N8384
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO 609 OF 2019

NGIP AGMARK LIMITED
Plaintiff

V

J & Z TRADING LIMITED
Defendant

Cannings J
Madang: 3, 12 March 2020
Waigani: 24 June 2020

PRACTICE AND PROCEDURE – application to enforce order made in previous proceedings. 

The plaintiff and the defendant were parties to previous proceedings that resulted in an order that they,within one month: (1) enter into a sub-lease agreement to formalise the conditions on which the defendant would continue to sublease and occupy a property that the plaintiff was leasing from the registered proprietor; and (2) negotiate and settle the issue of backdated rentals for an additional area that the defendant had occupied, for which it apparently had not being paying rent. Six months after that order was made, the plaintiff commenced the present proceedings, alleging that the defendant was in breach of that order by refusing to enter into a sublease and refusing to negotiate the issue of backdated rental. The plaintiff sought declarations that the defendant had failed to comply with that order and had acted harshly and oppressively contrary to s 41 (proscribed acts) of the Constitution, and an order that the defendant forthwith pay outstanding rent in the sum of K500,135.22 plus damages of K50,000.00. The defendant denied being in deliberate breach of the previous order and claimed that the order was legally flawed and had been agreed to by its then lawyers without its knowledge or consent and the plaintiff was trying to take advantage of a confusing situation arising from ownership of the property continuing to be in doubt; and further claimed that substantial improvements it had made to the property should be taken into account in calculation of any outstanding rent it owed the plaintiff. 

Held:

(1)	The order in the previous proceedings had not been set aside, appealed against or stayed. The defendant’s arguments about its legal correctness and whether it was made with the defendant’s consent were irrelevant and ineffectual. 

(2)	The defendant was in breach of the order in the previous proceedings due to its failure to negotiate meaningfully with the plaintiff as to the terms of the new sublease or how much backdated rentals it was liable to pay the plaintiff. A declaration to that effect was granted. 

(3)	There was no evidence or legal basis in support of the claim that the defendant had acted harshly or oppressively for the purposes of s 41 of the Constitution. 

(4)	The plaintiff proved on the balance of probabilities that the defendant was liable for backdated rentals for the additional area that the defendant had occupied, but the amount claimed, K500,135.22, had no evidentiary basis and was exaggerated. A fair estimate of the amount involved was K50,000.00.

(5)	Ordered that the defendant pay the plaintiff K50,000.00 backdated rentals + K10,000.00 costs. 

Cases Cited

The following casesare cited in the judgment:

Elizabeth Mandus Wukawa v Christine Gawi (2015) N6024
Koitaki Plantations Ltd v Charlton Ltd (2014) N5656
PNG Power Ltd v Augerea (2013) SC1245
Sankaran Venugopal & PNG Pipes Limited v Globe Limited (1999) SC634

ORIGINATING SUMMONS 

This was an application for declarations and orders regarding a court order made in previous proceedings involving the same parties.  

Counsel

B B Wak, for the Plaintiff
P Wariniki, for the Defendant

24th June, 2020

1.      CANNINGS J: This case arises out of a previous case involving the same parties, the plaintiff, NGIP Agmark Ltd, and the defendant, J & Z Trading Ltd, and the same property, Section 17, Allotment 8, Madang.

2.     NGIP Agmark is claiming in this case that J & Z Trading has not complied with an order of the Court made in the previous case and that, because of its non-compliance, J & Z Trading should be ordered to pay it back-rentals of K500,135.22 and damages of K50,000.00. 

SECTION 17, ALLOTMENT 8, MADANG 

3.     At the centre of both cases is the property in downtown Madang, Section 17, Allotment 8. The registered proprietor of the State Lease over this property is the Evangelical Lutheran Church Property Trust. 

4.     There are other entities connected with the Lutheran Church that claim effective ownership of the property, including the Evangelical Lutheran Church of Papua New Guinea, Lutheran Shipping Pty Ltd and the Evangelical Lutheran Church of PNG, Madang District. 

5.     Despite the confusing situation that existed (and still exists) regarding which Lutheran entity is the ‘real’ owner of the property, on 1 November 2015 NGIP Agmark entered into a five-year lease with the Evangelical Lutheran Church of Papua New Guinea. 

6.     NGIP Agmark then entered into a sub-lease with J & Z Trading. It was (and remains) a rather casual arrangement, lacking the normal formalities attaching to a commercial sublease, as the written sublease agreement is just one page in length. The sublease, however, has worked in a rough and ready sort of way and J & Z Trading has been paying rent regularly to NGIP Agmark since 2015.

THE PREVIOUS CASE 

7.     The proceedings were OS No 796 of 2015. J & Z Trading was a plaintiff, as was Lutheran Shipping Pty Ltd. The defendants were NGIP Agmark and “Evangelical Lutheran Church”. Those proceedings were rather complex, to say the least, a mishmash of different disputes that should probably have been commenced as separate proceedings. However, the various disputes were brought together in the one case, and I, as the Judge Administrator for Madang, ordered that the whole case be referred to mediation.

8.     It seemed like a good idea at the time. But the mediation, which did take place, did not work out according to plan, as is evident from the fact that the parties involved in that case have still not resolved their differences. The various Lutheran entities have still not agreed on which one is the real owner of the property. And NGIP Agmark and J & Z Trading are still in dispute about what, if anything, is owed by J & Z Trading to NGIP Agmark.

9.     The order in OS No 796 of 2015 that has become the subject of the present case was made by Chief Justice Salika on 13 March 2019. It was in the following terms:

(1) The parties Agmark and J & Z Trading Limited shall enter into a formal sub-lease agreement for part of Section 17, Lot 8 which J & Z is currently occupying within 1 month from today with the following essential terms in addition to the formal lease agreement:

(a)	Rental shall be K55,000 per month exclusive of GST
(b)	Annual rent shall be reviewed at 5% CPI increment [sic] whichever is the greater.

(2) The parties shall negotiate and settle the issue of backdated rentals for additional area of 471 square metres that J & Z Trading Ltd occupied since 1 November 2015 to date within 1 month from today’s date.

THIS CASE

10.     On 6 September 2019 NGIP Agmark commenced the present proceedings, alleging that J & Z Trading was in breach of the order of 13 March 2019 by refusing to enter into a sublease and refusing to negotiate and settle the issue of backdated rental. 

11.    NGIP Agmark seeks declarations that J & Z Trading has failed to comply with that order and acted harshly and oppressively contrary to s 41 (proscribed acts) of the Constitution, and an order that the defendant forthwith pay outstanding backdated rentals in the sum of K500,135.22 plus damages of K50,000.00. 

12.     J & Z Trading denies being in deliberate breach of the previous order and claims that the order is legally flawed and had been agreed to by its then lawyers, Thomas More Ilaisa Lawyers, without its knowledge or consent and that NGIP Agmark is trying to take advantage of a confusing situation arising from ownership of the property continuing to be in doubt. J & Z Trading further claims that substantial improvements it has made to the property, worth several million Kina, should be taken into account in calculation of any backdated rental.

DETERMINATION

13.     The first thing to note in deciding this case is that the order of 13 March 2019 in OS No 796 of 2015 has not been set aside, appealed against or stayed. It remains enforceable and must be complied with. I find all of J & Z Trading’s arguments about the legal correctness of that order and whether it was made with the consent of J & Z Trading irrelevant and ineffectual. No application has been made in these or any other proceedings to get that order set aside.

14.     An order is an order. It must be complied with by all persons affected by it, especially parties to the proceedings in which the order was made, unless the order is set aside, varied or stayed or quashed on appeal or review (Sankaran Venugopal &PNG Pipes Limited v Globe Limited(1999) SC634, PNG Power Ltd v Augerea (2013) SC1245, Koitaki Plantations Ltd v Charlton Ltd (2014) N5656, Elizabeth Mandus Wukawa v Christine Gawi (2015) N6024). 

15.     There is ample evidence in these proceedings that J & Z Trading has not complied with the order in OS No 796 of 2015 of 13 March 2019. It is in breach of that order due to its failure to negotiate meaningfully with NGIP Agmark on the terms of the new sublease or how much backdated rentals it is liable to pay the defendant. A declaration to that effect will be granted. 

16.     However, I find no evidence or legal basis in support of the claim that J & Z Trading has acted harshly or oppressively for the purposes of s 41 of the Constitution. 

17.     I find that NGIP Agmark has proven on the balance of probabilities that J & Z Trading is liable for backdated rentals for the additional area that J & Z Trading has occupied (referred to in order (2) of 13 March 2019). However, the amount claimed, K500,135.22, has no evidentiary basis and is clearly exaggerated, especially having regard to the substantial improvements worth several million Kina (of which there is ample evidence) that J & Z Trading has undertaken on the property. A fair estimate of the amount of backdated rentals involved is K50,000.00.

18.     I will order that J & Z Trading pay that amount to NGIP Agmark within three months. As for costs, I will order that J & Z Trading pay some costs as these proceedings were necessitated by its failure to comply with the order in OS No 796 of 2015 of 13 March 2019. I fix the costs at K10,000.00. This is better than ordering that the costs be taxed as that would no doubt lead to further delays and disputes.

19.    I encourage the parties to meet soon and resolve the issues still to be settled under order (1) of 13 March 2019. And I encourage the Evangelical Lutheran Church of Papua New Guinea, which is not a party to these proceedings but will no doubt take an interest in the outcome, to sort out, sooner rather than later, who is the ‘real’ owner of Section 17, Allotment 8. 

DECLARATIONS AND ORDERS

(1)	It is declared that the defendant has failed to comply with the order of the National Court in OS No 796 of 2015 of 13 March 2019.

(2)	It is ordered that the defendant shall pay the plaintiff the sum of K50,000.00, which shall be deemed to be the full amount of backdated rentals payable by the defendant to the plaintiff under order (2) in OS No 796 of 2015 of 13 March 2019, by 30 September 2020.

(3)	All other relief sought by the plaintiff is refused.

(4)	The defendant shall pay the plaintiff’s costs of these proceedings in the fixed sum of K10,000.00, by 30 September 2020.

(5)	These proceedings are thereby determined and the file is closed.

Judgment accordingly.
_____________________________________________________________
Bradley Wak Lawyers: Lawyers for the Plaintiff 		
Wariniki Lawyers: Lawyers for the Defendant