By JACOB POK
THE Waigani National Court has ordered the Consumer Affairs Council (CAC) to pay 8% interest to Chan Consolidated Limited (CCL) for violating a lease agreement on a commercial property.
CCL took CAC to court to claim for rental arrears for balance of lease on the basis that CAC unlawfully terminated the lease agreement.
The agreement was entered into on May 8, 2000, for the property, described as allotment 11, section 59 on McNicol Street, Rabaul, East New Britain province.
The lease was for three years, from (predated) Nov 1, 1999, to Oct 31, 2002.
The annual rental was agreed at K18,000, payable in quarterly instalments of K4,500.
The court heard that on Dec 13, 2000, CAC gave CCL a 14-day notice that it would vacate the property, effective on Jan 3, 2001.
CCL advised CAC that the notice was not valid, but despite the objection, CCL accepted the termination on March 14, 2001, and mitigated its loss by leasing the property to Novello Limited.
CAC maintained in court that it had lawfully terminated the contract because of recurring water leakages on the roof, all air conditions malfunctioning, no maintenance to water and sewerage systems and electrical problems.
CAC also argued that the continuous fall out of volcano dust from nearby volcano and other activities had been tagged as health hazard by relevant authorities, leaving it with no choice but to but to terminate the lease.
Justice George Manuhu found that CAC had not relied on the provisions of the agreement by failing to provide relevant clause on the provisions of the lease agreement in its termination letter to CCL.