Audela in this proceeding WS No. 1324 of 2008 was to apply to the Court in mid-2016 to have assessment of Audela’s damages pursuant to NHC’s undertaking as to damages filed on 18 November 2008 set down for trial. No explanation has been given by Audela as to why it took so long after the order of 5 March 2010 for a trial date on assessment of the company’s damages to be allocated. The Court’s file for the proceeding sheds no further light on the reason for that 6 year delay.
19. The trial on assessment of damages claimed by Audela was conducted by the primary judge over a period of two days, on 19 and 20 July 2016.
20. The primary judge delivered the National Court’s decision on 29 July 2020. The decision is reported as judgment N8436. His Honour gave a detailed analysis of Audela’s evidence adduced at the trial on assessment of damages. Audela claimed that it should be awarded a sum of K32,191,442 for damages to compensate it for estimated losses it had allegedly sustained as a result of the ex parte interim injunction which NHC had obtained back on 19 November 2008. His Honour found that Audela’s claim had been grossly exaggerated and held that Audela had failed to establish by credible evidence any of its alleged losses which were referable to the interim injunction. His Honour declined to enforce NHC’s undertaking of 19 November 2008. Consequently, no damages were assessed. Audela was ordered to pay NHC’s costs of the assessment of damages component of the proceeding.
21. Audela, aggrieved by the National Court’s decision, filed its appeal in SCA 83 of 2020 on 7 September 2020. The appeal came on for hearing before us on 26 July 2023.

THE MAIN ISSUE

22. Audela has pleaded twelve grounds of appeal arising from the primary judge’s decision that no damages should be awarded to it pursuant to NHC’s undertaking as to damages. At the hearing of the appeal counsel for Audela summarised the company’s grounds of appeal and presented them as constituting the following five issues for determination by this Court:

(1) Whether the primary judge erred in finding that Audela had failed to establish its damages?

(2) Whether the primary judge erred by taking into account irrelevant considerations when he ventured into the matter of Audela’s indefeasibility of title to the property?

(3) Whether the primary judge erred in determining that the evidence of certified practicing accountant Ms Asing Bogomos was inadmissible as being hearsay?

(4) Whether the primary judge erred by failing to give proper weight to the uncontested evidence of Audela in support of its claim for damages based on NHC’s undertaking?

(5) Whether the primary judge erred in determining that Audela failed to mitigate its losses?

23. Against this, counsel for NHC submitted that all of Audela’s grounds of appeal are misconceived because the primary judge had carefully analyzed the evidence presented for Audela at the trial on assessment of damages and in so doing the primary judge had properly concluded in his decision delivered on 29 July 2020 that Audela had failed to establish that it had suffered any loss at all as a direct consequence of NHC’s undertaking as to damages.
24. Having considered the written and oral submissions made by each counsel and having reviewed the extensive material contained in the two volumes of the Appeal Book, we are of the opinion that the main issue in this appeal is the first of the issues identified by counsel for Audela, that is to say:

Did the primary judge err in fact and or in law in finding that Audela had failed to establish its alleged damages by credible evidence?

We will address this issue first. We consider that there would be no utility in responding to the other four issues identified by counsel for Audela should the main issue be answered in the negative. However, should we determine the main issue in the affirmative, we will then respond to the additional four issues which counsel for Audela has raised.

LAW ON ASSESSMENT OF DAMAGES WHERE AN UNDERTAKING AS TO DAMAGES HAS BEEN GIVEN

25. The general principles of law on enforcement of an undertaking as to damages given in support of an application for an interim injunction are well established.
26. The common law position is that the source of the court’s ability to award damages when an injunction has been granted is the plaintiff’s voluntary undertaking which is given as the price for obtaining the injunction: Attorney-General v Albany Hotel Co [1886] 2 Ch 696.
27. The undertaking is given to the court. The undertaking is not a contract between the applicant and the respondent to an application for an injunction: Smith v Day (1882) 21 Ch D 421.
28. A court has no power to compel an applicant for an injunction to give an undertaking as to damages. The Court can only refuse to grant the injunction: Tucker v New Brunswick Trading Company of London [1890] UKLawRpCh 60; (1890) 44 Ch D 249.
29. The National and Supreme Courts have said that as a general rule, before the Court can grant an injunction, an applicant must provide an undertaking as to damages: Gobe Hongu Ltd v National Executive Council (1999) N1920; NHC v Yama Security Services Pty Ltd (2000) N1985; Chief Collector of Taxes v Bougainville Copper Ltd (2007) SC853.
30. A court has a discretion as to whether to enforce the undertaking but a plaintiff who has failed on the merits will normally be required to recompense the party who has suffered loss. A party is only compensated for the loss proven on the civil standard to have actually been caused by the grant of the injunction: Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd [1981] HCA 75; [1981] 146 CLR 249.
31. The purpose of an undertaking as to damages given in support of an application for an interlocutory injunction, and the consequences of that undertaking, are well explained by Gibbs J in the Air Express Ltd case at p.311:

“ The object of requiring a plaintiff who seeks an interlocutory injunction to enter into an undertaking of this kind is to attempt to ensure that the defendant will receive compensation for any loss which he suffers by reason of the grant of the injunction if it appears in the event that the plaintiff was not entitled to obtain it. The insistence upon the giving of an undertaking is a very important, if not essential, means of preventing injustice from being done by the court when it makes an order at the interlocutory stage, before the rights of the parties have been finally determined. The court has a discretion not to enforce such an undertaking but unless the defendant has been guilty of conduct that would render it inequitable to enforce the undertaking it would seem just ... that the plaintiff who has failed on the merits should recompense the defendant for the damage that he has suffered as the result of the making of the interlocutory order. However, it is perfectly clear, and it appears from the words of the undertaking themselves, that the only damages to which the defendant is entitled are those which he has sustained by reason of the grant of the injunction. The generally accepted view is that the damages must be confined to the loss which is the natural consequence of the injunction under the circumstances of which the party obtaining the injunction has notice.”

[underlining added]

32. Furthermore, it was held in the Air Express Ltd case that:

(1) There is a distinction drawn between damage caused by the grant of an injunction as opposed to damage which flows from the fact of the litigation itself. Only in the former instance are damages recoverable.

(2) It is for the party who seeks to enforce the undertaking to show that the damage claimed would not have been sustained but for the injunction.

33. The Air Express Ltd case is particularly instructive as it clarifies the distinction which exists between loss caused by an injunction, which is entirely different from loss caused by the litigation. This is what was said by Gibbs J at p. 312 of the decision, referring to the situation where a party is seeking damages by way of enforcement of an undertaking given by another party on grant of an interim injunction:

“ If the pendency of the litigation, rather than the making of the order, was the cause of the [applicant’s] loss, the terms of the undertaking have no application, since the [applicant] has not sustained loss by reason of the order.”

And at p. 313:

“ ... the defendant, who seeks to enforce the undertaking, must prove that the damage he has sustained was caused by the making of the order.”

34. Mason J expanded on this at p. 324 of the decision in Air Express Ltd by observing:

“ The distinction between damage caused by the injunction and damages which flow from the litigation is, I think, well founded on the language in which the usual undertaking as to damages is expressed. The party seeking damages must show that he has sustained damage “by reason of the Order”. The words connote a causal connection between the damage and the interim injunction.”

35. The principles applicable to enforcement of an undertaking as to damages and the assessment of those damages expounded in these English and Australian cases have been accepted and adopted in numerous Papua New Guinea cases: see White Corner Investments Ltd v Harro (2006) N3089; Cheng v Agmark Ltd (2008) N3338; Morobe Provincial Government v Tropical Charters Ltd (2011) N4240; Minig v Minig (2013) N5327; Mt Hagen Local Level Government v Mark (2018) N7588; Daniel v Air Niugini Ltd (2019) N7820; and Steamships Trading Company Ltd v Magellan Properties Ltd (2023) N10082.

CONSIDERATION OF MAIN ISSUE:

Did the primary judge err in fact and or in law in finding that Audela had failed to establish its alleged damages by credible evidence?

36. The undertaking as to damages which was filed for the NHC in this proceeding WS No. 1324 of 2008 on 18 November 2008 stated:

The Plaintiff hereby undertakes to pay damages to the Defendants for any damages that may accrue to the Defendants as a result of the Court granting restraining orders in favor of the Plaintiff herein.

37. To succeed in its claim for damages in the National Court based on the undertaking given by NHC, Audela was required to prove that it was the interim injunction itself which brought about such losses as it may have suffered, not the litigation: Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd (supra).
38. The determination of the duration of the interim injunction was, and is, crucial to establishing any entitlement on the part of Audela to damages flowing from the grant of the ex parte interim injunction which the NHC obtained on 19 November 2008. This was acknowledged by the primary judge when he posed this question at p.13 of his decision: What is the relevant period for an assessment of Audela’s damages under the undertaking as to damages?
39. We find that there were two matters which came before the National Court at the inter partes hearing which was conducted by the primary judge on 19 December 2008:

(1) the return of the ex parte interim injunction of 19 November 2008; and

(2) Audela’s motion filed on 11 December 2008 which sought orders that:

(a) the interim ex parte orders obtained by the plaintiff “be lifted or set aside”, and

(b) that the proceeding be summarily dismissed either for want of locus standi or for failure to have disclosed any reasonable cause of action because it was alleged that the proceeding was frivolous or vexatious and/or an abuse of process.

40. The transcript of the inter partes hearing on 19 December 2008 clearly shows that it was on that date that the primary judge “lifted” the ex parte interim injunction which the NHC had obtained against Audela on 19 November 2008. In so doing, the primary judge granted the first of the orders which had been sought in Audela’s motion filed on 11 December 2008. However the transcript also shows that the primary judge refused to grant dismissal of the proceeding, a dismissal having been the second of the orders sought in Audela’s motion filed on 11 December 2008. Instead of dismissing the proceeding, the primary judge issued a fresh interim injunction which restrained all of the parties from taking any further steps which could prejudice whatever interests each party had in the property pending determination of the case.
41. The following extracts are reproduced from pp. 16 and 17 of the transcript of the hearing of 19 December 2008, which can be found at pp. 494 and 495 of the Appeal Book:

HIS HONOUR: All right. And so as I said the order then is, I will decline the application [of Audela] to dismiss these proceedings for lack of standing ...and that the Lands Department has to grant title as of right [to the NHC for land] on which there is government improvement, where residential properties or building structures have been erected. That should be the first call directly to the National Housing Corporation. So this grant seems to be in breach of that. ...

If a grant has not proceeded in full and due compliance of the requirements of the legislation, the Land Act - Land Registration Act, then all the other relevant legislation apply [and] it could amount to a statutory fraud. In that requirements of the law have not been allowed to be fulfilled to the fullest in order for any grant of State Lease to be valid. And that seems to be the situation here. Whether that is the case is a matter for trial.

... As for the interim injunction, I will lift it but at the same time make an order that neither of the parties are to take any step in relation to these proceedings except to secure the integrity of the premises and at this stage the National Housing Corporation shall take every step to ensure that the property is properly secured, its value ascertained and maintained and that no step is taken to jeopardise or otherwise prejudice the interest and the value of the land until the proceedings are determined.

And for clarity I will make another other order. For clarity, those occupying the premises, if they are the same persons that went to court, in this court, and up to the Supreme Court, they have no right to insist on continued occupation unless and until they pay their dues to the National Housing Corporation.

[emphasis added]

42. It is noteworthy that there is no reference in the transcript of the hearing which took place before the primary judge on 19 December 2008 or in the National Court’s file for WS No. 1324 of 2008 to Audela having moved its earlier motion filed on 25 November 2008 which had sought orders that NHC pay the sum of K20,000 into Court as security for Audela’s alleged continuous losses, alternately that NHC be ordered to file a separate undertaking to pay for Audela’s economic losses from “date of transfer of lease title to Audela, or from date of issuance of the writ of summons to the date of determination of NHC’s substantive claims.” Audela presumably abandoned that motion and allowed it to lapse as the orders sought in that particular motion were never pursued subsequent to the inter partes order made by the primary judge on 19 December 2008.
43. A perusal of the National Court’s file for WS No. 1324 of 2008 shows that neither NHC nor Audela ever filed a minute of the order which was made by the primary judge on 19 December 2008, the terms of which order effectively discharged the ex parte interim injunction obtained by NHC against Audela on 19 November 2008. The terms of that order as announced by the primary judge also dismissed that part of Audela’s second motion filed on 11 December 2008 which had sought summary dismissal of the proceeding. The order of 19 December 2008 then contained a fresh interim injunction, issued by the primary judge in the exercise of his discretion, by way of new interim restraining orders which affected not only Audela but also NHC as well as NHC’s former tenants of the property, the latter having been directed by the order of 19 December 2008 to pay “their dues” to NHC if those persons were to continue to occupy the property pending determination of NHC’s suit.
44. The terms of the new interim injunction issued by the primary judge on 19 December 2008 were different from the terms of the ex parte interim injunction which the NHC had obtained on 19 November 2008. We find that the ex parte interim injunction of 19 November 2008 was effectively dissolved by the primary judge on 19 December 2008 and then immediately replaced by the new interim injunction of 19 December 2008, which had a much wider reach and affected not only Audela but also NHC and the occupants of the property pending the determination of NHC’s suit.
45. There is no evidence before this Court that almost 8 years later, when the primary judge subsequently heard Audela’s application on 19 and 20 July 2016 for assessment of damages, his Honour had a copy of the transcript of the hearing which had taken place before him on 19 December 2008. It seems that this particular transcript was only obtained after Audela had filed its notice of appeal in SCA No. 83 of 2020 on 7 September 2020 and then only because the parties, when settling the index to the Appeal Book, must have agreed that the transcripts of the two separate hearings of 19 December 2008 and then 19 and 20 July 2016 which took place before the primary judge were required for inclusion in the Appeal Book.
46. We observe that the transcript of the hearing held on 19 December 2008, to be found at pp. 478 to 496 of the Appeal Book, was certified as correct by the Director of Court Reporting Services on 11 November 2020. This therefore signifies that this particular transcript had not been prepared and was not available to the primary judge at the assessment of damages trial which was conducted on 19 and 20 July 2016, held almost 8 years after the inter partes hearing on 19 December 2008 which had dealt with the return of the ex parte interim injunction of 19 November 2008 and Audela’s second motion filed on 11 December 2008. Nor was that transcript available post-trial when the primary judge prepared his reasons for decision on Audela’s claim for damages arising from NHC’s undertaking as to damages.
47. Perusal of the separate transcript of the hearing which took place before the primary judge on 19 and 20 July 2016 on the assessment of Audela’s claim for damages indicates that the Court’s inter partes interlocutory order of 19 December 2008 was not brought to the attention of the Court by counsel for Audela in his written and oral submissions. Indeed, counsel for Audela seriously misled the primary judge when he informed his Honour that the subject ex parte interim injunction of 19 November 2008 was supposedly “lifted’ by the Court on 10 March 2010.
48. The following extract is taken from pp. 501 and 502 of the Appeal Book, at the point where counsel for Audela at the assessment of damages hearing had referred the primary judge to para. 3.10 et sequentia of counsel’s written submissions:

HIS HONOUR: ... What day was the injunctive order? 18 November [2008].

MR TILTO: Your Honour, the injunctive orders were obtained by the plaintiff on the - -

HIS HONOUR: On 20 November [2008].

MR TILTO: 20 November.

HIS HONOUR: So, when was it lifted?

MR TILTO: That was on 10 March 2010. That order was lifted when the Court dismissed the plaintiff’s proceedings against the first defendant.

49. We observe yet again that the National Court’s record shows that the ex parte interim injunction which the NHC obtained against Audela was granted by the primary judge on 19 November 2008, not 20 November 2008. A further error was made by counsel for Audela when he misinformed the primary judge that the order for assessment of damages was granted by his Honour on 10 March 2010 instead of 5 March 2010.
50. We repeat that the minute of the order for summary dismissal dated 5 March 2010, signed by the Registrar and entered on 9 March 2010, states that the terms of the order were these:

“ The Court orders that:-

1. The proceedings be dismissed for want of compliance with the Orders made by this Court on 8^th October 2009 and for want of prosecution.

2. Judgment be entered against the Plaintiff with damages to be assessed pursuant to the Undertaking As To Damages filed by the Plaintiff on 18^th December 2008.

3. The Plaintiff pays the 1^st Defendant’s costs and incidentals of this application and the costs of the proceedings on a party/party basis. ”

51. As counsel for Audela failed to alert the primary judge at the trial on assessment of damages in July 2016 to the incontrovertible fact, proved by the transcript of the hearing which took place on 19 December 2008, as certified by the Director of Court Reporting Services on 11 November 2020, that the ex parte interim injunction obtained by the NHC on 19 November 2008 was lifted by the Court on 19 December 2008, it is not surprising that the primary judge in his decision reported as N8436 delivered on 29 July 2020 makes no reference to the earlier interlocutory order of 19 December 2008 which had effectively changed the landscape of the litigation at the end of 2008. The terms of the interim order of 19 December 2008 expressly discharged the ex parte interim injunction of 19 November 2008, dismissed that part of Audela’s second motion filed on 11 December 2008 which had sought summary dismissal of the proceeding, immediately followed by a fresh set of orders made by the primary judge, orders which included a separate interim injunction which was in content significantly different in its wording from that which was contained in the ex parte injunction issued a month earlier and which had just been “lifted” by the primary judge.
52. We find that when the ex parte interim injunction of 19 November 2008 was “lifted” by the inter partes order of 19 December 2008, this effectively discharged the ex parte interim injunction and automatically relieved NHC from any subsequent liability for financial loss claimed by Audela pursuant to NHC’s undertaking filed on 18 November 2008. In other words, NHC’s liability for damages to Audela under NHC’s undertaking was limited to such financial loss that Audela was able to establish by cogent evidence had accrued to its detriment during the currency of the ex parte interim injunction, an injunction which had lasted for only one calendar month from 19 November 2008 to 19 December 2008. This is the significance to this case of the principles which were so thoroughly expounded in the Air Express Ltd case.
53. It is abundantly clear to us that the assessment of damages hearing which was conducted by the primary judge in July 2016 proceeded without the Court having been alerted by counsel for Audela, or indeed by counsel for NHC, of the existence and content of the inter partes order that had been made by the Court almost 8 years earlier on 19 December 2008. No minute of that crucial order was ever filed by the lawyers acting for Audela or by counsel for NHC. Had the primary judge had the benefit of knowledge of that order and was not misled into being informed by counsel for Audela that the ex parte interim injunction, erroneously said by counsel for Audela to have been granted on 20 November 2008 instead of the day before, was not “lifted” until the order for dismissal of NHC’s suit was made on 10 March 2010 (in fact, 5 March 2010), his Honour would not have commented, as he did at para. 21 of his decision, that if a duty on Audela to mitigate its damages did not apply then the duration of the ex parte interim injunction would be for a period of 1 year and 106 days from 19 November 2008 to 5 March 2010.
54. However, as it was, his Honour went on to make the following ruling in para. 21 of his decision:

“ Audela has neither made any submission nor has it provided any evidence as to why its failure to mitigate should be taken into account or, for that matter, the need to consider the issue of mitigation when assessing damages. In the circumstances, I am of the view that the relevant and applicable period for the purposes of assessing damages in this case is 13 days from 19^th November 2008 when the interim orders were issued to 01^st December 2008 when the orders were set to first return to the Court.”

55. As we have already observed, given the knowledge we now have from the transcript of the hearing that took place on 19 December 2008, a transcript that was not available to the primary judge at the assessment of damages trial in July 2016, the applicable period for the purposes of assessing any damages claimed by Audela as arising from the ex parte injunction of 19 November 2009 and enforceable pursuant to NHC’s undertaking filed on 18 November 2009 is properly one calendar month from 19 November 2008 to 19 December 2008.
56. For Audela to succeed in its claim for damages payable pursuant to the undertaking which the NHC filed on 18 November 2008, it had to demonstrate by satisfactory evidence at the assessment of damages trial held in July 2016 that the financial losses it sustained were caused as a natural result of the ex parte interim injunction obtained by NHC which was in force for only one calendar month at the end of 2008.
57. Our overview of the evidence which Audela adduced at the trial on assessment of damages shows that the evidence, particularly the evidence given by Audela’s financial consultant, relates to estimated financial losses said to have been incurred by Audela both before, during and after the order that was made by the primary judge on 5 March 2010 for Audela’s damages pursuant to NHC’s undertaking to be assessed. In other words, Audela’s evidence as to its alleged financial losses which was adduced at the trial on assessment of damages related to the litigation generally. None of that evidence was directed towards establishing whatever notional financial losses Audela might have sustained by reason of the ex parte interim injunction that was in force for one calendar month between 19 November 2008 to 19 December 2008. For this reason Audela’s claim that it was entitled to damages pursuant to the NHC’s undertaking filed on 18 November 2008 through to the trial on assessment of damages in July 2016 and beyond was misconceived and seriously flawed right from the start.
58. It must also be emphasised that on 19 November 2008 the primary judge expressly granted that part of Audela’s own motion filed on 11 December 2008 which had sought the “lifting” of NHC’s ex parte interim injunction. However, the primary judge declined that part of Audela’s motion which had sought an order pursuant to NHC’s undertaking as to damages that NHC pay “damages to be assessed at a later date.” That second order which had been unsuccessfully sought by Audela formed no part of the terms of the order which was made by the primary judge on 19 December 2008.
59. What then is the evidence of estimated financial losses which Audela adduced at trial on assessment of damages in July 2016 which should have addressed the period of one calendar month for when the ex parte interim injunction had been in force but which evidence when presented at trial encompassed a far greater time frame?
60. The submissions for Audela which were relied on by the company’s counsel at the trial on assessment of damages conducted by the primary judge on 19 and 20 July 2016 show that Audela was claiming that it had suffered total estimated losses of K32,191,442 as a result of the ex parte injunction. It endeavoured to substantiate this astonishing amount through four affidavits, namely:

(1) affidavit of Mr Kaluwin Potuan filed on 20 May 2016

(2) affidavit of Ms Iris Rainol filed on 20 May 2016

(3) affidavit of Ms Asing Bogomos filed on 20 May 2016

(4) affidavit of Mr Rex Mono filed on 12 July 2016.

61. Mr Potuan is a registered valuer. Annexed to his affidavit is a valuation report in respect of the property which gives a market value of the property as at 28 January 2016 of K8,878,000 for land and improvements comprising 22 residential units and other facilities built after NHC’s proceeding was effectively dismissed by order of the primary judge on 5 March 2010.
62. The valuation report was prepared by Mr Potuan and his assistant valuer, Ms Iris Rainol, at the request of Mr Rex Mono, who is the managing director of Audela. The valuation report states that it was requested by Mr Mono and was intended for Audela’s relationship manager at the ANZ Banking Group (PNG) Ltd for mortgage and loan security purposes.
63. Mr Potuan’s valuation report gives no indication as what the market value of the property may have been as at November and December 2008. It is not in dispute that in 2008 the improvements on the property, such as they were, consisted of several donga-style accommodation blocks which were in an advanced state of deterioration and occupied at that time by non-paying former tenants of the NHC.
64. We note that Mr Potuan’s valuation report is of no assistance to Audela in establishing what the likely market value of the property was as at the end of 2008, when the ex parte interim injunction obtained by NHC on 19 November 2008 was in force for a period of only one month.
65. Ms Rainol’s affidavit simply confirms that she has a degree in land studies from the University of Technology in Lae and that she assisted Mr Potuan in the inspection and compilation of Mr Potuan’s valuation report for the property as at 28 January 2016.
66. As to the affidavit of Ms Bogomos, she deposes that she is a registered accountant and the principal consultant at Melton Consulting of Port Moresby, NCD. Ms Bogomos states in her affidavit to the effect that her accountancy firm was engaged by Mr Mono, the managing director of Audela, in February 2016 to prepare backdated financial reports, company returns and tax returns for Audela for the period 2005 to 2015. Those reports and returns were prepared by Ms Bogomos for Audela from source documents and information furnished to Ms Bogomos by Mr Mono.
67. Annexed to Ms Bogomos’ affidavit are copies of documents marked with the letters hereunder:

Annexure “A” – a table giving a summary of the financial position of Audela for a period of 10 years from 2006 to 2015 showing a net profit of K4,141 in 2006, K11,922 in 2007, K5,903 in 2008 followed by net losses of K272,011 in 2009, K312,917 in 2010, K210,475 in 2011, K300,294 in 2012, K240,265 in 2013 and then net profit again of K249,873 in 2014 and K154,711 in 2015.

Annexure “B” – financial reports and tax returns for Audela for the years 2005 to 2010.

Annexure “C” – financial reports and tax returns for Audela for the years 2011 to 2015.

Annexure “D” – an executive summary of claims made by Audela against NHC totaling K32,291,442.

68. Ms Bogomos states in her background explanation for the executive summary which is Annexure “D” to her affidavit that:

“ Audela Properties Limited (“Audela”) was registered on 28 June 2005 with Investment Promotion Authority (“IPA”) as a property development and investment company to take advantage of the real estate market demand in Port Moresby.

Audela acquired a property and piece of land marked Lot 6, Section 43, Hohola (Curlew Street, Waigani) in the National Capital District (“NCD”) for the National Housing Corporation “(NHC”) to guild self-contained quarters comprising of 2 bedroom units and 1-bedroom units. Refer to Architectural Drawing List in this Report.

During the mobilisation and construction phase 1 in 205, tenants of NHC, supporters and wantoks (relatives) disrupted the work progress and took the company and its directors to court, a battle that lasted for 5 years. Audela suffered huge loss in legal fees, business and economical loss, including personal suffering, stress and hardship to the company directors, workers and contractors on the project.”

We need hardly observe that almost the whole of this background material deposed to by Ms Bogomos is in the nature of hearsay evidence and therefore of little probative value.

69. The summary of claims on page 2 of Ms Bogomos’ executive summary contains the following table:

SCH	Category of Claim	Actual Costs (PGK)	Opportunity Costs (PGK)	Final Claim (PGK)
1	Administration Costs	151,921		151,921
2	Demolition Costs	350,070
3	Loss of Business, Reputation & Hardship	517,300		517,300
4	Loss of Wages		885,640	885,640
5	Loss of Revenue		29,877.148	29,877,148
6	Legal fees incurred	509,363		509,363
	TOTAL	1,528,654	30,762,788	32,291,442
	Total claim on Loss of Business			32,291,442

70. We observe that none of the information and data in support of the categories set out in Ms Bogomos’ executive summary of Audela’s claim against NHC bears any relation at all to the period when NHC’s ex parte injunction was in force between 19 November 2008 to 19 December 2008. All of the financial information contained in the annexures to Ms Bogomos’ affidavit is irrelevant to whatever nominal or notional loss, if any, Audela may have suffered as a direct cause of NHC’s ex parte interim injunction. We reject all of the evidence in Ms Bogomos’s affidavit as it is unrelated to Audela’s entitlement to claim for any alleged financial loss the company may have sustained as a result of the ex parte interim injunction obtained by NHC against Audela.
71. This leaves the affidavit of Mr Mono, Audela’s managing director. Mr Mono deposes in his affidavit as to how his company managed to have the subject property exempted from advertisement for public tender by a delegate of the Minister for Lands & Physical Planning under s.69 (2) (d) of the Land Act 1996 on 23 March 2005, which exemption in turn resulted in the National Land Board granting a 99-year State Lease for the property to Audela on 10 February 2006.
72. Mr Mono’s affidavit then describes the steps Audela had to take to have evicted former tenants of NHC who were occupying the property, which entailed eviction proceedings in Port Moresby District Court in 2006 and 2007, with his company then having to repeatedly defend proceedings commenced by those occupiers in the National Court and Supreme Court in 2006 and 2007 which challenged the validity of Audela’s title to the property.
73. Mr Mono next refers in his affidavit to NHC’s proceeding WS No. 1324 of 2008, the subject of this appeal. He deposes in para. 31 of his affidavit to the effect that on commencement of suit NHC filed an application seeking a restraining order against Audela, supported by an undertaking as to damages, which resulted in the ex parte interim injunction, which he says was granted on 20 November 2008 (in fact, 19 November 2008).
74. In para. 32 of his affidavit, Mr Mono deposes that NHC’s proceeding against Audela was dismissed by the National Court on 5 March 2010, with judgment to be entered against NHC and damages to be assessed pursuant to NHC’s undertaking as to damages. We observe that this is correct, although we are puzzled why that order states that it was the proceeding itself that was dismissed rather than NHC’s claim that was dismissed. Be that as it may, Mr Mono makes no reference in his affidavit to the fact that on 19 December 2008 the primary judge lifted the ex parte injunction of 19 November 2008 and issued, among others, a fresh injunction on terms which were substantially different to those applicable to NHC’s ex parte interim injunction.
75. The remainder of Mr Mono’s affidavit is predominantly a chronology of the steps he says he took to implement Audela’s development project for the property. He says that after the order of 5 March 2010 was made, 22 residential rental units were constructed by him (presumably by his company) on the property in 2010 and a further 44 residential rental units were built in 2011, resulting in 66 residential units on the property being fully tenanted by 2012. Mr Mono says to the effect that the property would have generated more income prior to this if he had not been prevented access to the property through the actions of NHC’s former tenants in filing unnecessary proceedings in the Courts. Mr Mono does not mention NHC’s ex parte interim injunction at this juncture of his affidavit.
76. Mr Mono also refers in his affidavit to the mental, emotional and financial stress he suffered between 2006 and March 2010 but no corroborative medical evidence in this regard was sought to be adduced at Audela’s trial on assessment of damages.
77. We are compelled to observe that none of the matters deposed to by Mr Mono in his own affidavit material in support of Audela’s claim for damages is linked to any financial loss which Audela may have sustained by reason of the ex parte interim injunction which NHC obtained against Audela on 19 November 2008. The evidence of Mr Mono, such as it is, relates to matters which preceded and then occurred subsequent to the commencement of this litigation by NHC on 15 November 2008 for almost the next 8 years through to the trial on assessment of Audela’s damages in July 2016.
78. Taken in its entirety, none of the evidence of Mr Potuan, Ms Rainol, Ms Bogomos and Mr Mono adduced at the trial on assessment of damages in July 2016 established proof of any financial loss sustained by Audela as a result of NHC’s ex parte interim injunction. It therefore follows that we are satisfied that Audela failed to establish proof of its damages at that hearing.
79. We are mindful that the primary judge, at para. 37 of his decision in N8436, concluded his reasons for declining to award any damages to Audela based on NHC’s undertaking as to damages in this manner:

“ In the end, I find that Audela failed to establish with appropriate evidence that the damages it is claiming were forced upon it by the injunctive orders which was for the period commencing 19^th November 2008 and ending 05^th March 2010, if not earlier on 01^st December 2008. Audela has come to this Court with essentially a baseless claim covering a period of 5 years which is inclusive of periods prior to the grant [of the ex parte injunction] and after the dismissal of the injunctive orders. Clearly Audela has exaggerated its claim beyond what could have been the damages (if at all) that could have been caused directly by the injunction. In the end, I find Audela has failed to establish any of its alleged damages against the NHC. Consequently Audela has failed to establish its damages by reason of which I decline to award any damages to it under the undertaking as to damages given by the NHC on 18^th November 2008.”

80. Except for the primary judge’s reference to the expiration date of the NHC’s ex parte interim injunction as being its initial return date of 1 December 2008 instead of the date of discharge of that injunction by order of the Court which we now know was made on 19 December 2008, we find no demonstrable or manifest error of fact or of law in the primary judge’s reasons for decision as to why Audela had failed to establish on the evidence at the trial on assessment of Audela’s damages that it had sustained any financial loss that was causally related to the ex parte interim injunction which is the subject of this appeal.
81. We conclude our consideration of the main issue raised in this appeal by citing with approval what was said by Gabi J in Morobe Provincial Government v Tropical Charters Limited (supra) at para. 7, after referring, among others, to the English case of Air Express Ltd:

“ There is a distinction between damage caused by the grant of injunction and damage which arose from the litigation itself. It is clear from the authorities that the only damages to which a defendant is entitled are those which are sustained by reason of the grant of the injunction and the burden of proof lies on the defendant who asserts that he sustained damage by reason of the order.”

82. We have determined the main issue in this appeal overwhelmingly in favour of NHC. The appeal is to be dismissed. Consequently, it is not necessary for us to consider the other grounds of appeal and issues which were outlined by counsel for Audela in his submissions.
83. As to costs, these normally follow the event. We see no reason to depart from the conventional order as to costs. Audela is to pay NHC’s costs of the appeal and of the assessment of damages in the National Court on a party/party basis, such costs to be taxed if not agreed.

ORDER

84. The formal terms of the Order of the Court are these:

(1) The appeal is dismissed in its entirety.

(2) The decision made by the primary judge on assessment of damages in National Court proceeding WS No. 1324 of 2008 on 29 July 2020 is affirmed.

(3) The Appellant shall pay the Respondent’s costs of this appeal and of and incidental to the National Court’s assessment of damages in WS No.1324 of 2008, such costs to be taxed if not agreed.

Tamutai Lawyers: Lawyers for the Appellant
M Saka Lawyers: Lawyers for the Respondent

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^[1] Various of the documents subsequently filed in proceeding WS No. 1324 of 2008 state that the ex parte interim injunction obtained by the NHC was dated 20 November 2008. However, the Court’s record shows that 20 November 2008 was the date on which the order for the ex parte interim injunction was entered. The correct date on which the ex parte interim injunction was granted was 19 November 2008.
^[2] Appeal Book at p. 495: lines 18 to 30 of Transcript of hearing on 19 December 2008.