Dekenai Constructions Limited v Tati Keke Resources Limited And Andrew Feari & Pisai Feareka (2019) SC1800

• Jurisdiction: Papua New Guinea
• Judge: Mogish, Liosi & Anis JJ
• Judgment Date: 03 May 2019
• Court: Supreme Court
• Citation: (2019) SC1800
• Docket Number: SCA NO. 149 OF 2017
• Year: 2019
• Judgement Number: SC1800

Full Title: SCA NO. 149 OF 2017; Dekenai Constructions Limited v Tati Keke Resources Limited And Andrew Feari & Pisai Feareka (2019) SC1800

Supreme Court: Mogish, Liosi & Anis JJ

Judgment Delivered: 3 May 2019

SC1800

PAPUA NEW GUINEA

[IN THE SUPREME COURT OF JUSTICE]

SCA NO. 149 OF 2017

BETWEEN

DEKENAI CONSTRUCTIONS LIMITED

Appellant

AND

TATI KEKE RESOURCES LIMITED

First Respondent

AND

ANDREW FEARI & PISAI FEAREKA

Second Respondents

Waigani: Mogish, Liosi & Anis JJ

2019: 30th April & 3rd May

PRACTICE AND PROCEDURE – Standing – whether respondents parties to the agreement – doctrine of privity of contract

Cased Cited:

Beno Maoko v. Kevin Ling (2008) N3293

Albert Areng v. Gregory Babia (2005) N2895

The Papuan Club Inc. v Nusaum Holdings Ltd (No. 2)(2004) N2603

Soka Toligai v. Sir Julius Chan and Ors (2012) N4842

Dumal Dibiaso Incorporated Land Group v. Kola Kuma (2005) SC 805

Vunaibu Incorporated Land Group Inc. v. Michael Wilson (2017) N6806

Nicholas Morris v. Francisco Panfilo (2017) N6976

Counsel:

Mr Pilamb, for the Appellant

Mr Puka, for the Respondents

3rd May, 2019

1. BY THE COURT: This is an appeal against the decision of the National Court made on 14 September 2017. It was heard at 9:30am on 30 April 2019. We reserved our decision to 9:30am today.

2. This is our ruling.

BACKGROUND

3. The respondents were plaintiffs in the National Court proceeding. They sued the appellant who was then the defendant, for outstanding land use rentals that were allegedly due under an agreement which they said they had entered with the appellant. The agreement is dated 8 July 2009 (the agreement). They also sought other damages, namely, environmental damages, special damages, general damages, interest and costs.

4. Both parties had relied on affidavit evidence before the National Court. There was no cross-examination, and the trial proceeded by tendering of affidavits by consent and by presentation of submissions by the parties, that is, on 7 July 2015. The National Court reserved and handed down its decision on 14 September 2017. The Court made the following orders:

1. The plaintiffs have established their claim against the defendant company on the facts and applicable law on the balance of probability.

2. Damages suffered and sustained as a direct result of the defendant company’s breach of its contractual agreement as awarded in the following manner:

(i) Liquidated sum of K71,920.00 for default on land rental payments and occupational fees.

(ii) Amount of K150,000.00 for environment damages and water rights, pursuant to provisions of the Environment Act 2000, and specifically Section 87 providing for compensation.

(iii) Special Damages in the amount of K8,500.00 for travel to and from the National Court in Waigani, NCD, and daily sustenance.

(iv) Exemplary Damages, under the circumstances of this case, are warranted, and, therefore, awarded against the defendant company in the sun of K5,000.00.

(v) Grand total: K235,420.00.

3. Time for entry of these Orders is abridged to the time for settlement of the Orders by the Registrar, which shall take place forthwith.

GROUNDS OF APPEAL

5. The appellant’s grounds of appeal are stated in its notice of appeal. In total, the appellant raises six (6) grounds of appeal. Some of the grounds of appeal overlap each other. We will summarise the main grounds as follows. Firstly, the appellant alleges that the trial judge erred in both mixed fact and law by making findings on both liability and quantum when the trial was conducted to determine only the issue of liability. Secondly, the appellant claims that the trial judge erred in fact and law in finding the agreement binding upon the parties when the respondents were not parties or privy to the agreement. Thirdly, the appellant claims that the trial judge erred in fact and in law because the land the subject of the agreement, which was customary land, was under dispute and as such the Court did not have jurisdiction to deal with the matter. Grounds four (4) and five (5) of the appeal cover damages. We may address them later together with the first ground, that is, subject to our findings in relation to grounds two (2) and three (3) as summarised above which we intend to address first in our decision.

WHO ARE THE PARTIES TO THE AGREEMENT?

6. We now deal with the second ground of appeal. And we ask ourselves this. Who are the parties to the agreement? The agreement may be located at pages 25 and 81 of the Appeal Book (AB). There are two (2) parties to the agreement. The first party is called Tapala Landowners Resources Group, and the second party is the appellant Dekenai Constructions Limited.

7. In the statement of claim (page 10 of the AB), the 1st respondent held itself out as a landowner company that was owned by the Tati Keke Clans of Tapala village in the Gulf Province. The 2nd respondents, at paragraph 2 of the statement of claim, held themselves out as shareholders and board members of the 1st respondent. At paragraph 6 of the statement of claim, the respondents claim that the appellant had on 8 July 2009 entered into the agreement with the 1st respondent company. The appellant’s defence may be found at page 16, Tab 4 of the AB. In the defence, the appellant denied these material facts as pleaded in the statement of claim. These, we note, were the material contested facts that were before the trial judge, and we note that the appellant’s then counsel had covered these extensively in his submissions before the trial Court. The appellant’s submission on point was that the respondents were not parties or privy to the agreement. And what was the respondents’ reply, we ask? The glaring evidence, in our view, is the agreement itself, and submissions by counsel for the respondents which may be found in the transcript of proceedings, that is, at paragraph 6, page 142 of the AB. It reads, and we quote:

So we say your Honour that we do concede that the first plaintiff was not and is not a party to this agreement and I receive my friend’s – I did see a copy of the IPA extract your Honour. But we still maintain that our cause of – my client’s cause of action arose from this MOA in which the chairman, Mr Andrew Havoa Feai has or is part of that party endorsed in this MOA in his representative capacity your Honour.

8. We note that despite the evidence that were before the trial Court including the respondents’ admissions through their counsel, the trial Judge did not acknowledge that in his decision. Instead, we note that His Honour proceeded to deal with the doctrine of privity of contract at paragraph 4, page 151 of the AB. His Honour then concluded that the doctrine was not applicable in the matter. We note that His Honour did not say or discuss why he had reached that conclusion. We therefore find that His Honour erred in fact and in law. We come to this conclusion for the following reasons. Firstly, the respondents were not parties to the agreement. The agreement, in our view, is express. The parties to it were Tapala Landowners Resources Group and the appellant Dekenai Constructions Limited. The second reason is the admission by the respondents that they were not parties to the agreement. We see that there was overwhelming evidence to that effect that were before the trial Judge. We note that the respondents were not parties or privy to the agreement. The law on privity of contract in this jurisdiction is settled, that is, only the parties to a contract or an agreement may sue or be sued under it. See cases: Beno Maoko v. Kevin Ling (2008) N3293; Albert Areng v. Gregory Babia (2005) N2895; The Papuan Club Inc. v Nusaum Holdings Ltd (No. 2)(2004) N2603; Soka Toligai v. Sir Julius Chan and Ors (2012) N4842. We note that the respondents had argued that the 2nd respondent was a signatory to the agreement therefore he had ostensible authority to represent the landowners at the material time. We note that the doctrine of ostensible authority was briefly mentioned by the trial Judge in his decision, that is, at paragraph 1 at page 151 of the AB. We note however that His Honour did not explain with clarity and with evidence to say how the doctrine could have applied in the matter to the benefit of the respondents. We note that the respondents had filed one affidavit to their claim in the National Court which is the affidavit of the 2nd respondent Andrew Feari. The affidavit is located at page 77, Tab 7 of the AB. There is however nothing there which shows or explains any express or implied ostensible authority, that justifies the basis for the respondents commencing the proceedings in the first place. If at all, and if we were to infer that implied ostensible authority had been sought and had by the respondents, then the 2nd respondent Andrew Feari would have had or would have been assumed to have had the ostensible authority of the Tapala Landowners Resources Group and not the ostensible authority of the 1st respondent who had no business whatsoever to the agreement. And still based on the said assumption, the obvious question one would have to ask is this. Where was Tapala Landowners Resources Group named in the proceedings at the National Court? We note that Tapala Landowners Resources Group was never named or was a party...