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Middle Ramu Co-operative Society Ltd v Dogoliv [2014] PGNC 273; N5731 (15 September 2014)

N5731

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO 1242 OF 2012

MIDDLE RAMU CO-OPERATIVE SOCIETY LIMITED
Plaintiff

V

SAUL DOGOLIV
Defendant

Madang: Cannings J
2014: 20 June, 18 July, 15 September

CONTRACTS – lease agreement for use of land and warehouse – evidence of agreement – terms of agreement – whether breach of contract established by plaintiff.

The plaintiff claimed damages against the defendant for breach of contract. The contract was in the form of a written agreement for lease of the defendant's warehouse under which, the plaintiff claimed, it paid rent of K2,000.00 per month and used its own funds to assist the defendant to recover the warehouse from illegal tenants and to carry out extensive repairs and maintenance to the warehouse, which were to be reimbursed to it by the defendant. The plaintiff claimed that the defendant breached the agreement by evicting it from the warehouse without reimbursing the expenses incurred in recovering the property from illegal tenants and on repairs and maintenance. This is the judgment on liability.

Held:

(1) An enforceable contract existed between the plaintiff and the defendant.

(2) The contract required the defendant to allow the plaintiff continued use of the warehouse, provided that the plaintiff paid its monthly rent, until such time as he had reimbursed the plaintiff with expenses it incurred on recovering the warehouse from illegal tenants and on repairs and maintenance.

(3) The defendant breached the contract when he evicted the plaintiff from the property without reimbursing the plaintiff's expenses.

(4) The plaintiff established liability against the defendant for breach of contract.

TRIAL

This was a trial on liability for breach of contract.

Cases cited

The following cases are cited in the judgment.

John Manau v Telikom (PNG) Ltd (2008) N3268
NCDC v Yama Security Services Pty Ltd (2003) SC707
Steven Naki v AGC (Pacific) Ltd (2005) N2782

Counsel

T M Ilaisa, for plaintiff

15th September, 2014

1. CANNINGS J: The plaintiff Middle Ramu Cooperative Society Ltd is claiming damages for breach of contract against the defendant Saul Dogoliv. This is the judgment on liability.

2. The defendant does not appear to have taken the proceedings seriously. William Akuani Lawyers filed a defence and cross-claim on behalf of the defendant but shortly afterwards ceased to act for him. GP Lawyers then filed a notice of appearance for the defendant but then ceased to act for him and then filed another notice of appearance. At the moment GP Lawyers are the lawyers on the record for the defendant. However on the date of trial there were no lawyers on the record for him and he did not appear. His defence and cross-claim have remained un-prosecuted.

3. The plaintiff has not applied for default judgment or any sort of summary determination of liability, preferring instead to prove its case at a trial. The issues are:

1. Was there an enforceable contract between the plaintiff and the defendant?
   
2. What were the terms of the contract?
   
3. Was there a breach of contract?
   
4. What orders should the court make?
   

1 WAS THERE AN ENFORCEABLE CONTRACT?

4. Yes. I find that there was a contract in the form of a written agreement executed by the parties on 29 December 2008. It was an agreement for the lease of the defendant's warehouse at Section 51, Allotment 4, Pikus St, Madang to the plaintiff. The agreement sets out the terms of the contract, in particular the amount of rent to be paid by the plaintiff and the respective obligations of the parties. The plaintiff has proven the existence of the three essential elements of an enforceable contract: agreement between the parties; intention to create legal relations; and support of the agreement with consideration (NCDC v Yama Security Services Pty Ltd (2003) SC707, Steven Naki v AGC (Pacific) Ltd (2005) N2782, John Manau v Telikom (PNG) Ltd (2008) N3268).

2 WHAT WERE THE TERMS OF THE CONTRACT?

5. I find that the plaintiff was obliged to:

• pay rent of K2,000.00 per month;
  
• pay for costs associated with evicting illegal tenants occupying the warehouse (which the defendant would later reimburse to the plaintiff);
  
• pay costs of repairs and maintenance, it being understood that the warehouse, when first occupied by the plaintiff, was in a state of disrepair (which costs the defendant would later reimburse to the plaintiff).
  

6. I find that the defendant was obliged to:

• reimburse all recovery costs and repairs and maintenance costs incurred by the plaintiff before leasing the property to another person or selling the property.
  

7. I find that it was an implied term of the contract that the defendant would allow the plaintiff continued use of the warehouse, provided that the plaintiff paid its monthly rent, until such time as he had reimbursed the plaintiff with the costs it incurred on recovering the warehouse from illegal tenants and on repairs and maintenance.

3. WAS THERE A BREACH OF CONTRACT?
   

8. Yes. In October 2010, the defendant obtained an eviction order at the District Court and proceeded to evict the plaintiff from the property. The defendant breached the contract by evicting the plaintiff and leasing the warehouse to another tenant without reimbursing the plaintiff all costs associated with recovery of the property from illegal tenants and cost of repairs and maintenance to the property.

4 WHAT DECLARATIONS OR ORDERS SHOULD THE COURT MAKE?

9. The plaintiff has established liability in breach of contract. An appropriate declaration will be made and I will order that there be a trial on assessment of damages. Costs will follow the event.

ORDER

(1) The plaintiff has established liability for breach of contract by the defendant, and is entitled to damages, which shall be assessed at a trial.

(2) Costs of the proceedings to date shall be paid by the defendant to the plaintiff on a party-party basis, which shall, if not agreed, be taxed.

_______________________________________________________________
Thomas More Ilaisa Lawyers: Lawyers for the Plaintiff
GP Lawyers: Lawyers for the Defendant