N3292

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO 1418 OF 2004

NIUGINI CIVIL & PETROLEUM LTD
Plaintiff

V

WEST NEW BRITAIN DEVELOPMENT CORPORATION LTD
First Defendant

MICHAEL GIBSON
Second Defendant

WEST NEW BRITAIN PROVINCIAL GOVERNMENT
Third Defendant

Kimbe: Cannings J
2007: 6, 11 December
2008: 26 March

CONTRACT – assessment of debts due under contract – assessment of damages for breach of contract.

The plaintiff commenced proceedings against the defendants, claiming debts due under a contract and damages for breach of contract. Default judgment was entered against the defendants. This was a trial on assessment of debt and damages. 

Held:

(1)	The debts claimed by the plaintiff have been adequately pleaded and proven and therefore judgment was entered in the sum of K237,349.88.

(2)	The claim for damages for breach of contract has been inadequately particularised and suffers from a lack of evidence. However, the sum equal to 10% of the amount of the debt was awarded, ie K23,734.99.

(3)	The total amount of debt and damages awarded was K261,084.87.

(4)	Interest and costs are also payable by the defendant.

Cases cited:

Albert Baine v The State (1995) N1335
Cheong Supermarket Pty Ltd v Pery Muro [1987] PNGLR 24
Jonathan Mangope Paraia v The State (1995) N1343
Kopung Brothers Business Group v Sakawar Kasieng [1997] PNGLR 331
Livingston v Raywards Coal Co [1880] 5 App Cases 25
Misac Pokonoming v Jeffery Simiri, WS No 1596 of 2005, 26.10.07
Niugini Civil and Petroleum Ltd v West New Britain Development Corporation Ltd and Others (2005) N2909
Obed Lalip and Others v Fred Sikiot and The State (1996) N1457
Peter Wanis v Fred Sikiot and The State (1995) N1350
Yange Lagan and Others v The State (1995) N1369
Yooken Paklin v The State (2001) N2212

ASSESSMENT OF DEBT AND DAMAGES

This was a trial on assessment of debt and damages following the entry of default judgment in favour of the plaintiff.

Counsel

G Linge, for the plaintiff
E Ragi, layperson, with leave of the court, for the First Defendant
No appearance for the Second or Third Defendants

26 March, 2008 

1. CANNINGS J: This is a trial about assessment of debts due under a building contract and assessment of damages for breach of that contract. 

2. The contract was between the plaintiff, Niugini Civil & Petroleum Ltd, and the first defendant, West New Britain Development Corporation Ltd. It was for upgrading and extension work on the accident and emergency department and the antenatal facility at Kimbe General Hospital. The contract was entered into in January 2002 and NCP completed the work in November 2002.

3. From January to July 2002, WNBDC paid NCP K500,624.38 for work done under the contract but then a dispute arose. WNBDC refused to pay any more and claimed that NCP still had to do remedial work. 

COURT PROCEEDINGS

4. The parties remained at loggerheads until 20 October 2004 when NCP filed the writ now before the court.

5. WNBDC’s executive director, Michael Gibson, was named as second defendant and the WNB Provincial Government, which owns and controls WNBDC, was named as third defendant.

6. The statement of claim sought debts due under the contract totalling K237,349.88 and general damages of K200,000.00 for breach of contract. The breach of contract was claimed to have been committed on 14 May 2004 when the first and second defendants unilaterally varied the contract, thereby unlawfully repudiating it. 

7. The case was the subject of various interlocutory proceedings over a period of more than three years. In October 2005 I refused a motion by the defendants to stay the court proceedings and refer the dispute to arbitration (Niugini Civil and Petroleum Ltd v West New Britain Development Corporation Ltd and Others (2005) N2909).

8. Blake Dawson Waldron Lawyers of Port Moresby represented the defendants in that period but they ceased to act for them on 18 July 2007. 
 
9. On 19 July 2007 default judgment was entered in favour of NCP, ie the defendants were found liable for unpaid debts due under the contract and for damages for breach of contract, with the amount of the debts and the damages subject to assessment.

DEBTS DUE UNDER THE CONTRACT

10. The plaintiff claims the amounts set out in the following table.

a)	Unpaid Progress payment being claim 9 certified by the first defendant on the 25 February 2005 as due and owing to the plaintiff
	K65,558.52
	
b)	5% retention Fee payable/allowable under the contract (cl 10 and item Q at page 39 of appendix)
	K29,799.10	
c)	Amount owing as Penalty at 8% (cl 10 and item L at page 38 of appendix)
	K23,972.42	
d)	Unpaid Variations (in terms of cl. 10.4 and 10.14.2 item K at page 38 of appendix)
	K32,803.84
	
e)	Additional costs of completion
	K85,216.00	
Total	K237,349.88	

11. Mr Ragi, WNBDC’s managing director, who, with the leave of the court (and without objection from Mr Linge, for NCP) appeared for WNBDC at the trial, could not effectively counter those claims and raised no concerted objection to the calculations. I am satisfied that they are in accordance with the contract and are debts fairly payable by WNBDC to NCP.

DAMAGES

12. The plaintiff is claiming K200,000.00 general damages for breach of contract. 

13. In determining this claim, some basic rules about assessment of damages must be applied, in particular: 

•	In a civil action, the purpose of an award of damages is to put the innocent party in the same position, as far as possible, as they would have been in if the wrongdoer had not committed the wrongful act (the breach of contract). (Livingston v Raywards Coal Co [1880] 5 App Cases 25.)

•	The plaintiff has the onus of proving his loss on the balance of probabilities. It is not sufficient to make assertions in a statement of claim and then expect the court to award what is claimed. The burden of proving a fact is upon the party alleging it, not the party who denies it. If an allegation forms an essential part of a person’s case, that person has the onus of proving the allegation. (Yooken Paklin v The State (2001) N2212, National Court, Jalina J.)

•	Corroboration of a claim is usually required and the corroboration must come from an independent source. (Albert Baine v The State (1995) N1335, National Court, Woods J; Kopung Brothers Business Group v Sakawar Kasieng [1997] PNGLR 331, National Court, Lenalia AJ.) 

•	The principles of proof and corroboration apply even when the defendant fails to present any evidence disputing the claim. (Peter Wanis v Fred Sikiot and The State (1995) N1350, National Court, Woods J.)

•	The same principles apply after default or summary judgment is entered and the trial is on assessment of damages – even when the trial is conducted ex parte. A person who obtains a default judgment is not entitled as of right to receive any damages. Injury or damage suffered must still be proved by credible evidence. (Yange Lagan and Others v The State (1995) N1369, National Court, Injia J.)

•	If the evidence and pleadings are confusing, contradictory and inherently suspicious, the plaintiff will not discharge the onus of proving his losses on the balance of probabilities. It is conceivable that such a plaintiff will be awarded nothing. (Obed Lalip and Others v Fred Sikiot and The State (1996) N1457, National Court, Injia J.) 

•	The fact that damages cannot be assessed with certainty does not relieve the 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, National Court, Injia J.)

14. In light of those principles, I have to say that I am not greatly impressed by the evidence in support of this claim. It is vague and unsubstantiated. The pleadings are also deficient as they fail to particularise how and to what extent the plaintiff has suffered due to the breach of contract.

15. What saves the plaintiff from being awarded nothing, however, is the last principle mentioned: the court will do the best it can on the available evidence. I will take a similar approach to the one taken in a recent Buka case, Misac Pokonoming v Jeffery Simiri, WS No 1596 of 2005, 26.10.07. I will award an amount that I consider is fair in all the circumstances, a nominal amount which will compensate the plaintiff for the presumed loss of business income and inconvenience caused by the breach of contract. I assess damages at ten per cent of the amount of the debt that has been proven.

16. Thus K237,349.88 x 10% = K23,734.99.

SUMMARY OF DEBT AND DAMAGES AWARDED

17. Total debts due and payable under the contract = K237,349.88.

General damages = K23,734.99.

Total amount of debt and damages awarded = K261,084.87.

INTEREST

18. In the statement of claim the plaintiff claimed interest as per statute, which I regard as a claim for interest under the Judicial Proceedings (Interest on Debts and Damages) Act Chapter No 52. 

19. Section 1 is the appropriate provision. It states:

(1)	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.

(2)	Where the proceedings referred to in Subsection (1) are taken against the State, the rate of any interest under that subsection shall not exceed 8% yearly.

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 total amount of debt and damages for which judgment is being given: K261,084.87.

4	The appropriate period is the whole of the period between the date on which the cause of action arose and the date of the judgment. The cause of action arose on the day on which the breach of contract was committed, which is 14 May 2004. The date of judgment is 26 March 2008. The appropriate period, for the sake of mathematical convenience, is 3.9 years.

22.	I calculate the amount of interest by applying the following formula:

•	D x I x N = A

Where: 

•	D is the amount of debt and damages assessed;

•	I is the rate of interest per annum;

•	N is the appropriate period in numbers of years;

•	A is the amount of interest.

Thus:

•	K261,084.87 x 0.08 x 3.9 = K81,458.48.

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.

ORDER

24. I am going to enter judgment in the plaintiff’s favour and the judgment will, at this stage, only be entered against the first defendant, as it was the only defendant that was a party to the contract which is being enforced through this judgment. Furthermore, I am not satisfied that the second and third defendants have been given proper notice of this trial. The judgment will be in the following terms.

(1)	debt and damages payable by the first defendant to the plaintiff, of K261,084.87; 

(2)	interest payable by the first defendant to the plaintiff, of K81,458.48; 

(3)	being a total of K342,543.35;

(4)	in the event that the total judgment lump sum for the plaintiff is not paid within 30 days after the date of entry of this judgment interest shall be payable at the rate of 8% yearly from the date of entry of the judgment on so much of the total judgment lump sum as is from time to time unpaid; 

(5)	costs to be paid by the first defendant to the plaintiff on a party-party basis, to be taxed if not agreed.

Judgment accordingly.
____________________________

Linge & Associates: Lawyers for the Plaintiff
No legal Representation for the Defendants