Evangelical Lutheran Church of New Guinea Property Trust v Kundiawa Urban Authority [2001] PGNC 47; N2163 (7 December 2001)

N2163

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS 635 of 1996

BETWEEN

EVANGELICAL LUTHERAN CHURCH OF
NEW GUINEA PROPERTY TRUST
Plaintiff

AND

KUNDIAWA URBAN AUTHORITY

Defendant

Waigani : Sevua, J

2001 : 9th August & 7th December

REAL PROPERTY – Unimproved land – Plaintiff purported lessee – Defendant improved land by erecting building and fence for public market – No improvements effected by plaintiff.

Claim for mesne profit and damages for loss of building and fence – Plaintiff not suffered any damages – Plaintiff not entitled to mesne profit and damages for loss.

No cases cited in this judgment.

Counsel:
K. Kua for Plaintiff

7th December, 2001

SEVUA, J: This is a trial on assessment of damages, judgment having been entered for the plaintiff on 16th December, 1996.

The plaintiff’s claim arose from the defendant’s action of demolition and removal of improvements erected on land described as Section 32, Allotment 26, Kundiawa, Chimbu Province, which land comprises of approximately 93.37 hectares. Such improvements were erected by the defendant at its own costs.

On 5th March 1999, this Court directed parties to file and serve affidavits so as to shorten the duration of the trial. This direction was issued after the trial was fixed for 9.30 am on 9th July 1999. The filing and serving of affidavits were to be completed by 9th June 1999, however, since then, the trial date has been vacated several times due to circumstances that are not relevant to mention now. Inspite of that, both parties have filed affidavits in compliance with that direction.

The defendant was not represented by counsel on assessment of damages although, on record, Mr Yayonga Bal, is lawyer for the defendant. Court record clearly reveals that in many instances when this matter had come before the Court constituted by different Judges, the defendant had not been represented. Up until 23rd October 1997, when Mr Bal filed a notice of change of lawyers, Mrs Iva Kola had been acting for the defendant. These facts are stated at this juncture because, the Court has not had the benefit of any submission from the defendant, and furthermore, the affidavit’s filed by the defendant have been objected to by the plaintiff.

The plaintiff relied on the affidavits of Thomas Rombuk sworn on 15th April 1999; Pastor Kamem Gena sworn on 25th April 1999; and Pastor Iambo Kawage, sworn on 24th April 1999. These affidavits were put into evidence by the defendant and it appears that some of the materials in these affidavits have not been disputed by the defendant, except the costs of construction of the buildings, which I will address later in this judgment.

From the plaintiff’s evidence, it seems that the Lutheran Church had first settled on Section 32, Allotment 26, Kundiawa, in about 1933. There is no documentary evidence to support a grant of lease or a licence to the plaintiff, however, there is no evidence from the defendant disputing that piece of plaintiff’s evidence either. Sometime in 1988, the land was forfeited to the State on the ground that it had not been improved. Again the notice of forfeiture is not in evidence, but there is no other evidence disputing this. The plaintiff said in the affidavit of Pastor Gena that when government authority was established in Kundiawa, a title deed was created and issued to the Church. However, the plaintiff has not included that title in its evidence.

In the plaintiff’s evidence, the improvements effected on the land by the plaintiff, which commenced in the late 1950’s included a large Church building; residential dwellings for pastors and lay workers; Kundiawa Lutheran High School, which accommodates over 500 pupil, and which school consists of classrooms, library, playing field, two basketball courts, a church cemetery, roads and other infrastructures valued in excess of K1 million. There is no valuation report in evidence.

Following the forfeiture of the land in 1988, the plaintiff commenced various appeals against the forfeiture. Whilst these appeals were on foot, the Kundiawa Local Government Council erected two steel frame buildings on part of the land as a public market to service the needs of Kundiawa Town residents. A six feet high perimeter fence was also erected around the market. The defendant then occupied that part of the land from 26th October 1995 to 24th April 1996.

On 26th October 1995, the State re-issued a lease over the land to the plaintiff. The lease is a Mission Lease for a period of 99 years from that date. The title, Annexure "A" to Pastor Gene’s affidavit, is dated 9th January 1996. In about May 1996, the defendant commenced demolition of the two large steel framed buildings and the fence and removed the materials. It needs to be reiterated that the two buildings and fence were erected by the defendant at its expenses for the benefit of the Town community.

After the defendant demolished and removed the buildings and fence, the plaintiff established a market without the sheds and fencing. From fees collected from market vendors, the defendant was able to erect a new security fence around the market. The daily gate taking was K120.00. When the defendant was running the market, it was collecting about K80.00 per day, which amount is admitted in the defendant’s defence.

The plaintiff therefore claims mesne profit in the sum of K12,080.00 and a further sum of K80,862.00 for losses it claims it suffered as a result of the demolition and removal of the buildings and fence by the defendant. The original figures claimed in the statement of claim were K18,120.00 and K14,170.00 respectively, however these were amended by leave of the Court at trial. So the plaintiff claims the total sum of K92,942.00 in damages with interest and costs.

As I alluded to earlier, the defendant’s counsel failed to appear thus the Court has had no benefit from hearing from the defendant. However, it had filed two affidavits by Michael Noah, the Town Manager, sworn on 3rd June 1999 and Alex Albert, sworn on the same day. I have already adverted to the fact that, as the defendant was not represented, its affidavits were not tendered into evidence, and Mr Kua, counsel for the plaintiff, had taken objection to the Court relying on those affidavits. Alternatively, he submitted that if the Court were to rely on the defendant’s affidavits, no weight should be attached at all because the plaintiff had not been given the opportunity to cross examine the deponents although notice had been given to the defendant.

The Court is of the view that the affidavits filed by the defendant were filed in accordance with the order of this Court, purposely to reduce the length of trial, which was originally estimated at two days. The Court had directed that this trial proceeds in that manner and both parties had complied with that direction. It would be unfair, in my view, for the Court, having directed that course, to now make an about turn and not accept the evidence filed by the defendant because it’s counsel did not appear at the trial. I consider therefore that in fairness to the defendant, and in doing justice to all parties in this case, the Court would rely on the defendant’s affidavits just as it would with the plaintiff’s affidavits. However, I also consider that the affidavits ought to be given the weight they deserve because the plaintiff’s right to cross-examine has not been accorded due to the failure of counsel to appear and to make available the defendant’s witnesses.

Having said that, let me refer to the affidavits of Michael Noah and Alex Albert, both sworn on 03rd June 1999 and filed 8th June 1999. As I alluded to, Michael Noah is the Town Manager of the defendant. In respect of mesne profit, he has annexed to his affidavit, ledgers showing revenue earned by the defendant. Annexure "D" of Noah’s affidavit is a summary of income showing that from 25th October 1995 to April 1996, the defendant earned K18,339.55. Wages of gate keepers, water rates and other municipal services totalled K12,186.55, thereby leaving a profit of K6,153.00. He says the defendant was not aware that the plaintiff had title to the land in question until it received a letter dated 22nd March 1996 from the plaintiff asserting its proprietorship over the land. In respect of the plaintiff’s second claim, Noah has annexed actual costs of materials used for constructing the building from BHP Steel Products, which came to a total of K22,910.48. The present Town market was established after the materials were removed from the plaintiff’s land. Mr Noah said the defendant has a responsibility to the public in Kundiawa to provide municipal and other services including public markets. It was therefore necessary to provide a public market for the residents of Kundiawa. He further said the defendant had to remove its buildings, which is actually the property of the people. Finally, he said the plaintiff is better off now because the land has been physically improved.

In the affidavit of Alex Albert, he said he is employed by the defendant as a Health Inspector and is responsible for Health and Social Services in Kundiawa Town. He is aware of the dispute over the land in question. He said between 1989 and 1990, the Kundiawa Town Council constructed a public market on Section 22, Allotment 26. Following the introduction of the Organic Law on Provincial Governments and Local Level Governments, the functions of the Kundiawa Town Council was transferred to the defendant so was the market. He further said the land was not developed prior to 1990. It was overgrown with grass and was swampy. The defendant had to excavate the land and back-filled it and used culverts for drainage at a cost of K6,431.00.

The costs of erecting a fence and the market was K14,253.47. In July 1996, the two buildings and the fencing were demolished and removed to the present site of the Town market. He repeated what Mr Noah said, and that is, the defendant became aware of the plaintiff’s interest over the land on or about 22nd March 1996. Finally, he said, "there is substantial physical improvement on the land which was undertaken at the defendant’s expenses. At no point in time did the plaintiff incurs (sic) any cost in the development of the land."

That is all the evidence in this case.

Counsel for the plaintiff has not referred the Court to any authorities he relied on in this matter. I allude to this at this juncture because I consider it vital to the outcome of this matter. He submitted that the plaintiff is entitled to the amounts claimed, which totalled K92,942.00. In his submission, he said the sum of K12, 080.00 was for mesne profit while the sum of K80,862.00 was for losses the plaintiff claims it suffered as a result of the demolition and removal of the steel framed buildings and the fence.

While it is true that the plaintiff has obtained default judgment against the defendant, it does not necessarily follow in law that the plaintiff is automatically entitled to damages. It is trite law that the plaintiff must prove its damages.

From the evidence before me, I have great difficulty assessing damages because I am of the view that the plaintiff has not suffered any damages. If it has, it has not proven such damages. In respect of the land itself, it is undisputed that all the improvements were carried out by the defendant in its effort to serve the community of Kundiawa Town. The defendant at its own expenses, cleared the land and back-filled it with stones and soil because the land was swampy. It cost the defendant K6,431.00 to do that. Then it erected a fence at the cost of K14,251.47 around the property. The two steel framed buildings cost the defendant K22,910.48 including 3% Sales Tax.

In respect of the sum of K80,862.00 which the plaintiff claims it suffered as losses for the removal of the improvements, the plaintiff has not established the legal basis for that claim. The improvements were not erected by the plaintiff. The plaintiff did not own these improvements. There is no evidence of a lease except a lease re-issued in 1985. I remember Mr Kua submitting that, because the plaintiffs owned the land, the buildings and fence were fixtures therefore part of the land. While I appreciate that, that is the law, the plaintiff has not established its right or interest over the land at the time the defendant cleared the land and improved it. In my view, the plaintiff could not lawfully claim the value of these improvements. It is my view therefore that the plaintiff has not suffered any damages therefore it is not entitled to any.

In relation to the sum of K12,080.00 the plaintiff claimed as mesne profit, it is clear from the evidence that the land was unimproved and vacant without any economic activity being conducted on it. It was not until the defendant improved the land that it erected a public market on it. The plaintiff had never established and run a public market on the land previously. It never collected fees from market vendors prior to the land being improved by the defendant. What therefore is the legal basis for the claim for mesne profit? I consider that, once again, the plaintiff has not shown that it has suffered damages in relation to mesne profit. It therefore follows that it is not entitled to any damages.

For these reasons, I find that the plaintiff has not suffered any damages and is therefore not entitled to any damages. Its claims for damages in the total sum of K92,942.00 is accordingly dismissed. I make no order as to costs.
_____________________________________________________________________
Lawyer for Plaintiff : Fiocco, Posman & Kua
Lawyer for Defendant : Yayonga D. Bal