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HBS (PNG) Ltd v Hi-Lift Logistics Ltd [2023] PGNC 387; N10541 (27 October 2023)

N10541

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO. 270 OF 2023

BETWEEN:
HBS (PNG) LIITED
Plaintiff

AND:
HI-LIFT LOGISTICS LIMITED
Defendant

Lae: Dowa J
2023: 24^th & 27^th October

CIVIL PRACTICE AND PROCEDURE-Notice of Motion–Order 12 Rules 1 – National Court Rules – Application for earlier release of cargo retained under commercial lien– consideration of principles for interlocutory interim orders-satisfied applicant had arguable case and balance of convenience tilted in its favour-application granted on condition that applicant brings money into Court as security for the defendants outstanding invoices under dispute pursuant to Order 8 Rule 81 of the NCR-

Cases Cited:
Robinson v National Airlines Corp [1983] PNGLR 476
Employers Federation v PNG Waterside Workers (1982) N393
Craftsworks Niugini Ltd v Allan Mott [1998] PNGLR 572
Luis Mediang v Ramu Nico Management (MCC) Ltd (2010) N4127
Ramu Nico Management (MCC)Ltd v Tarsie (2010) SC1075

Counsel:
A. Dalton and M. Hiob, for the Plaintiff
D. Bidar, for the Defendant

RULING

27^th October 2023

1. DOWA J: This is a ruling on the Plaintiff’s application for the immediate release of its cargo currently withheld by the Defendant by reason of a lien over the goods for unpaid invoices.
   

Background Facts

2. The Plaintiff engaged the Defendant to carry out clearance for goods being shipped both locally and internationally. The service provided consists of individual service contracts numbering up to 250 on a case-to-case basis. Each job is documented with purchase order, an invoice and remittance advice for payment and delivery of the cargo which concludes the transaction.
   
3. The Plaintiff alleges the Defendant refused to release its cargo despite being paid for the invoices under the service contract. The total value for the goods withheld is in excess of K8,000,000.00. The Plaintiff alleges that in detaining the goods, the Defendant has unfairly charged the Plaintiff for late payments and storage fees which are unnecessarily accruing. The Plaintiff alleges further that, because of the unlawful detention of the cargo, they have suffered business loss within the vicinity of K4,988,785.14 in sales and K34, 148.30 in project income.
   

The Plaintiffs Application

4. By Notice of Motion the Plaintiff claims amongst others the following:
   
   1. The requirement of service of this notice of motion including its supporting affidavits and the undertaking as to damage be dispensed with pursuant to Order 4 Rule 38 (2)(d) of the National Court Rules.
      
   2. Pursuant to section 155(4) of the Constitution and Order 12 Rule 1 of the National Court Rules, the Defendants, its servants and agents immediately release all the Plaintiff’s cargo withheld and detained by the Defendant, make arrangements in preparation for release of the cargo and notify the Plaintiff of the same immediately, forthwith.
      
   3. Pursuant to section 155(4) of the Constitution and Order 12 Rule 1 of the National Court Rules, the Defendants, its agents and servants be restrained forthwith from charging the Plaintiff any further fees such as late payment fees and storage fees in relation to the Plaintiff’s cargo that has been fully paid but is being withheld and detained by the Defendant ...”
      
5. The Defendant opposes the application for the following reasons:
   
   1. The reliefs sought in the Notice of Motion are an abuse of the process rendering the proceedings incompetent because the interlocutory reliefs it seeks are the same sought in the Originating Summons. The Plaintiff in seeking a substantive relief in an interlocutory application is abusing the process of the Court.
      
   2. The Defendant has a contractual lien over the cargo for outstanding invoices for cargo clearance and storage charges and the retention of the Plaintiff’s cargo is necessary to secure the payment of its invoices before the cargo is released.
      

Issues

6. The issues for consideration are:
   
   1. Whether the proceeding is an abuse of the process, rendering it incompetent.
      
   2. Whether the Plaintiff is entitled to the reliefs sought in the Notice of Motion.
      

Whether the proceeding is an abuse of the process, rendering it incompetent.

7. The Plaintiff initiated the proceedings by filing an Originating Summons and the Notice of Motion on 27^th September 2023. In the Originating Summons, the Plaintiff is seeking a series of declaration of facts and orders, two of which are for the immediate release of the Plaintiff’s cargo and to cease from imposing further charges on late payments and storage. The terms of the Notice of Motion are in the identical terms of the orders sought in the original Originating Summons. It is arguable that the orders sought in the Notice of Motion are consequential or final orders which cannot stand on its own.
   
8. In my view things have changed since 10^th October 2023. The matter was mentioned in Court on 10^th October 2023. The Court noting the deficiency in the pleadings, directed the Plaintiff to plead the facts in a Statement of Claim and file same by 20^th October 2023 to be followed by the Defendant in filing its Defence thereafter, on 13^th November 2023. On 11^th October 2023, the Plaintiff filed an Amended Originating Summons. Most of the reliefs sought are substantially the same. On 20^th October 2023 the Plaintiff filed a Statement of Claim. (The Defendant has until 13^th November 2023 to file its Defence).
   
9. The Plaintiff pleaded in its Statement of Claim that the Defendant breached the terms of its service contract in withholding the release of its cargo after the invoices were settled in full at least by 26^th September 2023. The Plaintiff pleads that the continuous retention of the cargo and laying of further charges for penalty and storage charge is unlawful. The Plaintiff pleads further that because of the unlawful detention of its cargo it has suffered loss in the income it would have otherwise earned from the sales and engagement in projects.
   
10. In my view the Plaintiff has sufficiently pleaded a cause of action in contract law and in tort in the Statement of Claim. On this foundation, it is arguable that the Plaintiff can base its application. The next issue will be whether the reliefs sought by the Plaintiff are available especially in the face of the strong defence raised by the Defendant.
    

Whether the Plaintiff is entitled to the reliefs sought in the Notice of Motion.

11. In the Notice of Motion, the Plaintiff seeks two main reliefs. The first is for the release of the cargo. The second is for an order directing the Defendant from charging further penalty interest and storage charges. The Court will deal with the first relief only for now. The second matter is a substantive issue which will be determined on the proper hearing of the parties on their contractual arrangements.
    
12. The main issue before the Court is whether an interim order be granted for the immediate release of the Plaintiff’s cargo currently retained by the Defendant pending the final determination of the matters in dispute in these proceedings.
    

LAW

13. The Plaintiff is seeking interlocutory interim orders pursuant to section 155(4) of the National Constitution and Order 12 Rule 1 of the National Court Rules for the release of its Cargo currently retained by the Plaintiff. In my view the most appropriate Rule would be Order 14 Rule 10 of the National Court Rules which provide for preservation of property.

14. The purpose of this application is more than the preservation of the status quo until the hearing of the main action. Nevertheless, the Court has the jurisdiction to hear such applications and must be flexible in the use of its discretion to do what is just and convenient in the circumstances. See, Robinson v National Airlines Corp (1983) PNGLR476.

15. The principles upon which a Court may grant interim injunctions are settled in this jurisdiction. Refer. Employers Federation v PNG Waterside Workers (1982) N393, Craftsworks Niugini Ltd v Allan Mott (1998) PNGLR572, Luis Mediang v Ramu Nico Management (MCC) Ltd (2010) N4127, and Ramu Nico Management (MCC)Ltd v Tarsie (2010) SC1075. These principles are:

(a) Are there serious questions to be tried?
(b) Has an undertaking as to damages been given
(c) Would damages be inadequate remedy if the interim order is not granted?
(d) Does the balance of convenience favour the granting of the interim orders?
(e) Interest of justice

Triable issue

16. The Plaintiff pleads in the Statement of Claim that the Defendant is unlawfully withholding release of its cargo worth K 5,899,604.94, although the affidavit of Bob Watkins deposes to an amount exceeding K 8,000,000.00. It pleads it paid for the clearance jobs undertaken by the Defendant. As a result of the delay in the release of the cargo, the Plaintiff argues it has suffered loss of income in the sales and for project engagement. The Plaintiff submits further that the delay in the release of the cargo results in unnecessary accrual of storage fees.
    
17. Mr. Bidar, counsel for the Defendant, submits that the Plaintiff has no arguable case. The Plaintiff’s business relation with the Defendant is governed by the terms of Bill of Lading. A major term of the contract is that the Defendant has a contractual lien over the cargo until payment is made. The Defendant alleges it is owed a substantial amount of money for clearance, late payment penalty and for storage fees. The retention of the Plaintiff’s cargo is necessary and is within the terms of the contractual lien to secure the payment of its invoices before the cargo is released. There is therefore no cause of action as the Defendant has a lien over the said cargo.
    
18. I note from the Creditor’s Statutory Demand for Payment of Debt dated 6^th September 2023 issued by the Defendant that the amount for the debt is fixed at K 590,609.30. I have also perused the invoices annexed to the Affidavit of Dane Koch filed 24^th October 2023 (Annexure “B”) and note that the amount for the outstanding debt is about K519,361.85. Out of this amount, the sum of K306,138.26 is for cargo clearance and the balance is for storage and late payment charges.
    
19. The Plaintiff is disputing the amounts claimed by the Defendant for reasons amongst others that they have been settled in full, or that the charges are exorbitant or that they are for work not accounted or for unnecessary late fees and storage charges. I note from the invoices that the Defendant is retaining some cargo despite being fully paid.
    
20. While the Defendant is entitled to keep the cargo pending settlement of its invoices by virtue of the contractual lien it has over the goods, it is arguable that the amounts claimed may be excessive or inaccurate or unjustified. It is also arguable that the Defendant is unreasonably withholding cargo that have been completely or fully paid for and the continuous accrual of penalty interest and storage charges is unjustified.
    
21. For these reasons, I find there is an arguable case to be tried.
    

Balance of Convenience

22. The Plaintiff’s claim is for the release of its cargo worth more than K8,000,000.00. The Defendants interest is for the retention of the cargo until settlement of its outstanding debt of K590,609.30 or such other amount. Both parties seek possession of the cargo based on their competing interest. The dispute, however, is not over the cargo but the correct amount to be settled. Since the parties have not reached agreement, it will take some time for the matter to be resolved either by the parties themselves or by the Court. A delay in the resolution may mean more storage charges and business loss to the Plaintiff. The Court notes the Plaintiff’s willingness to pay into Court the disputed amount or such amounts as the Court determines for the earlier release of the cargo pending final determination of these proceedings.
    
23. For the reasons given, the balance tilts in favour of the Plaintiff, provided it makes payment into Court sufficient funds as security for the amounts in dispute.
    

Would damages be adequate remedy.

24. Given the background and the nature of complaints laid against the Defendants I do not think damages would be an adequate remedy should the injunctive relief be refused. Rather it is likely to worsen the current situation.
    

Interest of Justice

25. For the reasons given above, I am of the view that it is in the interest of justice, that the interlocutory orders sought be granted on terms.
    

Payment into Court

26. By Notice of Motion, the Plaintiff seeks approval for the Plaintiff by its employee, Bob Watkins and or Santhy Chrysanthina to be authorised persons to pay into Court security pursuant to Order 8 Rule 81 and Order 12 Rule 1 of the National Court Rules. The Plaintiff intends to make payment into Court a sum of money as security for the debt claimed by the Defendant pending determination of the dispute and further as a condition for the earlier release of its cargo currently retained by the Defendant as a lien. The Defendant does not oppose the application. I note the proposed payment is not done under Order 8 Rule 69 of the NCR (Bringing money into Court) neither is it a security for costs under Order 14 Rule 26 of the NCR. The payment is made in recognition of the fact that the Plaintiffs cargo is held by the Defendant based on a commercial lien over the cargo due to unsettled invoices although the amounts are disputed in this proceeding. The Plaintiff is prepared to pay into Court an amount up to K1,000,000.00. I am inclined to grant the orders sought as it is just and equitable especially in the light of the fact that the Defendant has raised a meritorious defence based on contractual lien over the cargo.
    

Cost

27. Cost is discretionary. The orders are only in the nature of interlocutory orders. In my view, the issue of costs shall remain costs in the cause until final determination of the proceedings.
    

Future conduct of the proceedings

28. The Court notes, the Defendant has until 13^th November 2023 to file its Defence. Perhaps it might as well consider filing a Crossclaim against the Plaintiff in respect of its outstanding invoices so the matters can be litigated expeditiously.
    

Orders

29. The Court orders that:
    
    1. The Plaintiff shall bring into Court a sum of K1,000,000.00 by its authorized officers, Bob Watkins and or Santhy Chrysanthina as security for the settlement of an outstanding debt by the Defendant as a precondition of the Defendant releasing the cargo currently in its custody.
       
    2. Upon payment of the security, the Defendants, its servants, and agents shall immediately arrange and release all the Plaintiff’s cargo currently withheld and detained by the Defendant without delay.
       
    3. The Defendant, on filing its Defence, shall if it desires, file and serve a Crossclaim in respect of the outstanding invoices.
       
    4. The matter returns to Court on 4^th December 2023 for further directions.
       
    5. The cost of the application be costs in the cause.
       
    6. Time be abridged.

________________________________________________________________
Dalton Legal Advisory: Lawyers for the Plaintiff
Goodwin Bidar Nutley Lawyers: Lawyers for the Defendant