NATIONAL CAPITAL DISTRICT WATER & SEWERAGE LIMITED trading as EDA RANU v YAMBARAN PAUSA SAKA BEN LIMITED

• Jurisdiction: Papua New Guinea
• Judgment Date: 23 March 2023
• Year: 2023
• Court: Supreme Court
• Judgement Number: SC2365

SC2365

PAPUA NEW GUINEA

[IN THE SUPREME COURT OF JUSTICE]

SCA NO. 34 OF 2020 (IECMS)

BETWEEN

NATIONAL CAPITAL DISTRICT WATER & SEWERAGE LIMITED
trading as EDA RANU

Appellant

AND

YAMBARAN PAUSA SAKA BEN LIMITED

Respondent

________________________________________________

SCA NO. 38 OF 2020 (IECMS)

BETWEEN

YAMBARAN PAUSA SAKA BEN LIMITED

Appellant

AND

NATIONAL CAPITAL DISTRICT WATER & SEWERAGE LIMITED
trading as EDA RANU

Respondent

Waigani: Makail J, Shepherd J, Tusais J

2022: 13^th December

2023: 23^rd March

SUPREME COURT – APPEAL – failure to raise issues in Court below precludes a party from raising those issues on appeal unless leave to do so has been granted.

SUPREME COURT – PRACTICE & PROCEDURE – discussion of meaning of “mixed fact and law” for purposes of Supreme Court Act, s.4(2)(b) – improper to plead “mixed law and fact” or “mixed law and facts” in notice of appeal.

CONTRACT – specific provision for variation in a contract excludes variation by implied conduct – any variation to a contract must be in very clear terms – where there is no contractual provision prescribing how variation is to be made, only then can conduct of parties be relevant to issue as to whether variation has occurred – parole evidence not admissible if provisions of contract are clear – issue of implied conduct only relevant if there is lack of contractual provision and genuine uncertainty as to how aspects of contract such as variation are to be observed.

Cases Cited:

Curtain Bros (PNG) Ltd v University of Papua New Guinea (2005) SC788

Fly River Provincial Government v Pioneer Health Services Ltd (2003) SC705

Kandapaki v Enga Provincial Government (2011) SC1139

Kumbu v Mann (2012) N4784

Mainland Holdings Ltd v RD Tuna Cannery [2000] PNGLR 213

National Broadcasting Corporation v Taison (2019) N8083

Nivani Ltd v China Jiangsu International (PNG) Ltd (2007) N3147

Papua Club Inc v Nusaum Holdings Ltd (2005) SC812

Papua New Guinea Banking Corporation v Tole (2002) SC694

PNG Ports Corporation Ltd v Canopus No. 71 Ltd (2010) N4288

Takori v Yagari (2008) SC905

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

Legislation

National Court Rules: Order 22 Rules 8, 11

Supreme Court Act Chapter 37: s.4(2)(b)

Supreme Court Rules 2012: Order 7 Rule 9(c)

Counsel

Mr L Manua, for the Appellant /Cross-Respondent

Mr R Tamarua, for the Respondent/Cross-Appellant

DECISION

23^rd March, 2023

1. BY THE COURT: The appellant in SCA No. 34 of 2020, National Capital District Water & Sewerage Ltd (Eda Ranu), appeals against the decision of the National Court whereby judgment was entered in favour of the respondent, Yambaran Pausa Saka Ben Ltd (Yambaran), with damages to be assessed

2. The appellant in SCA No. 38 of 2020, Yambaran, cross-appeals against the same decision of the National Court, but on different grounds than those pleaded by Eda Ranu in SCA No. 34 of 2020

3. These two appeals were heard together as although the grounds of appeal are different in each case, the two appeals arise out of the same facts and the parties are the same

BACKGROUND

4. On 29 July 2013 Eda Ranu executed a contract for the provision of backhoe hire services by Yambaran. The agreement was for a term of three years effective from 28 July 2013, with Yambaran to provide its backhoe services to Eda Ranu at a rate of K400 per hour per backhoe.

5. During the currency of the contract, by letter dated 29 April 2014 Eda Ranu notified Yambaran to the effect that there was to be a reduction in the rate of hire of Yambaran’s backhoe services such that Eda Ranu would only pay K300 per hour for those services, excluding idle time, and that the number of backhoes to be provided under the agreement at any one time was to be reduced from three backhoes to one backhoe per month. Eda Ranu’s letter further notified Yambaran that the company could withdraw its backhoe equipment from Eda Ranu should Yambaran not agree with Eda Ranu’s new conditions for hire of backhoes.

6. Yambaran did not promptly respond to Eda Ranu’s letter of 29 April 2014 to advise whether it objected to the reductions insisted on by Eda Radu but Yambaran appeared to tacitly accept those reductions for the next six months by continuing to provide backhoe services for one backhoe only per month but invoicing Eda Ranu at the lower rate of K300 per hour, for which continuing services the company was paid by Eda Ranu at the lower rate.

7. By letter dated 24 October 2014 Yambaran replied to Eda Ranu’s letter of 29 April 2014 and acknowledged the reduction of the backhoe hire rate from K400 to K300 per hour and the reduction in the number of backhoes.

8. Eda Ranu responded by letter dated 29 October 2014 and informed Yambaran that it would engage the company’s services for provision of two backhoes which would be hired at the rate of K300 per hour.

9. Almost a year later, by letter dated 24 September 2015 Eda Ranu again wrote to Yambaran, this time advising that it would only engage the hire of one backhoe “as and when the need arises”. The letter also stated that Eda Ranu was varying the rate it would pay for backhoe hire from K300 per hour to a fixed amount of K850 per day. The letter of 24 September 2015 concluded: “Should we not hear from you within 7 days of receipt of this letter we will assume that your company does not wish to conduct further business with EDA RANU and will treat this letter as sufficient notice under clause 6.1(b) of the Agreement to terminate the Agreement.”

10. Yambaran did not respond in writing to Eda Ranu’s letter of 24 September 2015 but continued to provide backhoe services to Eda Ranu, this time at the new rate of K850 per day. Eda Ranu paid Yambaran’s invoices at the new daily rate until the contract came to an end on its due expiry date of 29 July 2016.

11. On 1 September 2016 Yambaran filed suit against Eda Ranu in the National Court in WS No. 1089 of 2016 alleging breaches by Eda Ranu of its contract for Yambaran to provide backhoe hire services and claiming damages.

12. Yambaran’s substantive claim in WS No. 1089 of 2016 was heard by the National Court on 18 February 2019 and decision reserved.

13. The trial judge delivered the National Court’s decision in WS No. 1089 of 2016 on 30 April 2020. The trial judge dismissed that component of Yambaran’s claim which was based on the reduction of the number of backhoe hire services but allowed Yambaran’s claim for damages on the initial agreed rate of K400 per hour, the actual quantum of those damages to be assessed at further trial.

14. Aggrieved by the National Court’s decision to award Yambaran damages for breach of contract based on Eda Ranu’s unilateral conduct in reducing the initial agreed rate of K400 per hour to K300 per hour, Eda Ranu filed appeal SCA No. 34 of 2020 on 5 June 2020.

15. Yambaran, wishing to challenge the National Court’s decision to endorse Eda Ranu’s contractual entitlement to vary the number of backhoes to be provided by Yambaran from three backhoes to one backhoe, filed cross-appeal SCA No. 38 of 2020 on 5 June 2020, coincidentally on the same day as Eda Ranu’s appeal was filed in SCA No. 34 of 2020.

SCA No. 34 of 2020 (IECMS)

Grounds of appeal in SCA No. 34 of 2020

16. Eda Ranu has pleaded five grounds of appeal in SCA No. 34 of 2020. The grounds can be stated as follows:

(1) The trial judge erred in law by finding that clause 5 of the contract dated 29 July 2013 (Contract) did not authorise Eda Ranu to vary the backhoe hire rate from K400 to K300 per hour or K850 per day.

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