N10057

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 638 OF 2007

BETWEEN
GIBSON TRISA trading as MERRY CREEK TRANSPORT
Plaintiff /Cross-Defendant

AND
MOROBE PROVINCIAL GOVERNMENT
Defendant/Cross-Claimant

Lae:  Dowa J
2021: 20th May 3rd June
2022: 11th March

CONTRACT LAW – breach of government contract -provincial supply and tenders board-plaintiff has burden of proof- termination of contract justified-claim dismissed.

CROSSCLAIM-claim for refund of monies paid in advance for mobilisation-failed to prove crossclaim with credible evidence- crossclaim dismissed. 

        
Cases Cited:

Yooken Paklin v The State (2001) N2212
Peter Wanis v Fred Sikiot and The State (N1350)
Enaia Lanyat v State (1996) N1481 
Obed Lalip v Fred Sekiot and The State (1996) N1457
Jonathan Mangope Paraia v The State (1995) N1343 
Samot v Yame (2020) N8266

Counsel

M, Karu, for the Plaintiff
T. Berem, for the Defendant
DECISION
11th March, 2022
1.	DOWA J:	This is a decision on both issues of liability and damages.  The Plaintiff claims against the Defendant damages for breach of a road maintenance and construction contract.
BRIEF FACTS
2.	On 28th June 2005, the Plaintiff entered a Government Contract agreement with the Defendant through the Provincial Supply and Tenders Board for road maintenance of the Wau-Kasengare-Gairana roads for a Contract sum of K714,000.  In late December 2005, the Plaintiff was paid K221,330.00 for mobilization of equipment and machinery.

3. 	On 22nd June 2006, the Defendant terminated the contract on the grounds that the Plaintiff breached the terms of the contract by failing to perform the contract.

4. 	The Defendant/Cross-claimant denies the Plaintiffs claim and crossclaims against the Plaintiff the sum of K159,130.00 being refund of monies paid in advance for mobilisation.

5. 	The trial was conducted on 20th May 2021, where both parties by consent tendered their respective affidavits. The matter was then adjourned to 3rd June 2021 for submissions.  The Plaintiff and his lawyer did not appear in Court and made no submissions.  Only the defence counsel presented his submissions.

EVIDENCE

A)	The Plaintiffs evidence.

6.	The Plaintiff relies on the following Affidavits which were tendered into evidence by consent of the Defendant and exhibited.

No	Affidavit	Date Sworn	Date Filed 	Exhibit	
1	Affidavit of Kipson Trisa (unnumbered)	23/05/2008	26/05/2008	P1.1	
2	Affidavit of Kipson Trisa (unnumbered)	23/05/2008	23/05/2008	P1.2	
3	Affidavit of Jim Wari (doc 14)	28/05/2008	29/05/2008	P2	
4	Affidavit of Robin Asok (unnumbered)	23/05/2008	26/05/2008	P3	
5	Affidavit of Kipson Trisa (unnumbered)	06/11/2008	06/11/2008	P4	
6	Affidavit of Francis Yaninga (doc 46)	15/04/2009	16/04/2009	P5	
7	Affidavit of William Pialkolos (doc 47)	15/04/2009	16/04/2009	P6	
8	Affidavit of William Pialkolos (doc 52)	22/06/2009	23/06/2009	P7	

7.	This is a summary of the Plaintiffs evidence.  The Plaintiff was awarded two road maintenance contracts by the Defendant, one in 2003 for K177,000.00 and the second in 2005 for the sum K700,000.00. For the 2005 contract, the Plaintiff was required to do road maintenance work from Kessinger – Garaina Road covering 83 kilometres.  They were paid K221,330.00 up front for mobilisation in December 2005.  

8.	After completing about 26.5 km, the works were delayed due to bad weather as well as poor management.  The Plaintiff rendered invoices and requested additional funds to complete the job.  The defendant did not make any further payment for the project. The Plaintiff had several meetings with the Defendants to reach understanding and to quicken payments so that work could be completed.  Despite assurances of payment by the then Administrator and the Governor’s office, no funds were released.  Then on 22nd June 2006, the Plaintiff’s Works Contract with the Defendants was terminated for non-performance. By the time the contract was terminated, the Plaintiff says he has completed about 37.2 km. The Plaintiff says the termination was a breach of the contract.

B)	The Defendant’s Evidence

9.	The defendant relies on the following Affidavits as exhibited which were also tendered into evidence by consent of the Plaintiff.
 
No	Affidavit	Date Sworn	Date Filed	Exhibit	
1	Affidavit in Support of Kiprien Kevere (doc 16)	30/10/2008	30/10/2008	D1	
2	Affidavit in Support of Wiap Mawapon (doc 17)	30/10/2008	30/10/2008	D2	
3	Affidavit in Support of Lawrence Obe (doc 18)	30/10/2008	30/10/2008	D3	

10.	The summary of the Defendant’s evidence is this.  In June 2005 the Defendant through the Provincial Supply and Tenders Board awarded a road maintenance and restoration works contract for the Wau/Kesengare and Garain road to the Plaintiff.  The Plaintiff executed the contract with the Defendant on 28th June 2005.  The major terms of the contract were that the Plaintiff would complete the road maintenance works covering 83 kilometres for the contract value of K714,648.00.  By the end of December 2005, the Plaintiff was paid K221,330 being for mobilization of his equipment and machinery, and urged the Plaintiff to commence work immediately.  After noting a delay, the Defendants issued a letter on 7th February 2006 demanding the Plaintiff to commence work by 1st March 2006.  The Plaintiff wrote back to the Defendants, apologising for the delay.  The Plaintiff was facing both management and financial problems which delayed the project.  In early May 2006, the Defendants wrote to the Plaintiff again demanding the completion of the project without delay.  On 9th May 2006, an inspection on the project was carried by the Senior Works Supervisor and found that the Plaintiff failed to perform the contract with due diligence.  The Provincial Supply and Tenders Board was advised of the Plaintiff’s lack of performance of the contract.  On 22nd June 2006, the Defendant terminated the contract for poor performance and for breach of contract.

11.  According to the defendant’s evidence, the Plaintiff did some work covering 14 kilometres only.  As per the Schedule of Quantities and Rates used in the contract, it was assessed that the value for the work done was K62,200.00.  On 24/10/06 the Defendant requested the Plaintiff to refund K159,130.00 being the balance of the monies paid for mobilisation (K221,330.00).  This is the amount the Defendant is seeking in its crossclaim.

ISSUES

12.	The issues for consideration are:

a)	Whether there was a contract works being entered between the Plaintiff and Defendant.
b)	Whether the Defendant breached the terms of the contract for works by terminating the contract.
c)	Whether the defendant/Cross-claimant is entitled to the crossclaim.

Whether there was a contract agreement for works entered between the   Plaintiff and the Defendant in 2005.

13.	The Plaintiff pleads in the Statement of Claim that he entered a Contract for road maintenance and construction works with the Defendant for the sum of K714,648.00 on 28th June 2005.  The Plaintiff pleads further in paragraphs 17 and 18 of the Statement of Claim that he entered a second Contract for Works with the Defendant for K300,000.00.

14.	In respect of the contract dated 28th June 2005, the Plaintiff did not produce any direct evidence. However, there is evidence from the Defendant, confirming the contract.  Annexure ‘A’ of the Affidavit of Kiprien Kevere sworn and filed 30th October 2008 is a copy of the Contract Agreement dated 28th June 2005. The contract price was for K 714,648.00. I am prepared to accept the evidence.

15.	In respect of the Second Contract for K300,000.00, I find no credible evidence.  The Plaintiff is relying on a promise for a future contract for K300,000.00 after the completion of the 2005 project. This promise appears to have been made orally. I find this promise did not and even could not materialise as the current contract was terminated. Secondly this “promised” contract was not formalised to create any legally binding agreement. I conclude from the evidence and submissions of counsel that the only contract for Works is the one signed on 28 June 2005 for the price of K714,648.00.

Whether the Defendant breached the terms of the Contract by terminating the Contract on 24 June 2006.

16.	The Contract Agreement dated 28 June 2005 consisted of the following documents:

a)	The contract Agreement dated 28 June 2005,
b)	Schedule of Quantities,
c)	Technical Specifications
d)	Correspondences issued prior to the execution of the agreement.

17.	The terms of the Contract are clear.  The Plaintiff was required to do maintenance and road works between Wau-Kangere to Garaina covering 83km for the contract price of K714,648.00.

18.	Under the terms of the contract, the Plaintiff was paid in advance K221,330 for mobilisation of equipment and machinery to commence work.  Although the Plaintiff received payment in December 2005, he did not commence work.  By letter dated 7th February 2006 the defendant was concerned that the work was delayed.  The Plaintiff admitted the delay and explained it was caused by bad weather, poor management, and financial difficulties.  The evidence shows, on 16th March 2006, the Plaintiff requested an additional payment to resume work, which was refused by the Defendant.

19.	It appears, between March and May 2006, the works came to a standstill.  An inspection was carried out by one Lawrence Obe, the Senior Works Supervisor on or about 9th May 2006 whereby it concluded unsatisfactory work performance. Mr Obe’s report conflicts with two other inspection reports provided by fellow supervisor, Jim Wari. Jim Wari did two separate inspection reports dated 20th October 2006 and 11th January 2008. The inspection reports by Jim Wari were rejected by Mr Wiap Mawapon, the Provincial Works Manager, because Jim Wari was not authorised to do the inspection. I also note that the inspections were done after the termination of the contract on 28th June 2006. I find Jim Wari’s inspection reports lack credibility. I accept the inspection report of Lawrence Obe as it is supported by Mr Mawapon, the Provincial Works Manager.

20.	The details of the poor workmanship are detailed in the Affidavit of Lawrence Obe filed 30/10/2008 (Exhibit D3).  Based on the performance report, the defendant terminated the Contract Agreement. 

21.	Clause 16 of the Standard Terms and Conditions of Contract provided for termination of contract where a contracting party caused a fundamental breach. It provides a fundamental breach of Contract shall include but shall not be limited to the following:

a)	The Contractor stops works for 28 days or did not start the Work on time as agreed in the program for each cycle of maintenance and the stoppage has not been authorised by the Project Manager.
b)	The Project Manager instructs the Contractor to delay the progress of the Works, and the instruction is not withdrawn within 28 days;
c)	A payment certified by the Project Manager is not paid to the Contractor within 56 days of the date of Project Manager’s Certificate;
d)	The Project Manager gives Notice to correct a particular defect and the Contractor fails to correct it within a reasonable period of time determined by the Project Manager.

Notwithstanding the above, the Employer may terminate the Contract for convenience.”

22.	There is overwhelming evidence which show that the Plaintiff caused a fundamental breach of the Contract Agreement, which entitled the Defendant, to terminate the contract. After receiving the initial deposit of K 221,330.00 the Plaintiff did not commence work in accordance with the work specifications and time schedule. The Plaintiff delayed the project and ran into management and financial problems. 

23.     This was a government contract for public works. It was funded by public funds. The Plaintiff was under a contractual obligation to deliver the maintenance works within the prescribed time and in accordance with work specifications. The evidence clearly demonstrated that the Plaintiff did not have the necessary equipment. He did not have management and financial capacity to complete and deliver the maintenance works. In my view the refusal of additional funds by the defendant was in order as it was under no obligation to keep advancing money ahead of schedule. It would appear the Defendant made an error of judgment in awarding the contract in the first place.

24.	The burden of proving the claim rests on the Plaintiff and he 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, Peter Wanis v Fred Sikiot and The State (N1350), Enaia Lanyat v State (1996) N1481; Obed Lalip v Fred Sekiot and The State (1996) N1457; Jonathan Mangope Paraia v The State (1995) N1343, and Samot v Yame (2020) N8266.

25. 	From the evidence presented, I find the defendant had good reasons to terminate the Plaintiff’s Contract Agreement. I conclude, therefore that, the Plaintiff has not proved his claim on the balance of probabilities and should be dismissed.

Whether the Defendant/Cross-claimant is entitled to judgment on its Crossclaim.

26.	The Defendant Crossclaims against the Plaintiff the sum of K159,130.  The Defendant pleads in its crossclaim that in December 2005, it paid the Plaintiff K221,330 for mobilisation.  Up to the date of termination, the Plaintiff performed works covering 14 km to the value of K62,200.00.  The Defendant submits that it is entitled to the refund of the balance of K159,130.00.

27.	I have considered the evidence and find; it is inconsistent with the pleadings.  The Defendant says, the sum of K221,330 was paid for mobilization, which represents about 20% of the contract price.  20% of the Contract price of K714,648 is K142,929.60.

28.	There is an explanation for the extra K78,400.00.  According to the Plaintiff, the payment of K221,330 was not just for the mobilisation. It included payment for outstanding invoices for previous work undertaken in a 2003/2004 contract. The Plaintiff produced evidence which is consistent with his contention. The defendant has not rebutted the Plaintiff’s evidence.

29.	I also note from the Defendant’s own evidence that the sum paid for the mobilisation under this contract was K141,330.00.  This piece of evidence is from Kiprian Kevere’s Affidavit, Exhibit P1, Annexure ‘B’.  This letter was issued by Manasupe Z. Zurenuoc, Chairman of the Provincial Supply and Tenders Board. Based on this figure of K141,330.00, the balance for the refund would be K79,130.00 only. The evidence is therefore inconsistent with the pleading for the crossclaim.

30.	Secondly, the value of work completed is based on the report by Lawrence Obe.  In his report, Mr Obe assessed that the Plaintiff completed only 14km at the time of termination of the contract.  This is inconsistent with Jim Wari’s report.  Mr Wari was the Senior Works Supervisor.  He deposed in his affidavit that, after the initial inspection, the Plaintiff did work up to 26.10 kilometres.  Based on their standard schedule of quantities and rates, the value for the works for 26.10 km would be K117,150.00. Although I have preferred Mr Obe‘s evidence to that of Mr Wari, the disparity in the inspection reports put a dent on the accuracy of the value for works undertaken.

31.  	Furthermore, the Plaintiff deposes that up to the time of termination, they have covered 37 kilometres.  If that is accepted, the value of the works would be more, even up to K164,385.71.

32.	Given the differences in the inspection reports, it would have been prudent to do a joint inspection to ascertain the real value of the works done.

33.	For the foregoing reasons, I am not satisfied that the Defendant has proven its crossclaim on the balance of probabilities.  I will therefore dismiss the Defendant’s crossclaim.

COST

34.	Cost is discretionary.  The parties’ respective claims are dismissed.  However, it was the Plaintiff who initiated the proceedings.  The Defendant is entitled to a fraction of the cost.

ORDERS

1.	The Plaintiff’s claim is dismissed.
2.	The Defendant’s crossclaim is dismissed.
3.	The Defendant is entitled to 50% of the cost after being taxed.
4.	Time be abridged

_______________________________________________________________
Daniels & Associates Lawyers: 	Lawyers for the Plaintiff
Berem Lawyers: Lawyers for the Defendant