Audela Limited v National Housing Corporation

• Jurisdiction: Papua New Guinea
• Judge: David J,Geita J,Shepherd J
• Judgment Date: 09 February 2024
• Neutral Citation: SC2531
• Docket Number: SCA NO. 83 OF 2020 (IECMS)
• Date: 09 February 2024
• Counsel: Ms P. Tamutai, for the Appellant,Mr M. Saka, for the Respondent,Counsel:
• Citation: SC2531, 2024-02-09
• Hearing Date: 26 July 2023,09 February 2024
• Court: Supreme Court

SC2531

PAPUA NEW GUINEA

[IN THE SUPREME COURT OF JUSTICE]

SCA NO. 83 OF 2020 (IECMS)

Audela Limited

Appellant

v.

National Housing Corporation

Respondent

Waigani: David J, Geita J, Shepherd J

2023: 26^th July

2024: 9^th February

DAMAGES — Appeal from National Court's assessment of damages on undertaking as to damages — no award of damages made by the primary judge — principles relating to assessment of damages on undertaking as to damages given in support of application for interim injunction — distinction between damages for loss caused by interim injunction and loss caused by the litigation — importance of identifying duration of interim injunction when assessing damages pursuant to undertaking as to damages — party seeking to enforce undertaking must show that the damages claimed would not have been sustained but for the interim injunction — evidence must establish that damages sustained were caused by the interim injunction — evidence of alleged loss in this appeal failed to make any causal connection to the interim injunction — appeal dismissed.

Held:

1. The principles on assessment of damages based on an undertaking as to damages include:

(a) The source of the Court's ability to award damages when an injunction has been granted is the application's voluntary undertaking which is given as the price for obtaining the injunction.

(b) An undertaking is given to the Court. It is not a contract between the applicant and the respondent to an application for an injunction.

(c) The Court has no power to compel an applicant for an injunction to give an undertaking as to damages but the Court can refuse to grant the injunction if an undertaking is not given.

(d) The Court, upon being satisfied that an interlocutory injunction was not warranted in the circumstances, has a discretion whether to enforce the undertaking but the general rule is that a plaintiff who has failed on the merits should recompense the party who has suffered loss.

(e) The Court has a similar discretion whether to enforce the undertaking where a suit is dismissed for want of compliance with directions or for want of prosecution.

(f) A party is only compensated for loss proven on the civil standard to be the natural consequence of the injunction.

(g) Damages caused by the grant of an injunction are different from damages caused by the litigation. Where an undertaking as to damages has been given, damages are only recoverable where the loss is proven on the civil standard to have been caused by the injunction and not from the litigation generally.

2. The Appellant failed in this instance to establish by credible evidence at trial on assessment of damages that it sustained any financial loss that was causally related to the interim injunction. The primary judge's decision not to award damages based on the undertaking given as to damages was accordingly affirmed and the appeal dismissed.

Cases Cited:

Papua New Guinean Cases

Cheng v Agmark Ltd (2008) N3338

Chief Collector of Taxes v Bougainville Copper Ltd (2007) SC853

Daniel v Air Niugini Ltd (2019) N7820

Gobe Hongu Ltd v National Executive Council (1999) N1920

Minig v Minig (2013) N5327

Mt Hagen Local Level Government v Mark (2018) N7588

Morobe Provincial Government v Tropical Charters Ltd (2011) N4240

National Housing Commission v Yama Security Services Pty Ltd (2000) N1985

Steamships Trading Company Ltd v Magellan Properties Ltd (2023) N10082

White Corner Investments Ltd v Harro (2006) N3089

Overseas Cases

Air Express Ltd v Ansett Transport Industries (Operations) Pty Ltd [1981] 146 CLR 249

Attorney-General v Albany Hotel Co [1886] 2 Ch 696

Smith v Day (1882) 21 Ch D 421

Tucker v New Brunswick Trading Company of London (1890) 44 Ch D 249

Counsel:

Ms P. Tamutai, for the Appellant

Mr M. Saka, for the Respondent

Tamutai Lawyers: Lawyers for the Appellant

M Saka Lawyers: Lawyers for the Respondent

DECISION ON APPEAL

9^th February 2024

1. BY THE COURT: The appellant appeals from the whole of the decision of the National Court delivered on 29 July 2020 in proceeding WS No. 1324 of 2008 whereby after summary dismissal of suit the Court declined to award any compensation to the appellant pursuant to an undertaking as to damages which had been given by the National Housing Corporation at the initial stage of the proceeding.

BACKGROUND

2. The background facts were that on 15 November 2008 the National Housing Corporation (NHC) issued proceeding WS No. 1324 of 2008 in the National Court at Waigani alleging fraud by the National Land Board in connection with the grant to Audela Limited of a State Lease in respect of property described as Allotment 6 Section 43, Hohola, NCD. The NHC asserted it had title to the property and that the property contained improvements consisting of two donga-style accommodation blocks and separate ablution facilities which the NHC had been leasing to tenants. The NHC alleged breaches by the National Land Board of ss. 68 and 69 of the Land Act 1996 in that it was pleaded that there had been no advertisement of the availability of the property for the grant of a State Lease and no exemption from the statutory requirement for such advertisement. The NHC claimed orders, among others, that the State Lease issued by the Registrar of Titles to Audela Limited be revoked and that a new title for the property be issued to the NHC. The NHC also sought general damages for destruction of improvements on the property said to have been caused by Audela Limited, alternatively damages by way of compensation for the assessed value of the land and improvements.

3. Audela Limited was incorporated as a local company under the Companies Act 1997 on 28 June 2005. It later changed its name to Audela Properties Limited (Audela). At all material times Mr Rex Mono was a shareholder and director of Audela. Mr Mono refers to himself as the managing director of the company.

4. On 19 November 2008 the NHC obtained an ex parte interim injunction in WS No. 1324 of 2008 which restrained Audela from evicting the NHC's tenants from the property. The interim injunction also restrained Audela from any further dealings with the property, including any proposed redevelopment, pending the determination of the substantive proceeding. However, the Court ordered that the NHC's motion for the interim injunction was returnable on 1 December 2008 for inter partes hearing.

5. The full text of the ex parte interim injunction which the NHC obtained against Audela on 19 November 2008 is reproduced below:

The Court orders:-

1. Leave is granted to the Plaintiff to waive and dispense with the requirements for compliance with the Rules of the National Court relating [to] service of all documents filed herewith upon the Defendants.

2. An order in the nature of interim injunction restraining the First Defendant, its officers, agents and or servants from further conducting eviction of Plaintiff's tenants and their families from the property known as Section 43 Allotment 06, Hohola at Waigani.

3. An order [restraining] the First Defendant from any further dealing with the property including any proposed redevelopment pending the hearing and determination of the substantive proceedings.

4. An order that the Orders of the District Court dated the 22nd of October 2008 and all previous and subsequent orders and proceedings are stayed until the hearing and determination of the substantive proceedings.

5. That the documents relied upon in this application and the proceedings substantive be served upon the Defendants within seven (7) days.

6. The matter is returnable on the 1st of December 2008 for hearing inter-partes.

7. Costs of the application be costs in the cause.

8. Time for the entry of these Orders be abridged to the time for settlement which shall take place forthwith before the Registrar.

6. The NHC's motion for the ex parte interim injunction which was granted by the National Court on 19 November 2008¹ was supported by an undertaking as to damages signed by a person named David Dambali on behalf of the NHC. The undertaking as to damages was filed on 18 November 2008. The operative text of the undertaking is set out later in this decision.

7. On 25 November 2008 Audela filed the following documents in the proceeding:

(1) notice of intention to defend;

(2) defence to the NHC's statement of claim which pleaded, among others, that title to the property was initially vested in the Department of Lands and Physical Planning, that the NHC had never had title to the property, that the NHC lacked locus standi to pursue the proceeding and that no fraud had been committed in connection with the grant of the State Lease to Audela;

(3) a motion seeking orders that the NHC be required to pay the sum of K20,000 into Court as security for economic losses “continuously suffered” by Audela, alternatively that the NHC be directed to file an undertaking to pay for those economic losses from date of transfer of lease title to Audela, or from date of issuance of the writ of summons, to the date of the Court's determination of NHC's substantive claims.

8. When the ex parte interim injunction returned before the Court on 1 December 2008 for inter partes hearing there was no appearance for the NHC. The matter was adjourned by the Court to 10 December 2008 and then further adjourned to 19 December 2008.

9. On 11 December 2008 the newly appointed lawyers for Audela, Kari Bune Lawyers, filed a further notice of motion for Audela, this time seeking orders that the ex parte interim injunction of 19 November 2008 be lifted or set aside and that the proceeding be summarily dismissed pursuant to Order 12 Rule 40 of the National Court Rules (NCR) for failure to disclose any reasonable cause of action, because the suit was frivolous or vexatious and because the claim was an abuse of process, particularly in view of the NHC's lack of locus standi. This second motion of Audela also sought an order pursuant to the NHC's...