N10593

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 24 OF 2016 (COMM)

BETWEEN
CANAAN INVESTMENTS LIMITED TRADING AS CANAAN GAS DISTRIBUTORS
Plaintiff

V

ORIGIN ENERGY (PNG) LIMITED
Defendant

Waigani: Anis J
2022: 10th August
2023:  1st December

CONTRACT – Breach of Contract – alleged contract partly in writing, partly oral and partly by the conduct of the parties – preliminary consideration -whether the pleadings of a partly written contract is supported with prima facie evidence to support the proposition or claim to better assist the Court understand and venture into considering the substantive matter – considering the claim for the part where it is alleged that the contract is partly in writing – whether the purported part of the contract that is said to be in writing supports the broader claim of the alleged contract as alleged in the pleadings – or whether the alleged partly written part of the contract a standalone or separate contract - considerations – ruling 

CROSS-CLAIM – whether cross-claim contested – consideration - ruling

Cases Cited:

Papua New Guinean Cases
Jixing Industries Ltd v. Aitape Metropolitan Forest Investment Ltd (2013) SC1294
Christian Life Centre v. Associated Mission Churches of PNG & Ors (2002) N2261
PNGBC v. Barra Amevo & Ors (1998) N1726
Papua New Guinea Banking Corporation Limited -v- Jeff Tole (2002) SC694
National Provident Fund Board of Trustees -v- Jimmy Maladina & Ors (2003) N2486
The Central Bank of PNG v. Gabriel Tugiau (2009) SC1013

Overseas Cases:
Courtney & Fairburn Ltd -v- Tolaini Bros (Hotels) Ltd [1975] 1 WLR 297
Dunlop Pneumatic Tyre Co Ltd v. Selfridge & Co Ltd [1915] AC 847

Counsel:
C Kup-Ogut, for the Plaintiff
G Garo with counsel assisting M Adadikam, for the Defendant

JUDGMENT

1st December, 2023

1.	ANIS J:  This was a trial on liability on alleged breach of contract by the plaintiff.  The defendant also filed a cross-claim for debt recovery premised on a service contract between the parties.  I heard final submissions on 10 August 2022, and reserved my ruling thereafter to a date to be advised.

2.	Parties have been notified so I will rule on the matter now.

BACKGROUND

3.	The relevant background of the matter is this.  The plaintiff company used to operate a fuel service station in Hohola in the Nation’s Capital, Port Moresby.  Services there included retail sales of a cooking gas called Liquified Petroleum Gas (LPG).  In 2013, the plaintiff expressed its intention to be a distributor or dealer of LPG for the defendant.  The plaintiff’s representative who negotiated with the defendant at the material time was Paul Morris.  He is the owner and Managing Director of the company.  The defendant’s main contact person at the material time was Gabrial Laka.  He was the National Marketing Manager of the defendant.  Mr Laka met his demise on 7 August 2021, so he was not available to give evidence either for the plaintiff or the defendant in regard to the matter.

4.	Evidence adduced shows that the defendant and the plaintiff had various discussions or meetings in 2013.  The plaintiff, premised on the understanding that it would enter into a commercial arrangement for sales of LPG, applied for a substantial loan of K4,000,000 with the Australian & New Zealand Banking Group (PNG) Limited (ANZ Bank) in 2013.  The loan was not granted immediately for various reasons, and it was pending approval in 2013.  Whilst that was the case, on 11 December 2013, the plaintiff and the defendant signed an agreement called Dealership Supply Agreement (DSA/dealership agreement).  

5.	In January 2014, the plaintiff, after having waited unsuccessfully for its business loan to be approved by ANZ, applied to another financier, namely, Finance Corporation Ltd (Fincorp) for a similar loan.  Its application was successful.  On 31 March 2014, the plaintiff and Fincorp signed a commercial loan agreement for a sum of K4,000,000 (Loan Agreement).  

6.	The plaintiff used the loan money or some of it, to renovate and set up its facilities as per the business agreement or arrangement that it had or thought to have had with the defendant.  The plaintiff, despite the existence of the DSA that it had signed with the defendant which was binding between the parties, claimed that there was more to it than just the DSA.  The plaintiff claims in the pleadings that in actual fact, the DSA was only part of a much bigger contract that it had entered into with the defendant in 2013. And that, I must say, is where the facts become murky and contested.  The plaintiff had argued to the defendant in 2014 that, premised on the various discussions, meetings, and representations that it had had with the defendant in 2013 or earlier, it was of the view that the parties would and have entered into a Flagship/Distribution or Bulk Cylinders Agreement.  It alleged that as far as it was aware, that was the basis of the commercial deal between the parties, and that the parties have already entered into this purported Distribution Agreement (alleged DA or Main Contract).  

7.	The submissions and evidence adduced by the plaintiff appear somewhat convoluted on this matter because the plaintiff appears to be arguing on the one hand that the DSA constitutes a part of the alleged Main Contract, and on the other hand, it appears to also allege that the DSA was signed for no other purpose except to support its loan application with the understanding that the parties would later sign or enter into the Flagship/Distribution or Bulk Cylinders Agreement.  The later argument appears to suggest that the plaintiff may be asserting that there could have been in existence in 2013, an agreement to enter into a Flagship/Distribution or Bulk Cylinders Agreement, or in other words, an agreement to agree to enter into another agreement.  See cases:  Jixing Industries Ltd v. Aitape Metropolitan Forest Investment Ltd (2013) SC1294; Courtney & Fairburn Ltd -v- Tolaini Bros (Hotels) Ltd [1975] 1 WLR 297.

8.	The plaintiff, in all, claims breach of contract, and in so doing, seeks, amongst others, liquidated losses as follows: (a) K8,356,186.88 for alleged liquidated damages, (b) K13,302,000 for alleged loss of income up to 2018, and (c) K9,954,027 for alleged loss to service the loan. 

9.	The defendant, however, denies the existence of the alleged Main Contract or the DA.  It claims that the only valid agreement it signed or had with the plaintiff was the DSA which was executed on 11 December 2013.  The defendant also files a cross-claim against the plaintiff.  It claims the plaintiff owes it monies for LPG that had been supplied to the plaintiff under the DSA which remains outstanding as a debt.  The total sum claimed, amongst others, is K277,743.76.  

10.	The said disputes have resulted in this Court proceeding.

EVIDENCE

11.	Parties gave both oral and written testimonies at the hearing.  Several of the witnesses were also cross-examined.  

12.	Evidence tendered were marked with exhibit numbers.  The plaintiff tendered the following evidence:

No.	Documents Tendered	Exhibit No	

1	
Affidavit of Paul Morris sworn 02.09.17 filled 09.10.17	
Exhibit P1	
2	Second Affidavit of Paul Morris sworn 29.05.18 filed 15.06.18	Exhibit P2	
3	Third Affidavit of Paul Morris sworn 29.05.18 filed 15.06.18	Exhibit P3	
4	Affidavit for Trial of Paul Abraham Morris sworn 24.02.20 filed 28.02.20	Exhibit P4	
5	Affidavit for Trial of Paul Abraham Morris (Photographs & Statement of Loan Accounts sworn 27.02.20 filed 28.02.20	Exhibit P5	
6	Affidavit for Trial of Paul Abraham Morris sworn 26.02.20 filed 28.02.20	Exhibit P6	
7	Letter from Mr. Laka of Origin dated 13 June	Exhibit P7	
8	Letter dated 17 June 2012	Exhibit P8	
9	Agreement dated 11 December 2013 with documents attached	Exhibit P9	
10	Summary of discussion – email dated 14 August 2014	Exhibit P10	
11	Photographs about the launching of the project in Gerehu on 1 October 2014	Exhibit P11
	
12	Video recordings of the launching of the project on 1 October 2014	Exhibit P12	

13.	And the defendant tendered the following evidence:

No.	Documents Tendered	Exhibit No	

1	
Certificate if Incorporation of Canaan date 29 May 202	
Exhibit D1	
2	IPA Company Extract of Canaan dated 29 May 2020	Exhibit D2	
3	Canaan Gas Distributors Business names extract dated 15 August 2020	Exhibit D3	
4	Canaan Gas Distributors Certificate of Registration of Business Name dated 15 August 2020	Exhibit D4	
5	Canaan Service station Business names extract dated 22 June 2020	Exhibit D5	
6	Canaan Service station Certificate of Registration of Business Name dated 15 August 2020

Canaan Service station Business Extract dated 15 August 2020 shows the entity was removed on 12 March 2020	Exhibit D6

Exhibit D7	
7	Canaan Service station Certificate of Registration of Business Name dated 15 August 2020

Canaan Service station Business Extract dated 15 August 2020 	Exhibit D8

Exhibit D9	
8	Email dated 4 August 2013	Exhibit D10	
9	Email dated 28 August 2013	Exhibit D11	
10	Email dated 17 October 2013	Exhibit D12	
11	Agreement (unsigned) attached to email dated 17 October 2013	Exhibit D13	
12	Agreement (signed)	Exhibit D14	
13	New account document – Origin Energy signed on 6th November 2014	Exhibit D15	
14	Email dated 19 May 2014	Exhibit D16	
15	Email dated 27 August 2014	Exhibit D17	
16	Affidavit of Navaratnarajah Rajaramanan sworn and filed 10 February 2021	Exhibit D18	
17	Supplementary Affidavit of Navaratnarajah Rajaramanan sworn on 26 February 2021 filed on 3 March 2021	Exhibit D19	
18	Affidavit of Navaratnarajah Rajaramanan sworn and filed 4 May 2022	Exhibit D20	
19	Affidavit of search of Victor Lovai sworn on 31 July 2020 filed on 6 August 2020	Exhibit D21	
20	Affidavit of Christopher Miviri sworn 3 August 2020 and filed on 6 August 2020	Exhibit D22	
21	Affidavit of Lesieli Moala Taviri filed on 11 September 2020	Exhibit D23	
22	Affidavit of Lesieli Moala Taviri filed on 16 March 2021	Exhibit D24	
23	Affidavit of Lesieli Moala Taviri filed on 29 September 2021	Exhibit D25	
24	Affidavit of Lomot Kanawi filed on 10 February 2021	Exhibit D26	
25	Affidavit of Lomot Kanawi filed on 11 September 2020	Exhibit D27	
26	Affidavit of Deon Botha filed on 10 February 2021	Exhibit D28	

PRELIMINARY ISSUE

14.	I have considered the issues raised by the parties herein.  There is a preliminary matter that stands out which I will now address, which is this: Whether the DSA can be used to argue that it formed part of the purported DA that was created in 2013 as alleged by the plaintiff.

15.	The relevant pleadings in the Statement of Claim (SoC) that concerns this issue are those contained at para 5(a) and (b).  The pleadings read in part as follows:

5.	In 2013, or thereabouts the Plaintiff and the Defendant entered into an agreement for the exclusive distribution of LPG vessels by the Plaintiff to the Retailers within NCD, and extending to Kerema town.  The agreement was made partly orally, partly in writing and partly by conduct, particulars of which are as follows:

(a)	Insofar as the agreement was made orally, the agreement was made in the following discussions and exchanges held between Paul Morris representing the Plaintiff and Gabriel Laka the Marketing and Strategy Manager, and Joh Cholai, the General Manager representing the Defendant: 
……

(b)	Insofar as the agreement was made in writing, the agreement is contained in the Dealership Supply Agreement dated 11 December 2013 (“the Agreement”):-“

16.	The issue, in my view, is crucial because premised on the pleadings and the arguments by the plaintiff at the trial, the alleged DSA, the plaintiff claims, formed part of the critical component of the alleged DA or Main Contract, that is, where it is alleged that the Main Contract was in writing.  

17.	Pleadings shall drive the issues and evidence, thus, and in my view, there must be clarity on this before I can proceed any further.  See cases: Papua New Guinea Banking Corporation Limited -v- Jeff Tole (2002) SC694, National Provident Fund Board of Trustees -v- Jimmy Maladina & Ors (2003) N2486 and The Central Bank of PNG v. Gabriel Tugiau (2009) SC1013.

18.	Let me refer to and clarify this undisputed fact which has been adduced in evidence by the parties, which is the existence and validity of the DSA.  The agreement was signed between the parties on 11 December 2013.  I note that the plaintiff through Mr Morris tried to allege that he was given the DSA at the very last minute to sign off on, or that he was not given any opportunity to consult his lawyers before he signed off on the DSA.  However, I discard this evidence as having any relevance to the matter because the validity of the DSA is not raised as a material issue or at all in the pleadings that may require a determination by this Court.  In fact, and as pleaded by the plaintiff, the DSA purportedly forms a material part of the claim in regard to the alleged Main Contract.  The plaintiff is in fact relying on its existence and validity, to assert its claim on the existence of the alleged Main Contract.

19.	I note the submissions of the parties on this.

20.	I observe that Mr Morris appears to contradict himself regarding his knowledge of the DSA.  Email exchanges between himself and Mr Laka confirms that he did receive and was shown a draft copy of the defendant’s standard Dealership Supply Agreement several months before the parties signed off on it on 11 December 2013.  I refer to Mr Morris’s own evidence, that is, paras 28, 35, 36 and Annexure PM7 to Exhibit P4.  Similar relevant evidence is also revealed at annexures LT 17 and LT 18 to Exhibit D23, namely, the Affidavit of Lesieli Moala Taviri.  The evidence reveal 2 email exchanges between Mr Laka for the Defendant and Mr Morris.  Mr Laka’s email to Mr Morris is dated 17 October 2013, and it was sent at 10:37am.  He attaches therein a copy of the standard Dealership Supply Agreement of the defendant.  Mr Morris responded to Mr Laka’s email 1 hour 11 minutes later as follows:

“Good Day Mr. Laka.

I have gone through the standard agreement.  All accepted.  Excellent.

You may go ahead.  Once I obtain a copy from you, I will hand this over to my accountant to proceed further.”

21.	However, at paras 29 to 77 of Exhibit P1, Mr Morris deposes evidence that is contradictory to what he had said in the above email.  At paras 62, 64 and 66, Mr Morris deposes as follows

62.	Surprisingly on the same day (11 December 2013) without any notice, Mr Laka and Mr Tamarua delivered a copy the signed Agreement for my signature at Badili, the company’s office and asked me to sign it.
……

64.	This was the first time I was given the copy and saw the actual Distributorship Agreement.  There was no discussion or explanation of the terms of the Agreement to confirm what was discussed since 2012.  Mr Laka and Tamarua said that everything was in order and I should sign three copies of the agreement which they presented so as to move things forward.
……

66.	Also they went further and indicated that it was the Distributorship Agreement consistent with our discussions from 2012 onwards.  They asked me to sign them without asking me to seek an opinion of a lawyer or a third party.  They did not even asked me to keep the Agreements for a few days and digest them before signing them.  They said to be in hurry.
……”

22.	Mr Morris also makes similar claims at para 30 to Exhibit P4.  I observe that in Mr Morris’s own evidence, as of August of 2023, he was eager but unhappy that the parties were slow in signing the DSA, and he was also very concerned that he could not get the plaintiff’s business loan approved because of the delay.  Even in the morning on the day of signing the DSA, Mr Morris was complaining about it.  And when the agreement was finally brought to him to sign, which was the same agreement where a draft had been shown to him in October of 2013 where he had agreed on, he accused the defendant for rushing it, and also, he complained that he was not given any opportunity to review it.  To me, I observe that it makes no sense at all, and I am not sure whether Mr Morris realizes what he is saying to the Court under oath.  I say this given the glaring inconsistencies that he has testified to under oath.  

23.	Mr Morris holds himself out to have vast experience in the fuel sales or distribution business since the 80s.  Evidence adduced shows that he does indeed possess a vast experience in the sector.  He is also the Managing Director of the plaintiff and has been in the business for more than 20 years.  Whilst Mr Morris was giving evidence in Court, I observed him to be qualified and I must say that I regard him as a person of good or high intellect in the business sector.

24.	Therefore, and with such qualifications, I find it odd that Mr Morris would not recall or that he would give inconsistent or false evidence that he never came across a draft standard copy of the DSA before he sighted and signed it on 11 December 2013.  He also stated in his evidence that the DSA was presented to him, and that he was forced to sign it without being given an opportunity or time to consult his lawyers.  I find his recollection and account to be crucially inconsistent and hard to believe.  The adduced evidence which I find credible is that Mr Morris had been shown a copy of the standard Dealership Supply Agreement on 17 October 2013.  Mr Morris’s own evidence shows that it was he who had been impatient because his company had applied for a personal loan with ANZ Bank and they had been requesting the defendant to provide a copy of a duly executed contract, to attach together with the plaintiff’s loan application.  Even at the time on the eve of the signing of the DSA on 11 December 2013, email exchanges at Annexure O to Exhibit P1 shows that Mr Morris was pressuring Mr Laka in regard to the signing of the DSA.  And when the agreement was rushed to Mr Morris to sign to enable or assist him to submit to ANZ Bank for the plaintiff’s long outstanding personal loan, which he did, he later or now gives evidence and accuses the defendant for rushing the agreement to him to sign and for not allowing him time to consult his lawyers.  

25.	I also find Mr Morris to be disingenuous or that he appears to ‘play dumb’ by his evidence, that is, in regard to his awareness and knowledge of the DSA.  There was nothing preventing him from requesting time to peruse the documents or the DSA.  He instead expressly stated in his evidence that he signed the DSA.  The reason why he did that, it seems, which I find to be the case, was that he knew or ought to have known very well the terms of the DSA.  The DSA had been explained well by Mr Laka and forwarded to Mr Morris in October of 2013 where he had seen and had agreed with its content.  He stated in his own evidence that he was eagerly waiting for the defendant to approve the agreement so that he would use it to support the plaintiff’s personal loan to ANZ.  So, when the DSA was presented to him, he did not wait to consider it further, which he could easily have done, or he did not wait to consult a lawyer to advise him on the terms and conditions of the DSA.  He signed it voluntarily, and I find that to be the case, that is, knowing fully well of what he was signing on behalf of the plaintiff.  I also reject Mr Morris’s other evidence and reasons given.  Even if he did not understand the terms of the agreement (which I find to the contrary), that would have also been an internal matter for the plaintiff to attend to and not for the defendant to concern itself with; if Mr Morris did not consult a lawyer or sought assistance from experts in August of 2023 to the time immediately before the signing the DSA, that may be negligent on his part as the Managing Director of the plaintiff.  The preparatory work by the plaintiff towards the signing of the DSA had nothing to do with the defendant, and I find that to be the case.

26.	I must say that I have reasons or causes to therefore treat Mr Morris’s evidence with a high degree of suspicion.  Mr Morris’s evidence on the issue is inconsistent, and he appears to be an unreliable witness for the plaintiff.  I find that to be the case.

27.	However, what is certain for this purpose is the existence and validity of the DSA.  And the plaintiff, as stated, is relying on it as forming part of the alleged Main Contract.  And this all comes back to the issue, that is, whether the DSA is part of the written terms of the alleged Main Contract.

28.	I will answer this question in the negative.  A copy of DSA is adduced in the evidence of the parties.  It is marked as Annexure P to Exhibit P1 and Annexure LT 20 to Exhibit D23.  Evidence that have been adduced by both parties, when considered wholly on the preliminary issue, have shown, and have caused me to make the following determinations:

(i)	the DSA was derived from a standard standalone contract of the defendant;

(ii)	the DSA is different to the standard standalone Distribution, Flagship or Bulk Cylinders Agreement of the defendant;

(iii)	the plaintiff through Mr Morris was shown a draft copy of the standard Dealership Supply Agreement on 17 October 2013; 

(iv)	evidenced adduced shows that the plaintiff knew or ought to have known what the terms and conditions of the DSA were when the plaintiff, through Mr Morris, approved it on 17 October 2013, that is, before he later executed it on behalf of the plaintiff on 11 December 2013;

(v)	the DSA was duly executed on 11 December 2013, and it was binding on the parties;

(vi)	the plaintiff’s loan was personal and the plaintiff had applied for it to use some of the funds to upgrade its facilities to meet the strict terms and conditions that are required under the DSA;

(vii)	it is not known whether all the loan funds had been applied purposely for the benefit of the plaintiff in relation to the DSA;

(viii)	the defendant had nothing to do with how the plaintiff would apply its loan of K4,000,000 which was a private matter;

(ix)	the defendant was not privy to the business arrangement between the plaintiff and Fincorp: see cases:  Christian Life Centre v. Associated Mission Churches of PNG & Ors (2002) N2261, Dunlop Pneumatic Tyre Co Ltd v. Selfridge & Co Ltd [1915] AC 847 and PNGBC v. Barra Amevo & Ors (1998) N1726.

29.	In view of my findings as summarised above, the DSA cannot be regarded as part of the alleged Main Contract.  And because the plaintiff is relying on it as constituting the written part of the alleged Main Contact, the cause of action in my view shall fail.  As determined above herein, the DSA is separate and thus cannot be referred to or used by the plaintiff to claim or allege that it is part of the alleged Main Contract or of any other contract or arrangements for that matter.  In other words, the said findings of this Court removes a main ‘DNA component’ of the claim of a binding contract as alleged by the plaintiff in its pleadings.

30.	I also note in perusing the DSA that there are no express terms and conditions therein for one to assume that the parties, upon signing the said contract, had intended that they will later enter into a Distribution, Flagship or Bulk Cylinders Agreement.  There is nothing whatsoever that is contained in the DSA that can assist me to try to appreciate the plaintiff’s argument.  And further, there are no concrete or reasonable inferences that may be derived from the evidence that would also assist me in this regard to follow the plaintiff’s claim.  As I have ruled above, Mr Morris’s evidence are not reliable, and the defendant’s evidence, which are reliable, all say and support the proposition that the negotiations that were held between the parties in 2013 only concerned or relate to the parties’ intention to enter into a dealership supply agreement which they eventually did on 11 December 2013.

31.	Consequently, the plaintiff is left with only alleged oral terms and alleged conducts of parties, as the basis for its arguments or claim of a binding contract.  I therefore find that the claim by the plaintiff for breach of contract shall fail as being baseless or without merit.  I find that the plaintiff has failed to prove the existence of the alleged Main Contract.  The plaintiff’s main witness Mr Morris has given contradictory evidence.  His evidence were not corroborated, and there were reasons to believe as I have found above, that Mr Morris was not a truthful or credible witness of the plaintiff on what had occurred at the material time before and after the signing of the DSA in 2013.

32.	In conclusion, I also make the following preliminary observations and findings:

(a)	Prior to up to 2013 when the plaintiff expressed its intention to distribute the defendant’s LPG or to engaged in the said business with the defendant, the plaintiff had no experience in distributing major volumes of LPG; the plaintiff had only operated as a retail distributor of LPG;

(b)	 Prior to up to 2013 when the plaintiff expressed its intention to distribute the defendant’s LPG, the plaintiff did not qualify to be considered and be offered a Distribution, Flagship or Bulk Cylinders Agreement by the defendant; the plaintiff did not have the facilities or capacity to be in a position to be offered a Distribution, Flagship or Bulk Cylinders Agreement by the defendant at the material time;

(c)	evidence adduced shows that the plaintiff was struggling to upgrade its facilities even to qualify to meet the defendant’s mandatory requirements or standards under its standard Dealership Supply Agreement;

(d)	evidence adduced shows that the plaintiff had required the assistance of the defendant to upgrade its facilities in order to qualify to doing business with the defendant but at the level of dealership of the defendant’s LPG business;

(e)	evidence adduced shows that the personal business loan of K4,000,000 by the plaintiff was approved because of or premised on the plaintiff’s intended business with the defendant which was to be one of its dealer of LPG but at the level of or premised on the defendant’s standard Dealership Supply Agreement;

(f)	evidence adduced shows that the loan was not approved premised on any signed Distribution, Flagship or Bulk Cylinders Agreement or premised on the parties’ intention to enter into such major agreement;

(g)	there may have existed at the time, a general expression of intention by the plaintiff to enter into a Distribution, Flagship or Bulk Cylinders Agreement; however, this appears, premised on the evidence considered in totality, to be mere expression or discussions which were not backed up with concrete or supportive evidence between the parties, or backed up with the capability or ability of the plaintiff to provide such services or enter into such high-level negotiations with the defendant;

(h)	Mr Laka appears to personally know Mr Morris and vise-versa.  However, Mr Laka is deceased and therefore none of the evidence of Mr Morris of what he said had occurred in 2012 and 2013 onwards may be corroborated; but regardless, it is possible to assume that Mr Laka was trying to assist his friend Mr Morris succeed or be awarded with this standard Dealership Supply Agreement which he eventually did;

(i)	it was Mr Morris’s words against the evidence of the defendant where the defendant’s evidence were substantiated, believable, and I found them to make logical or common sense;

(j)	the defendant’s line of business may be regarded as highly dangerous or risky and thus it has strict standard terms and conditions of contracts that have been approved or controlled by strict international and domestic guidelines that must be complied;

(k)	such business arrangements appear to have no room for implied terms, or contracts that may be created orally or partly in writing, or contracts that may exist premised on conducts of the parties; it is illogical, and it makes no sense at all for the defendant to engage itself in these types of uncertain, unsafe or risky business dealings or propositions with third parties;

(l)	the alleged Main Contract which the plaintiff claims to exist, is actually provided for in express and mandatory terms by the defendant under its separate standard contract called Distribution, Flagship or Bulk Cylinders Agreement; 

(m)	the defendant had at no time made an offer to and entered into a Distribution, Flagship or Bulk Cylinders Agreement with the plaintiff in 2013 as alleged;

(n)	none of the evidence that have been adduced suggests or implies that the defendant had engaged or had attempted to engage the plaintiff into entering into a contract that would match a Distribution, Flagship or Bulk Cylinders Agreement, that is, whether orally, by conduct or otherwise premised on the events of 2013;

(o)	the defendant has different terms and conditions and level of authority for approval if it intends to enter into a contract with a person in regard to its Distribution, Flagship or Bulk Cylinders Agreement; its strict process was summarised by Ms Taviri both in her oral and written testimonies; none of these requirements had been met or discussed with the plaintiff prior to the signing of the DSA in December of 2013; 

(p)	the plaintiff would not have qualified at the material time as a person who would have met the prerequisites to enter into a Distribution, Flagship or Bulk Cylinders Agreement with the defendant;

(q)	the plaintiff’s evidence that suggests or deposes that it qualified accordingly for a Distribution, Flagship or Bulk Cylinders Agreement is simply not true based on the undisputed facts, and also, based evidence that were presented before me.

FINDING

33.	In summary, I find that the plaintiff has failed to establish the allege Main Contract or DA as pleaded.  The plaintiff’s claim will therefore be dismissed.

CROSS-CLAIM

34.	I refer to the defendant’s cross-claim filed 30 October 2020 (CClaim).

35.	The defendant seeks to recover a total sum of K277,743.76.  Its claim of the money is premised on the DSA.  It claims in summary that:

•	pursuant to the DSA, it supplied the plaintiff various LPG at the material time and during the tenure of the agreement;
•	the plaintiff received the goods and services but failed to settle the amounts claimed in the various invoices as pleaded in the CClaim;
•	a total sum of K251,949.85 remains to be settled and continues to remain outstanding;
•	on at least 3 occasions, the plaintiff attempted to part pay the debt by writing cheques to the defendant which were, however, dishonored by the banks due to insufficient funds in the plaintiff’s account.

36.	In its cross relief, the defendant seeks, (i), the sum of K277,743.76 against the Plaintiff/Cross-Defendant, (ii), Bank fee of K50 being the charge for the 2 dishonored cheques, (iii), interest at 8% per annum and (iv), Cost of the proceeding.

37.	The plaintiff’s response to the cross-claim is this.  Premised on its Reply and Cross-Defence filed 23 March 2016, and at paras 3(a) and 6(a) and (b) of its Cross-Defence, the plaintiff says (and I will summarise):

(i)	it does not deny being supplied with the goods or the LPG by the defendant; 

(ii)	however, it denies that it was incapable of paying the said money and it claims that the only reason why it could not pay was because it had insufficient funds, and it says that was due to the negligent actions of the defendant, and also due to the fact that the defendant had breached of the terms and conductions of the alleged Main Contract.

38.	In view of my findings concerning the alleged Main Contract, the qualified pleadings in the Cross-Defence that deny liability are dismissed or lifted meaning that the plaintiff is therefore liable.  Without the existence of the alleged Main Contract, the plaintiff, premised on the pleadings, does not deny services that had been rendered to it for the said monies as claimed by the defendant.  Thus, I find the plaintiff to be liable to the relief sought by the defendant in its CClaim.

39.	Further to or regardless of the above finding, I note that the plaintiff has also admitted to the debt in the evidence that have been adduced by both parties.  I refer to Annexure NR12 to Exhibit D20 (Affidavit of Navaratnarajah Rajaramanan filed 4 May 2022).  The attachment contains a statutory declaration made by Mr Morris on 16 July 2015 where he admits to the debt that was owed at that time.  Mr Morris also admits to the debt at paras 63 and 75 in Exhibit P2, and at paras 134 and 139 in Exhibit P4.  

40.	Full details and particulars of the debt as claimed in the CClaim are summarised and adduced in evidence by the defendant, that is, Exhibit D20.  I accept them favourably for the defendant.

SUMMARY

41.	In summary, I dismiss the plaintiff’s claim and uphold the defendant’s CClaim.  I will therefore grant the defendant’s CClaim, that is, for its debt which remains owing under the DSA, plus K50.00 which is the reimbursement bank fee for the 2 cheques that had bounced.

COST & INTEREST

42.	An order for cost is discretionary.  I will order cost to follow the event on a party/party basis to be taxed if not agreed.

43.	The defendant’s claim for interest is at 8% per annum on the judgment sum of K277,743.76.  It is made under the Judicial Proceedings (Interest on Debts and Damages) Act Chapter No. 52, that is, under the repealed Act which has now been replaced by Judicial Proceedings (Interest on Debts and Damages) Act 2015.  I am minded to award interest at the said rate which is standard and allowable under the 2015 Act.

44.	However, I note that no period on when interest should apply, for purposes of computation, was pleaded by the defendant in its CClaim.  As such, this is how I intend to compute interest in this matter or in regard to the CClaim.  Interest at 8% per annum shall apply on the judgment sum if the sum is not settled within 30 days after the date of service of the order on the plaintiff.

ORDERS OF THE COURT

45.	I make the following orders:

1.	The plaintiff’s claim for breach of contract is dismissed.

2.	The defendant’s cross-claim for debt recovery premised on the Dealership Supply Agreement which was signed on 11 December 2013 is granted.

3.	Judgment is therefore entered in favour of the defendant against the plaintiff as follows:

(a)	In the sum of K277,743.76.

(b)	Interest at the rate of 8% per annum shall apply on the judgment sum if the judgment sum is not settled with 30 days after the date of service of this order or judgment upon the plaintiff.

(c)	Bank fee of K50.00 being the charges for two dishonored cheques.

4.	The plaintiff shall pay the defendant’s cost of the proceeding on a party/party basis to be taxed if not agreed.

5.	Time for entry of these orders is abridged to the date and time of settlement by the Registrar of the National Court which shall take place forthwith.

The Court orders accordingly
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Kup & Co: Lawyers for the Plaintiff
Dentons: Lawyers for the Defendant