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Wei Xiang Cheng v Agmark Ltd [2008] PGNC 89; N3338 (25 April 2008)

N3338

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO. 1068 OF 2005

BETWEEN:

WEI XIANG CHENG (Also Known as PETER WEI)
First Plaintiff

AND:
PNG CORPORATE SERVICES LIMITED
Second Plaintiff

AND:

AGMARK LIMITED
First Defendant

AND:

PATRICK LUVI
Second Defendant

Waigani: Gavara-Nanu, J
2007: 7 September
2008: 25 April

DAMAGES – Assessment of damages – Undertaking as to damages – Court’s discretion to enforce such undertaking – Undertaking is made to the court - Principles to be applied by the court when exercising its discretion.

Cases cited:

Papua New Guinea Cases
White Corner Investments Ltd v. Regina Waim Harro N3089

Overseas cases:
Air Express Ltd v. Ansett Transport Industries (Operations) Pty Ltd [1981] HCA 75; (1981) 146 CLR 249
Cheltanham & Gloucester Building Society v. Ricketts & Ors [1993] 1 WLR 1545
F Hoffmann – La Roche & Co. AG v. Secretary of State for Trade and Industry [1975] AC 295
Grant MccLeary & Ors v. The Commonwealth Director of Public Prosecutions & Or [1998] WASCA 181
Griffin v. Blake [1884] UKLawRpCh 166; (1884) 27 Ch D 474
Vieweger Construction Co. Ltd v. Rush & Tompkins Construction Ltd (1965) 48 DLR (2d) 509

Counsel:
C. Makail, for First defendant/Applicant

25 April, 2008

1 GAVARA-NANU J: This was an ex-parte trial on assessment of damages for claims of monetary loss allegedly suffered by the first defendant. The claims are made pursuant to an undertaking as to damages filed by the plaintiffs on 24 November, 2005. The substantive action by the plaintiffs was determined by Davani, J on 21 December, 2005, in which her Honour set aside the interim ex-parte injunctive orders obtained by the plaintiffs on 25 November, 2005 against the defendants and dismissed the entire proceedings. The orders made by Davani J followed an application made by the first defendant pursuant to a Notice of Motion filed on 6 December, 2005. On 21 December, 2005, her Honour also ordered the defendants to proceed to assess their damages pursuant to the plaintiffs’ undertaking, although such relief was not sought by the first defendant in the Notice of Motion.

2 The relief orders sought by the plaintiffs in their substantive action are relevant to the claim for damages by the first defendant, thus, they are restated here:-

1. Orders restraining the defendants or their agents from entering the property known as Portion 249C Kimbe, West New Britain Province;
   

ii. A declaration that the plaintiff had a binding lease agreement with the second defendant;

iii. A declaration that the sale of the said property from the second defendant to the first defendant was unconscionable;

iv. Damages;

v. Costs.

3 In the amended Originating Summons filed on 24 November, 2005, the second plaintiff was joined. On 25 November, 2005, the plaintiffs obtained a number of interim ex parte injunctive orders, but the relevant orders obtained for purposes of assessing the first defendant’s claim for damages are:-

i. The first and second defendants and their servants or agents be restrained from evicting, harassing or intimidating and removing the plaintiffs and their properties or otherwise from the property known as Portion 249C Kimbe, West New Britain Province (" the property") until further notice;

ii. The first and second defendants and their servants and agents be restrained from going within ten (10) meters of the property known as the Portion 249C Kimbe, West New Britain Province until further order.

4 In its Notice of Motion filed on 6 December, 2006, the first defendant sought orders that:-

1. The ex-parte interim injunctive orders obtained by the plaintiffs on 25 November, 2005, be set aside;
   
2. The entire action by the plaintiffs be dismissed for not disclosing a reasonable cause of action pursuant to Order 12 r 40 (1)(a) of the National Court Rules;
   

iii. Costs.

5 On 21 December, 2005, Davani, J granted these relief orders then went on to order that the defendants proceed to assess their damages pursuant to the plaintiffs’ undertaking, which as I said earlier was not a relief sought in the Notice of Motion.

6 In its submissions the first defendant placed reliance on the Court’s order that it proceed to assess its damages. A number of issues arise from that order as a matter of law. First, it is in my respectful opinion a misconception for the first defendant to place reliance on that particular order because the issue regarding enforcement of plaintiffs’ undertaking was not before the Court when it made the order, as it was not one of the relief sought in the Notice of Motion. Second, it was for the first defendant to apply to the Court and invoke its powers to enforce the undertaking for damages. Such application had to be supported by evidence, either by way of affidavit or orally substantiating the damages suffered. Third, the Court then had to consider whether the undertaking was of a kind which could be enforced. In exercising its discretion, the Court had to consider and take into account various factors such as whether the substantive action had been concluded and if it had been concluded, whether it was concluded by a decision of the Court and whether there was an appeal pending against the decision; whether there had been a delay by the first defendant in making the application for the undertaking to be enforced; whether the injunctive orders were obtained in the interest of the public to maintain the status quo pending the determination of the rights of the parties, this is an important factor to take into account, where the party obtaining injunctive orders is a public body; whether the conduct of the first defendant as the party seeking to enforce the undertaking would make the enforcement inequitable and so on. See, Vieweger Construction Co. Ltd v. Rush & Tompkins Construction Ltd (1965) 48 DLR (2d) 509; Griffin v. Blake [1884] UKLawRpCh 166; (1884) 27 Ch. D 474; F Hoffmann- La Roche & Co. AG v. Secretary of State for Trade and Industry [1975] AC 295 at 361; Air Express Ltd v. Ansett Transport Industries (Operations) Pty Ltd [1981] HCA 75; (1981) 146 CLR 249; Grant MccLeary & Ors v. The Commonwealth Director of Public Prosecutions & Or [1998] WASCA 181.

7 Thus in the instant case, the enforcement of the undertaking made by the plaintiffs could not be ordered by the Court as a matter of course or arbitrarily without there being an application made by the first defendant for such enforcement. As a matter of law, the court’s power or jurisdiction to enforce the undertaking had to be properly invoked first by the first defendant as the party seeking damages by an application. Without such application before it, the Court had no power to order enforcement of the undertaking. See, White Corner Investments Ltd v. Regina Waim Harro N3089, where Gabi J, said:

"An undertaking as to damages is given to the Court, not to the other party to the proceedings. As such there is no contract between the parties and no right is conferred on party to the proceedings to sue. However, it enables the other party to apply for compensation for loss suffered as a result of the injunction." (emphasis mine).

8 His Honour also quoted and adopted a passage from Neill L. J’s judgment in Cheltanham & Gloucester Building Society v. Ricketts & Ors [1993] 1 WLR 1545 at 1551, where it was said:

"... The undertaking though described as an undertaking as to damages does not found any cause of action. It does, however, enable the party enjoined to apply to the court for compensation if it is subsequently established that the interlocutory injunction should not have been granted." (emphasis mine).

9 I make these observations as a matter of principle, but they are only academic in this case because, I note that the first defendant did make an application for the enforcement of the plaintiffs’ undertaking through a Notice of Motion filed on 5 April, 2006, in which the first defendant sought leave to set the matter down for assessment of damages. On 3 May, 2006, the first defendant obtained leave. Thus the first defendant having applied and obtained leave to set the matter down for assessment of damages, the granting of leave effectively settled all the above mentioned issues regarding enforcement of the plaintiffs’ undertaking.

10 Turning then to assessment of damages for the first defendant, there is evidence that on 9 October, 2005, a Mr. Norman John Nightingale, who is the Group Managing Director of New Guinea Islands Company Ltd and the first defendant, entered into a Contract of Sale of the subject land (Portion 2493C Kimbe, West New Britain Province) with the second defendant resulting in the registration and transfer of the said land to Norman John Nightingale on 13 October, 2005. The subject land is therefore now owned by Mr. Nightingale and has the indefeasible title to it.

11 After having read and considered the three affidavits sworn by Mr. Nightingale on 6 December, 2005, 14 December, 2005 and 25 January, 2006, respectively and the affidavit sworn by Ms Joan Duigu on 26 January, 2006, I am satisfied that the first defendant did suffer monetary loss resulting directly from the interim ex-parte injunctive orders obtained by the plaintiffs on 25 November, 2005. It is noted that when the plaintiffs obtained those orders, the first defendant was already leasing the said land and was using it to do business. Thus the interim ex-parte injunctive orders resulted in the first defendant being prevented and deprived from and of the use of the land to do business. For instance, the first defendant was prevented from using the land to house its hardware and building supplies and containers for storage. The first defendant was also prevented from constructing a warehouse on the land and to store its agricultural goods and equipment. All these resulted directly in the first defendant suffering monetary loss.

12 The affidavit by Ms Joan Duigu deposes that in 2004 and 2005, the first defendant made net profits of K59, 817.00 and K133, 792.00 respectively. Ms Duigu is the Financial Controller for the first defendant. She has annexed profit and loss Statements for 2004 and 2005 which clearly show that the first defendant made profits in those years.

13 In paragraph 7 of her affidavit, Ms Duigu also deposes that in November, and December 2005, the first defendant also made losses. In November, 2005, its loss amounted to K30, 287.00 and in December, 2005, its loss amounted to K24, 916.00. Mr. Nightingale has estimated the company’s total loss at K80, 000.00. He deposes this in paragraph 19 of his affidavit sworn and filed on 6 December, 2005.

14 I am however, prepared to accept the evidence deposed by Ms Duigu in her affidavit as she is directly responsible for the finances of the first defendant and more importantly, her evidence of monetary loss for the first defendant for November and December, 2005 is based on the actual profit and loss Statements for those months. Having said that, I am not prepared to allow the total amount of loss claimed for November, 2005, because the injunctive orders were taken out on 25 November, 2005. The end result is the first defendant can only claim for the loss suffered from 25 to 30 November, 2005, which is six days. I calculate the loss for those six days at K5, 050.00. I will allow the total amount of loss claimed for December, 2005, which is K24, 916. 00.

15 I have therefore determined that the total loss for the first defendant is K29, 966.00.

16 Interest is claimed at 8 percent. This is to be calculated from 25 November, 2005 to today (25 April, 2008). I have determined the interest for the period at K5, 793.43. Thus the total amount awarded in damages and interest is K35, 759.43.

17 I further order that any assets and chattels belonging to the plaintiffs, currently kept by the first defendant as lien over its claim for damages against the plaintiffs are to remain in the care and custody of the first defendant until the plaintiffs fully satisfy this judgment.

18 The plaintiffs will pay the first defendant’s costs of and incidental to this action.

Orders accordingly.

O’Briens Lawyers: Lawyers for the First Defendant