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National Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
WS NO 501 OF 2003
ALBERT ARENG
Plaintiff
V
GREGORY BABIA
First Defendant
NATIONAL HOUSING CORPORATION
Second Defendant
Madang: Cannings J
2008: 21 February
14 May, 10 September
JUDGMENT
DAMAGES – breach of contract – failure of vendor of real property to transfer title deed to purchaser – plaintiff claims damages for: loss of expected earnings; loss of value of property; general damages.
The National Housing Corporation sold one of its properties to a tenant but breached the contract of sale by not transferring title to the purchaser until 16 years after he was entitled to it. The purchaser authorised his son to sue the Corporation for breach of contract and liability was established through entry of default judgment. A trial was held to assess damages. The plaintiff claimed for three heads of damage: economic loss; loss of value of the property; and general damages.
Held:
(1) The plaintiff and his father could have improved the property and charged more rent for it, if they had the title to it. Economic loss was assessed at K18,000.00.
(2) The claim for loss of value of the property was rejected as it was not pleaded in the statement of claim and there was no evidence to support it.
(3) General damages for distress, inconvenience, hardship and frustration were assessed at K30,000.00.
(4) The total amount of damages awarded was K18, 000.00 + 0 + K30, 000.00 = K48, 000.00.
(5) In addition, interest of K16,512.00 is payable, making the total judgment K64,512.00.
Cases cited
The following cases are cited in the judgment:
Areng v Babia & NHC (2005) N2895
Areng v Babia & NHC (2005) N2928
Cheong Supermarket Pty Ltd v Pery Muro [1987] PNGLR 24
Desmond Huaimbukie v James Baugen (2004) N2589
John Pias v Michael Kodi (2004) N2690
Jonathan Mangope Paraia v The State (1995) N1343
Komboro George v MVIT [1993] PNGLR 477
MVIT v James Pupune [1993] PNGLR 370
Peter Wanis v Fred Sikiot and The State (1995) N1350
Rodao Holdings Ltd v Sogeram Development Corporation WS 521/2001, 23.02.07
Yooken Paklin v The State (2001) N2212
TRIAL
This is a trial on assessment of damages.
Counsel
B W Meten, for the plaintiff
J Kolkia, for the defendant
10 September, 2008
1. CANNINGS J: The plaintiff, Albert Areng, has successfully sued the National Housing Corporation for breach of contract and has come to the court for an assessment of damages.
2. The plaintiff’s father, Michael Areng, was the tenant of a NHC house in Newtown, Madang. Mr Areng and the family moved in during 1974. In 1985 he entered into a contract with the NHC to purchase the house. He finished paying it off at the end of 1989. But the NHC did not transfer the title deed to him. This went on for years. Mr Areng tried to get the title deed but the NHC failed to comply. In 2003 he authorised his son to commence this case against the NHC. The plaintiff sought an order that title be transferred to his father, plus damages for breach of contract.
3. The NHC failed to file a defence and liability was established through entry of default judgment in 2003. The NHC made two unsuccessful attempts to have the default judgment set aside (Areng v Babia & NHC (2005) N2895 and Areng v Babia & NHC (2005) N2928). In 2006 the National Court ordered that the title be transferred; and that has been done, 16 years after it should have been. This judgment is about assessment of damages.
4. I am not satisfied that the first defendant, Gregory Babia (the NHC’s regional manager) has been given proper notice of these proceedings. So I will only assess damages against the second defendant, the NHC.
5. The plaintiff is claiming damages for:
IS THE PLAINTIFF ENTITLED TO DAMAGES FOR LOSS OF EXPECTED EARNINGS?
6. The plaintiff is saying that if title had been transferred to his father when it should have been, they would have been able to get a bank loan, renovate the house and charge more rent for it. Because they had no title deed, the banks turned them away. His father has not been living in the house for a long time, instead choosing to rent it out for K150.00 per month. The plaintiff claims that they would have been able to get K350.00 rent per fortnight, about K700.00 per month.
7. I understand the logic behind this claim but there is not a lot of evidence to support it. As Mr Kolkia, lawyer for the NHC pointed out, even though the NHC presented no evidence, the plaintiff at all times bears the onus of proving his losses on the balance of probabilities. It is not sufficient to make assertions in a statement of claim or in submissions and then expect the court to award what is claimed. The burden of proving a claim is upon the party alleging it, not the party who denies it (Peter Wanis v Fred Sikiot and The State (1995) N1350; Yooken Paklin v The State (2001) N2212).
8. Mr Kolkia submitted that the plaintiff should be awarded nothing for economic loss as he has not proven that his father was engaged lawfully in business and paying taxes on the rental income he was receiving. This is true as no records of the receipt of rent have been adduced in evidence. The court only has the plaintiff’s affidavit and his oral evidence to go by.
9. However, the fact that damages cannot be assessed with certainty does not relieve a wrongdoer of the necessity of paying damages. Where precise evidence is available the court expects to have it. However, where it is not, the Court must do the best it can (Jonathan Mangope Paraia v The State (1995) N1343).
10. I do not think it would be fair or just to award nothing for economic loss. There is sufficient evidence (in the form of a statement by the BSP Madang branch manager) that the plaintiff’s father was unable to obtain a loan to improve the property because he could not produce the title deed. I find that this was the case for a period of 15 years (from 1991, when the property was first rented out) to 2006 (when the NHC transferred the title to the plaintiff’s father). I estimate that, if a loan had been obtained and the house renovated, the net gain for the plaintiff’s father would have been K100.00 per month. I therefore assess economic loss as:
K100.00 per month x 180 months (15 years) = K18, 000.00.
IS THE PLAINTIFF ENTITLED TO DAMAGES FOR LOSS OF VALUE OF THE PROPERTY?
11. The same reasoning that underpinned the claim for economic loss applies here: the plaintiff’s father could not get a bank loan as he had no title deed, so he could not improve the property, so he has lost out. The capital value of the property is a lot less today than what it would have been if the NHC had transferred the title when they should have.
12. There are major problems with this claim. It is not a head of damage that is expressly pleaded in the statement of claim. There is a claim for K100,000.00 for "breach of contract". But that is too vague. The particular head of damage must be set out in the statement of claim, so that the defendant is put on notice as to what it has to respond to. As Mr Kolkia correctly pointed out in his submission, in a civil case, the pleadings drive the evidence. A plaintiff must plead the type of damages he is claiming in the statement of claim and then adduce evidence to substantiate the claim. If evidence is adduced of something that was not pleaded in the statement of claim, that evidence is irrelevant (MVIT v James Pupune [1993] PNGLR 370; Komboro George v MVIT [1993] PNGLR 477; Desmond Huaimbukie v James Baugen (2004) N2589; John Pias v Michael Kodi (2004) N2690).
13. Likewise, if the nature of a plaintiff’s claim only becomes clear during the course of submissions – and there is no evidence to support the claim – the claim will almost invariably be rejected.
14. That is the case here. It only became clear when Mr Meten was presenting his submission that the plaintiff was claiming K100,000.00 for loss of value of the property. There is no evidence to support this claim. Not only that, it is not pleaded in the statement of claim.
15. I refuse the claim and award nothing.
IS THE PLAINTIFF ENTITLED TO GENERAL DAMAGES?
16. Mr Meten submits that K50, 000.00 should be awarded to compensate the plaintiff for the distress, inconvenience, hardship and frustration caused to the plaintiff and his father as a result of the NHC’s conduct. He refers to my decision in a recent Madang case, Rodao Holdings Ltd v Sogeram Development Corporation WS 521/2001, 23.02.07, in which I awarded the plaintiff K50, 000.00 damages for distress, inconvenience and frustration in a breach of cct case.
17. Mr Kolkia submitted that nothing should be awarded as there is no evidence to support it. I reject that submission as this is one claim that is well documented. Ivery clear from the plaintiaintiff’s affidavit and his oral evidence that he and his father have been trying conscientiously to get the title to the property sorted out over many years. Inefficiency and administrative incompetence on the part of the NHC are clearly the reasons it took 16 years to get the title transferred. It is easy to understand how this continued bureaucratic bungling over such a long period would have led to distress and frustration for the plaintiff and his father.
18. After comparing this case with Rodao (where the parties were engaged in a business transaction, the overall amount of the claim was several million kina and the facts more complex than in this case) an appropriate award of general damages is K30, 000.00.
SUMMARY OF DAMAGES AWARDED
| Economic loss | K18, 000.00 |
| Loss of value of property | 0 |
| General damages | K30, 000.00 |
| Total damages | K48, 000.00 |
INTEREST
19. In the statement of claim the plaintiff claimed interest. The relevant law is Section 1(1) of the Judicial Proceedings (Interest on Debts and Damages) Act Chapter No 52, which states:
Subject to Section 2, in proceedings in a court for the recovery of a debt or damages the court may order that there be included in the sum for which judgment is given interest, at such rate as it thinks proper, on the whole or part of the debt or damages for the whole or part of the period between the date on which the cause of action arose and the date of the judgment.
20. As Bredmeyer J pointed out in Cheong Supermarket Pty Ltd v Pery Muro [1987] PNGLR 24, this section confers a four-fold discretion on the Judge: (1) whether to grant interest at all; (2) to fix the rate; (3) to grant interest on the whole or part of the debt or damages for which judgment has been given; and (4) to fix the period for which interest will run.
21. I exercise that discretion in the following way:
1 A plaintiff should in the normal course of events receive interest. There is nothing that takes this case out of the ordinary in that regard. The Court will order that interest be included in the sum for which judgment is given.
2 The rate of interest commonly used is 8%. In view of current economic conditions in the country I think 8% is the proper rate of interest.
3 Interest should be payable on the whole of the sum of damages for which judgment is given.
4 Often, the commencement date for the appropriate period will be when the cause of action accrued, but in this case it took the plaintiff many years to file proceedings so I have decided that a more appropriate commencement date is when the writ was served, 24 April 2004. The end of the period is the date of judgment, 10 September 2008. The appropriate period is 4.3 years.
22. I calculate the amount of interest by applying the following formula:
Where:
Thus:
COSTS
23. The general rule is that costs follow the event, ie the successful party has its costs paid for by the losing party on a party-to-party basis. The question of costs is a discretionary matter. There are no special circumstances in this case that warrant departure from the general rule.
JUDGMENT
24. I direct entry of judgment in the following terms:
(1) damages, payable by the second defendant to the plaintiff, of K48,000.00;
(2) interest payable by the second defendant to the plaintiff, of K16,512.00;
(3) being a total judgment lump sum of K64,512.00 to be paid within 30 days after the date of entry of this judgment;
(4) costs of the proceedings shall be paid by the second defendant to the plaintiff on a party-party basis, to be taxed if not agreed.
Judgment accordingly.
______________________________________
Narokobi Lawyers: Lawyers for the plaintiff
Paul Paraka Lawyers: Lawyers for the defendants
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