Hubert Domayuong Shong t/as Hube Building Contractor v The Finschaffen District Development Authroity and Others

• Jurisdiction: Papua New Guinea
• Judge: Dowa J
• Judgment Date: 15 March 2024
• Neutral Citation: N10688
• Citation: N10688, 2024-03-15
• Counsel: R. Geoctau, for the Plaintiff,E. Philemon, for the First Defendant,B. Tomake, for the Second and the Third Defendants
• Docket Number: WS NO. 1336 OF 2016
• Hearing Date: 15 March 2022,07 April 2022,02 May 2022,15 March 2024
• Court: National Court

N10688

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 1336 OF 2016

Between

Hubert Domayuong Shong t/as Hube Building Contractor

Plaintiff

v.

The Finschaffen District Development Authroity

First Defendant

and

Gari Baki — Police Commissioner

Second Defendant

and

The Independent State of Papua New Guinea

Third Defendant

Lae: Dowa J

2022: 15^th March 7^th April & 2^nd May

2024: 15^th March

CONTRACT — Government Contract — building construction-breach of contract — frustrated by nonpayment of outstanding invoices-defence raises breach of procurement requirements under Public Finances (Management) Act and District Development Authority Act-incomplete work — entry of summary judgment — resolves all issues of liability — Quantum meruit claim can be considered for actual performance. considerations for appropriate and reasonable damages. Duty to mitigate loss-Judgment for the Plaintiff

Cases Cited:

Fly River Provincial Government vs. Pioneer Health Services Limited (2003) SC705

The State vs. Barclay Bros (PNG) Ltd (2004) N2507

Delphi Corporate Investigations Ltd vs. Bernard Kipit (2003) N2480

Leontine Ofoi vs. Kris Bongare (2007) N3248

Teine vs. University of Goroka (2019) SC1881

Steven Turik vs. Mathew Gubag (2013) N5132

Tirima v Angau Memorial Hospital Board (2005) N2779

Peter Wanis v The State (1995) N1250

Graham Mappa v PNG Electricity Commission (1995) PNGLR170

Kamaip Trading v George Wanguho

Kekeral Farming v Queensland Insurance (1995) PNGLR 405

Marshall Kennedy v Coca Cola Amatil (2011) N4946

Coecon Ltd v The National Fisheries Authority of PNG (2002) N2182

PNGBC v Jeff Tole (2002) SC 694

William Mel v. Coleman Pakalia (2005) SC790

Albert v Aine (2019) N7772

Counsel:

R. Geoctau, for the Plaintiff

E. Philemon, for the First Defendant

B. Tomake, for the Second and the Third Defendants

Valorem Attorneys: Lawyers for the Plaintiff

E. Philemon: Lawyer for the First Defendant

Solicitor General: Lawyer for the Second and Third Defendants

JUDGMENT

15^th March 2024

1. Dowa J: This is a judgment on issues of both liability and damages.

Background Facts

2. The Plaintiff is a building contractor and carries on business under the business name Hube Building Contractor. The Plaintiff entered a Building Contract executed on 16^th January 2014 with the Finschaffen District Development Authority and the second Defendant to construct a Police Station and a Cell Block at Gagidu, Finschaffen District, Morobe Province. The contract price was agreed at K 2,000,000.00. The Plaintiff was paid K 1 million at the commencement of the project. The Plaintiff alleges, after almost completing the job, he issued a final invoice for the balance of K1,000,000.00 but was not paid and remains due and outstanding resulting in the current recovery proceedings.

Defence

3. The Defendants deny the claim for following reasons:

a) The Plaintiff failed to complete the buildings.

b) The contract was illegal having failed to meet the procurement requirements under the Public Finance (Management) Act and the District Development Authority Act.

c) The building project was not managed by the Provincial Works Department for the purpose of meeting the building regulatory requirements and for the issue of completion certificates.

Proceedings

4. On 24^th June 2019, the Court dismissed an application by the Defendants seeking leave to file their Defence out of time. The Court dismissed the application and entered summary judgment for the Plaintiff in damages to be assessed. During the trial the Defendants gave evidence and raised the issue of liability and urged the Court to revisit liability.

ISSUES

5. The issues for consideration are:

a) Whether the Defendants are liable.

b) How much is the Plaintiff entitled to in terms of damages.

c) Whether the Plaintiff failed to mitigate his loss

EVIDENCE

6. The Plaintiff presented his evidence orally as well as by Affidavits. He was cross-examined. In respect of the Affidavit evidence, he relies on the following:

I. Affidavit in Support of Hubert Domayong Shong sworn and filed 8^th August 2017 – Exhibit P1

II. Affidavit in Support of Hubert Domayong Shong sworn 17^th April and filed 24^th April 2018 – Exhibit P2

III. Affidavit in Reply of Hubert Domayong Shong sworn and filed 7^th August 2018 – Exhibit P3

IV. Supplementary Affidavit of Hubert Domayong Shong sworn 20^th May and filed 28^th May 2021 – Exhibit P4

V. Affidavit of Hubert Domayong Shong sworn 15^th May and filed 18^th May 2021 – Exhibit P5

7. This is the summary of the Plaintiff's evidence. The Plaintiff is a builder carrying on the business of building constructions and maintenance works under the trade name Hube Building Contractor.

8. On 1st December 2013, the Plaintiff was awarded a Contract to construct the new Gagidu Police Station with a Cellblock [‘the Project’] by the Finschaffen District Administration through a letter under the hands of the former District Administrator and former Finschaffen MP, Theo Zurenoc after a tender process was formalized. On 16th January 2014, the Plaintiff executed a Contract of Engagement [the ‘Contract’] with Carl Baga on behalf of Finscahffen Joint District Planning and Budget Priority Committee (now replaced by the first Defendant) and a delegate of the Second Defendant, ACP Joab Mangae on behalf of the second and third Defendants.

9. The funding of the Project was by the National Government in the Development Budget 2012 for the Police Department and the First Defendant was to coordinate and manage the Project. The value of the project was K2 million and the Plaintiff was paid K1 million which comprise of K70,000 as a mobilization fee and K930,000 as the first instalment. The payments were made on 27th December 2013.

10. The Plaintiff commenced work on the Gagidu Police Station and Cell Block on 10th January 2014 and completed about 90% of the Project in May 2014 or thereafter. Progress Reports on the completion rates were done independently by the Defendants' own personnel. The First Report was done by Saki Beka, the first Defendant's District Engineer. The second Report was done by Inspecter Francis Druwen from the Royal PNG Constabulary, Headquarters. Inspecter Druwen stated in his report that by May 2014, the project was 87% complete. The second Defendant, Commissioner Gari Baki, also visited the project site and was pleased with the progress.

11. The Plaintiff took the liberty to send the final invoice to the Defendants towards the end of 2014 for the balance of the contract price. The Defendants, especially the second Defendant who was managing the funds did not pay. The Defendants continued to delay the payments despite several follow-ups. On 12th March 2015, the Plaintiff attended on the Royal PNG Constabulary Headquarters at Konedobu, NCD and personally delivered a copy of the final invoice. ACP Joab Mangae attended on him (the Plaintiff) and promised to pay the invoice once funds were released from the Finance Department on presentation of the Contract Number by the first Defendant.

12. Despite the promises, the Defendants have not paid the second part of the contract price which prompted the Plaintiff to seek legal recourse in this proceeding. The Plaintiff says he has fully performed his obligations under the Contract in successfully delivering the new Police Station and cell Block, yet the Defendants have failed to honor their contractual obligation in paying the outstanding K1 million.

Defendants' Evidence

13. The second and third Defendants rely on the following affidavits:

i. Affidavit of Joab Mangae sworn and filed 25th April 2018 – Exhibit D1.

ii. Affidavit of Marcel Oreke sworn 16th and filed 18th January 2019 – Exhibit D2.

14. Joab Mangae is a senior policeman, Assistant Commissioner for Policr (ACP), and Officer in Charge of Policy and Planning based at the Police Headquarters. He confirms that the Plaintiff was given a contract to build the Polce Station and the Cell block at Gagidu, Finschaffen District, an initiative of the then local Member for Finschaffen. He deposes the Police Department was not a party to the contract but only managed the funds. He confirms that the first K 1,000,000.00 was released to the Plaintiff in December 2013.

15. As for the balance of the contract price, the Commissioner was not happy with the progress as the project was delayed and he was asked to put a hold on the second part of the payment. He deposes that when the Plaintiff turned up at the Police Headquarters in March 2015, a cheque of K 500,000.00 was raised and sent for clearance by the Finance Department. The Finance Department requested the Plaintiff to provide the following information before the cheque is cleared for payment:

a. Contract Documents

b. Certificate of Compliance from IRC

c. IPA Certificate

d. Clearance letter from State Solicitor

e. Acknowledgement letter from the Provincial Supply and Tenders Board

16. Mr. Mangae deposes he asked the Plaintiff to present the said documents, but the Plaintiff has not gone back with the documents. He deposes that payment would be released once the Plaintiff presents the requested documents.

17. The Defendants second witness is Marcel Oreke. He is the Provincial Architect in the employ of Provincial Works Department and the Chairman of the Morobe Provincial Building Board. He deposes that he was asked by the Lawyers for the Defendants to provide technical advice on the status of building construction at Gagidu Police Station. He deposes that the Provincial Works Department was not informed of the project and were not involved in providing technical advice and for ensuring compliance of building regulatory requirements. He deposes that the Plaintiff did not register the building plan for building approval and permit. The Department has not and is yet to issue any completion Certificates for these buildings.

Whether the Defendants are liable

18. The first issue to be considered is whether the Defendants are liable....