N906

PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]

SAE SADELMI

V

MORGAN EQUIPMENT PTY LTD

Lae
Doherty AJ

30-31 May 1990

LIENS - Particular lien - For work done - Essentials for - Where amount for repairs stipulated - Effect of tender - Major repairs to crane - Amount agreed disputed - Tender of part - Insufficient evidence of enforceable lien.

Held

(1) A claim to retain a chattel for which charges have been incurred under a particular lien, requires evidence of:

(a) the expenditure of labour and skill in the improvement or repair as distinct from mere maintenance of the chattel;

(b) possession with the express or implied authority of the owner for the work to be done; and

(c) completion of the work.

(2) Where an amount is stipulated for the work to be done:

(a) a lien inconsistent with that stipulated amount cannot be set up, unless completion is prevented by the owner; and

(b) tender of the stipulated amount puts an end to the lien, (but demand for a larger sum does not constitute waiver of the lien).

(3) In circumstances where a crane was retained following major repairs, disputes arose as to the amount of the repairs and completion of those repairs and where less than the stipulated amount for repairs was tendered, there was insufficient evidence of an enforceable lien.

Interim Application

This was an application, pending disposal of proceedings, for return of a crane, on tender of the alleged cost of disputed repairs to the crane.

Counsel

P Dowa, for the plaintiff.
D Sawong, for the defendant.
Cur adv vult

31 May 1990

DOHERTY AJ: The plaintiff has sued for return of a crane which was deposited with the defendant for repairs. The pleadings have not closed and the plaintiff seeks an interim order for return of the crane and tenders what he alleges is the cost of repairs and undertakes to pursue his claim for full relief.

The defendant has replied by affidavit disputing the amount of the indebtedness for the work done to the crane and the affidavits filed show that there is also a dispute as to the price agreed in the course of the dealings between the parties. These will clearly have to be the subject of further proceedings.

The defendant states in one paragraph of his affidavit that "he claims a lien on the said crane until the sum of K28,300 is paid".

I have not heard any argument from the plaintiff concerning the law of lien and the defendant’s arguments are limited to the statement that "Common Law entitles a person in possession of goods or chattels to retain them until the charge is paid in relation to those goods".

In the short time available I am unable to trace any statute in Papua New Guinea (other than s 40 of the Goods Act (Ch No 251)) relating to lien and I am unable to find any published judgments on the subject.

It would appear therefore that this is a matter to be decided according to the underlying law and since I have no proof of any relevant customary law and, pursuant to Sch 2.2 of the Constitution, consider that the law applicable is the Law of England as at the date of Independence.

This is set out in Halsbury’s Laws of England (4th ed), Vol 28, pars 501-600. Certain types of lien are provided for. There are legal liens, non-possessory liens, statutory liens, contractual liens, equitable liens, general liens, judicial liens, particular liens and a subrogatory lien.

This matter before me does not come within s 40 of the Goods Act and is not, therefore, a statutory lien nor is there any evidence before me of a contractual relationship relating specifically to liens. There is no suggestion that it arises from any equitable matter and it would appear, on the limited facts before me, to be some other form of legal lien. Legal lien is defined as (at par 507):

"Legal lien. In its primary or legal sense 'lien’ means a right at common law in one man to retain that which is rightfully and continuously in his possession belonging to another until the present and accrued claims of the person in possession are satisfied. In this primary sense it is given by law and not by contract."

From the facts I consider this to be either a general lien or a particular lien.

A general lien is defined as follows (at par 516):

"A general lien entitles a person in possession of chattels to retain them until all claims or accounts of the person in possession against the owner of the chattel are satisfied. It can only exist (1) as a common law right arising from general usage, or (2) by express agreement. General liens are discouraged because they give special privileges as against other creditors and tend to upset the equitable distribution of assets on bankruptcy. They have been regarded as an encroachment upon the common law. However, where the usage has been frequently recognised the right of lien becomes part of the common law, and is accepted by the courts without further evidence."

A general lien can arise by trade usage or, in certain cases for work done. There is no evidence of any trade usage before me and I disregard that provision at present. It would require evidence of accepted usage and may arise in the hearing. If the defendant relies solely on the work done to the crane then he appears to claim a particular lien which is defined as (at par 517):

"A particular lien at common law is the right to retain goods for which charges have been incurred until those charges have been paid."

I would have to be satisfied that the lien was for work done. This is not as wide as it may first appear. To establish a particular lien there must be evidence that:

1. a person has expended labour and skill in the improvement or repair as distinct from mere maintenance of a chattel bailed to him for that purpose;

2. it must also have come into his possession with the express or implied authority of the owner for the work to be done;

3. the work must be completed;

4. if the work is for a stipulated price then a workman may not set up a lien inconsistent with the contracted sum (or a reasonable sum if there is no stipulated amount).

On the facts before me it is not stated if the work was repair, or maintenance or improvement to the crane. It appears to have been more than maintenance and was a major repair requiring replacement of parts.

No lien arises until work has been completed but if completion is prevented by the owner, the lien arises for the work actually done.

From the affidavits I note several items of work were to be done but at least one item was not done.

Tender by the debtor of the amount due to the creditor puts an end to the creditors lien, but the demand by the creditor for a larger sum than that covered by the lien is not a waiver of the lien. There has been tender of lesser amount than the amount the plaintiff says is the contractual amount. The plaintiff states he has taken into account that part of the work was not completed. The defendant, as I have said, disputes the contractual amount, saying the sum stipulated was changed by agreement in the course of the dealings. An owner who claims a lien is extinguished must tender the amount really owing without deduction or set off.

I have not been referred to, and cannot find a clear rule in the National Court Rules relating to tender in circumstances such as this case where release of the goods is sought before pleadings have closed.

From the information before me the plaintiff has attempted to tender the amount which it considers due to the creditor, there is no trade usage giving a general lien and it would appear that the work is not completed. These, together with the justice of the situation, as I see it, lead me to consider that this is an inappropriate case for the defendant to claim a lien that a court can enforce and I order the return of the crane to the owners on the following conditions:

1. The plaintiff pay the defendant the sum of K12,300 forthwith.

2. The plaintiff pay into court the sum of K5,000 as security for (1) the balance due (if any) and (2) costs arising from this matter (if any).

Orders accordingly

_________

Lawyers for the plaintiff: Henao Cunningham Priestley.
Lawyers for the defendant: Don Sawong & Associates.