PNG Aviation Services Pty Ltd v Geob Karri, To'oro Aihi, Michael Nali, Lindsay Gideon and The State

• Jurisdiction: Papua New Guinea
• Judge: Brown J
• Judgment Date: 04 August 1995
• Citation: [1995] PNGLR 103
• Court: National Court
• Year: 1995
• Judgement Number: N1372

National Court: Brown J

Judgment Delivered: 4 August 1995

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

PNG AVIATION SERVICES PTY LTD

V

GEOB KARRI;

TO'ORO AIHI;

MICHAEL NALI;

LINDSAY GIDEON; AND

THE STATE

Waigani

Brown J

20 July 1995

1 August 1995

2 August 1995

3 August 1995

4 August 1995

CONTRACT — Lease — The State as lessor seeking possession of airport lease property — Offer to lessee of alternative hanger site at airport — Sufficiency of offer — State alleging sufficiency — State alleging sufficiency as justification for recovery of possession of original lease property — Aerodrome (Business Concessions) Act Ch 354.

LAND LORD AND TENANT — Lease — Breach — Claim of transaction — Doctrine of.

Facts

The plaintiff held a lease from the state over a site at Jackson's Airport. The lease was for a period of 3 years with options to renew every 3 years thereafter to a maximum period of 26 years. There the plaintiff carried on business as a small aircraft maintenance engineering company. The State gave the occupiers of that part of the aerodrome, including the plaintiff, notice to vacate because of the need to give possession of the area to a construction company in accordance with the Port Moresby redevelopment programme. The State then offered the plaintiff an alternate site on which it had erected a new hanger, a bare building which the latter claimed to be unsuitable for its purposes for various reasons. They then sought allowances from the State for relocation expenses, the cost of putting the building into a fit state for its business and the cost of having the building comply with minimum building standards applicable to hangers. The State then withdrew its offer of an alternate site and pleaded "frustraion of contract".

Held

1. The State has breached the term of the lease for quiet enjoyment and consequently breached the contract of lease giving rise to a claim by the plaintiff in damages.

2. There are no sufficient terms agreed upon by the parties whereby the Court could find an agreement between the parties which could be enforced by an order for specific performance.

3. The facts do not amount to "frustration of contract" as understood by the doctrine, and the State's defence of "frustration" must fail.

4. Because of the State's wish for early possession of the site, in the circumstances, the State should pay moneys for removal expenses of the plaintiff pending assessment of damages for breach of contract.

Cases cited

De Beers Consolidated Mines Ltd v British South Africa Co (1912) AC 52.

National Carriers Ltd v Panalpina (Northern) Ltd (1981) AC 675.

Counsel

J. L. Shepherd, for the plaintiff.

S. Alberic and I. Mesulam, for all defendants.

4 August 1995

BROWN J: These proceedings were initially by way of originating summons seeking declarations in respect of lease No.005 registered in the Register of Aerodrome (Business Concessions) Leases as Lease Volume 1 Folio 28, that the purported termination was null and void, that the lease is currently valid and enforceable by the plaintiff and consequently the plaintiff, as lessee, is entitled to further renewals of such lease, to extend to 12 March 2021. More importantly the plaintiff sought a declaration that on voluntary surrender, it would be entitled to a lease of an alternate site for the plaintiff's business at Jacksons Airport on similar terms and conditions to the subsisting lease, paying to the plaintiff fair and reasonable compensation for the expenses to be incurred in relocating.

As a result of argument following the hearing of this cause on the 20 July, I make orders that the proceedings should continue by pleadings, for the nature of the cause did not effectively enable the defendants to plead nor the Court to make findings on facts necessary for an effective resolution of the dispute.

The plaintiff company carries on business at a site on the N.W. part of the Jacksons Aerodrome described as part of Portion 97, Port Moresby. That business is small aircraft maintenance and repairs and is run by its managing director Mr York Andrew Mendoza, a licensed aircraft maintenance engineer. He holds qualifications in associated fields necessary for his business and has been occupying the current premises for the company's business purposes since 1975 (and for a couple of years before then whilst in partnership).

The State, as part of the Port Moresby Airport Redevelopment programme has given notice to all occupiers about the plaintiff's business premises, (which comprises a large hanger (building No.1) with associated workshops including engine overhaul; machine shop; engine tear down; electrical overhaul; sheet metal; welding; bulk stock store; cable maintenance), that these businesses must move from their present location, for possession of the site needs to be given to a contractor engaged to do the redevelopment.

In an endeavour to provide an alternative site for various airline operators and the plaintiff's business, the State through DCA, arranged for the construction and erection of various hangers at the South East end of the airport apron. One of these hangers described as section 143 allotment 13, new general aviation apron, Jacksons Airport) has been offered to the plaintiff.

These proceedings have arisen, for the plaintiff says that the hanger offered is not reasonably suitable for its purposes, that such alternative site and a lease offered are not on terms which are comparable to those enjoyed by it presently, and that agreement cannot be reached about a reasonable sum for relocation expenses offered by the 1st defendant.

The plaintiff has, by its substituted statement of claim pleaded these matters fully, including what it claimed to be a breach of the defendant's undertakings to offer a suitable alternative site by virtue of the Minister's letter of the 21 July 1995 where he notified it that he no longer intended to grant a new lease for the alternative site.

The defendants by its statement of defence joined issue with the plaintiff in relation to many of the matters pleaded. The latter claimed that the lease 005 is subsisting and consequently a declaration that it is entitled as lessee to further consecutive renewals, the next such renewal to commence on the 13 March 1996 and the final such renewal to expire on 12 March 2011. Further a declaration that it is not lawfully required to surrender the lease, until such time as the State has completed the construction of a suitable replacement aviation maintenance facility for the company, the design and construction of such facility to be in consultation with it and shall provide as closely as possible the same amenities including car parking and aircraft approaches and aircraft parking bays as are located at its existing facility. The plaintiff further seeks a declaration that on voluntary surrender, it shall be offered a new lease for the alternate hanger site with provisions similar in all material effects to thosein the existing lease and in particular the plaintiff spelt out express provisions.

As a consequence of the second declaration it says that the State (through DCA the responsible authority) shall be liable (for the alternative site) to it for the internal out fitting; installation of a room for electrical generating; installation of a storm water drainage system; hanger insulation; interior hanger ventilation; gutters and down pipes; adequate lighting (required by the nature of the plaintiff's work in instrument fitting for instance); security fences; perimeter fences; upgrading electrical reticulation; air conditioner ducting; roll a door vehicular access and for the upgrading of the hanger structure to higher wind strength standards from the existing 28m to 31m (as required by DCA standards). As well the plaintiff seeks reasonable compensation for relocating expenses.

In the alternative the plaintiff seeks damages, including exemplary or punitive, and such other orders as the Court thinks fit. This latter claim goes, as the plaintiff argues, to the breach of contract of the existing lease committed by the defendants.

The defendants deny the plaintiff's claim for declarations 1 & 2. They say that the old lease should have been surrendered in 1991. The defendants say that any fresh lease of the new hanger facility is a separate issue to the surrender of the old and is entirely within the discretion of the Minister.

The defendants say, in so far as the second declaration is concerned, that the plaintiff must first relinquish or surrender the first lease so that the new lease may be effected. Financial constraints are such that the State can only offer the plaintiff K100,000 to relocate. The defendants deny that assertion of the plaintiff that it can dictate how the new hanger should be built. So far as the third declaration (the terms of the new lease) and the fourth (the State liability to construct and out fit the new hanger in particular ways), the defendants take issue on the basis that a new lease has been offered and refused. Finally and most importantly from the Court's point of view, the defendant Minister has withdrawn the offer of a new lease and that discretion of the Minister...