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Bio-Normalizer (PNG) Ltd v CPL [2009] PGNC 19; N3649 (30 March 2009)

N3649

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 1172 OF 2006

BETWEEN:

BIO-NORMALIZER (PNG) LIMITED
Plaintiff/Cross Defendant

AND:

CPL formerly trading as CITY PHARMACY LIMITED
Defendant/Cross Claimant

Waigani: Hartshorn J.
2008: 4th, 19th November,
: 9th December,
2009: 30th March

CONTRACT – whether varied and breached - correspondence evidence of agreement to vary terms – No breach of varied Agreement – claim dismissed

Facts:

Bio-Normalizer (PNG) Ltd agreed to supply CPL Ltd with its product for 2 years pursuant to a memorandum of agreement. Bio-Normalizer alleges that CPL breached the Agreement by not ordering the agreed quantity of product and by not making the agreed payments. Bio-Normalizer commenced this proceeding seeking damages and specific performance.

Held:

1. The correspondence between the parties constituted a valid variation of the Agreement.

2. The Agreement as varied was not breached by CPL.

Cases cited:

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

Counsel:

Ms. E.N. Suelip, for the Plaintiff/Cross Defendant
Mr. G. Gileng, for the Defendant/Cross Claimant

30 March, 2009

1. HARTSHORN J: Bio-Normalizer (PNG) Ltd (BNL) agreed to supply CPL Ltd (CPL) with its product for 2 years pursuant to a memorandum of agreement (MOA). BNL alleges that CPL breached the MOA by not ordering the agreed quantity of product and by not making the agreed payments. BNL commenced this proceeding seeking damages and specific performance.

2. CPL’s position is that:

a) it was induced to enter into the MOA by a misrepresentation,

b) the MOA was varied and CPL did not breach the varied MOA, or

c) the MOA without variation was not breached by CPL.

3. I will consider first, whether the MOA was varied and if so whether CPL breached the varied MOA. To do so, I proceed on the basis that there is a valid MOA between the parties and that CPL was not induced to enter into it upon a misrepresentation. It is to be understood however, that I make no determinations on these two (2) issues.

Variation

4. BNL denies that there was a variation to the MOA as:

a) BNL had not discussed or agreed to any variations being made,

b) in regard to the letter of 10th March 2005 (incorrectly dated 9th September 2005) allegedly written by Mrs. June Venudi, the Managing Director of BNL, to CPL, Mrs. Venudi cannot recall writing the letter, a copy of the letter cannot be found in her records and the grammar in the letter is not her style.

5. CPL submits that:

a) there is provision in the MOA permitting amendment or a review of the terms of payment,

b) the parties agreed to vary the terms of the MOA,

c) the variation terms are contained in the correspondence between the parties from 4th March 2005 to 24th June 2005.

Evidence

6. In cross-examination, Mrs. Venudi, when questioned as to whether she had signed 2 letters purportedly signed by her and addressed to CPL, did not specifically deny signing the letters but said that she could not recall. These 2 letters appear to contain changes to the MOA. Mrs. Venudi did not deny that meetings had taken place between representatives of the parties concerning the operation of the MOA but she could not recall receiving letters from CPL that also contained what appear to be changes to the MOA.

7. In assessing Mrs. Venudi’s demeanour as a witness, I found her initially to be confident, but then reserved and sometimes evasive in her answers. I did not have confidence that Mrs. Venudi’s answers were truthful when she believed that they might harm BNL’s case.

8. I have difficulty in understanding how someone in Mrs. Venudi's position cannot recall whether particular letters were sent or received, when they relate specifically to the performance of an agreement that at the time, pursuant to Mrs. Venudi's own evidence, constituted the major portion of BNL’s business.

9. Given that Mrs. Venudi does not deny, but cannot recall, there is the likelihood that she did sign the subject letters and receive the letters from CPL.

10. I am satisfied, after considering all of the evidence, that the letters purportedly signed by Mrs. Venudi were so signed and that the letters from CPL were received by BNL. I am further satisfied that the content of these letters reflects the agreement reached between the respective persons on behalf of each of the parties.

11. As to whether the content of this correspondence constitutes a valid variation of the MOA, counsel for BNL cited the case of Nivani Ltd v. China Jiangsu International (PNG) Ltd (2007) N3147, a decision of Lay J., which held amongst others:

a) parties may by agreement, vary a contract made by them,

b) where a contract makes no provision for variation, there must be a contract of variation to bind the parties,

c) a contract of variation can be formed by the conduct of the parties.

12. In this instance, I am satisfied that the subject correspondence is evidence of agreement to vary the terms of the MOA. The evidence of the conduct of both parties is consistent with what had been agreed between them and what was contained in the subject correspondence. It is clear in my view, that it was agreed between the parties that the MOA was to be varied, that all outstanding matters between them that had arisen since the MOA was entered into, were settled and that the parties were to continue with the MOA as varied.

13. Consequently, I find that there was a variation of the MOA as contained in the correspondence between the parties between 4th March 2005 to 24th June 2005. As to whether CPL breached the MOA as varied, I am not satisfied on the evidence that there was any breach by CPL.

14. Given this finding, it is not necessary for me to consider the other arguments of counsel.

15. The plaintiff’s claim against the defendant is dismissed. Costs of and incidental to the plaintiff's claim shall be paid by the plaintiff to the defendant.

____________________________________________

Mirupasi Lawyers: Lawyers for the Plaintiff/Cross Defendant
Posman Kua Aisi Lawyers: Lawyers for the Defendant/Cross Claimant