National Housing Corporation v Audela Limited and Francis Tanga as Chairman, National Lands Board and Raga Kavana as Registrar of Titles and Kepi Kimas as Secretary for Department of Lands and The Independent State of Papua New Guinea (2020) N8436
| Jurisdiction | Papua New Guinea |
| Judge | Kandakasi DCJ |
| Judgment Date | 29 July 2020 |
| Court | National Court |
| Citation | (2020) N8436 |
| Docket Number | WS No.1324 OF 2008 |
| Year | 2020 |
| Judgement Number | N8436 |
Full Title: WS No.1324 OF 2008; National Housing Corporation v Audela Limited and Francis Tanga as Chairman, National Lands Board and Raga Kavana as Registrar of Titles and Kepi Kimas as Secretary for Department of Lands and The Independent State of Papua New Guinea (2020) N8436
National Court: Kandakasi DCJ
Judgment Delivered: 29 July 2020
N8436
PAPUA NEW GUINEA
[IN THE COURTCOURT OF JUSTICE]
WS No.1324 OF 2008
NATIONAL HOUSING CORPORATION
Plaintiff
AND
AUDELA LIMITED
First Defendant
AND
FRANCIS TANGA as Chairman, National Lands Board
Second Defendant
AND
RAGA KAVANA as Registrar of Titles
Third Defendant
AND
KEPI KIMAS as Secretary for Department of Lands
Fourth Defendant
AND
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Fifth Defendant
Waigani: Kandakasi DCJ
2016: 15th July
2020: 29th July
DAMAGES – undertaking as to damages - assessment of damages based on applicable principles – damages claimed must be directly connected to the injunction – party affected by injunction under duty to establish its damages by evidence – no clarity in damages claimed as to when, where and how they were incurred – no award of damages
Facts
Supported by an undertaking as to damages, the Plaintiff obtained an interim injunction pending a determination of the proceeding. Thereafter, the Court issued directions to progress the matter to trial, which the Plaintiff failed to comply with and also failed to prosecute its claim with due diligence. That resulted in a dismissal of the proceeding, a lifting of the interim injunction and an order for an assessment of the First Defendant’s damages based on the undertaking as to damages. The First Defendant claimed K32,191,442.00 in damages which were not demonstrated by any evidence to have been forced upon it by the interim injunction. At the hearing on damages, the Plaintiff took issue on the validity of the undertaking arguing that it was not binding on it because the person who signed the undertaking was not an authorised officer and was not under its corporate seal.
Held:
1. Having secured the interim restraining order on the basis of the undertaking, the Plaintiff was precluded from taking issue with the validity of the undertaking and in any case the undertaking was valid.
2. The relevant principles on assessment of damages based on an undertaking as to damages are:
(a) If a plaintiff ultimately fails in the substantive merits of his case, a defendant is entitled to an enquiry as to damages sustained by reason of interlocutory injunctions, unless there are special circumstances.
(b) An assessment of damages should proceed on an undertaking as to damages following a discharge of an interim injunctive order after a decision is made to have the undertaking enforced.
(c) A discharge of an interim injunctive order can occur upon discontinuance or dismissal of the substantive proceedings and not before then.
(d) An undertaking is made to the Court and not to the other party or those enjoined and is for the Court to decide whether it should be enforced.
(e) If the Court decides in favour of enforcing the undertaking, it should proceed to assess the entitled party’s damages.
(f) Damages are usually assessed in accordance with the established principles governing assessment of damages applicable to breach of contracts.
(g) Save in special cases, an undertaking as to damages is the price which the person asking for an interlocutory injunction has to pay for its grant.
(h) The undertaking though described as an undertaking as to damages does not found any cause of action. It does, however, enable the party enjoined to apply to the court for compensation if it is subsequently established that the interlocutory injunction should not have been granted.
(i) In a case where it is determined that the injunction should not have been granted the undertaking is likely to be enforced, though the Court retains discretion not to do so.
3. The party claiming the damages has an obligation to establish by appropriate evidence the damages suffered as a result of the injunction from the date of the commencement of the injunction to its lifting.
4. A party entitled to damages under an undertaking as to damages as a duty to have his or her damages mitigated which includes making appropriate applications for a set aside of the interim orders.
5. The First Defendant failed to establish by any credible evidence that K32, 191, 442.00 it claimed in damages based on the undertaking of the Plaintiff in this case were forced upon it by the interim injunction and also it failed to mitigate its damages. Consequently, no damages were assessed and awarded to the First Defendant.
Cases Cited:
Lee & Song Timber (Png) Co LTD v. Nathanael Burua (2005) N2836.
Bougainville Copper Ltd v. Chief Collector of Taxes (2007) SC853.
PNG Deep Sea Fishing Ltd v. Luke Critten (2010) SC1126.
MAS International Ltd v David Sode (2008) SC944.
Telikom PNG Limited v. ICCC (2007) N3143.
Rimbunan Hijau (PNG) Ltd v. Ina Enei (2019) SC1859.
PNG Bible Church Inc v. Carol Mandi (2018) SC1724.
Brian Laki v. The State (2005) SC783.
Motor Vehicle Insurance (PNG) Trust v James Pupune [1993] PNGLR 370 at 380 and Abel Kopen v. The State [1998-89] PNGLR 659.
White Corner Investments Ltd v. Regina Waim Harro (2006) N3089.
Wei Xiang Cheng v. Agmark Limited (2008) N3338.
Pastor James Molu v. Dokta Pena (2009) N3817.
Bui Minig v. Joycelyn Minig (2013) N5327.
Morobe Provincial Government v. Tropical Charters Limited (2011) N4240.
Norman Daniel v. Air Niugini Ltd (2019) N7820.
Marsh v. Hay [1981] PNGLR 392.
Jack Livinai Patterson trading as Patterson Lawyers v. NCDC (2001) N2145.
Dr Florian Gubon v Pacific Mobile Communications Ltd (2006) N3104.
The Central Bank of PNG v. Gabriel Tugiau (2009) SC1013.
SareaSoi v. Daniel Korimbao (2018) N7081.
Counsel:
Mr. P. Pera, for the Plaintiff
Mr. L. Tilto, for the First Defendant
No appearance for the Second to the Fifth Defendants
29th July, 2020
1. KANDAKASI DCJ: Following dismissal of the National Housing Corporation’s (NHC) claim on account of non-compliance of Court orders and want of prosecution, the Court ordered the First Defendant, Audlea Limited’s (Audlea) damages be assessed. That proceeded on the basis of an undertaking as to damages given by the NHC in support of an interim injunctive order it secured against Audlea, pending a final determination of the proceeding.
Parties Arguments
2. Audlea, claims it suffered a total of
Item of alleged loss |
Value in Kina |
|
1 |
Administration Costs (actual) |
151, 921.00 |
2 |
Demolition costs (actual) |
350,070.00 |
3 |
Loss of business, loss of reputation, hardship, etc |
517,300.00 |
4 |
Loss of wages (lost opportunity) |
885,640.00 |
5 |
Loss of revenue (lost opportunity) |
29,887,148.00 |
6 |
Legal fees incurred (actual) |
509,368.00 |
Total K32,191,442.00 | ||
3. In arguing against this claim, the NHC is making two points. Firstly, it claims the undertaking as to damages is not binding on it because it was not signed under its seal and the person who signed the undertaking was not an authorised officer. It goes on to argue that, these defects should have been raised by Audlea and have the interim orders lifted earlier but it failed to do so by reason of which, it is precluded from claiming the damages. Secondly, it submits Audela has not established by any evidence that it suffered these alleged damages during the currency or as a direct result of the restraining orders. The relevant period of the injunction was 14 months from 20th November 2008 to 05th March 2010. NHC further argues that, the alleged damages are speculative and are for a period of 9 years which is beyond the currency of the injunction.
Relevant issues
4. The issues from the Court to determine are these:
(1) Whether the undertaking as to damages was defective in that, it was not signed under seal and by an unauthorised officer and is therefore, not binding on the NHC?
(2) If the undertaking was defective, did Audlea have any obligation to point those out and seek a set aside of the injunctive orders and thereby avoid or mitigate its damages?
(3) What is the relevant period for an assessment of Audlea’s damages under the undertaking as to damages?
(4) Has Audlea established by appropriate evidence its damages for the relevant period of the injunctive orders?
Relevant background facts
5. In order to properly consider and determine each of these issues, it is important that the background facts leading to these issues need to be properly understood. The relevant facts are set out in NHC and Audela’s submissions and various affidavits each of them has filed and are in the Court file, which are as follows:
(a) On 11th October 2004, Rex Mono, the Managing Director of Audela wrote to Lands Department expressing Audela’s interest in a State Lease property,...
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