Vanimo Forest Products Limited v Ossima Resources Limited (2013) SC1275

• Jurisdiction: Papua New Guinea
• Judge: Salika DCJ, Cannings & Logan JJ
• Judgment Date: 19 September 2013
• Court: Supreme Court
• Citation: (2013) SC1275
• Docket Number: SCA 6 OF 2012
• Year: 2013
• Judgement Number: SC1275

Full Title: SCA 6 OF 2012; Vanimo Forest Products Limited v Ossima Resources Limited (2013) SC1275

Supreme Court: Salika DCJ, Cannings & Logan JJ

Judgment Delivered: 19 September 2013

SC1275

PAPUA NEW GUINEA

[IN THE SUPREME COURT OF JUSTICE]

SCA 6 OF 2012

VANIMO FOREST PRODUCTS LIMITED

Appellant

V

OSSIMA RESOURCES LIMITED

Respondent

Waigani: Salika DCJ, Cannings & Logan JJ

2013: 29 August, 19 September

NATURAL JUSTICE – Failure by counsel to appear on adjourned date appointed for closing submissions following trial – adjourned date pronounced orally by trial judge in presence of counsel – whether a denial of natural justice.

PRACTICE AND PROCEDURE – whether plaintiff had adequately pleaded renewal of contract by conduct in a claim for breach of contract – particulars of alleged conduct neither given nor sought – effect of interlocutory ruling on point of law.

CONTRACT – whether renewal of conduct evidenced by conduct of parties – whether defendant in breach of contract entitling plaintiff to damages.

The appellant appealed against a judgment of the National Court finding it liable in breach of contract to the respondent. The National Court awarded damages to the respondent but the appeal was confined to the question of liability. The appellant argued that: (1) it was denied natural justice as a result of the trial judge not hearing its submissions before proceeding to judgment; (2) the question of liability was decided on the basis of a renewal of the contract by conduct, a matter that was not pleaded in the statement of claim; and (3) there was no evidence to warrant the conclusion that the contract was renewed by conduct.

Held:

(1) The trial judge afforded the appellant the opportunity to be heard but the appellant, as a result of its counsel’s confusion as to the date of the hearing, failed to take up the opportunity extended to it. There was no denial of natural justice.

(2) Though desirable it is not essential that every element of every cause of action be expressly pleaded in a statement of claim. What is essential is that the statement of claim read as a whole discloses a cause of action in sufficiently clear terms to put the defendant on notice as to the claim that it has to meet. The respondent adequately pleaded that its contract with the appellant had been affirmed and extended by the conduct of the appellant.

(3) The renewal of a contract can be inferred from the conduct of the parties. Here there was a body of relevant and materially uncontroversial evidence to support the conclusion that the appellant by its conduct affirmed renewal of the contract. The conclusion reached by the trial judge was open in law and fact. The appeal was accordingly dismissed.

Cases cited

The following cases are cited in the judgment:

Bank South Pacific Ltd v Gibson Nad SCA No 41 of 2008, 14.05.10, unreported

Household Fire Insurance Co v Grant (1879) 3 Ex D 216

Jimmy Mostata Maladina v Posain Poloh (2004) N2568

Kumagai Gumi Co Ltd v National Provident Fund Board of Trustees (2006) SC 837

Mercidita Malihan v Divine Word University (2010) N4112

Michael Kuman v Digicel (PNG) Ltd (2013) SC1232

National Development Bank Ltd v Maxtone Graham (2012) N4739

Sela Gipe v The State [2000] PNGLR 271

APPEAL

This was an appeal against a decision of the National Court that the appellant was liable in breach of contract to the respondent.

Counsel

N Kopunye for the appellant

T Sirae for the respondent

19th September, 2013

1 BY THE COURT: Vanimo Forest Products Limited (VFP) appeals against the decision of the National Court that it was liable in breach of contract to the respondent, Ossima Resources Limited (ORL). VFP was the holder of a timber permit issued by the Minister for Forests on 31 October 1991 for blocks 1, 2, 3, 4, 5 and 6 of the Vanimo Timber Rights Purchase Area in West Sepik Province. That permit conferred on VFP an exclusive right to log timber from those blocks for a period ending in November 2011.

2 On 1 November 2005, VFP entered into a contract with ORL under which it authorised ORL to harvest logs from blocks 1, 2 and 6 within that permit area and sell them to it. Clause 6.1 of that contract provided:

The agreement shall be renewed every one year (1) from the date of the signing of this agreement.

3 There was a variation to the contract in February 2006. It was common ground that this variation did not affect, amend or delete clause 6.1. Materially, the variation enlarged the type of timber species that VFP would accept and purchase from ORL. The contract bound VFP to purchase the logs harvested by ORL. It further provided that it was determinable on one week’s notice.

NATIONAL COURT PROCEEDINGS

4 ORL instituted proceedings in the National Court against VFP, claiming damages for breach of contract. As pleaded in its amended statement of claim, the case made by ORL was that, on the true construction of the contract, its term was for a period limited only by the expiry of the timber permit. That contract, it alleged, had been breached by VFP’s actions in January 2007. ORL cast its damages claim accordingly. By its defence, VFP denied that any contract existed in 2007, the contract between the two companies being said, on the true construction of its terms, to have been of but one year’s duration and thus brought to an end by effluxion of time before then. VFP’s stance was that it was entitled to harvest logs itself in January 2007 because the contract had by then expired.

5 The evidence before the National Court at trial disclosed that, during the period prior to November 2006, ORL commenced logging pursuant to the contract with VFP making payments accordingly. It also established and the trial judge, Thompson AJ, found that, in January 2007 (two months after the expiry of the first year of the contract) VFP went into the timber permit areas allocated to ORL under the contract and began logging for itself. The trial judge also found that, in the period from the start of November 2006 to that time, ORL had harvested 150 logs from that area, which VFP not only refused to accept but also refused to allow ORL to sell to other sawmills.

6 One allegation made by ORL in its reply which should be noted is an allegation that VFP had by its conduct “clearly indicated” that ORL was “the only contractor to harvest logs on the subject land until year 2011”. Particulars were neither given, nor were they sought, in respect of that allegation. It must also be noted that from the very outset of the proceeding, part of the case for ORL was that VFP’s conduct was material to ORL’s claim that the term of the contract was for a period longer in duration than one year.

7 On 14 April 2011, the proceeding came on for directions before Kandakasi J. Each party was legally represented. The transcript of that hearing discloses that his Honour made orders directed to resolving a legal issue as to what was, on the true construction of the contract, its duration. Those directions included provision for the filing in advance of written submissions. The proceeding was then adjourned for oral submissions. On 4 May 2011, and as the transcript reveals, after hearing submissions from counsel for the parities, Kandakasi J delivered ex tempore reasons, ruling that the meaning of clause 6.1 was not that the contract was automatically renewed after one year but rather that the parties had done no more than to negotiate with respect to its renewal after the expiry of a given year. His Honour further found that, for the contract to be renewed after the expiry of the first year, there had to be evidence of its renewal for a further year. The parties were then left to consider their positions in light of that ruling.

8 Neither an order for the separate determination of a legal question nor the resultant determination was drawn up, lodged and entered; nor did the parties seek before the later trial that the ex tempore reasons for judgment be revised by his Honour and placed on the court file. The failure by the parties to undertake these steps was to occasion Thompson AJ some initial difficulty at the trial in ascertaining what had earlier occurred before Kandakasi J.

9 In the result, the ruling on the point of law did not, as his Honour, from a reading of the transcript clearly hoped it might, lead to a consensual resolution of the proceeding. It came on for trial before Thompson AJ on 10 and 21 November 2011. On 21 November 2011, after evidence at the trial had been completed, her Honour adjourned the proceeding until 14 December 2011. The occasion for the adjournment was the then unavailability of the transcript of the hearing which had taken place before Kandakasi J. The suitability to counsel of an adjournment until that date and the pronouncement of the adjournment accordingly are explicitly recorded in the transcript of proceedings of 21 November 2011.

10 On 14 December 2011 when the proceeding came back on before Thompson AJ there was an appearance on behalf of ORL, but not VFP. By that stage, the...