Nivani Ltd v Coconut Products Ltd [2016] PGNC 364; N6582 (14 December 2016)

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BREACH OF CONTRACT - agreement to extract gravel from river bed - agreement partly written - agreement was for 2 years - the agreement continued on a month-to-month basis - the agreement continued for about 7 years - defendant issued notice of termination with restrictions - agreement concluded - plaintiff claim breach of contract against the restrictions

CROSS-CLAIM filed for outstanding debt owed under the contract and for breach contract - based on breach of contract, two other allegations claimed - one for breach of provisions of the Environment Act 2000 - the other for negligence based on breach of provisions of the Environment Act 2000

The plaintiff and the defendant had entered into a contract for extraction of gravel from the defendant's land. The contract had existed for a total period of about seven (7) years. The plaintiff claimed it suffered damages because it said it had to leave behind gravel that was worth a substantial amount of money. It said this was after the defendant had imposed two (2) restrictions during the last month of extraction, which were not part of the terms of the contract. The defendant denied the allegation. The defendant also filed a cross-claim. In the cross-claim, the defendant said the plaintiff had breached schedule 3 clause 2 of the contract in that the plaintiff had failed to obtain an environment permit as required to under the Environment Act 2000. Based on the said alleged breach of schedule 3 clause 2, the defendant also claimed negligence and breach of provisions under the Environment Act 2000. The defendant also claimed that the plaintiff still owed it K50,000 which represented the final royalty payments that were due under the contract.

(i) the defendant's intention at the material time was to conclude the contract and the contract was concluded pursuant to clauses 4 and 5;

(ii) the contract was not repudiated by the parties; the contract was not rescinded by the defendant which would have given rise to a claim for damages; the Court noted the fact that the defendant never stated earlier that it was going to sue for breach of schedule 3 clause 2 until after more than four (4) years later;

(iii) the conduct of the defendant at the material time proved its intention then which was to simply conclude or end the month-to-month contract between the parties and nothing more;

(iv) schedule 3 clause 2 is an indemnity clause which actually protects the defendant, even to this day, against possible actions by third parties;

(v) schedule 3 clause 2 is not the type of clause where one could rely on and allege breach of contract;

(vi) the meaning and purpose of schedule 3 clause 2 was misconstrued by the defendant.

(ii) after that, he must demonstrate that he cannot quantify the said damage(s).

[Text referred: Chitty on Contracts, Volume 1 - General Principles, 26th Edition (1989)']

Cases cited
Agnes Kapi v. Andrew Andu (2015) N6125
National Provident Fund Board of Trustees v. Southern Highlands Provincial Government (2006) N3028)
PNG Forest Products Ltd v. Ossima Resources Ltd (2013) SC 1275
PNG Air Services Pty Ltd v. Geob Karri (2009) SC1002
Pogera Joint Venture Manager Placer (PNG) Ltd v. Robin Kami (2010) SC1060

Counsel:
Ms S Kiene, for the Plaintiff/Cross-Defendant
Mr M Goodwin, for the Defendant/Cross-Claimant

1. ANIS AJ: The proceeding consists of a claim and cross-claim, in relation to a gravel extraction contract the plaintiff/cross-defendant (plaintiff) and the defendant/cross-claimant (defendant) had entered into between 2004 and 2011.

2. The trial was conducted on 15 August 2016. Written submissions were presented on 27 September 2016. The Court, thereafter, reserved its decision to a date to be advised.

4. The material facts are not disputed. On or about April 2004, the plaintiff and the defendant entered into an agreement (original contract) for the plaintiff to extract gravel over the defendant's land called "Tabuna Plantation" in Kokopo, East New Britain Province. The parties did not produce a signed copy of the original contract in Court but I note that its existence is not an issue. The original contract's term was for two (2) years. Consistent with the terms of the original contract, the parties, by agreement and primarily based on their conduct, continued with extraction of gravel after the two (2) years of the original contract had lapsed. On 2 July 2009, by mutual consent, the parties renewed the terms of the original contract with some additional terms added. The parties continued with the said agreement for another 18 months or so. I note that the defendant has also alleged that the 2009 discussion between the parties consisted of a new agreement so that will be an issue for determination.

5. On 26 March 2011, the defendant, by telephone, informed the plaintiff to cease gravel extraction from the Tabuna Plantation. Three (3) days after on 29 March 2011, the defendant wrote a letter to the plaintiff giving one (1) month notice of its intention to terminate the agreement (Notice of Intent). The defendant also, in the Notice of Intent, imposed two (2) restrictions on the plaintiff. Firstly, the plaintiff was restricted to carrying 15 loads per day and secondly, the plaintiff was not permitted to work during weekends.

6. The plaintiff received the Notice of Intent by email on 30 March 2011. The plaintiff responded by email that same day. The plaintiff informed the defendant that it accepted the Notice of Intent but disputed the two (2) imposed restrictions and cited breach of contract. The defendant however maintained its position with the restrictions. The plaintiff consequently left the site after a month with protest. The plaintiff said then and now that due to the said imposed restrictions, it was unable to retrieve its gravel that had been won from the riverbed and left at the site for transportation. The plaintiff seeks to recover the value of the said gravel, which it says is valued at K1,040,798. The plaintiff claims that the restrictions had prevented it from fully performing its obligations under the contract in particular clauses 1.2 and 5.

7. The defendant denies that it had breached the contract as alleged by the plaintiff. Instead, the defendant files a cross-claim and claims outstanding royalty payments it says were still owed to it by the plaintiff under the contract. The defendant's secondly claims breach of contract and expounds on that to allege breach of provisions under the Environment Act 2000 (EA) and negligence directly as a result of the allege breaches under the EA.

8. Let me summarise the issues as identified by the parties in the Pleadings Book (PB) filed on 1 July 2016. I refer to page 32 of the PB and read:

(i) Whether or not the Defendant, upon giving the one (1) month notice of termination was entitled to impose new conditions.

(ii) Whether or not the Plaintiff is entitled to its claim against the Defendant for the sum of K1,040,798.00 being for the Sand and Gravel left at Tabuna Plantation as a result of the restrictions of access to Tabuna Plantation.

(iii) Whether or not the Defendant/Cross-Claimant is entitled to its Cross-Claim for the sum of K50,000.00 being for outstanding royalty payments.

(iv) Whether or not the Plaintiff's extraction activities carried out under the agreement caused environmental damage to the Defendant/Cross-Claimant's land.

(v) Whether or not the Defendant is entitled to claim damages against the Plaintiff/Cross-Defendant for

9. The plaintiff called one (1) witness. He is David John Stein. Mr Stein is a director and General Manager of the plaintiff.

12. The parties sought leave of the Court and tendered their affidavits. Despite objections from both sides, the Court over-ruled the objections and accepted the exhibits. I note that I gave oral reasons for rejecting the objections, which may be seen in the transcript of the trial dated 15 August 2016. I list the tendered exhibits herein:

Exhibit	Description	Date sworn & date filed
“P1”	Affidavit of David John Stein	31/3/16 08/4/16
“P2”	Affidavit of David John Stein	30/4/16 06/5/16
“P3”	Affidavit of David John Stein	30/4/16 06/5/16
“D1”	Affidavit of Noel Rajan	30/3/16 11/4/16
“D2”	Affidavit of Biatus Bito	10/3/16 12/3/16

13. I will begin firstly by determining the type of agreement. In my opinion, it is not difficult to recognise the type of agreement or arrangement the parties had had over the past seven (7) years or so since 2004. The original contract is tendered and is in evidence. This was a commercial or business arrangement, that is, the defendant had agreed to and had allowed the plaintiff access onto its land or Tabuna Plantation to extract gravel from a riverbank, for a fixed price per load.

14. The parties have attached unsigned copies of the original contract in their evidence. For the plaintiff, it is marked as Annexure H to Exhibit PI. For the defendant, it is marked as Annexure C to Exhibit D1. I note that the validity or existence of the original contract at the material time, is not disputed. This is reflected under the sub-heading AGREED FACTS in the PB. Further, evidence of recognition of the original contract by the parties may be seen generally under Exhibit P1 and Exhibit D1.

15. The original contract, according to the parties, was not the only document that had constituted the agreement. I refer to paragraph 6 at page 26 of the PB. It states and I read:

(b) Email from David Stein of the plaintiff to Michael Jackson of the defendant dated 1 July 2009

(c) Email in reply from Michael Jackson of the defendant to David Stein of the plaintiff dated 2 July 2009

16. In regard to the two (2) emails, they are located at Annexure B and Annexure C to Exhibit P1. They are also located at Annexure D and Annexure E to Exhibit D1.

17. The three (3) documents above, according to the parties, had formed the agreement. But when I closely examine them, I note that there is nothing significant in the two (2) emails that could have expressly or impliedly created a new agreement between the parties rather than the fact that they seem to essentially confirm the existence of the original contract and its operation between the parties at the material time. The emails may have extended or restarted the duration of the original contract for a further 18 months or so, but when that period lapsed, the parties fell back, by their conduct, on the terms of the original contract and the original contract continued to operate on a month-to-month basis, pursuant to clause 4 until it was terminated. The claim by the defendant that the parties had entered into a new contract in 2009 is misleading as well as misconceived because it gives an impression that something completely new had been reached in 2009. I say this simply by looking at the actual emails and the conduct of the parties during the seven (7) years of operation up to the date when the contract was concluded in 2011. Let me now expound on what I have said here below.

Term:- This agreement shall be for a term certain of 2 years from the date of the execution, and if it shall run-on over that termination period, by agreement then it shall be so, on a month-to-month basis, unless otherwise agreed in writing by the parties.

19. The original contract was signed in April of 2004. It extended past its two (2) year term. The parties continued business thereafter whereby the plaintiff would extract gravel and pay the defendant as per the fixed price at K3 per cubic meter of the extracted gravel. I find that its extension had been by agreement and or by the conducts of the parties.

20. Consequently and pursuant to clause 4 of the original contract, the contract continued on a month-to-month basis after 2006.

21. On 1 & 2 July 2009, the parties exchanged emails. They confirmed their existing arrangements or the original contractual terms with some suggested additional terms or propositions. This was generally agreed to by consent based on the responding email by the defendant a day after on 2 July 2009. In my opinion, it is unclear due to lack of evidence, whether the said email discussions or propositions were confirmed and were ever actually effected by the parties thereafter. Nevertheless and in my opinion, the proposed additional terms are irrelevant for this purpose. What is however relevant for this purpose, was the continuity of the original contract, which this Court has found had existed right through to 2011 when the contract was concluded. As I have held above in my judgment, the extended period of the original contract may have ended 18 months or so after 2009, but the parties continued on, that is, on a month-to-month basis, by their conduct and based on clause 4 of the original contract until April 2011 when the contract ended.

22. The law is quite clear on this point namely existence of contract based on conduct and I do not need to go into depth with this but perhaps refer to the principle with the aid of a case authority. I refer to the case PNG Forest Products Ltd v. Ossima Resources Ltd (2013) SC 1275. The Supreme Court held and I read in part as follows:

18 In principle, the existence of a contract can be inferred by the conduct of the alleged parties to it. As was stated in Household Fire Insurance Co v Grant (1879) 3 Ex D 216:

Agreement is not a mental state but an act, and, as an act is a matter of inference from conduct. The parties are to be judged, not by what is in their minds but by what they have said or done.

19 It necessarily follows that, if the existence of an initial contract can be inferred by the conduct of the parties, that it has been renewed in accordance with a provision anticipating that the parties may extend its term can likewise be inferred from the conduct of the parties. Repudiation of a contract can also be inferred from the conduct of the parties: Mercidita Malihan v Divine Word University (2010) N4112, National Development Bank Ltd v Maxtone Graham (2012) N4739. There was, therefore no error in principle in her Honour acting on the basis that it was lawfully possible for renewal to be inferred from the conduct of the parties. There did not have to be a formal instrument of renewal signed by the parties.

23. In my opinion, the said principle is applicable to this case. In summary, the original contract, which had been entered into between the parties in 2004, was extended pursuant clause 4 and it continued to operate on a month-to-month basis until it was concluded on 29 April 2011.

24. The plaintiff's allegation of breach of contract only relates to allege breach during the period of the Notice of Intent and nothing more. The plaintiff simply says because the defendant had failed to observe the terms of the contract during its final 30 days, it suffered damages. One could also regard the plaintiff's claim as a recovering action, that is, it is seeking damages for its properties that were not recovered at the extraction site due to the two (2) imposed restrictions by the defendant.

25. Let me consider the facts under this sub-heading. On 26 March 2011, the General Manager of the Defendant called the General Manager of the plaintiff by telephone. He informed the plaintiff to immediately cease operation at Tabuna Plantation. On 30 March 2011, the plaintiff received an email from the defendant. The defendant's Notice of Intent was attached to the said email. The letter is marked as Annexure E to Exhibit P1. It states and I read in part:

Due to the above two reasons we regret to inform your good self that we intend to issue a month's notice as of today for Nivani Ltd to cease operations.

We also advise you that you are to cart no more than 15 loads of gravel each working day of the week and none during the weekend.

26. The plaintiff' says the two (2) imposed restrictions namely (i) for the plaintiff to take out 15 loads per day and (ii) for the plaintiff not to operate during weekends (the two restrictions), were not agreed to and did not form part of the agreement between the parties at the material time. It said because the defendant had imposed the two restrictions, it was unable to perform its part of the contract during the notice period in terms of retrieving its properties including the gravel that had been extracted or won from the riverbed that were supposed to have been loaded and taken out from the site.

27. This issue, in my opinion, is not difficult to determine. I note that I have already found the existence and continuation of the original contract at the material time. Clauses 1.2 and 5 are relevant for this purpose. They state and I read:

1.2 Full and sufficient rights of way and passage over and upon the ways for Nivani's vehicles (or its duly authorised agents workmen and employees) for the purpose of taking away all the river gravel won from the said area of land, and for all other directly associated purposes.

5. Removal of Plant:- Upon the determination of this agreement, Nivani shall within 30 days remove from the said area of land all sheds erections machinery rails and plant and any property not so removed with that 30 day period shall be disposed of by CPL as it shall determine and without incurring any liability thereof to the purchaser.

28. Let me go over the process with the above clauses in mind. At the material time, the defendant issued the Notice of Intent and as it puts it in its letter a month's notice as of today for Nivani to cease operations. This, in my opinion, is consistent with clause 5 of the original contract so there is nothing wrong there so far. However, in addition to that, the defendant also issued the two restrictions. My first question is this: Where is the source or basis for issuing these two restrictions under the original contract? The plaintiff's particulars of the said alleged breach, is pleaded at paragraph 21 of its statement of claim. The defendant simply denies that at paragraph 18 of its defence without providing any particularities for its denial so nothing can be drawn from that by this Court. The next place to look at of course would be the evidence. I refer to Exhibit D1, the affidavit of Noel Rajan. Mr Rajan for the defendant did not state the source the defendant had used to impose the two restrictions in his affidavit. Mr Rajan however said these and I will read paragraphs 16 and 20 herein:

16.1 From 2004 to 2006, both parties were bound to the terms of a two year Agreement;

16.2 From 2006 to 30 June 2009, both parties were bound to the 2004 to 2006 Agreement on the basis that the Agreement said that after its date of lapse, the Agreement could be continued by the parties on a month to month hold-over basis;

16.3 From 1 July 2009 to 31 December 2010, both parties were bound by an email Agreement that had modified the 2004 Agreement; and

16.4 From 1 January 2011 onwards, the email Agreement was surviving at the will of the parties.

Question: Did you seek permission from Nivani before modifying the terms of the agreement?

Answer: When we made the restrictions we weren't making reference to the agreement.

Question: Was it a term of the original agreement that CPL could impose restrictions without the plaintiff's consent?

Answer: We believe we can because there were quite a few conditions not met.

30. Firstly, in relation to the Defendant's understanding of its relationship with the Plaintiff as stated under paragraph 16 of Mr Rajan's affidavit, I note that I have already determined the validity and existence of the contract above in my judgment. I also note that this evidence by the defendant speaks contrary to what the parties had agreed under paragraph 6 of the PB as I have already quoted and discussed above in my judgment.

31. I find it interesting to note that Mr Rajan appears to pick and choose from his evidence and argument. On the one hand and as shown both in his affidavit and during cross-examination, he tries to portray that the defendant did not recognise the terms of the original contract as part of the agreement. But in his evidence on alleged environment damage, he refers to the original contract and states the requirements and alleges breaches of the terms of the original contract namely schedule 3 clause 2. I will get to discuss that later further below in my judgment but I am mentioning it to demonstrate the disparity in the defendant's evidence and argument on this issue.

32. Having set out the defendant's evidence above, I return to the issue, and the question I have is this: Where is the provision in the original contract whether express or otherwise, that provides for variation to the terms of the agreement? And I think I should reduce the question down further to the notice period and ask this: Is there a provision in the agreement between the parties whether expressly, orally or impliedly, which states that the defendant is entitled to, during the notice period, set restrictions or that the defendant can unilaterally vary or change the terms of the agreement?

34. I find firstly as a fact no such express terms in the original contract. Secondly, I note that the defendant did not plead any alleged oral or implied terms of the contract, which it would have used or relied upon to justify its actions when it imposed the two restrictions. That being the case, I cannot see how the defendant can succeed in arguing that it had a right to impose the two restrictions back then.

35. Now, at the trial, there was one misconceived fact, which I thought was clarified by Mr Stein. In his oral evidence, he said and maintained that at the material time of the notice period, Nivani did not extract any new gravel from the riverbed. He said Nivani was simply trying to remove the already extracted gravel from the site. Mr Stein said the Notice of Intent was issued suddenly at the time when Nivani had outstanding delivery orders. He said because of the two restrictions, Nivani was unable to remove all its properties including the extracted gravel out from the site within the 30 days timeframe.

36. I always find common sense, rationality or practical application of facts important when considering issues such as this, that is, by putting one's self into the positions of the parties at the material time. It is obvious, in my opinion, that the defendant at the time of issuing the Notice of Intent simply wanted the plaintiff out of the site immediately, that is, without any regard to for example:

(i) of the fact that the plaintiff' was fully operational and was conducting business on site; or

(ii) of the fact that the plaintiff had fixtures, plant and equipments on site; or

(iii) of the fact that the plaintiff had extracted (or won) gravel that were piled up on site for deliveries; or

(iv) of the fact that the parties had the said relationship for the past seven (7) years.

37. I say these because it is not disputed that the Notice of Intent was sudden. Well, the actual notice was given verbally by telephone and it called for the plaintiff to immediately cease operations on 26 March 2011. This is evident at Annexure D to Exhibit P1, that is, email dated 26 March 2011 by the plaintiff to the defendant.

38. You would have to ask this: Was the defendant being reasonable by imposing a month for the plaintiff to pack up and leave? But I note that that was the agreement agreed to by the parties under clause 5 of the original contract. And I note that the plaintiff had accepted that in its latter email dated 30 March 2011 to the defendant. See Annexure F to Exhibit P1. But for the defendant to also impose the two restrictions is, in my opinion, not only in breach of clauses 1.2 and 5 of the original contract but it could also be seen as a deliberate attempt by the defendant to disrupt, stall or injure the plaintiff's business. I ask myself this: Why else would the defendant impose such sudden restrictions other than the reasonable conclusion that the aim was perhaps to also hurt or injure the plaintiff's business operations? I note that the defendant has alleged that it was concerned with environmental damage. I will get to discuss this point in detail later below in my judgment but what is certain and which was confirmed at the trial and during cross-examination of Mr Rajan is as follows: The defendant's claim for alleged environment damage was not based on any expert opinion obtained before the Notice of Intent was issued. It was based on its own inspection, which had been conducted a month earlier. So, in my opinion, I do not think the defendant can expect this Court to seriously regard such evidence to support its allegation then that there had been serious environmental damages. Despite the fact that this fact was important as alleged by the defendant, Mr Rajan makes no mention of it or of any inspections that had been conducted by the defendant at that time, in his affidavit. Mr Rajan was cross-examined on this point in Court by the plaintiff's counsel. In summary, he said only two inspections were conducted at the site, one in March 2004 and the other in March 2011. He did not say who conducted the site inspections so this evidence may be hearsay and as such little or no weight will be given to it. And this: Why did the defendant had to wait for more than four (4) years before it engaged an expert to do an inspection or assessment on the environment at the site? Does this fact or delay show that the defendant was genuinely concerned about the environment or environmental damage as alleged in the Notice of Intent? Clearly and in my opinion, the conduct of the defendant appears to speak contrary to its claim.

39. Let me refer to the defendant's written submissions on this point. It begins at paragraph 49. In summary, the defendant alleges that the agreement was a licensor-licensee agreement and it demonstrates that by trying to distinguish it from a tenancy in common type agreement. I note that I have already made findings on the agreement above in my judgment.

40. I note that it is not disputed that no agreement had been reached in regard to the two restrictions that had been imposed by the defendant during the notice period. I note that when Noel Rajan was specifically asked on this point during cross-examination, he responded by staying that the defendant never consulted the plaintiff before it imposed the restrictions. Mr Rajan said they believed at that time that the plaintiff had breached the some of the conditions, which I take to mean the terms of the agreement, which was why he said the defendant had acted in such a manner.

41. Given the above findings, the only conclusion to be drawn is that the defendant had acted outside the terms of the original contract when it imposed the two restrictions that did not form part of the agreement, on the plaintiff. In doing so, it seems quite clear that the defendant breached the terms of the agreement when it prevented the plaintiff from fulfilling or performing its obligations under the contract during the notice period, that is, to operate without the two restrictions and remove its properties, which included the already extracted gravel from the site at Tabuna Plantation.

42. In the statement of claim, the plaintiff pleads breach of contract as follows and I read from paragraph 20 herein:

(1) failed to allow the Plaintiff to exercise all its rights including exclusive licence and full liberty to quarry river gravel for the balance of the Agreement from the date of issuance of the Notice of Terminate.

(2) Imposed restrictions on the Plaintiff to cart only 15 loads of gravel and not to work on weekends until the expiration of the one (1) month's period.

43. I find that the defendant breached clauses 1.2 and 5 of the original contract as alleged by the plaintiff.

44. The defendant's cross-claim is in two folds. Firstly, it claims that the plaintiff, under the contract, owed it a sum of K50,000 for gravel that had been extracted and trucked out from the site. During the trial, it was revealed that the sum represented the last loads before the contract was determined. In my opinion, this claim is similar to or is nothing more than a debt recovery matter, that is, monies still owed under a concluded contract. Firstly, I find that this claim is properly before the Court.

45. Now, I ask myself this: Where can I find from the defendant's evidence proof that the plaintiff owed it K50,000? I note that very little is said in Mr Rajan's affidavit. At paragraph 27 of his affidavit, he states and I read:

46. The letter Mr Rajan refers to is marked as Annexure I to Exhibit P1. I note that in the said letter, there was no mention of the actual sum owed to the defendant by the plaintiff.

47. Based on the above, it appears the defendant has not provided sufficient evidence to convince me that the plaintiff owned it K50,000 in outstanding debt under the original contract.

48. However, I note that the primary role of this Court is to deliver justice, be fair and uphold the rule of law. I note that all the evidence have been tendered and are before the Court to consider. In my opinion, once the evidence are in, this Court has a duty to ensure that regard must be had to all the evidence, to assist it determine the issues that are properly before it. If for example, evidence disclosed by the opposing party supports or justifies an argument raised by the other party, the Court must accept or give due regard to that.

49. For this case and on this point, I firstly note that despite the plaintiff's denial in its defence that it owed monies to the defendant, it did not at trial seriously oppose the defendant's claim regarding the K50,000. In fact, the plaintiff's own evidence shows that such a sum is owed to the defendant. I refer to Annexure L to Exhibit P1 and firstly refer to the email dated 23 August 2011 by Mr Stein to John Cross of the defendant. Mr Stein therein sets out what the plaintiff owed to the defendant and what the defendant owed to the plaintiff. He states that the plaintiff owned the defendant a sum of K53,920.03. Mr Stein also attaches reconciliation statements under the same annexure. I note that the last attachment at Annexure L to his affidavit contains the plaintiff's reconciliation sheet, which shows the break-up and proof of the said K53,920.03. I note that there is a slight decrease of 30 toea, that is, when comparing the figures in the email to the reconciliation sheet. It seems to be a typographical error. The correct toea should be three (3) toea and not thirty-three (33) toea.

50. I am satisfied and find herein that the plaintiff owe the money as claimed by the defendant. I also refer to and accept the defendant's written submission on this point. In summary, the defendant referred this Court to the plaintiff's evidence showing monies owing to it. I have covered the said evidence above in my judgment. I note that the defendant has only claimed for a sum of K50,000 in its Cross-Claim. As such and of course following the pleading rules, I am confined to and will only award what is being sought by the defendant which is K50,000.

DEFENDANT'S INTENTION WAS TO CONCLUDE THE CONTRACT, NOT TO RESCIND THE CONTRACT AND SUE FOR DAMAGES

52. Firstly, I think the fourth (4) issue, as identified by the parties in the PB is misleading. It states and I read:

Whether or not the Plaintiff's extraction activities carried out under the agreement caused environmental damage to the Defendant/Cross-Claimant's land.

53. My view or should I say the rational answer would be this: Of course, there would have been environmental damage caused to the land. The type of the business the parties had agreed to, involved extraction of gravel from the riverbed on the defendant's land, which had happened for over a period of seven (7) years. It is obvious that both parties had known what they had gotten themselves into in the first place. So I do not follow this issue as pleaded.

54. Let me look at the Cross-claim. The defendant is seeking breach of the original contract, namely schedule 3 clause 2, statutory breaches of the provisions of the EA and a claim for negligence, that is, based on the alleged breach of the provisions of the EA.

55. The defendant's claim for statutory breach and negligence are both derived, based on its pleading, from schedule 3 clause 2. Let me read the said clause:

56. So how was the contract concluded by the defendant in the first place? In my opinion, it is imperative to determine this question before anything else. What was the intention of the parties at the material time? It is not seriously disputed and I am satisfied based on the evidence adduced by both parties, that the defendant's intention to end the contract was sudden and came as a surprise to the plaintiff. I note that I have already made a ruling on that above in my judgment. The three (3) crucial documents on point that were tendered are:

(ii) plaintiff's email in reply dated 30 March 2011, Annexure F to Exhibit P1.

We would like to state that we are deeply concerned on the environmental degradation due to over extraction of gravel from Toboona Plantation.

Mr David Steins commuique with Mike Jackson confirms that the arrangements were to be renegotiated end-2010.

Due to the above two reasons we regret to inform your good self that we intend to issue a month's notice as of today for Nivani Ltd to cease operations.

We note the contents of your last email and would like to state that we also value the good working relationship between CPL and Nivani.

We also advise you that you are to cart no more than 15 loads of gravel each working day of the week and none during the weekend.

58. I note that I have already found that the contract, before it was determined, was a month-to-month contact based essentially on the terms of the original contract. The Notice of Intent was obviously issued pursuant to clause 5 of the original contract. Let me re-state clause 5:

59. When I read the phrase "Upon the determination of this agreement", what does that mean? In my opinion, it means that the contract ends or is concluded. So when did the contract between the parties conclude or end? Well, the Notice of Intent, which essentially gave notice of the defendant's intention to determine or end the contract, was dated 29 March 2011. One (1) month after that would be 29 April 2011. Therefore, the agreement between the plaintiff and the defendant ended or was determined on 30 April 2011. Now, clause 5 again states "Upon the determination of this agreement, Nivani shall within 30 days remove from the said area.....". When I look at that and interpret it, it means that the plaintiff was entitled under clause 5 of the original contract to, within 30 days after the contract was determined or concluded on 30 April 2011 remove its properties, plants and equipments. This means that the cleanup was supposed to have ended on 29 May 2011 and not on 29 April as demanded by the defendant at that time.

60. Coming back to the Notice of Intent, I note that the defendant did not expressly cite breach of contract as the reason for wanting to end the contract. The defendant's letter simply said the defendant was deeply concerned on the environmental degradation due to over extraction of gravel and secondly it referred to an earlier discussion of possible extension of the contract in 2010. I note that during cross-examination, Mr Rajan confirmed that the defendant did not obtain or sought any professional advice or expert opinion regarding the defendant's claim in the Letter of Intent of environmental degradation due to over extraction of gravel. Mr Rajan said the defendant's assessment was based on a single inspection at the extraction site sometime in March 2011 or about a month before the Notice of Intent was issued.

61. I therefore find as a fact that at the material time, the defendant simply exercised its right under clause 5 of the original contract, which had existed on a month-to-month basis, to determine it. The defendant wanted to end the contract, or to put it another way, at the material time, the defendant did not want the month-to-month contract to continue after it expires on the following month. Further, I also refer to the defendant's lawyers' letter dated 27 April 2011 as further proof of the defendant's intention to simply end the contract. The letter is marked as Annexure I to Exhibit P1 or at Annexure K to Exhibit D1. There is nothing in the said letter that states that the defendant has rescinded the contract and will sue or that the defendant has reserved its right to sue, for damages. Repudiation of the contract, based on the facts of the case, is also out of the question. I also note that there is no evidence produced by the defendant at that material time that alleged breach of schedule 3 clause 2 and that the defendant was going to sue for breach of contract. Other than the plaintiff's evidence on this point, I note that the defendant's own evidence has convinced me to make this finding of fact.

62. The final proof is this: The defendant had sought and this Court has now awarded outstanding royalty payments that were due under the original contract, to the defendant. The outstanding payments include royalty payments for truckloads of gravel taken out of the extraction site during the last month of the notice period in April 2011. In my opinion, the fact that the defendant had asked for these payments in this proceeding confirms or demonstrates its intention at that time. That is, that its Notice of Intent was issued to the plaintiff to conclude the agreement and in return receive the full payments that were due under the contract.

63. I therefore find based on the conduct of the defendant, that it had intended to conclude the contract and that the contract had concluded under its terms. I find therefore that the defendant's cross-claim alleging breach of schedule 3 clause 2 was recently made-up or that it was alleged after the contract was formally concluded.

64. I also find the doctrine of waiver applicable here (see the case: National Provident Fund Board of Trustees v. Southern Highlands Provincial Government (2006) N3028). In the present case, the defendant's conduct in accepting royalty payments for the full seven (7) years of operation right up to the conclusion of the contract in April 2011, including its claim for the outstanding royalty payments in this proceeding, means that the defendant has waived its right to any claim for breach of contract.

65. Finally, I also do not find the claim for the allege breach of schedule 3 clause 2 valid for two (2) reasons. I will discuss the first reason here and the next reason in the next sub-heading below titled SCHEDULE 3 CLAUSE 2 IS AN INDEMNITY CLAUSE AND IT IS ALSO NOT AVAILABLE FOR ONE TO RELY ON TO ALLEGE BREACH OF CONTRACT. When one looks at the said schedule and clause, it imposes the responsibility of compliances with conditions imposed by various government bodies and non-government bodies, upon the plaintiff to, where require, obtain. In this case, the defendant has decided to make its allegations against the plaintiff based on the EA. It argues that the plaintiff's activity under the contract then was a level 2 activity and as such, the plaintiff had failed to obtain an environment permit. The plaintiff denies this and says its activity at the material time was a level 1 activity that did not require an environment permit under the EA. So the parties want this Court to determine this issue. The question I have is this: Can this Court make such a finding? Is the issue properly before this Court for the Court to make a finding? My answer is "no". The first person who would consider and decide this type of issue would be the Director of Environment who is appointed under section 15 of the EA. And his decision may be subject to judicial review. The Director is not a party in this proceeding. The defendant has not disclosed evidence to show that it had complained or written to the Director of Environment seeking clarity on this point. I cannot see how I can make a competent or fair decision with these existing discrepancies. Let me remind myself that this is a claim for breach of contract and it is not a claim for judicial review. The option for judicial review is there. The defendant, it seems, has not exhausted that option. By not making a finding on this issue here does not extinguish the defendant's right to proceed by way of judicial review.

66. I am therefore not convinced the defendant has thought through this issue carefully before raising it before this Court. This Court has a duty to ensure that only meritorious issues are brought before it or before the correct forum.

SCHEDULE 3 CLAUSE 2 IS AN INDEMNITY CLAUSE AND IT IS ALSO NOT AVAILABLE FOR ONE TO RELY ON TO ALLEGE BREACH OF CONTRACT

67. The final question I have and which I would like to now discuss is this: What is the meaning or purpose of schedule 3 clause 2? Let me re-state that herein:

68. In my opinion, this schedule essentially indemnifies the defendant. It expressly passes on the responsibility for the submission, processing and adherence to all government and non-government legislations, regulations, codes of conduct, policy and laws attributed to the extraction of the gravel from the river system on the plaintiff. It is an indemnity clause, which is only available to the defendant for protection. For the defendant to claim breach over it is, in my opinion, not possible.

69. I therefore find that the breach of contract, as alleged by the defendant and as pleaded in its cross-claim, is misconceived. In fact, the correct way, in my opinion, to read schedule 3 clause 2 is this: Any breach of the said schedule (i.e., schedule 3 clause 2) will mean that the plaintiff will be solely responsible for its consequences and not the defendant. The defendant has and is, pursuant to schedule 3 clause 2, indemnified. This means that if the plaintiff had failed to for example, obtain an environment permit under the EA, the plaintiff will be responsible for its consequences that may follow, not the defendant. That is what schedule 3 clause 2 says or implies.

70. So in addition to the earlier findings above in my judgment on this subject matter, I find that schedule 3 clause 2 is an indemnity clause which protects the defendant against third parties regarding the gravel extraction activity, which the parties had signed up for. I find that it is misconceived that the defendant could rely on schedule 3 clause 2 to claim breach of contract and I would, except for the award of K50,000, dismiss the entire cross-claim based on the reasons stated under this sub-heading.

71. The defendant pleads negligence as its alternative claim. Alleged negligence is pleaded at paragraph 8 of the cross-claim. I note that this tort was not captured as a separate issue for determination in the PB.

72. Nevertheless, I find as follows: When I consider the pleadings, the claim for negligence is solely dependent upon or arises out of the defendant's arguments on the alleged breach of schedule 3 clause 2. I note that I have already made my ruling in respect of breach of contract, which is against the defendant.

74. It is also my opinion that the cause of action in this proceeding is in contract and not in the tort of negligence. The actions of the plaintiff whether rightly or wrongly were governed by the terms of the contract the parties had entered into. As such, any breach or wrong should in my opinion, be sought from the said contractual relationship rather than in negligence.

75. I think it is necessary to make some remarks regarding defendant's claim that the plaintiff's actions had caused environmental damage.

76. The defendant, in evidence, said that it had conducted two site inspections during the past seven (7) years. The last it said was conducted in March of 2011. The defendant said based on the said inspection, it was of the view that there had been environment damage caused to the environment where the extraction was happening. A month later, the defendant gave its Notice of Intent to the plaintiff and the contract was concluded the following month. I note, as I have found above in my judgment, that the defendant has not provided evidence to say who conducted the last site inspection and whether whoever had conducted the inspection was an expert in the field. The plaintiff challenged that evidence at paragraph 6 of Exhibit P3. I read therein where Mr Stein said "The Defendants plantation manager, Bob Wilson, was regularly at the site and he never observed or raised issue with any said "damage". Mr Stein also goes on to say in the same paragraph that the defendant never invited the plaintiff in for a joint inspection of any sort on such alleged environment damage claims.

77. Let me also discuss two other facts, which I have also found to be revealing or that they far outweigh or contradict the submissions by the defendant that it was deeply concerned with the environmental damage. Firstly, after the defendant had given its Notice of Intent to the plaintiff, it imposed restrictions that effectively limited or prevented the plaintiff sufficient time to take steps to repair the damage that may have been caused due to the extraction activities at the site. I have found above that, based on clause 5 of the original contract, the plaintiff had an extra month to tidy up things, which was the period from 29 April 2011 to 29 May 2011. The defendant's Notice of Intent did not allow for that extra month as provided for under clause 5 of the contract. There is also undisputed evidence, which shows that the plaintiff had offered the defendant the option to take measures to clean up and sort out the riverbed to try to bring it back to normalcy. The defendant unfortunately did not allow that to happen. Evidence of negotiations to that effect instigated by Mr Stein, may be seen at paragraphs 18 onwards at Exhibit P1.

78. The second damning fact is this: Despite the defendant's concern of the environment damage as it has claimed in this proceeding through breach of contract, the defendant never engaged any expert to inspect or provide a detailed report on the alleged damage immediately after the contract had ended. The defendant did practically nothing for not one (1) or two (2) or three (3) but for more than four (4) years. It was only towards the end of 2015, that the defendant engaged Biatus Bito, an environmental scientist, to prepare some sort of report, which he attaches to his evidence, which is Exhibit D2. During cross-examination, Mr Bito stated that he visited the site. He said his source of information was from his physical observation of the area. He said he talked to village people whom he branded as "experts" on the environment. He said he never consulted the plaintiff or their representatives during the course of his investigations. He said he was never there on site in 2004 as well as during or after time of the operation. But he said he is an expert and based on his skills and investigations, he has come up with his assessment. Upon cross-examination, Mr Bito said that he was not a qualified geomorphologist nor has he studied geomorphology.

79. With respect, I find this witness and his findings weightless. More than four (4) years have passed after the contract was concluded, that he conducted his investigation and made his findings. The defendant engaged this consultant who had no personal knowledge or clue of the environment, namely, what it was like in 2004, which was more than 10 years ago, up to 2011. And this person did not see the site immediately after the operation had closed. His source of information was from village people whom he called "experts". I find it hard to believe Mr Bito's claim that the village people whom he had talked to were experts. I find this nothing more than a vague and unfounded remark. Mr Bito did not consult the plaintiff at anytime during his investigation. There is no evidence to say that he tried to consult or call the plaintiff in for an interview at the material time. I note that it does not take an expert to tell us that a river and its surroundings do not remain the same long and that they constantly change. For example, Mr Stein in evidenced stated that the extracted gravel on site was washed away due to flood. There could have been many floods along the said riverbed during the past four (4) to five (5) years or for the past eleven (11) years if we start counting from 2004 to when the report was prepared which was in 2015. With all these facts in evidence and possibilities before this Court, the defendant cannot seriously expect this Court to believe or value Mr Bito's findings as a fair, correct and accurate one.

80. The defendant's own conduct particularly to wait for more than four (4) years before showing any real interest in attempting to measure damages caused to its environment, in my opinion, shows that the defendant was actually not serious about the claim for environmental damage. I find this to be the case, that is, the defendant, by its actions told a different story, which is that it was not serious about its claim for alleged environmental damage. I find that the defendant's conducts spoke loudly and contrary to its submissions regarding its concerns for the environment.

81. I give little or no weight to Exhibit D2. I also find that there appears to be indication or presumption of bias in the report. I say this because Mr Bito was directly engaged by the defendant to do the report and he prepared the report without consulting the plaintiff. I would have had a different view had both parties appointed or assigned an independent person with such experience to prepare such a report.

82. My findings under this sub-heading constitute remarks. I say this given that I have already reached my decisions concerning the liabilities of the parties.

83. The plaintiff's claim was invoiced to the defendant a month after the contract had ended. It is in evidence. It is marked as Annexure J to Exhibit P1. The first document consists of an email dated 12 May 2011 by the plaintiff's James Bell to the defendant's Ayyamani Jadadish. The second document is a copy of the plaintiff's original Invoice No. 257373 dated 9 May 2011 (the invoice).

84. The plaintiff claims damages for a sum of K1,040,798 as per the invoice, which is also pleaded in its statement of claim. Detailed particulars or break-up of the items charged in the invoice may be seen at Annexure K to Exhibit P1.

85. I note that Mr Stein explains these at paragraph 16 and 17 in his affidavit marked as Exhibit P1.

86. I note that the defendant had objected to paragraphs 18 to 37 of Mr Stein's affidavit or Exhibit P1. I note that I have overruled the objection during the trial and accepted the evidence. I recall reasoning that since the objection was based on hearsay or frivolity; that I had held that it would be a matter for submission and the Court would have to decide whether to accept or strike out the paragraphs when it is determining the matter. The defendant's objection on point is covered under paragraph (b) of page 2 of the Particulars of Objection that was handed up in Court during the trial by the defendant. In summary, the defendant submits firstly that these paragraphs were irrelevant because the events occurred after the alleged breach of contract. I find this objection baseless. The paragraphs are very relevant. Mr Stein addresses events that have occurred immediately before the original contract ended and events that have occurred after the contract ended. The events are very relevant towards establishing the fact that the plaintiff has in fact suffered real damages and that the defendant knew at that time. The defendant secondly objected on the basis that the settlement discussions after the event relate to separate companies not related to the defendant and they were not parties to the proceeding. It said nevertheless, these settlement discussions failed as no agreement had been reached. I also dismiss this argument. I find the evidence very relevant. I note that despite the defendant's submission that these companies were different companies or unrelated companies, the defendant had failed to prove that by way of adducing evidence. I see nothing in that regard in Exhibit D1. So this submission is without any merit. When I look at the evidence adduced by Mr Stein, it reveals clear admissions that the companies were related. The parties had tried to settle the very claim the plaintiff is pursuing in this proceeding. Unfortunately, a settlement could not be reached because the defendant had delayed it for months, and evidence showed that flood had destroyed the plaintiff's gravel that had been left at the site. Without the product, settlement discussions fell through.

87. I find the objections filed by the defendant baseless. I also find that the objections are made in bad-faith in that they are aimed at removing important facts relevant to the plaintiff's case in terms of establishing the damages that it had suffered.

88. I note that the settlement discussions between the parties were not done on a "without prejudice" basis. That being the case, I am satisfied that the plaintiff has proven the existence of the quantity of various grades of gravel it had to leave behind because of the imposed restrictions. I also find that the defendant, its agents or servant, by negotiating to settle with the plaintiff itself at the material time, amounts to or demonstrates an admission by the defendant that such a gravel with such quantity and value had existed at that time the plaintiff left the site or as the plaintiff claims in its statement of claim.

89. I am therefore satisfied and I will make an award for the said of K1,040,798 in favour of the plaintiff.

90. I note that I have also found in favour of the defendant for the sum of K50,000. The defendant's debt will obviously have to be deducted off from the sum of K1,040,798 as part-payment to settle the plaintiff's judgment sum.

91. In regard to the plaintiff's claim for General Damages, let me firstly look at the law governing this relief. I will firstly seek assistance from the case law. I firstly refer to the case of Pogera Joint Venture Manager Placer (PNG) Ltd v. Robin Kami (2010) SC1060. The Supreme Court held and I read:

51. At common law, the usual remedy for breach of contract is damages and how it is measured is based upon the principle of restitutio in integrum which basically means that, an injured party must be compensated, as far as money can, for any loss, which is not too remote for any loss suffered by him as a result of the other party’s breach of contract. In other words, the general rule is that, the measure of damages for breach of contract is intended to place the injured party in the same situation, as far as money can do it, as if the contract had been performed.

92. The second case I refer to is the case of PNG Air Services Pty Ltd v. Geob Karri (2009) SC1002. The Supreme Court held and I read:

14 When assessing damages in contract, the court seeks to put the injured party in the position that party would have been in but for the breach of contract. In other words, the object is to put the plaintiff in the same position as if the contract was performed. That statement of general principle for the assessment of damages for breach of contract is usually based on the decision in Robinson v Harman [1848] EngR 135; (1848) 1 Exch 850 at 855[1848] EngR 135; , 154 ER 363 at 365, approved by the High Court of Australia in The Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64 at 80, as set out by the trial judge who noted that both counsel agreed with that statement.

93. And Justice Hartshorn in Agnes Kapi v. Andrew Andu (2015) N6125 held and I read:

12. I am mindful of the following passage from Chitty on Contracts, volume 1, General Principles, 28th ed. at page 271, to which I referred in PNG Nambawan Trophy Ltd v. Tuban Investments Ltd (2009) N5349 as to the calculation of damages for breach of contract:

“Damages for a breach of contract committed by a defendant are compensation to the claimant for the damage, loss or injury he has suffered through that breach. He is, as far as money can do it, to be placed in the same position as if the contract had been performed. This implies a “net loss” approach in which the gains made by the claimant as a result of the breach (e.g. savings made because he is relieved from performing his side of a contract which has been terminated for breach; savings in taxation; benefits obtained from partial performance; or the salvage value of something left in his hands) must be set off against his losses arising from the breach (after he has taken reasonable steps to minimise those losses)."

95. I would also like to refer to the text Chitty on Contracts, Volume 1 - General Principles, 26th Edition (1989) for further clarify. I quote in part at page 1117 where it states:

General damages are given in respect of such damages as the law presumes to result from the infringement of a legal right or duty: damage must be proved but the claimant cannot quantify exactly and any particular items in it.

96. So after a party has established breach of contract, to succeed on the relief General Damage:

(ii) After that, he must demonstrate that he cannot quantify the said damage(s).

97. Well, as for the present case, I note that I have already awarded the loss the plaintiff has suffered because of breach of contract. That part of the plaintiff's claim has been quantified. Now, I note that the relief General Damages is being sought separately. I am therefore obliged to consider this relief but of course on its merit and following the two (2) tests. Did the plaintiff disclose evidence to show other damages it has suffered? In my opinion, the plaintiff was capable of proving other damages suffered other than its quantified gravel loss. For example, the plaintiff could have easily calculated the differences in the profits or projected profits for the duration of the notice period due to the imposed restrictions. I think that based on the plaintiff's arguments, it seems only interested in its claim for the loss of its gravel. I say this because I note that no evidence or effort was put by the plaintiff to address potential losses under the heading General Damages. For these reasons, I find that the plaintiff has failed the two (2) tests and I refuse to make an award under the relief General Damages for the plaintiff. I note that the plaintiff also claims that the sudden Notice of Intent had disrupted its contracts with third parties. But again, no effort was put by the plaintiff to establish that it did suffer damages as a result. For example, evidence of contracts with third parties could have been attached as evidence. That would have satisfied the first test and had that been done, it would not have been difficult to establish the second test, which is that such a claim would be difficult to quantify and therefore this Court would have been in a position to make an award under the heading General Damages.

98. The plaintiff also seeks Special Damages. I also refuse to award any sum for this damage because it was not particularised nor supported with evidence.

99. The plaintiff pleads interest at 8% per annum under the repealed Judicial Proceedings (Interest on Debts and Damages Act) Chapter N0. 52 (old Act). The defendant also pleads reliance on the old Act in its cross-claim. The replacing Act is called Judicial Proceedings (Interest on Debts and Damages Act) No. 15 of 2015 (new Act).

100. The new Act came into effect on 9 March 2016 after it was published in the National Gazette No G138 dated 16 March 2016. Section 8 of the new Act states and I read:

Nothing in this Act affects the validity of any act or decision done or made under the repealed Act, before the coming into operation of this Act, and every such act and decision shall be taken to be valid and effectual and to have continuing effect notwithstanding anything in this Act.

101. I note that this proceeding was commenced on 8 April 2015. As such and pursuant to section 8 of the new Act, the old Act is applicable herein.

102. I will exercise my discretion under the old Act and apply interest at 8% per annum to the two awards made in this proceeding. I will calculate interest from the date the cause of action arose to the date of judgment.

103. The plaintiff was awarded K1,040,798. Eight (8) percent per annum of K1,040,798 is K83,263.84. We divide that by 365 days equals a daily interest rate of K228.12. The cause of action arose, in my opinion, from the date of the Letter of Intent on 29 March 2011. Now, 29 March 2011 to 29 March 2016 is five (5) years. And 30 March 2016 to 30 November 2016 is eight (8) months. The date of judgment is 14 December 2016 so from 1st of December to the 14th of December is 14 days. In total, that will be five (5) years eight (8) months and 14 days. I will estimate 30 days for each of the eight (8) months. Therefore and in summary, I will firstly multiply K83,263.84 by five (5) years which will give me a sum of K416,319.20. I will then multiply 30 days by eight (8) months, which will be 240 days, and I will add the 240 days with the 14 days to get a total of 254 days. I will multiply 254 by K228.12, which will come to a sum of K57,942.48.

104. The total interest to be added to the principal award of K1,040,798 is K474,261.68. The final pre-judgment sum for the plaintiff is K1,515,059.68.

105. The defendant's debt awarded by this Court is K50,000. I will apply similar method I used to calculate the plaintiff's interest. Eight (8) percent of K50,000 is K4,000 per annum. Divide that sum by 365 days equals a daily interest rate of K10.96. The cause of action for the defendant on the debt arose 14 days after 29 April 2011. I say this because that would have been the due date for the last royalty payment for the previous month as per schedule 2 of the original contract. Fourteen days after 29 April 2011 would be 13 May 2011. Therefore, 13 May 2011 to 13 May 2016 would be five (5) years. So if we multiply that by K4,000 will give K20,000. And 13 May 2016 to 13 December 2016 would be 7 months. I will multiply 30 days by 7 months and add 1 day, which is the date of the judgment on 14 December 2016, which will give me a total of 211 days. Now I will multiply 211 days by K10.96 which is the daily interest rate, which will give me a sum of K2,312.56.

106. The total interest to be added to the principal sum of K50,000, is K22,312.56. The final pre-judgment sum for the defendant is K72, 312.56.

107. Cost of the proceeding is of course discretionary. I will decide that now based on my findings. I must say that the whole dispute started because one of the parties took a wrong stand or action. I am of course referring to the defendant. Because the defendant had imposed the two (2) restrictions on the plaintiff during the notice period, the matter has come this far to the Court. If the restrictions were not set, the plaintiff would have had sufficient time to remove all its equipments and properties and settled all its bills with the defendant. However and because of the said restrictions, the plaintiff was disappointed and understandably so had withheld settlement of its bills with the defendant. I note that the plaintiff was not selfish in the sense that it had opened doors for the defendant and had tried to reach an amicable resolution. Had the settlement been reached, this proceeding could have been avoided. But as evidence has revealed, the refusal and delay by the defendant had contributed to no agreement being reached as well to the destruction of the plaintiff's gravel at the site due to flood.

108. For these reasons, I find that the defendant should pay for the costs of the proceeding.

109. I will order the defendant to pay the plaintiff's costs of the proceeding, which will be taxed, if not agreed upon.

110. In regard to the first issue, Whether the defendant was entitled to impose new conditions upon giving the one (1) month notice of termination, I would answer "no". In regard to the second issue, Whether there had been breach of contract and if so, whether the plaintiff had suffered damages as alleged to the tune of K1,040,798, I would answer "yes". In regard the third issue, Whether the defendant is entitled to receive K50,000 which represents the outstanding royalty payments that were due during after the lapse of the notice period, I would answer "yes". In regard to the fourth issue, Whether the plaintiff's extraction activities carried out under the agreement caused environmental damage to the defendant's land, I would answer "the issue is frivolous, unattainable and misconceived." And in regard to the final issue, Whether the defendant is entitled to claim damages against the plaintiff for (a) loss of use and loss of amenity and (b) costs of rectifying the environmental damage, I would answer "no".

The Court Orders accordingly.
_______________________________________________________

In-house Lawyer: Lawyer for Plaintiff/Cross-Defendant
O’Brien Lawyers: Lawyers for the Defendant/Cross-Claimant

National Court of Papua New Guinea

Nivani Ltd v Coconut Products Ltd [2016] PGNC 364; N6582 (14 December 2016)