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Steamships Trading Company Ltd v Magellan Properties Ltd [2023] PGNC 11; N10082 (20 January 2023)

N10082


PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]


WS NO. 763 OF 2012


BETWEEN


STEAMSHIPS TRADING COMPANY LIMITED
First Plaintiff


AND
HARBOURSIDE DEVELOPMENT LIMITED
Second Plaintiff


AND
MAGELLAN PROPERTIES LIMITED
First Defendant


AND
BISMARK MARITIME LIMITED
Second Defendant


Waigani: Shepherd J
2018: 15th June
2023: 20th January


DAMAGES – assessment of damages – principles for assessment of damages – claimant not required to mitigate loss by having remedial work done at lower cost – claimant entitled to reasonable cost of repair – what is reasonable cost is question of fact for trial judge to determine - credible evidence of assertion in support of a claim must be adduced where it is available - Goods and Services Tax Act 2003 – GST not taken into account in assessing damages in circumstances of this case - interest on damages – Judicial Proceedings (Interest on Debts and Damages) Act 2015, s.4(1) – Court has wide discretion to apply most appropriate rate of interest to damages – differential rates of interest at 8% per annum and 4% per annum applied to components of plaintiffs’ claim for different periods to reflect changing economic conditions in Papua New Guinea.


INJUNCTIONS – interim injunction - undertaking as to damages – principles relating to undertaking as to damages - application to enforce undertaking must be made in same proceeding as injunction granted – where proceedings have been consolidated then application to enforce undertaking can be made in consolidated proceedings without need to apply to enforce in same proceeding in which injunction was granted.


Cases Cited:


Papua New Guinean Cases
In The Matter of Damansara Forest Products (PNG) Ltd (In Liquidation) (2005) N2789
Motor Vehicles Insurance Limited v Kol (2007) SC902
Paraia v The State (1995) N1343
Paklin v The State (2001) N2212
White Corner Investments Ltd v Harro (2006) N3089


Overseas Cases Cited:
Air Express Limited v Ansett Transport Industries (Operations) Pty Ltd [1981] HCA 75; [1978-1981] 146 CLR 249
Coles v Hetherton (2013) EWCA Civ 1704
Livingstone v Rawyards Coal Company (1880) F App Case 25 (HL)
Love v Thwaites & Anor [2014] VSCA 56


Legislation:
Goods and Services Tax Act 2003
Judicial Proceedings (Interest on Debts and Damages) Act 2015: s.4(1); s.6(1)
National Court Rules: Order 12 Rule 6(2)


Counsel
Mr Michael Goodwin, for the Plaintiffs
Mr Bill Frizzell, for the Defendants


DECISION


20th January, 2023


  1. SHEPHERD J: This is a decision on assessment of the Plaintiffs’ quantum of damages following entry of judgment on liability in favour of the Plaintiffs.

BACKGROUND

  1. Steamships Trading Company Limited (Steamships) is the registered proprietor of Special Purposes Lease dated 6 August 1991 in respect of Portion 773 referred to in Registered Plan Catalogue No. 49/2680 (Portion 773) being the whole of the land comprising 0.399 hectare described in State Special Purpose Lease Volume 1 Folio 153, which land forms part of the shore frontage for the port area of Port Moresby, National Capital District.
  2. Steamships has a 50% shareholding in an associated company named Harbourside Development Limited (Harbourside). Harbourside has contracted to purchase Portion 773 from Steamships. Unless the context indicates otherwise, these two companies are collectively referred to in this Decision as the “Plaintiffs”.
  3. Magellan Properties Limited (Magellan) is the registered proprietor of Business Lease dated 15 September 1975 in respect of Allotment 6 Section 53, Granville, Port Moresby referred to in Registered Plan Catalogue No. 49/2527 (Magellan’s Land) being the whole of the land comprising 0.107 hectare described in State Lease Volume 28 Folio 6833, which land also forms part of the shore frontage for the port area of Port Moresby.
  4. Magellan’s Land is directly adjacent to and generally west of Steamships’ land at Portion 773. Magellan’s Land includes a portion of seabed, a wharf, a wharf ramp and other structures.
  5. Bismark Maritime Limited (Bismark) owns and operates a maritime and shipping business which includes the loading and unloading of cargo from marine vessels docked at what historically has been referred to as ‘Craig’s wharf” on Magellan’s Land at the port area.
  6. Unless the context indicates otherwise, Magellan and Bismark are collectively referred to in this Decision as the “Defendants”.
  7. Steamships assert that the activities on Magellan’s Land had encroached on Steamships’ land at Portion 773 for many years and that Magellan and Bismark’s wharf ramp and marine vessels had similarly habitually encroached on Steamships’ Land.
  8. Steamships contends that despite its requests, Magellan and Bismark refused to abate, stop or remove the encroachments, thereby interfering not only with Steamships lawful use and enjoyment of its Portion 773 but also interfering with Steamships’ major Harbourside project on contiguous land owned by Steamships.
  9. Steamships’ Harbourside project at the port area involved the construction of two new multi-storey office blocks and an up-market dining precinct with food and beverage outlets on the northern side of Champion Parade, Port Moresby, overlooking Fairfax Harbour. As part of the Harbourside project, Steamships had contractually committed itself to the construction of an overwater carpark on Portion 773 to service the parking requirements for its Harbourside project.
  10. The Plaintiffs commenced this suit WS No. 763 of 2012 against the Defendants by writ of summons with endorsed statement of claim filed on 3 August 2012 seeking damages for financial losses caused by the encroachments. The Plaintiffs also sought various orders restraining the Defendants from encroaching on Portion 773 and requiring the Defendants to abate the encroachments.
  11. Prior to commencement of this suit, the Defendants had commenced their own separate proceeding in the National Court against Steamships in OS No. 421 of 2012, seeking injunctive relief. On 24 July 2012 an interim order was made in that proceeding by the Court whereby Steamships was required to remove and also prevent any marine vessels from coming within a zone of 15 meters from the front or the side of Magellan’s Land. Steamships was restrained by that interim order from erecting or installing any beams, wharf or other structures within that zone.
  12. To obtain the interim order of 24 July 2012, Bismark gave an undertaking as to damages to the Court in OS No. 421 of 2012 to pay any party “adversely affected by the Order (if any) as the Court may consider to be compensation, damages or costs (if any) to be assessed by the Court or as it may direct, to any person, whether or not a party, affected by the operation of the order made herein or any continuation thereof” (the Undertaking).
  13. On 20 August 2013 proceeding OS No. 421 of 2012 was transferred by order of Davani J to the Court’s Commercial List to be heard in conjunction with this present suit.

DECISION OF NATIONAL COURT ON LIABILITY

  1. The Defendants liability in this proceeding WS No. 763 of 2012 was determined on 12 August 2015, which is when Kandakasi J (as he then was) delivered the Court’s judgment in favour of the Plaintiffs.
  2. His Honour’s judgment for the Plaintiffs included the following terms:

“ 1. Judgment for the Plaintiffs against the Defendants in the proceedings.

2. Relief is granted to the Plaintiffs against the Defendants in terms of paragraphs A to D of the [Writ of Summons] filed on 3 August 2012, namely:

A. An Order restraining the First and Second Defendants, their members, agents, servants, or employees, from encroaching on, or interfering with, the Plaintiffs’ Land.

B. An Order restraining the First and Second Defendants, their members, agents, servants or employees, from interfering, harassing or otherwise hindering the Plaintiffs, their members, agents, servants, employees or contractors, in the construction of the Carpark on the Plaintiffs’ Land, or the building development on the Plaintiffs’ Land generally.

C. An Order that the Defendants forthwith remove, demolish, cut away or otherwise abate the encroachment of the Defendants’ wharf ramp over the boundary to the Plaintiffs’ Land, in default of which the Plaintiffs have leave to do so at the expense of the Defendants.

D. An Order allowing the Plaintiffs to realign and construct fencing to the correct boundary position between the adjoining land of the Plaintiffs and the Defendants and the Defendants be liable for 50% of the costs of the realignment and construction.

...

5. Leave is granted to the Plaintiffs to list the matter for hearing for an assessment of damages and interest as claimed in paragraphs E and F of the [Writ of Summons] filed on 3 August 2012. ”

  1. I mention at this juncture that I have been unable to find any record that the interim injunction granted in OS No. 421 of 2012 on 24 July 2012 was ever formally discharged by the Court. It is nevertheless obvious that continuation of the interim injunction would have served no purpose after the encroachment issues and liability for this present suit were determined in favour of the Plaintiffs by Kandakasi J on 12 August 2015. There has been no appeal by the Defendants against his Honour’s decision on liability. In any event, it is apparent from the parties’ respective submissions that they agree the interim injunction of 24 July 2012 ceased to have any practical effect 3 years later when Kandakasi J delivered the Court’s decision in WS No. 763 of 2012 on 12 August 2015, which effectively determined liability for the encroachment issue in favour of the Plaintiffs.
  2. At the assessment of damages hearing which conducted by me on 15 June 2018, the Plaintiffs claimed damages pursuant to terms 2D and 5 of the substantive order of the Court of 12 August 2015 as well as interest pursuant to the Judicial Proceedings (Interest on Debts and Damages) Act.

EVIDENCE ON ASSESSMENT OF DAMAGES

  1. At the hearing on assessment of damages, the Plaintiffs’ relied on the following five affidavits which were admitted in evidence:

(1) Affidavit of Jon Cullen filed on 19 December 2016.

(2) Affidavit of Lawrie Foster filed on 3 March 2017.

(3) Affidavit of Jon Cullen filed on 3 March 2017.

(4) Affidavit of Anthony Paru filed on 20 April 2017.

(5) Affidavit of Lawrie Foster filed on 13 June 2017.

  1. In response, the Defendants relied on two affidavits of Hamish William Sharp, a director of Magellan and Bismark, which were filed on 8 May 2018 and 11 May 2018.

ISSUES

  1. Having considered the evidence and the submissions made for the parties, I find that the issues which fall for determination by the Court in its assessment of the quantum of the Plaintiffs’ damages are twofold:

(1) Should the Plaintiffs’ damages which flow from the Defendants’ Undertaking in OS No. 421 of 2012 be included in this assessment of damages in WS No. 763 of 2012?

(2) What is the quantum of the Plaintiffs’ damages that should properly be awarded in WS No. 763 of 2012?

CONSIDERATION

Issue 1: Should the Plaintiffs’ damages which flow from the Defendants’ Undertaking in OS No. 421 of 2012 be included in this assessment of damages in WS No. 763 of 2012?

  1. The Plaintiffs by their counsel addressed the Court at length on the significance of the Undertaking given by Bismark in earlier proceeding OS No. 421 of 2012 insofar as that Undertaking impacts on the Court’s assessment of the Plaintiff’s damages in this proceeding WS No. 763 of 2012.
  2. Counsel for the Plaintiffs referred the Court to the appellate decision of the Supreme Court of Victoria, Court of Appeal in Love v Thwaites & Anor [2014] VSCA 56 where the Court reviewed the principles relating to undertakings as to damages given in injunction applications. The Victorian Court of Appeal outlined the Australian and English authorities and principles governing damages flowing from an undertaking as to damages which were relied on by the judge in the court below and which were approved by the appellate Court. The cases were The Wagon Mound No 1 [1961] UKPC 1; [1961] AC 388; Davinski Nominees Pty Ltd v I &A Bowler Holdings Ltd [2011] VSC 220; Air Express Limited v Ansett Transport Industries (Operations) Pty Ltd [1981] HCA 75; (1981) 146 CLR 249 (Aickin J at [266], approved on appeal at (1981) 146 CLR 306 et seq.); European Bank Limited and Robb Evans of Rob Evans & Associates [2010] HCA 6, (2010) 240 CLR 432,439; and Alexander v Cambridge Credit Corporation Ltd (1987) 9 NSWLR 310, 365.
  3. The principles when assessing damages consequent upon the giving of an undertaking as to damages as approved in Love v Thwaites and derived from earlier English and Australian authorities are essentially these:

(1) The damages must flow directly or naturally from the injunction.

(2) The damages are those which could have been foreseen when the injunction was granted.

(3) The damages are separate from any award by the Court due to the proceeding between the parties, even where no such relief is awarded to the successful claimants in the substantive action.

  1. Counsel for the Plaintiffs pointed out that the restrictions imposed in this instance by the interim injunction which the Defendants obtained in OS No. 421 of 2012 on 24 July 2012 prevented the Plaintiffs from being able to complete their pre-existing building works which had already commenced for their commercial development of Portion 773 as an overwater carpark intended to service the carparking requirements for the Plaintiffs’ Harbourside project.
  2. The interim injunction restrained Steamships from dealing with any part of its Portion 773 which fell within 15 meters of Magellan’s Land, which, as Kandakasi J later ruled in this proceeding WS No. 763 of 2012, included Magellan’s wharf structures which were at fault for having encroached onto Portion 773, no easement having been created for the benefit of Magellan’s Land for the area occupied by the wharf ramp and its associated structures.
  3. The Plaintiffs assert that the interim injunction forced them to abandon the works that were already partially underway for the overwater carpark as it was no longer feasible for those works to proceed to completion while the interim injunction remained in force. Construction of the overwater carpark was the subject of a major contract which the Plaintiffs had previously entered into with CRCG (PNG) Ltd (CRCG), a construction company allied to the Chinese Railway Construction Company Group.
  4. The Plaintiffs produced documentary evidence at the assessment of damages hearing to show that to mitigate the disruption to their development plans for the overwater carpark area for Portion 773 caused by the interim injunction, they had to abandon the works already underway and instead devise an alternative, which ultimately resulted in the construction of an overwater commercial building on that part of the land at Portion 773 which was not affected by the 15 meter exclusion zone the subject of the interim injunction. The commercial building which replaced the overwater carpark now accommodates two restaurant spaces on the eastern side of the Harbourside dining precinct at the port area.
  5. The change to the Plaintiffs’ development plans for Portion 773 caused by the interim injunction meant that the Plaintiffs had to negotiate new contractual arrangements with CRCG to convert the works from an overwater carpark to construction of a commercial building supported by marine pilings and to bring in new contractors to undertake the altered works at additional cost, including specialist marine engineering firm Civil PNG Ltd, architect firm Cullen Feng Pty Ltd and engineering firm Kramer Ausenco.
  6. Work for the installation of marine piles to support the overwater car park which had already commenced prior to the interim injunction was forced to cease. The marine piles were later re-repurposed to support the commercial building which replaced the overwater carpark.
  7. The Plaintiffs submit that the financial damage they sustained by the disruption to their development of Portion 773 as an overwater carpark was a forseeable consequence of the injunction, including financial losses borne by the Plaintiffs in relation to the suspension of the marine piling work which could not be completed while the 15 meter exclusion zone surrounding Magellan’s wharf remained in force.
  8. The Plaintiffs’ accordingly submit that they are entitled to all damages pleaded in their statement of claim endorsed on their writ of summons filed in WS No. 763 of 2012 on 3 August 2012 as well as all damages covered by the Defendants’ Undertaking given in OS No. 421 of 2012 on 12 April 2012 and flowing as a result the Defendants’ interim injunction obtained in that proceeding on 24 July 2012.
  9. A summary of the damages claimed by the Plaintiffs is set out in their Statement of Agreed and Disputed Facts with Legal Issues for Trial filed in WS No. 763 of 2012 on 15 June 2017 (the Statement). Those damages include at Item 6J an amount of K852,472.30 claimed by the Plaintiffs as being reimbursement for the costs flowing from the suspension of the marine piling work and remobilization expenses but which amount excludes the cost of the commercial building that replaced the overwater carpark.
  10. In answer to the Plaintiffs’ position regarding the Undertaking, the Defendants’ principal submission is that the Court should not, in the present assessment of damages, award any additional damages to the Plaintiffs for remobilization and other costs arising from delay in construction of the pilings which was halted by the interim injunction of 24 July 2012. The Defendants submit that an undertaking given by an unsuccessful party can only be enforced on application of the successful party made in the proceeding in which the undertaking was granted, in this instance in OS No. 421 of 2012. The Defendants argue that the Plaintiffs are not procedurally entitled to claim any damages in this suit WS No. 763 of 2012 which are referable to the Defendants’ Undertaking given in OS No. 421 of 2012 because any such claim would have to be made in OS No. 421 of 2012.
  11. In support of this proposition, counsel for the Defendants directed the Court’s attention to further case law and principles applicable to undertakings given in support of interim injunctions, many of which cases were referred to by Gabi J in White Corner Investments Ltd v Harro (2006) N3089. His Honour summarised in his decision at paragraph 13 a number of the applicable principles in these terms:

“ 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 a 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. ”

  1. His Honour also made reference in White Corner Investments Ltd v Harro to the following extract from the Australian case of Air Express Limited v Ansett Transport Industries (Operations) Pty Ltd [1981] HCA 75; [1978-1981] 146 CLR 249 where Stephen J said at page 318:

“ What occurs when such an undertaking is extracted from a plaintiff is that the Court, as a condition of its grant of interim or interlocutory injunctive relief, has ensured that, should it turn out that that relief should never have been granted, it will have the power, so far as monetary compensation allows, to make good the harm which the grant has done to the defendant. ”

  1. As to enforcement of an undertaking, Gabi J said at paragraph 19 of White Corner Investments Ltd v Harro:

“ The authorities show that the application to enforce an undertaking as to damages is made after the conclusion of the trial. It should be made in the proceedings in which the undertaking was given.”

  1. In the present case, counsel for the Defendants placed much emphasis on Gabi J’s pronouncement that an application to enforce an undertaking must be made in the proceeding in which that undertaking was given.
  2. It was submitted for the Defendants that there are two steps in relation to the enforcement of an undertaking as to damages:

(1) an application to enforce the undertaking in the proceeding in which it was granted; and

(2) subject to the outcome of that application, an assessment of those damages.

  1. It was therefore contended for the Defendants that as Steamships has made no such application in OS No. 421 of 2012, the proceeding in which the Undertaking was given, the Undertaking cannot be enforced in this present assessment of damages in WS No. 763 of 2012.
  2. If this contention were to be accepted by this Court, this would mean that any damages flowing from enforcement of the Undertaking which were in addition to damages susceptible of assessment in WS No. 773 of 2012 would have to be the subject of separate application to be made by the Plaintiffs in OS No. 421 of 2012 and would require separate assessment by the Court of those additional damages.
  3. It was argued for the Defendants that the decision of Kandakasi J in this proceeding WS No. 773 of 2012 made no reference to any application having been made by the Plaintiffs to enforce the Undertaking in OS 421 of 2012 as would be necessary for there to be any assessment of damages concerning the Undertaking and the interim injunction.
  4. It was said for the Defendants that although the Plaintiffs’ statement of claim in WS No. 773 of 2012 pleads at paragraphs 12 and 25 forseeable loss in respect of encroachments and the effect of those encroachments on the Plaintiffs’ pre-existing contracts, those pleadings do not deal with a claim for damages in respect of the Plaintiffs’ claim for K852,472.30, which relates to the supply and installation of nine marine piles and related works claimed at item 6J of the Plaintiffs’ Statement.
  5. Therefore, it was argued, any consideration by this Court of the Plaintiffs’ claim for assessment of financial losses of K852,472.30 which the Plaintiffs asserts it sustained in connection with the suspension of the marine piling work would, in furtherance of pronouncements made by Gabi J in White Corner Investments Ltd v Harro, have to be the subject of a separate application to be made by the Plaintiffs in OS No. 421 of 2012 for enforcement of the Defendants’ Undertaking and could not be entertained by the Court for the purposes of the present assessment of damages in WS No. 763 of 2012.
  6. With respect, I disagree with the Defendants’ submission on this issue.
  7. Firstly, as already noted, an order was made by Davani J in OS No. 421 of 2012 on 20 August 2013 that those proceedings be “transferred to the Commercial List to be heard, where relevant, with National Court proceedings known as WS (Comm) 763 of 2012”. This order was tantamount to an order for consolidation of the two proceedings as both cases have involved common questions of law and fact relating to the encroachment issue affecting the same two parcels of adjoining land and the same parties, except that Harbourside is an additional plaintiff in WS 763 of 2012. As to the principles applicable to consolidation of proceedings, see In The Matter of Damansara Forest Products (PNG) Ltd (In Liquidation) (2005) N2789 (Gavara-Nanu J).
  8. Secondly, the circumstances which confronted Gabi J in White Corner Investments Ltd v Harro were quite different to the present circumstances. What was before the Court in the White Corner Investments Ltd case was an application by the defendant, Regina Waim Harro, seeking an order to have the plaintiff company’s suit against her struck out as an abuse of process. The plaintiff company had been seeking enforcement of an undertaking given by Mrs Harro in support of an interim injunction which she had obtained in separate but related matrimonial property proceedings involving her husband, Elijah Harro. The interim injunction in the matrimonial proceedings restrained Mr Harro, a director of the family company White Corner Investments Ltd, from disbursing a large insurance claim payout pending further order of the Court. His Honour ruled that the plaintiff company’s proceedings which came before him seeking enforcement of Mrs Harro’s undertaking in the separate but related matrimonial proceedings should be dismissed because the final determination of the matrimonial proceedings was still pending and the interim injunction granted in those matrimonial proceedings was still in force. This is why his Honour ruled that an application to enforce an undertaking must be made in the proceedings in which the undertaking has been given. However His Honour was not called upon in that case to deal with the situation where two interrelated cases were, by order of the Court, directed to be heard together.
  9. In the present case, the Defendants’ liability has been substantively determined by Kandakasi J’s decision delivered on 12 August 2015. That decision in WS No. 763 of 2012 effectively bound the Defendants in their capacity as plaintiffs in OS No. 421 of 2012, which as Davani J directed, was to be heard in conjunction with WS No. 763 of 2012 and was therefore dependent on the substantive outcome of the Plaintiffs’ case in WS No. 763 of 2012. The encroachment issue having been determined by Kandakasi J’s finding on liability in favour of the Plaintiffs, the Defendants are now prevented by the usual principles of res judicata and issue estoppel from pursuing any claims they may have had against Steamships in OS No. 421 of 2012.
  10. Thirdly, if the Court were to endorse the submission made for the Defendants that the Plaintiffs should be required to make separate application in OS No. 421 of 2012 for enforcement of the Defendants’ Undertaking and that upon that application being granted there be a further hearing for assessment of any damages flowing from the Undertaking in OS No. 421 of 2012 not covered by this assessment of damages hearing in WS No. 763 of 2012, this would lead to a multiplicity of otherwise avoidable hearings. I consider that such a result would be a pointless waste of the Court’s valuable time and resources and a waste of legal costs incurred by all parties.
  11. For these reasons I find that even if the Plaintiffs’ claim for financial losses in respect of the marine piling work were to be considered to be losses in addition to the damages expressly pleaded by the Plaintiffs in their statement of claim in WS No. 763 of 2012, a proposition which on the evidence adduced in this instance I do not accept, those additional losses were still a forseeable consequence of the interim injunction obtained by the Defendants in OS No. 421 of 2012 and therefore claimable in this present assessment by the Court of the quantum of the Plaintiffs’ damages.
  12. While I generally agree with the proposition referred to by Gabi J in White Corner Investments Ltd v Harro that an application to enforce an undertaking as to damages must be made in the proceedings in which it is granted, to this must be added the qualification that only one such enforcement application need be made in proceedings which by order of the Court have been directed to be consolidated or heard together, as has happened here.
  13. I accordingly rule that the Plaintiffs’ damages in this instance which flow from the Defendants’ Undertaking in OS No. 421 of 2012 are to be included for consideration in this assessment of damages in WS No. 763 of 2012. The Plaintiffs are not procedurally required in the circumstances of this case to make separate application to the Court in OS No. 421 of 2012 for enforcement of the Defendants’ Undertaking. Issue 1 is resolved in favour of the Plaintiffs.

Issue 2: What is the quantum of the Plaintiffs’ damages that should properly be awarded in WS No. 763 of 2012?

  1. The Plaintiff’s claim for the damages which it seeks is summarised in paragraph 5 of the Plaintiffs’ Statement. A short description of the works, the names of the contractors and professional firms involved in provision of the additional works and their estimated costs and fees (including GST) is set out in tabular form in paragraph 6 of the Statement.
  2. According to paragraph 7 of the Statement, the overall total of the Plaintiffs’ claim, including interest, comes to K2,024,046.44. Although not stated in paragraph 7 of the Statement, this total of K2,024,046.44 presumably includes notional allowance for 10% GST payable under the Good and Services Tax Act 2003 on delivery of invoices.
  3. The Defendants contest all of the quotes relied on by the Plaintiffs in support of their claim for assessment of damages. The Defendants assert that the quotes from the Plaintiffs’ contractors are excessive and have not been corroborated. The Defendants rely on less costly quotes which they have obtained from their own preferred contractor. The Defendants submit that the lower quotes they have obtained should be accepted by the Court as being more reasonable.
  4. Paragraph 6 of the Plaintiffs Statement refers to the following damages which are claimed by the Plaintiffs:

(A) The cost of removal, demolition or abatement of the wharf ramp encroaching on the Plaintiffs’ Land.

(B) The costs of the realignment and construction of the fence adjoining the Plaintiffs’ boundary to the correct boundary position.

(C) The costs of the structural/civil engineer.

(D) The costs of the architect.

(E) The escalation costs for the work, claimed at 10% per annum.

(F) The costs for the re-documentation for the structural engineering aspects of the work.

(G) The costs for the re-documentation of the architectural aspects of the work.

(H) The fees of associated professionals for the work.

(I) The building contractor’s additional costs for the work.

(J) The cost of installation of marine piles.

  1. Quotes supporting several of the items claimed in paragraph 6 of the Plaintiffs’ Statement are attached to the affidavit of architect Mr Jon Cullen filed on 19 December 2016.
  2. Mr Cullen deposes in his affidavit that he is registered as an architect in New South Wales and in Papua New Guinea and that he has significant experience in the design and procurement of commercial developments and buildings. Mr Cullen’s professional resumé is annexure “A” to his affidavit.
  3. Mr Cullen’s qualifications and experience as outlined in his resumé are impressive. He holds a Bachelor of Applied Science (Environmental Design) degree from the University of Canberra (1989) and a Bachelor of Architecture (Honours) degree from the University of Sydney (1992). He has been a director of the Sydney-based architectural firm Cullen Feng Architects from 1997 through to the date of his affidavit. Cullen Feng Architects have been involved in over 100 residential, apartment, commercial and interior design projects ranging in project value from A$100,000 to A$40million.
  4. Mr Cullen’s key architectural projects in Port Moresby include Harbourside South Apartments (2015), Grand Papua Hotel (2011), Jackson’s Bar & Sizzlers Restaurant – Gateway Hotel (2013), 35 units at Era Matana Apartments (2012), Garamut Waterfront Retail Centre (2011) and 40 units at Windward Stage 2 Apartments (2007). Major architectural projects of Mr Cullen at locations other than in Papua New Guinea include corporate office fit-outs, museums, restaurants and commercial buildings in Sydney, Launceston and Darwin in Australia as well as 12 villa residences in Bahrain in the Middle East.
  5. Set out below are extracts from Mr Cullen’s first affidavit filed on 19 December 2016:

“ 2. In or around September 2013, I was engaged by the Plaintiff, Steamship[s] Trading Company Limited, to conduct and prepare a costs analysis report associated with the delayed construction on the Steamships Harbourside Office Development area due to this proceeding, and the costs associated with work to rectify encroachments as per the Court Orders of 12 August 2015.

3. The land subject to the report extends over Portion 773 being the whole of the land contained in State Lease Volume 1 Folio 153 (the Special Purposes Lease) which includes the land below the high and low water mark towards Fairfax Harbour.

4. I have completed my report as at 21 November 2015, to take into account the extended delay in the construction of marine piling, wharf removal and fencing, all of which was subject to a dispute between Plaintiff and the Defendant.

5. I have inspected the land and my findings indicate that the following works are required to be undertaken as construction works:

5.1 Relocation of the constructed boundary wall and fence and refinishing of the area between the constructed parking area and the fence including extension of stormwater drainage and landscaping;

5.2 Removal of the existing portion of the Second Defendant’s wharf encroaching over the site boundary;

5.3 Installation of marine piles and an extension of the wharf deck to these piles.

6. Costs to the building and piling contracts arising from the out of sequence post-contract period for construction, as stated above can be summarised as follows:

6.1 Relocation of Fence and Landscaping: K164,398.00

6.2 Removal of Existing Encroaching Wharf Structure: K232,937.00

6.3 Installation of Marine Piles (Originally priced
in September 2013) K1,038,076.00

6.4 Add Escalation at 10% per annum (3 years,
September2013 – September 2016) K343,603.15

6.5 Re-Documentation Structure K40,970.00

6.6 Re-Documentation Architecture K20,000.00

6.[7] Total Cost All Works K1,839,984.15

7. Annexed hereto and marked [with] the letter “B” is a true copy of my Costs Analysis Report to the Plaintiff prepared in November 2016.

8. I verify that the matters, views, opinions and costings in my report all arise out of the dispute between the parties and are true and correct to the best of my professional knowledge. ”

  1. Mr Cullen’s Costs Analysis Report referred to in paragraph 7 of his first affidavit is a 2-page document dated 21 November 2016 from Mr Cullen to Steamships’ Ms Mary Ann Hill. The subject heading of the Report is “Steamships Harbourside Office Development Port Moresby - Delayed Construction of Marine Piling, Wharf Removal and Fencing”.
  2. In his Costs Analysis Report (Report), Mr Cullen has identified the work for that part of Steamships Harbourside project which, although it was initially suspended by the interim injunction of 12 July 2012, was able to resume some 15 months after the Court’s decision on liability was delivered by Kandakasi J on 12 August 2015. Mr Cullen states in his Report of 21 November 2016 as follows:

“ We understand access is now possible up to the eastern boundary of the site in the area previously in dispute with the adjoining owner and subject to a court order preventing construction works from proceeding over the water closer than 15m from the Bismarck Maritime Wharf.

Due to the above restrictions during construction, the new boundary wall and fence was constructed well within the site and one row of marine piles closest to the boundary could not be installed.

In order now to utilise the site no longer in dispute and confirmed by the Court to be within Steamship’s boundary, the following works will be required to be undertaken as completely separate construction works to the main contract.

1. Relocation of the recently constructed boundary wall and fencing and refinishing of the area between the constructed parking area and the fence including extension of stormwater drainage into that area and landscaping.

2. Removal of the existing portion of the Bismarck Maritime wharf encroaching over the site boundary.

3. Installation of the last line of marine piles and extension of the wharf deck to these piles - as wharf is now constructed new documentation will need to be prepared to delineate the new works and indicate demolition and connection details.

As requested we had previously contacted the Building Contractor and Piling Contractor regarding the potential additional costs to the project arising from the out-of-sequence and post-contract period construction of the piling and have now also spoken to the contractor regarding the first two items.

A summary of the costs relating to these items is as follows:

1. Relocation of Fence and Landscaping

Builder Costs K135,858
Associated Professional Fees K 28,540

Subtotal K164,398 ex GST

2. Removal of Existing Encroaching Wharf Structure

Demolition and removal
Extend Sea Wall to boundary
Install Rip Rap Rock to match existing
Builders Cost for above Works K205,097
Associated Professional Fees K 27,840

Subtotal K232,937 ex GST

4. Install Marine Piles Closest to Boundary (Costs Originally Reported 9 Sep 2013)

Piling Contractor K774,893 ex GST
Building Contractor K200,000 ex GST
Structural/Civil Engineer K 47,749 ex GST (3 add. months site attendance)
Architect K16,434 ex GST (1 add month site attendance)

Subtotal K1,038,076 ex GST

Add Escalation at 10% per annum [on subtotals] K343,603.15

Re-Documentation Structure K 40,970

Re-Documentation Architecture K 20,000

Subtotal K1,442,649.15

4. Total Possible Cost All Works K1,839,984.15 ex GST

We have not included in the above the cost of the wharf structure above the piles in the above as that would have been included in the original contract costs. We have however included the costs of re-supply of the piles as the pile stock is no longer available. ”

  1. Mr Cullen does not attach to his Report any quote from the builder to substantiate the amount of K135,858 claimed in Item 1 for “Relocation of Fence and Landscaping”. Nor does Mr Cullen state the name of the company he refers to in Item 1 of his Report as the builder. However, I note that Items 2 and 3 in Mr Cullen’s Report, which relate to costings for the removal of the encroaching wharf structure and installation of marine piles, also refer to the builder, although not by name, and there are attachments to Mr Cullen’s Report giving quotes for those two areas of work which have come from CRCG. I therefore take it that Mr Cullen’s reference to the builder in Item 1 of his Report, who he says at the foot of page 1 of his Report he contacted regarding Items 1 and 2, is in fact a reference to CRCG.
  2. Attached to Mr Cullen’s Report are quotes from the following contractors:

This quote by Civil PNG was given 14 months after the interim injunction was granted on 12 July 2012 but almost 2 years before the Court’s order of 12 August 2015 which determined the Defendants’ liability for the encroachment.

  1. Also attached to Mr Cullen’s first affidavit is a series of emails between Mr Cullen and Karl Lee, Cost Manager with CRCG covering a date range from 27 July 2013 to 13 August 2013 regarding the additional cost which Steamships would be likely to incur if the proposed overwater carpark to be constructed by CRCG had to be deferred because of the interim injunction. Mr Cullen requested CRCG to provide an estimate which included allowance for escalation in the cost of steel and materials, remobilisation, additional site supervision, hoardings and barriers to keep the construction site safely separated from the completed office building and allowance for repairs to already completed work caused by new construction work on the proposed overwater carpark being out of sequence, eg. road surface to eastern carpark being damaged by construction activities related to the proposed overwater carpark requiring repair. CRCG’s Cost Manager’s email to Mr Cullen dated 13 August 2013 indicates that the company’s estimated cost, exclusive of GST, for the additional works specified by Mr Cullen would be a ballpark figure of K200,000.
  2. The affidavit of Lawrie Foster filed on 3 March 2017 in support of the Plaintiffs’ claim for assessment of its damages gives an explanation of the changes that had to be made by Steamships, because of this litigation, to its Harbourside project which was completed in 2016.
  3. Mr Lawrie deposes that he is the general manager of Pacific Palms Property, the property business arm of Steamships. Mr Lawrie says that in 2010 Steamships commenced its development plans for Portion 773, which included a commercial overwater carpark to provide adequate parking spaces for Steamships Harbourside project involving the construction of commercial offices and food and beverage venues. However, Mr Lawrie says that when the interim injunction granted in OS No. 421 of 2012 on 24 July 2012, it restrained the Plaintiffs from carrying out any construction work on Portion 773, and in particular the installation of any structures in and above seabed and foreshore 15 meters off the front and 15 meters off the side of the Defendants’ property and wharf.
  4. Mr Lawrie explains that at the time of signing of his affidavit in February 2017:

“ 7. The course of these proceedings ha[s] run for more than 4 years, consequently prompting the Plaintiffs’ to make commercial decisions surrounding the use and utilization of the intended carpark space. Advice was received from Jon Cullen of Cullen and Feng Pty Ltd (architectural consultants) that without being able to remove, relocate and construct a fence along the correct boundary to the property, the overwater car park would no longer be feasible. This is because the position of the access road would take up too many car lots as well as the loss of space due to the Court order.

8. The Plaintiffs then made a decision to alter the development plans to suit the Court order and as a result, the Plaintiffs decided to build a commercial space, instead of an overwater carpark which was not feasible.

9. The original carpark was redesigned by Cullen and Feng and two food and beverage (R&B) retail outlets were built. Both commercial spaces are located at Portion 773.

10. Units 7 and 8 make up the commercial space[constructed instead of the overwater car park] and they each have a floor area of 144.4m2 and 209.1m2 respectively. Unit 7 is currently vacant and Unit 8 is leased to [a] restaurant operator under the name of Sogno. ”

  1. Mr Foster concludes his affidavit by stating at paragraphs 12 and 13 that as at February 2017 the cost of running the commercial space now occupied by Units 7 and 8 in terms of overheads has outweighed the rental revenue received and that Steamships has been making a loss on that commercial space. Mr Foster says to the effect that he has deposed to these matters in his affidavit to refute an allegation that had been made on behalf of the Defendants that the Plaintiffs are estopped from claiming damages for the delay in the construction of the proposed overwater carpark on that part of the site on Portion 773 now occupied by Units 7 and 8 because of rental returns generated by Steamships’ change of use to which the proposed overwater carpark area has been put.
  2. Reverting to the evidence of Mr Cullen, his second affidavit filed on 3 March 2017 contains an amplification of the matters he deposed to in his affidavit filed 3 months earlier on 19 December 2016. Mr Cullen refers in his second affidavit to the Report he prepared for Steamships in connection with the delay in construction of the Steamships’ Harbourside office development area caused by the Defendants’ interim injunction. Mr Cullen also refers to the costs associated with the works necessary to rectify the Defendants’ encroachments as per the Court interim injunction of 24 July 2012. Mr Cullen explains at paragraphs 7 to 14 of his second affidavit as follows:

“ 7. The injunction sought and granted to the Defendants prevented the installation of the east most line of 9 marine piles and therefore removed effectively 7 metres of width from the usable carpark area. This had the effect of rendering the carpark marginal dimensionally and awkward from an access perspective, as the driveway would now need to have a dogleg in it, resulting in the loss of a number of parking lots and the loss of the original efficiency of the layout. It was subsequently decided the area had become unsuitable for use as a carpark unless the injunction area became available prior to construction being completed.

8. Any future work required to utilise the two areas that were not available during the construction period will now be at additional cost to the Plaintiffs – as the construction contract has been completed and the builder has completely demobilised off the site. This would have been avoided had the areas in question been available during the construction process.

9. On the land area, the Plaintiffs now intend to reconstruct the boundary fence on the actual boundary line and reinstate the landscaping that was originally intended for the boundary side of the carpark. The cost claimed for this work envisages re-use of the existing fence components wherever possible.

10. Given the outcome of Judgment in favour of the Plaintiffs in these proceedings, the Plaintiffs intend to install the east-most line of marine piles over the water area, followed by the construction of the remaining 7 metres of the available wharf area within the site boundary. The available floor area allows construction of additional staff, storage and support facilities for the commercial space that has not been constructed on the wharf instead of the originally intended carpark.

11. It is noted that the costs claimed in relation to the items for assessment of damage relate only to installation of the remaining marine piles by a civil contractor; provision of documents to allow the installation of these piles as a separate contract; and the builder’s remobilisation cost and additional preliminaries cost to construct the wharf only (not including any buildings). No part of the actual construction cost of the wharf or any building construction is included in the costs claimed. A significant element of cost in this exercise is the remobilisation of the required piling equipment.

12. The Plaintiffs wanted to complete their development for use by occupants and visitors without leaving parts of it unfinished. As the Court proceedings prevented access to the two areas mentioned, the builder was instructed to complete the works up to the edges of the work that was available. The builder has subsequently completed work and demobilised off the site.

13. Any presumption[s] that the piling works are simply a resumption of a delayed activity are incorrect – the works will need to be undertaken as a separate contract and will need to be clearly documented relative to the works to be completed.

14. Furthermore, the out of sequence installation of the majority of the piles that were installed, has not been claimed. The overwater piles should have been installed at the same time as the main site civil works and when the civil contractor was established on site. Because of the proceedings and injunction, a decision to proceed with the overwater piles (and the land boundary fence) was delayed as it was hoped the matter would be resolved in full before it became essential to install the piles (and build the fence) to finish the project. Unfortunately, that did not occur and it will now be necessary to carry out these works under a separate contract.”

  1. The fourth affidavit adduced in evidence at the assessment of damages hearing was the affidavit of Mr Anthony Paru, a lawyer with O’Briens, filed on 20 April 2017. A copy of the interim injunction granted in OS No. 421 of 2012 on 24 July 2012 which restrained Steamships from carrying out its construction work is annexure “A” to Mr Paru’s affidavit. A copy of Bismark’s Undertaking as to Damages filed in that proceeding on 12 July 2012 submitting to any order of the Court for payment of compensation as the Court may consider to be just is annexure “B” to Mr Paru’s affidavit.
  2. The fifth and final affidavit which was relied on by the Plaintiffs at the assessment of damages hearing is the second affidavit of Mr Lawrie Foster filed on 13 June 2017. Mr Foster deposes in this affidavit that on 11 April 2017, some 20 months after the Court’s substantive order of 12 August 2015 was made in WS No. 763 of 2012, a further order was issued by the National Court which directed the Defendants to within 2 months remove the encroachments the subject of this proceeding which had continued to be on Portion 733. Mr Foster says that he conducted a physical inspection of the property and its encroachments on 7 June 2017 and again on 13 June 2017 and that at that stage the Defendants had still not complied with the Court’s order of 11 April 2017 because the encroachments had continued to remain in place. A photograph of the encroachments taken by Mr Foster on 7 June 2017 is annexure “A” to his second affidavit.
  3. The Defendants responded to the Plaintiffs’ evidence on assessment of damages by two affidavits in rebuttal. The affidavits were sworn by Hamish William Sharp and filed on 8 May 2018 and 11 May 2018 respectively.
  4. I turn now to the Plaintiffs’ claims identified in Items 1, 2 and 3 of Mr Cullen’s Report, reflected in the Plaintiffs’ Statement, as it is those Items which best outline the different components of the Plaintiffs’ overall claim for damages.

Item 1 in Mr Cullen’s Costs Analysis Report: Relocation of Fence and Landscaping

  1. Term 2D of the substantive order of the Court made by Kandakasi J on 12 August 2015 stated:

2D An Order allowing the Plaintiffs to realign and construct fencing to the correct boundary position between the adjoining land of the Plaintiffs and the Defendants and the Defendants be liable for 50% of the costs of the realignment and construction.

  1. Term 2D of the substantive order is in effect an acknowledgement of the statutory liability imposed by Section 157 of the Land Act 1996 on occupiers of land on either side of a dividing fence to each pay one-half of the cost of repair of the dividing fence.
  2. The Plaintiffs claim a total of K180,837.80 in item 5.2 and 6A of the Statement for the cost of relocating the fence to its correct boundary position and for landscaping. However, this same claim is Item 1 in Mr Cullen’s Report, which is for the lower amount of K164,398. It comprises:

1. Relocation of Fence and Landscaping

Builder’s costs: K 135,858

Associated professional fees: K 28,540

Total: K 164,398 ex GST

The difference in these two amounts is presumably because the higher amount of K180,837.80 includes an amount of K16,439.80 to allow for GST of 10%.

  1. Mr Cullen states on page 1 of his Report, with reference to Item 1, that one of the works required to be undertaken as a separate construction matter following the Court’s determination of liability is:

“ 1. Relocation of the recently constructed boundary wall and fencing and refinishing of the area between the constructed parking area and the fence including extension of stormwater drainage into that area and landscaping. ”

  1. A detailed architectural plan SK317A in respect of the new boundary works was prepared by Cullen & Feng Pty Ltd and is dated 17 November 2016. It is Attachment 1 to the quote from engineering firm Kramer Ausenco dated 22 November 2016 which is attached to Mr Cullen’s Report.
  2. I observe that if there was a quote from CRCG for the builder’s estimated costs of K135,858 ex GST for relocating the fence and landscaping, that quote was not attached to Mr Cullen’s Report or to any of the affidavit material relied on by the Plaintiffs at the hearing on assessment of damages. There was no documentary evidence adduced for the Plaintiffs’ to support their claim for the estimated costs of K135,858 to relocate the fence and landscaping.
  3. Mr Cullen states in the summary for Item 1 on page 2 of his Report, under the heading of relocation of fence and landscaping, that there would be professional costs of K28,540 associated with the works for the relocation of the boundary fence and landscaping. But there is no direct linkage in Mr Cullen’s affidavit evidence to explain which professionals, be they engineers or his own architect firm or both, would be charging these associated fees of K28,540.
  4. There is, however, indirect evidence of professional charges that would be made by the engineering firm of Kramer Ausenco for the new boundary and landscaping works. That quote, mentioned above, is dated 22 November 2016 and it is attached to Mr Cullen’s Report. The quote, which is styled “Variation to the Contract” states that the reason it has been given is this:

“ Bismark end of boundary to be redefined by relocating the fence, addition of a garden bed, demolition of existing wharf on PPP property and insertion of remaining piles to the new wharf.”

  1. Kramer Ausenco’s quote at a total of K61,550 ex GST indicates that the professional services to be provided by that engineering firm for the additional works required for Steamships Harbourside project as a result of the interim injunction would be preparation of the structural and civil engineering documentation required for three areas of work covered by the quote, including the relocation of the fence and addition of garden bed as per Cullen & Feng Pty Ltd’s architectural plan SK317A, and performing required inspections. Kramer Ausenco’s quote covers 3 task areas. Task 1 is described as follows:

“ Task 1

Design, documentation and site compliance inspections of the new garden bed and required garden retaining walls:

1) Assess the site to determine the extent of the Engineering Services required;

2) Engineer and document the required planters and retaining walls including the footings;

3) Carry out site inspections of the installation.”

  1. Kramer Ausenco’s quote indicates that it would allocate a total of 34 hours to be spent on Task 1 by two of its structural engineers, one project engineer and one draftsman. The names of those professional staff are given in a table set out on page 2 of the quote and their rates per hour are given in a table on page 1. Doing the best I can by extrapolation from this data, my calculation of the fees to be charged by Kramer Ausenco which are referable to Task 1 would be K13,540 ex GST for professional engineering staff assigned by Kramer Ausenco to Task 1. If this K13,540 were to be deducted from the figure of K28,540 assessed by Mr Cullen as being the likely cost of overall professional staff involved in the relocation of fencing and landscaping exercise, this would leave K15,000 ex GST yet to be explained by Mr Cullen in Item 1 of his Report but which could be referable to his own firm’s professional architects’ fees for these works. However, Mr Cullen makes no reference to this balance of K15,000 for professional fees in Item 1 of his Report - or to whom that balance of K15,000 would be paid.
  2. The Defendants challenge the Plaintiffs’ net claim of K164,398 ex GST for the combined estimated costs of the builder and associated professionals for relocation of the fence and landscaping as being excessive and unreasonable. Mr Sharp in his first affidavit filed on 8 May 2018 says this at paragraphs 10 and 11 regarding Kramer Ausenco’s quote:

“ 10. The KA diagram [Cullen & Feng Pty Ltd’s architectural plan SK317A] shows that the landscaping is outside of the existing fence to the actual boundary. I say that there is no requirement therefore to move the present fence and as a consequence the only cost would be construction of the landscaping from fence to survey boundary.

11. In any event, MPL [Magellan] will, at its cost relocate the aforesaid boundary fence onto the surveyed boundary between the allotment owned by the plaintiffs and that of MPL if, in fact, that is required. Such as is necessary that work can be supervised by the plaintiffs or their contractors. ”

  1. Mr Sharp therefore appears to agree that the landscaping works covered in Task 1 of Kramer Ausenco’s quote need to be done. Mr Sharp also says that Magellan would, at its cost, relocate the boundary fence from its then present position to the boundary as determined by proper survey. Mr Sharp relies in this regard on a quote dated 12 June 2017 for K12,250 from Nawae Constructions Ltd, which is one of three quotes from that Alotau-based company annexed to Mr Sharp’s second affidavit filed on 11 May 2018. The relevant quote from Nawae Constructions Ltd is addressed to Magellan. It states:

“ Removal of existing boundary fence between Magellan Properties Ltd
and Steamships – approximate length 32 meters K12,250

Notes:

  1. The Defendants by their counsel submitted at the assessment of damages hearing that Magellan could achieve actual relocation of the boundary fence at a minimal cost of K12,250, presumably ex GST, not K164,398 ex GST as claimed for the Plaintiffs in Item 1 of Mr Cullen’s Report. But there is nothing in the Defendants’ evidence to indicate any costings that Magellan may have sought in respect of the landscaping works, which even Mr Sharp concedes in his first affidavit would be required.
  2. Mr Cullen deposes at paragraph 9 of his second affidavit filed on 3 March 2017 as follows:

“ 9. On the land area, the Plaintiffs now intend to reconstruct the boundary fence on the actual boundary line and reinstate the landscaping that was originally intended for the boundary side of the carpark. The cost claimed for this work envisages re-use of the existing fence components wherever possible. ”

  1. What then is the reasonable cost that the Plaintiffs should be awarded for the estimated combined cost of the relocation of the boundary fence and landscaping?
  2. What must be borne in mind at this juncture is that the Plaintiffs are not required by term 2D of the Court’s order of 15 August 2015 to allow the Defendants to perform the realignment and construction of the fencing to its correct boundary position. Term 2D of the Court’s order is unambiguous. It stipulates that it is the Plaintiffs who are to “realign and construct fencing to the correct boundary position” and that is the Defendants who are to be liable for 50% of the costs of that realignment and construction.
  3. I observe that Mr Sharp’s two affidavits for the Defendants do not provide any critical analysis as to why Mr Cullen’s net estimate of K135,858 for the builder’s cost of carrying out the relocation of the fence and landscaping works is said to be excessive. The quote from the Defendants’ preferred contractor, Nawae Constructions Ltd, only refers to the fence relocation exercise and states that as far as possible materials from the existing fence are to be used. Magellan have provided no quote at all for the landscaping work referred to in Cullen & Feng Pty Ltd’s landscaping and boundary re-alignment plan SK317A, yet Mr Sharp gives every indication in his first affidavit that he agrees on behalf of Magellan that the landscaping work needs to be done.
  4. As for the Defendants’ objection to the professional fees of K28,540 assessed by Mr Cullen as being a necessary component of the Plaintiffs’ costs for the fence relocation and landscaping works, this is answered in part by my analysis of the professional fees attributable to Task 1 in engineering firm Kramer Ausenco’s overall quote of K61,550. The extrapolation shows that Kramer Ausenco’s quote for K61,550 includes an amount of K13,540 for the professional engineering fees for the landscaping works covered by Task 1 in that quote, leaving a balance of K15,000 for other forms of chargeable professional fees which have not been explained in the Plaintiffs’ evidence, either by Mr Cullen or anyone else on behalf of the Plaintiffs.
  5. Despite the absence of supporting evidence given by Mr Cullen for the builder CRCG’s estimated cost of K135,858 for the relocation of the fence and landscaping works, it is obvious from Plan SK317A and from Mr Cullen’s own evidence as to the nature and extent of these works that they would cost far in excess of Nawae Constructions Ltd’s quote of K12,250, which in any event was only for fence relocation works and did not include any estimate for the landscaping works. Given Mr Cullen’s extensive experience in property development projects and the absence of any quote for landscaping costs from Magellan’s preferred contractor, Nawae Constructions Ltd, I am inclined to accept Mr Cullen’s estimate of the builder’s cost for the fence relocation and landscaping works at K135,858 as being reasonable, particularly as the costings include the detailed construction and realignment works depicted in Cullen & Feng Pty Ltd’s plan SK317A, which Mr Cullen states has also allowed for the extension of stormwater drainage into that area.
  6. I accept that in addition to the builder’s estimated costs of K135,858, there should be allowance for an amount of professional costs associated with the relocation of the fencing and landscaping. I say this because I consider it was a forseeable consequence of the interim injunction obtained by the Defendants in OS No. 421 of 2012 that professional fees would be incurred by the Plaintiffs in connection with additional works resulting from the suspension of the Plaintiffs’ development of Portion 773 as an overwater carpark. It was equally foreseeable that those professional fees would be covered by the Defendants’ Undertaking if their claim in OS No. 421 of 2012 proved to be unsuccessful, which it was.
  7. What then is the quantum of professional fees associated with the additional works for relocation of the fencing and landscaping which should be allowed by the Court? I have already determined that Mr Cullen’s estimate of professional fees of K28,540 associated with these works should be limited to K13,540 for Kramer Ausenco’s professional engineering fees, those fees being the amount which I have calculated by reference to data I have dissected from tables in that engineering firm’s quote.
  8. I will disallow the balance of associated professional fees of K15,000 which has been left unexplained in Mr Cullen’s evidence, even though part or all of those associated professional fees would probably be chargeable by Cullen & Feng Pty Ltd for their own additional architectural and project supervision work. If Cullen & Feng Pty Ltd wished to claim for their associated professional costs for this extra work, that should have been made clear in Mr Cullen’s evidence and a separate quote furnished from Cullen & Feng Pty Ltd. No such quote from Mr Cullen’s architect firm was produced in evidence at the hearing on assessment of damages.
  9. I accordingly assess the Plaintiffs’ estimated allowable cost for the relocation of the fence and landscaping at K149,398 ex GST computed as follows:

Builder’s costs (as claimed): K 135,858

Associated professional engineering costs (Kramer Ausenco): K 13,540

Estimated allowable cost: K 149,398 ex GST

  1. However, this estimated allowable cost of K149,398 for relocation of the fencing and landscaping under Term 1 of Mr Cullen’s Report must then be reduced by one-half to accord with the requirement in term 2D of the Court’s order of 12 August 2015 that the Defendants are liable for 50% of the costs of the realignment and construction of the fence. This results in a finding that the Defendants’ one-half share of the estimated allowable cost for the physical relocation of the fence to its correct boundary position, including landscaping, amounts to K74,699, which I round off to K74,700.

Item 2 of Mr Cullen’s Report: Removal of Existing Encroaching Wharf Structure

  1. Term 2C of the substantive order of the Court of 12 August 2015 states:

2C An Order that the Defendants forthwith remove, demolish, cut away or otherwise abate the encroachments of the Defendant’s wharf ramp over the boundary to the Plaintiffs’ Land, in default of which the Plaintiffs have leave to do so at the expense of the Defendants.

  1. The Plaintiffs costing for this work is set out in Item 2 of Mr Cullen’s Report. The costing is for an amount of K223,937 ex GST for the overall cost of removal of the existing encroaching wharf structure. It comprises:

2. Removal of Existing Encroaching Wharf Structure

The builder CRCG’s cost for the removal of the
encroaching wharf and extension of rock sea wall
to boundary: K 205,097

Associated professional fees: K 27,840
Total: K 232,937 ex GST

  1. Mr Cullen’s figure of K232,937 is at variance with the Plaintiffs’ claim for K225,607.59 for the same work referenced in Item 5.1 and 6H of the Plaintiffs’ Statement. I am unsure as why this variance, which amounts to K7,329.4 and is obviously not an allowance for 10% GST, has occurred. It has not been explained in the Plaintiff’s evidence. I will therefore proceed on the basis that the Plaintiffs rely on CRCG’s quote for this work, which is attached to Mr Cullen’s Report, rather than 5.1 and 6H of their Statement. CRCG’s quote is undated but it obviously precedes Mr Cullen’s Report dated 21 November 2016.
  2. CRCG’s quote states:

“ Proposed Project: Wharf removal works

Project Location: Harbourside office project

Attention: Jon Cullen

COST QUOTATION – Wharf removal works

We ... submit our cost for the above project which includes supply material, labour and equipment to carry out above mentioned works on the above location, please note that this cost is according to the scope of works calculated according to drawing [from Cullen & Feng Pty Ltd] No#SK317A and the statement of the email provided by consultation Please refer below to cost details ... ”.

  1. CRCG’s quote then sets out an itemised list of its costs and rates coming to a sub-total of K205,097.81 net, plus GST of K20,509.78, a total for the quote of K225,607.59. The quote contains individual costings and rates for the hire of an excavator, rock hammer and dump truck as well as costings for materials (concrete, mesh wire etc), labour, tools, safety, medical and transport/logistics. The quote from CRCG also includes an amount said to be “10% markup”, although no detail is given of the basis, construction industry-related or otherwise, on which that 10% markup has been calculated.
  2. In reply to the Plaintiffs’ claim for the cost of the removal of the encroachment of Magellan’s wharf, Mr Sharp for the Defendants says this in paragraph 5 of his first affidavit filed on 8 May 2018:

“ 5. I refer to paragraph 5.1 and 6H of the statement of agreed and disputed facts and legal issues on hearing for assessment of damages filed 15.06.2017 (doc. 109) (“the statement’) which refers to the cost of removal or demolition of the wharf ramp. This relates to the “wharf ramp” rather than a sea retaining wall behind it and is in relation to excising that part of the “wharf ramp” which encroaches onto the state lease of the plaintiffs. Nawae Construction[s] Ltd of Magi Highway, Alotau Milne Bay Province have informed MPL [Magellan] that it will carry out the removal of the encroachment at a cost to MPL of K75,000. ”

  1. A copy of Nawae Constructions Ltd’s quote dated 12 June 2017 for K75,000 addressed to Magellan for the removal of the wharf ramp encroachment is one of the attachments forming part of Annexure “A” to Mr Sharp’s second affidavit filed on 11 May 2018. The quote is phrased in the simplest of terms, devoid of any detail, makes no allowance for GST, and merely states:

“ Removal of encroachment Craig’s Waterfront
Stanley Esplanade, Port Moresby: K75,000.00

Notes:

[signature]
Julius Violaris
Director ”

  1. It was submitted by counsel for the Defendants at the assessment of damages hearing that as Magellan had already removed the actual wharf encroachment by November 2017, the real issue was the cost of abatement of the encroachment of the concrete ramp giving access to that wharf and that the actual cost of abatement was reflected in the quotes obtained by Mr Cullen in his Report. However it was nevertheless submitted for the Defendants that Nawae Constructions Ltd’s quote of K75,000 should be accepted as being more reasonable than the Plaintiffs’ quote from CRCG for removal of the wharf ramp which is attached to Mr Cullen’s Report. No explanation other than the disparity between the parties’ respective two quotes (ex GST) of K205,097.81 and K75,000 was embarked on by Mr Sharp in his affidavit evidence.
  2. In view of the paucity of content of Nawae Constructions Ltd’s quote of K75,000 and the lack of any detail of the works to which that quote relates, I accept that CRCG’s quote of K205,097.81 is the more realistic of the two quotes.
  3. Furthermore, I observe that at the date of hearing of assessment of damages it was not in dispute that the abatement work required in respect of the wharf ramp was still outstanding, this being more than 14 months after terms 1 and 2 of the Court’s Order of 11 April 2017 had required Magellan as the lead defendant to remove the wharf encroachments still extant as at April 2017 within 2 months, i.e. by 11 June 2017, in default of which term 3 of that order stated:

3. If the Defendant fails to comply with Orders 1 and 2, the Plaintiff shall be entitled to engage its contractors to remove the existing encroachments subject to the Defendant paying costs for the Plaintiff’s contractors in the quoted and pleaded amount of K225,607.59.

  1. Despite reasons having been given by Mr Sharp in his first affidavit that the delay in Magellan’s compliance with the Court’s order of 11 April 2017 could be attributed to meetings which had been scheduled with the Plaintiffs’ representatives not having taken place, the fact remains that as at the date of the hearing of assessment of damages the abatement of the encroachment of the wharf ramp had still not been remedied by Magellan. I observe that no application had been made to the Court by Magellan subsequent to June 2017 seeking an extension of time to comply with the 2-month time limit from 11 April 2017 for Magellan to complete the removal of the encroachment caused by its wharf ramp. I therefore find that the Plaintiffs are entitled under term 3 of the Order of 11 April 2017 to require Magellan to account to the Plaintiffs for CRCG’s quote for K225,607.59, which after deducting the GST component comes to K205,097. I explain my reasons for not allowing GST later in this decision.
  2. I find that CRCG’s quote of K205,097 ex GST is reasonable in the circumstances as presented by the Plaintiffs.
  3. I am bolstered by my finding in this regard by the common law principle, affirmed by the English Court of Appeal in Coles v Hetherton (2013) EWCA Civ 1704, that in tortious claims, claimants are not required to mitigate their loss by having repairs done at a lower cost. It was held in Coles v Hetherton that a claimant’s loss is the diminution in value of a damaged chattel and not the cost of repairs. Claimants in tort are entitled to the “reasonable cost of repair”, which is a question of fact for the trial judge to determine. This applies even if the repairs are not actually done, in which event a claimant is entitled to damages equivalent to the reasonable cost of the repairs required to be done, and this is not a loss that can be mitigated.
  4. I note that in the present case, the Plaintiffs’ statement of claim in this proceeding WS No. 763 of 2012 includes causes of action based on the torts of private nuisance, trespass and inducing breach of contract. I therefore adopt and apply the principle in Cole v Hetherton that a claimant is not required to mitigate its loss by having repair work done at a lower cost as having direct application to the circumstances of this case.
  5. I accordingly assess the Plaintiffs’ damages claimed under item 5.1 and 6H of the Statement at the net amount of K205,097.81 ex GST stated in CRCG’s quote and as covered by Item 2 of Mr Cullen’s Report.
  6. As to the associated professional fees of K27,849 referred to in Item 2 on page 2 of Mr Cullen’s Report, I apply the same analysis as I applied to Task 1 of the quote from engineering firm Kramer Ausenco’s quote dated 16 November 2016 to extract the number of hours and hourly rates quoted for that firm’s professional staff for Task 2, which relates to the wharf encroachment issue. My analysis in this regard results in a finding that Kramer Ausenco has allowed an aggregate amount of K12,840 for its professional fees chargeable for 2 x structural engineers, 1 x engineer, 1 x draftsman and 1 x project engineer. If that amount of K12,840 is deducted from associated professional fees of K27,840 referred to in Item 2 on page 2 of Mr Cullen’s Report, this again leaves an unidentified amount of K15,000 for additional professional fees, presumably fees which Cullen & Feng Ltd would charge but which have not been quoted for by Mr Cullen. As with the approach I took for professional fees for the same amount for Item 1 (relocation of fence), I will disallow that second unidentified amount of K15,000 but will allow engineering firm Kramer Ausenco’s estimated professional fees of K12,840 for the additional work covered by their Task 2.
  7. I therefore allow the Plaintiffs a total of K217,937, rounded off to K217,940 ex GST, for the estimated cost of removal of the encroaching wharf structure, or rather the wharf ramp, as at the date of hearing of assessment of damages, comprising:

Demolition and removal, extension of sea wall
to proper boundary (if required) and rock as per
CRCG’s quote: K 205,097

Associated professional fees of Kramer Ausenco
extracted from that engineering firm’s quote: K 12,840

Total of allowable estimated costs of removal of
existing encroaching wharf structure: K 217,937 ex GST

Rounded off to K217,940 ex GST

Item 3 of Mr Cullen’s Report: Installation of Marine Piles closest to Boundary

  1. Mr Cullen’s description of this work, which is covered by Item 3 in his Report, is as follows:

“ 3. Installation of the last line of marine piles and extension of the wharf deck to these piles – as wharf is now constructed new documentation will need to be prepared to delineate the new works and indicate demolition and connection details.

As requested we had previously contacted the Building Contractor and Piling Contractor regarding the potential additional costs to the project arising from the out-of-sequence and post-contract period construction of the piling ...

We have not included in the above cost of the wharf structure above the piles in the above as that would have been included in the original contract cost. We have however included the cost of re-supply of the piles as the pile stock is no longer available. ”

  1. The amount claimed by the Plaintiffs for the additional work for installation of the marine piles and associated works is a net total of K1,442,649.15 which, according to Item 3 on page 2 of Mr Cullen’s Report, comprises:

Piling Contractor: K 774,893 ex GST
Building Contractor: K 200,000 ex GST
Structural/Civil Engineer: K 46,749 ex GST (3 additional months’ site attendance)
Architect: K 16,434 ex GST ( 1 additional month’s site attendance)
Subtotal: K 1,038,076 ex GST

Add Escalation at 10% p.a: K 343,603.15
Re-documentation Structure: K 40,970.00
Re-documentation Architecture: K 20,000.00
Total: K 1,442,649.15

  1. The amount of K774,893 ex GST for the piling contractor is derived from the quote for that amount from Civil PNG Ltd dated 4 September 2013 which forms part of Annexure “B” to Mr Cullen’s first affidavit. The quote from Civil PNG Ltd is itemised. It gives details for quantities and rates for mobilization and demobilization of crane and pile hammer, provision of steel grids, corrosion protection, cost of barge, push boat and staff, surveying and cost of installation of marine piles with spliced welding as required.
  2. The amount of K200,000 ex GST claimed for the building contractor for the additional works covered by Item 3 of Mr Cullen’s Report is based on email exchanges between Mr Cullen and CRCG’s costs manager, Mr Karl Lee, which took place in July 2013 and August 2013. Copies of these emails form part of Annexure “B” to Mr Cullen’s first affidavit.
  3. Mr Cullen’s Report attaches an email to CRCG’s Mr Karl Lee dated 17 July 2013, written almost a year after Magellan had obtained its interim injunction in OS No. 421 of 2012 on 24 July 2012, which is when the overwater carpark for the Plaintiffs’ Harbourside project came to a compulsory halt pending further order of the Court. Mr Cullen’s email to Mr Lee of 17 July 2013 states as follows:

“ The resolution of the marine and site boundary issue with the neighbouring property to the East (Bismarck Shipping) is progressing.

As part of the process Steamships needs to make an assessment of the worst case costs it may face as a result of delay in being able to complete the overwater carpark.

We have already asked CPNG [Civil PNG Ltd] to provide a cost to supply and install the remaining line of piles of the overwater carpark.

Can CRCG please consider the following:

In the worst case CRCG may not be able to construct the overwater carpark within the current contract period. If that was the case and CRCG had to complete the work after the contract period had expired – what would be the likely extra over cost? The latter could include escalation in materials supply cost – particularly steel – remobilisation, additional site supervision and management as a result of the work being carried out outside the contract time, hoardings and barriers to keep the construction site safely separated from the completed office building, allowance for repairs to completed work caused by new construction being out of the preferred sequence. Eg road surface to eastern carpark may be damaged by construction activities related to the overwater carpark and have to be repaired.

  1. Mr Lee’s email in reply to Mr Cullen’s enquiry is dated 13 August 2013. It is short. It states:

“ Our Assessment to construct the overwater carpark during construction period is K600,000.00 (ex GST). If in the worst case you put out [o]ur itemised budget additional costs is K200,000 (ex GST). Above cost exclude[s] CPNG’s remaining line of piles. ”

  1. Mr Lee’s reply therefore made it clear that CRCG’s estimated cost of K200,000 for the additional work required to be undertaken by CRCG as the building contractor resulting from the interim injunction did not include the cost of any marine piles. Steamships or CPNG (Civil PNG Ltd) would need to supply CRCG with whatever marine piles were needed for CRCG to undertake the construction aspect of the additional work.
  2. The Defendants’ response to the two quotes which Mr Cullen obtained from Civil PNG Ltd (K774,893) and CRCG (K200,000) for the marine piling work is contained in paragraphs 13 to 18 of Mr Sharp’s first affidavit filed on 7 May 2018. Mr Sharp deposes as follows:

“ 13. Bismark Maritime Ltd (“BML”) has for many years owned and operated piling gear for use on its wharves in Lae and other wharves used by it around Papua New Guinea in the course of its coastal shipping business. This was because the cost of employing civil contractors was totally uneconomic due to the irregular requirement for piling and specialized knowledge required.

14. Whilst MPL was reconstructing its wharf and removing five meters from it, BML had its piling and related gear at Craig’s wharf ready to complete the insertion of the nine piles necessary for the development of the plaintiff. All meetings during 2017 arranged with the plaintiffs to give effect to that piling never eventuated.

15. The piling gear of BML is presently in Rabaul Harbour constructing a wharf and can be made available to the plaintiff at completion of that work in Rabaul at no cost to install the nine piles necessary. MPL [Magellan Properties Ltd] will pay BML for that cost and will supply the piles necessary in accordance with the dimensions detailed in the letter from Civil PNG to the plaintiff dated 04.09.2013 and contained in annexure “B” to [Jon Cullen’s affidavit filed 19 December 2016] namely, “supply and installation of nine, 20 meters (average length) piles 406 mm diameter x 12.7 mm nominal thickness with slicing of piles where necessary.”.

16. The plaintiff can engage such of its contractors or consultants thought necessary to oversee the installation of nine piles by BML at the cost of MPL.

17. Nawae Construction[s] Ltd has informed MPL that it can supply and install the nine piles as required for the sum of K460,000.00.

18. I assume that all piles used in construction by the plaintiff were in similar size and nature in which event they must be ordered well in advance of their use. The Civil PNG quote in September 2016 in annexure “B” to [Mr Cullen’s affidavit filed 19 December 2016] included supply of the nine piles indicating to me they were not ordered for the construction prior to that date.”

  1. Nawae Constructions Ltd’s quote for the supply and installation of the nine piles is dated 12 June 2017. The quote is one of the attachments to Annexure “A” to Mr Sharp’s second affidavit filed on 11 May 2018. As with the other two quotes from Nawae Constructions Ltd for the relocation of the boundary fence and removal of the wharf encroachment, the company’s quote to Magellan for the supply and installation of the nine piles is remarkably short on detail. All that this quote states is this:

“ 1. Supply of 9 number, 20 mtrs 9 average length piles
406 diameter, 12.7mm nominal thickness to site K 70,000.00

2. Installation, driving, splicing and welding of piles as
required, including supply of barge and pile driver
adjacent to Craig’s Wharf: K 390,000.00
K 460,000.00

Notes:

[signature]
Julius Violaris
Director ”

  1. In answer, counsel for the Plaintiffs submitted at the assessment of damages hearing that the three quotes from Nawae Constructions Ltd attached to Mr Sharp’s second affidavit filed 11 May 2018, and in particular the quote for the provision and supply of pilings, have given no breakdown of costs, do not include allowance for the fees of the architects and engineers or for insurance or for project supervisory costs. It was pointed out that Nawae Constructions Ltd’s quotes are not based on any referenced drawings or designs, and appear to be self-serving the interests of the Defendants rather than genuine arms-distance quotes. Counsel for the Plaintiffs submitted that Mr Sharp’s affidavits do not provide any critical analysis of why the Plaintiffs’ quotes obtained from Civil PNG Ltd and CRCG, referred to by Mr Cullen in his Report, are not appropriate or valid. I agree with these submissions made by counsel for the Plaintiffs.
  2. I accept that the supply and installation of the nine marine piles formerly required for the Plaintiff’s overwater carpark was work that still had to be carried out but under new contract arrangements with the Plaintiff’s various contractors after liability for the Defendants’ wharf encroachment issue had been resolved by Kandakasi J in favour of the Plaintiffs. The Plaintiffs were prohibited by the interim injunction from developing that area on Portion 773 which was affected by the Defendants’ wharf encroachment. Once Kandakasi J’s decision on liability was delivered, the Plaintiffs were at liberty to contractually re-engage its contractors to carry out the additional works, including the supply and installation of the nine marine piles, at increased cost. This was a foreseeable consequence if the Undertaking, given by Bismark when the Defendants obtained their interim injunction, later had to be enforced by the Court for the benefit of the Plaintiffs, as is now the case. The fact is that the nine marine piles were still required at the time of the assessment of damages hearing to be supplied and installed despite the change of use of the structures to be constructed above them. The additional costs incurred and which had yet to be incurred by the Plaintiffs for the supply and installation of the nine marine piles have, in my opinion, been adequately documented by the quote from Civil PNG Ltd for K774,893 augmented by the construction estimate of K200,000 from CRCG, both of which quotes do not include GST of 10%.
  3. I reject the quote of K460,000 from Nawae Constructions Ltd as being insufficiently detailed and unrealistic. No evidence has been adduced for the Defendants to suggest that Nawae Constructions Ltd has the industry experience and technical capacity to do what Mr Sharp himself says at paragraph 13 of his first affidavit are works that require specialized knowledge. There is simply no evidence to that effect.
  4. For these reasons, the quotes of Civil PNG Ltd for K774,893 and CRCG for K200,000 are accepted as valid components of Item 3 of Mr Cullen’s Report.
  5. What is less satisfactory is Mr Cullen’s allowance in his Item 3 of additional site attendances of 3 months amounting to K46,749 ex GST for structural/civil engineering firm Kramer Ausenco and 1 month amounting to K16, 434 for his own architect firm Cullen Feng Pty Ltd. These firms are not even named in Mr Cullen’s Item 3. There are no quotes or other documentary material in Mr Cullen’s affidavit evidence to substantiate the necessity and fee rates for these two site attendance allowances. The site attendances may be necessary but the Plaintiffs have the onus of proof to explain why that is so. I disallow Mr Cullen’s allowances for the additional site attendances estimated for Civil PNG Ltd and Cullen Feng Pty Ltd referred to in Item 3 of Mr Cullen’s Report.
  6. Item 3 of Mr Cullen’s Report includes an amount of K343,603.15 for what he terms “Escalation at 10% per annum” based on a formula which he states is “((Above *1.1*1.1*1.1) -Above)”. There are no specific amounts consecutively numbered 1.1 in Items 1, 2 and 3 of Mr Cullen’s Report. I assume that Mr Cullen is referring here to builder’s costs of K135,858 in Item 1, builder’s costs of K205,097 in Item 2 and piling contractor’s costs of K774,893 in Item 3 because these are the first estimated amounts under each of those Items. In his accompanying affidavit filed on 19 December 2016, Mr Cullen says at paragraph 6.4 that he has calculated an amount for escalation at 10% per annum for a period of 3 years from September 2013 to September 2016. Try as I might, I have not been able to reconcile how Mr Cullen arrived at this amount of K343,603.15 by reference to any amounts stated in his Items 1, 2 and the preceding part of his Item 3 in his Report. The closest I can arrive at is an amount of K334,360.20 calculated as follows:

Item 1 – builder’s costs: K 135,858
Item 2 – builder’s costs: K 205,097
Item 3 - piling contractor’s costs: K 774,893
K 1,114,534

K1,114,534 x 10% per annum = K111,453.40
K111,453.40 x 3 years “escalation” = K334,360.20

  1. The discrepancy between Mr Cullen’s calculation of an allowance for an escalation rate of 10% per annum for 3 years at K343,603.15 and my calculation of K334,360.20 (based on what may well be an erroneous assumption on my part due to the vagueness of Mr Cullen’s formula) is K9,242.95.
  2. But to my mind, there is a difficulty in accepting Mr Cullen’s calculation of an escalation rate of 10% per annum for an across-the-board period of 3 years from September 2013 if it includes builder’s costs in Item 1 and Item 2 of his Report. This is because although I have accepted that the builder’s costs for Item 1 of K135,858 were reasonable, no actual quote for that work from CRCG was produced in evidence for the Plaintiffs. There is therefore no evidence as to the date on which the builder’s quote from CRCG for Item 1 was given. It may well have been a quote given by CRCG in 2013 but that quote of K135,858 could just as well have been from a much later date. As to the undated quote of K205,097 from CRCG which is reflected in Item 2 of Mr Cullen’s Report and attached as part of Annexure “B” to Mr Cullen’s first affidavit, that quote refers to Cullen & Feng Ltd’s architect’s plan SK317A, which was dated 17 November 2016. Therefore CRCG’s quote for Item 2 must have been prepared on a date somewhere between 17 November 2016 and the 19 December 2016, the date on which Mr Cullen’s first affidavit was filed.
  3. If any amount for escalation is to be considered by the Court as being reasonable, then on the evidence adduced for the Plaintiff an amount for escalation could only apply to the quote dated 13 September 2013 for K774,893 which came from the piling contractor, Civil PNG Ltd. There is simply no evidence to substantiate that an amount for escalation back-dated over 3 years should be applied to the amounts assessed by Mr Cullen for builder’s costs of CRCG in Items 1 and 2 of his Report.
  4. However, quite apart from there being no extrapolation in Mr Cullen’s evidence to explain how he arrived at his allowance in Item 3 of his report for an amount of K343,603.15 for escalation over a period 3 years, there is similarly no evidentiary material adduced for the Plaintiffs to indicate why Mr Cullen considered an escalation rate of 10% per annum was appropriate.
  5. I therefore start with the premise that if there is to be any allowance for escalation, this can more properly be catered for by allowing for interest pursuant to the Judicial Proceedings (Interest on Debts and Damages) Act 2015 on certain components of the Plaintiffs’ overall damages claim, as pleaded by the Plaintiffs in paragraph F of their prayer for relief in their statement of claim in WS No. 763 of 2012.
  6. The issue of interest on damages, as opposed to any allowance for “escalation” costs, was not addressed by counsel for the Defendants at the assessment of damages hearing. The issue was, however, mentioned in the oral submissions made by counsel for the Plaintiffs, Mr Goodwin. Reproduced below are relevant excerpts from pages 10 and 11 of the transcript of the hearing, commencing at line 19 on page 10:

MR GOODWIN: ... In that schedule of damages, there is a claim for escalation costs on the piling work of 10 per cent per annum. Mr Cullen deposed ... the reason for that is that he used the original costings of 2013 and in his professional opinion a 10 per cent escalation cost is appropriate to cover the increase in cost over time.

HIS HONOUR: What, on an inflation basis or?

MR GOODWIN: He calls [it] on an escalation basis but I think the reasoning is it is akin to being like inflation because the costs of doing business is greater over time. But in building terms it is called an escalation cost. If your Honour did not accept that, the alternative is our client would entitled to interest on that damage. So either way, we would submit that the assessment by Mr Cullen is reasonable given that it is now 2018, we have got five years of escalation costs.

HIS HONOUR: And in terms of your alternative there, have you in your submissions addressed [what ] that rate of interest might be [?]

MR GOODWIN: I have not addressed interest at all, your Honour. ... we claim interest in the pleadings and that was awarded by his Honour Justice Kandakasi, interest on damages, but interest at 8 per cent is similarly akin to escalation costs of 10 per cent. So I am submitting now that ... interest on that amount at 8 per cent would be reasonable in any event. We would accept a 2 per cent reduction if that was what your Honour was minded to do.

  1. In view of the absence of evidence supporting the appropriateness of an escalation factor of 10% per annum sought by Mr Cullen for the Plaintiffs and given the absence of any evidence as to what would be an appropriate rate or rates of interest to be applied to any element of the damages to be awarded to the Plaintiffs, I am minded to apply the conventional interest rate of 8% per annum to certain components of the Plaintiff’s claim and half that rate, 4% per annum, to other components.
  2. Section 4(1) of the Judicial Proceedings (Interest on Debts and Damages) Act 2015 provides:

4. Pre-Judgment Interest on debts and damages

(1) Subject to Section 5, in proceedings in a court for the recovery of a debt or damages, the court may order a rate as it thinks proper to be applied to the sum of which judgment is given interest, on the whole or part of the debt or damages for the whole or part of the period between the date on which the cause of action arose and the date of the judgment.

  1. Section 5 of the Act prohibits the awarding of interest on interest, that is to say compound interest, except where such interest is payable as of right under an agreement or otherwise and except that compound interest, where it is payable as of right, may not be claimed against the State.
  2. The conventional rate of interest, unless the Court otherwise orders, is 8% yearly: Order 12 Rule 6(2) of the National Court Rules. However the Court has a wide discretion when determining the most appropriate rate or rates of interest to be applied to damages.
  3. I will allow pre-judgment interest at the rate of 8% per annum to be applied to Civil PNG Ltd’s quote for K774,893 ex GST for the piling work covered by Item 3 of Mr Cullen’s Report from the date of Civil PNG Ltd’s quote on 4 September 2013 to the date of assessment of damages hearing on 15 June 2018 and thereafter on the quoted amount of K774,893 at the rate of 4% per annum from 15 June 2018 to the date of this decision on quantum of damages.
  4. The reason for the reduction of the allowable interest rate to 4% per annum on certain components of the Plaintiff’s damages between date of the assessment hearing in June 2018 to the date of this decision is because it is a matter of public knowledge that interest rates on term deposits and other financial facilities offered by registered banks in Papua New Guinea over the last 4 to 5 years have plummeted to 4% and below. The purpose of damages is to compensate a successful party who has sustained loss as close as possible for that sum of money which will put the party in the same position as it would have been if it had not sustained the loss for which compensation is being awarded: Motor Vehicles Insurance Limited v Kol (2007) SC902 (Kandakasi, Lanalia and David JJ), citing Lord Blackburn in Livingstone v Rawyards Coal Company (1880) F App Case 25 (HL) at p.39. The purpose of awarding interest on damages is to compensate a claimant for being kept out of money later found by the Court to be payable. As the Plaintiffs here could not reasonably expect to have earned 8% per annum on any component of damages now awarded to them had it been invested with a bank in Papua New Guinea over the last 4 to 5 years, I consider that a rate of interest of 4% per annum applied to a component of damages for that period is a fair and proper rate of interest to be applied by way of compensation which is reflective of the prevailing economic conditions in the country.
  5. Interest on the equivalent of Civil PNG Ltd’s quote of K774,893 for the two periods in is computed by applying the formula: D x IR x (N/365) = I, where: D is the principal amount, IR is the applicable percentage rate of interest per annum, N is the number of days expressed as a percentage of years and I is the amount of interest.
  6. Pre-judgment interest on the equivalent of Civil PNG Ltd’s quote of K774,893 dated 4 September 2013 is therefore computed as follows:

(1) For period 4 September 2013 to 15 June 2018
(date of hearing) - 4 years, 9 months, 11 days (1,745 days):

K774,893 x 8% x (1,745/365 days) = K 296,370

(2) For period 15 June 2018 (date of hearing)
to 20 January 2023 (date of decision)
– 4 years 7 months 5 days (1,680 days):

K774,893 x 4% x (1,680/365 days) = K 142,665

Total interest on K774,893 for above 2 periods: K 439,035

  1. I will apply pre-judgment interest on allowable damages of K74,700 for the fence relocation costs and landscaping at the rate of 8% per annum as from the date of Mr Cullen’s affidavit filed on 19 December 2016 to date of hearing on 25 June 2018 and then at 4% per annum from date of hearing to date of this decision:

(1) For period 19 December 2016 to 15 June 2018
(date of hearing) – 1 year, 5 months 27 days (543 days):

K74,700 x 8% x (543/365 days) = K 8,890

(2) For period 15 June 2018 (date of hearing)
to 20 January 2023 (date of decision) –
– 4 years 7 months 5 days (1,680 days):

K74,700 x 4% x (1,680/365 days) = K 13,753

Total interest on K74,700 for above 2 periods: K 22,643

  1. I will apply pre-judgment interest on allowable damages of K217,940 for the estimated cost of removal of the encroaching wharf structure at the rate of 8% per annum as from the date of Mr Cullen’s affidavit filed on 19 December 2016 to date of hearing on 25 June 2018 and then at 4% per annum from date of hearing to date of this decision:

(1) For period 19 December 2016 to 15 June 2018
(date of hearing) – 1 year, 5 months 27 days (543 days):

K217,940 x 8% x (543/365 days) = K 25,937

(2) For period 15 June 2018 (date of hearing)
to 20 January 2023 (date of decision) –
– 4 years 7 months 5 days (1,680 days):

K217,940 x 4% x (1,680/365 days) = K 40,124

Total interest on K217,940 for above 2 periods: K 66,061

  1. The final aspect of the Plaintiffs’ claim for the cost of the additional work required for installation of marine pilings as set out in Term 3 of Mr Cullen’s Report are the two estimates for re-documentation of structural features at a cost of K40,970, presumably to be done by Civil PNG Ltd, and re-documentation of architectural features at a cost of K20,000, obviously to be done by Cullen Feng Pty Ltd. However, I disallow these two estimates for the same reason as site attendances for structural/civil engineering fees of K46,749 and architect’s fees of K16,434 set out in Term 3 have been refused. No quotes or other material to substantiate the re-documentation costs estimated at K40,970 and K20,000 have been produced in evidence for the Plaintiffs. Again, I have no doubt that re-documentation of engineering and architectural features would of necessity be required but at a trial on assessment of damages it is not sufficient for a claimant to make bare assertions and then expect the Court to award the amount of that assertion. Credible evidence of the assertion in support of a claim must be adduced where it is available: Paraia v The State (1995) N1343 (Injia J); Paklin v The State (2001) N2212 (Jalina J). Quotes for the re-documentation work should have been adduced in evidence and proper explanation furnished for the necessity of that re-documentation.

Summary of quantum of damages assessed under Issue 2:

  1. A summary of the quantum of damages assessed in this proceeding and payable by the Defendants to the Plaintiffs is set out below:
Item:
Description of Damages:
Amount claimed:
ex GST
Amount awarded:
ex GST
1.
Relocation of Fence and Landscaping
K 164,398
K 74,700
2.
Removal of encroaching wharf structure
K 232,937
K 217,940
3.
Installation of remaining marine piles and associated works
K 1,442,649.15
K 774,893

Total of assessed damages:
K1,067,533
  1. A summary of the pre-judgment interest on damages is set out below:
Item:
Pre-judgment interest on:
Interest claimed:
Interest awarded:
1.
Total of pre-judgment interest on K74,700 (Item 1 above) at 8% & 4% per annum for specified 2 periods
For determination by the Court
K 22,643
2.
Total of pre-judgment interest on K217,937 (Item 2 above) at 8% & 4% per annum for specified 2 periods
For determination by the Court
K 66,061
3.
Total of pre-judgment interest on K774,893 (Item 3 above) at 8% & 4% per annum per annum for specified 2 periods
For determination by the Court
K 439,035

Total of pre-judgment interest on assessed damages:
K 527,739
  1. Judgment for the Plaintiffs on assessment of damages will therefore be entered for a total of K1,595,272 comprising:

Total of assessed damages: K 1,067,533

Total of pre-judgment interest: K 527,739

Total of Judgment: K 1,595,272

COSTS

  1. The Defendants are required by term 6 of the Court’s order of 12 August 2015 to pay the Plaintiffs’ costs of this proceeding, which includes the Plaintiffs’ costs of this assessment by the Court of the quantum of the Plaintiffs’ damages. The general rule is that costs follow the event, that is to say that the successful party has its legal costs paid by the unsuccessful party on a party-to-party basis in accordance with the scale of costs set out in Table 1 of Schedule 2 of the National Court Rules. At the conclusion of the trial on assessment of damages I enquired of the parties’ counsel as to whether there was any issue as to the question of costs. Both counsel agreed that costs should follow the event. I will accordingly order that the Defendants are to jointly and severally pay the Plaintiffs’ costs of and incidental to this assessment of damages on a party/party basis, such costs to be taxed if not agreed and to be in addition to the costs which the Defendants were required to pay by term 6 of the Order of the Court made in this proceeding on 12 August 2015.

CONCLUDING REMARKS

  1. I was not addressed by counsel for the parties at the hearing as to whether GST of 10% under the Goods and Services Tax Act 2003 should be allowed on such of the contractors’ quotes accepted by the Court as being reasonable. Most of the contractors’ quotes and other estimates considered in this assessment of damages specifically stated that they excluded GST. I consider that as GST would only become payable by the Plaintiffs on receipt of contractors’ actual invoices and as this assessment of damages has proceeded on the basis of quotes and estimates, not invoices, any attempt to allow for GST in addition to the above total of damages assessed at K1,067,533 would be a matter of inaccurate conjecture. I have therefore declined to include any allowance for GST in this assessment of the Plaintiffs’ damages. I consider that any allowance for GST that could have been calculated and included in this assessment of damages had evidence of invoices been available is more than offset by the interest components which have been applied to allowable amounts for the Plaintiffs’ claims for relocation of fencing and landscaping, for removal of the encroaching wharf structure and for the supply and installation of the remaining marine piles.
  2. Post-judgment interest will, pursuant to the discretion of the Court allowed by Section 6(1) of the Judicial Proceedings (Interest on Debts and Damages) Act 2015 and Order 12 Rule 6(1) of the National Court Rules, be payable by the Defendants at the rate of 4% yearly on such of the judgment amount of damages assessed at K1,067,533 as remains from time to time unpaid.
  3. I will hear counsel as to the final orders which need to be made by the Court for the final disposition of related proceeding OS No. 421 of 2012.

JUDGMENT

  1. The terms of the formal order of this Court on assessment of the Plaintiffs’ damages are:

(1) Judgment is entered for the Plaintiffs in the sum of K1,595,272 comprising:

(a) assessed damages: K 1,067,533

(b) pre-judgment interest on assessed damages: K 527,739

Total of Judgment: K 1,595,272

(2) Post-judgment interest shall accrue at the rate of 4% per annum on so much of the sum of the above assessed damages of K1,067,533 as remains from time to time unpaid.

(3) The Defendants shall jointly and severally pay the Plaintiffs’ costs of and incidental to the Court’s assessment of damages together with the Plaintiffs’ costs of this proceeding required by term 6 of the Order of the Court made on 12 August 2015 to be paid by the Defendants, all such costs to be on a party/party basis and to be taxed if not agreed.

(4) The time for entry of this order is abridged to the time of signing by the Court which shall take place forthwith.

Judgment accordingly


O’Briens: Lawyers for the Plaintiffs
Warner Shand: Lawyers for the Defendants

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