National Development Bank Ltd v Iangalio [2014] PGNC 324; N6259 (8 December 2014)

N6259

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 1174 OF 2007

BETWEEN

NATIONAL DEVELOPMENT
BANK LIMITED
Plaintiff

AND
MASKET IANGALIO
Defendant

Waigani: Hartshorn, J
2013: 11^th December
2014: 8^thDecember

Assessment of Damages

Cases cited:

Administration of the Territory of Papua and New Guinea v. Grant [1965-66] PNGLR 311

Chard v. Chard (otherwise Northcott) [1955] 3 All ER 721
Frank Onga v. The General Manager Engineering Management Pty Ltd (2003) N2321
William Mel v. Coleman Pakalia & Ors (2005) SC790

Counsel:

Mr. I. R. Shepherd, for the Plaintiff
Mr. T. Boboro, for the Defendant

8^th December, 2014

1. HARTSHORN J: This is an assessment of damages following the entry of a default judgment.
   

Background

2. The plaintiff commenced this proceeding in October 2007 seeking judgment against the defendant as guarantor. The plaintiff relied upon a Deed of Guarantee executed by the defendant on 30^th November 1989. Pursuant to the guarantee the defendant was jointly and severally liable for the debts of the borrower Gemini Holdings Limited. The plaintiff obtained default judgment against the defendant for damages to be assessed on 5^th November 2010.

Assessment of damages – law

3. The Supreme Court in William Mel v. Coleman Pakalia & Ors (2005) SC790 stated:

“The principles that apply to a trial on assessment of damages following entry of default judgment were summarised by Kandakasi J. in Coecon Ltd (Receiver/Manager Appointed) v National Fisheries Authority (2002), National Court, N2182.

His Honour stated:
A survey of the authorities on assessment of damages after ټ&##160;< < #160;

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2. Any matter that has not been pleaded that is introduced at the trial is a matter on which the defendant can take an issue on liability.

3. In the case of a claim for damages for breach of contract as in this case, such a judgment confirms there being a breach as alleged and leaves only the question of what damages necessarily flow from the breach.

4. The plaintiff in such a case has the burden to produce admissible and credible evidence of his alleged damages and if the Court is satisfied on the balance of probabilities that the damages have been incurred, awards can be made for the proven damages.

5. A plaintiff in such a case is only entitled to lead evidence and recover such damages as may be pleaded and asked for in his statement of claim.

The Supreme Court adopted and applied those principles in Papua New Guinea Banking Corporation v Jeff Tole (2002) SC694, Amet CJ, Sheehan J, Kandakasi J.

Kandakasi J. applied those principles recently in the National Court in Desmond Huaimbukie v James Baugen (2004) N2589. We believe His Honour succinctly and correctly stated the law. We elaborate on the first principle by saying that once default judgment is entered, the facts as pleaded and their legal consequences in terms of establishing the cause of action as pleaded must be regarded as proven. (See Keith Reid v Murray Hallam and Allcad Pty Ltd (1995) N1337, National Court, Kapi DCJ and Andale More and Manis Andale v Henry Tokam and The State (1997) N1645, National Court, Injia J.)........................

Turning back to the issue raised above as to the role of the trial judge after entry of default judgment, we consider the following to be the correct approach:
the trial judge should make a cursory inquiry so as to be satisfied that the facts and the cause of action are pleaded with sufficient clarity;
if it is reasonably clear what the facts and cause of action are, liability should be regarded as proven;
only if the facts or the cause of action pleaded do not make sense or would make an assessment of damages a futile exercise should the judge inquire further and revisit the issue of liability.”

4. Reference is also made to the following passage from the judgment of Kandakasi J. in Frank Onga v. The General Manager Engineering Management Pty Ltd (2003) N2321:

“As noted in Coecon Limited (Receiver/Manager Appointed) vs. The National Fisheries Authority of Papua New Guinea and The Independent State of Papua New Guinea (supra), a plaintiff can discharge his burden of prove (sic) by calling credible evidence. If he is able to do that in relation to what he alleges then, there is no reason why there should (not) be a finding in his favour unless, the defendant is able to rebut it by other credible evidence. Apparent in this is the fact that, once a plaintiff establishes his case on the balance of probabilities, the burden then shifts to the defendant to rebut it. If the plaintiff (sic) (defendant) fails to discharge that burden, it is open to the Court to act on the evidence of the plaintiff.”

Defendant’s case

5. The defendant denies the claim and contends that:

1. the loan has been fully repaid by Gemini Holdings Ltd,
   

b) the loan was novated to a third party, MMK Transport Ltd in 1999 - 2000,

c) he overpaid the plaintiff by K 100,000 on 2^nd December 2010.

6. As is made clear above, the question of liability has been determined and so the only issue for determination now is the claim for damages for breach of the guarantee; that is the defendant’s contingent liability. The plaintiff has the burden of producing admissible and credible evidence of those damages

Plaintiff's case

7. The guarantee was for the principle of K 250,000 plus interest accrued at 11%. The plaintiff’s evidence is that the amount outstanding after payment of K 100,000 on 3^rd December 2010, by the defendant was K297, 821.61 as per annexure “A” to exhibit 3. A substantial proportion of that amount owing was interest. It is clear from the statement that most of the principal itself had been paid, but interest had not been paid and continues to accrue. The plaintiff submits that judgment should be entered in favour of the plaintiff for K 297,821.61 together with interest at 11% per annum from 29^th January 2013 and costs.

8. The defendant contends that the plaintiff’s evidence does not show or prove the damages claimed. In Mr. Solomon Kiage’s affidavit, exhibit 2, is annexed a statement showing that by or about November 2006 the balance outstanding was K 84,294.27 and in December 2007 the balance was K 64,394.27. The statement further shows that the balance was paid when a payment of K 100,000 was made on the 3^rd December 2010 and there was K 41, 756.13 to the defendant's credit.

9. The defendant submits there is not an adequate explanation as to why there is such a difference between the statement in Mr. Kiage’s earlier affidavit compared to the statement in his later affidavit. Further, as there are clear discrepancies in the records and statements of the loan account, the plaintiff has failed to provide clear and accurate evidence to prove that the debt remains outstanding and that the borrower has defaulted on its obligations under the loan.

10. The defendant refers to the Supreme Court case of Augerea v. Bank South Pacific (2007) SC869, and that the case held that a bank owes a duty to its clients to amongst others, maintain accurate records. That decision was a successful appeal against the entry of summary judgment in favour of a bank. In the decision the Supreme Court made observations as to a bank's duty to maintain accurate records and to inform customers accurately on a monthly basis on the status of their accounts. Further, the head note of the decision refers to a bank being under a duty to ensure that client’s obtain legal advice when negotiating and entering into an agreement with the bank. These observations in my respectful view appear to be obiter dicta.

11. As to the evidence of Mr. Kiage, counsel for the plaintiff submits that whilst there is an apparent discrepancy between the statements annexed to Mr. Kiage’s affidavits, it is the later statement which contains a detailed summary of the account from April 1998 to December 2010 and which shows the correct interest rate of 11% which is to be preferred, and which the court should accept. Further, Mr. Kiage was not cross-examined on this issue and, the defendant elected not to file any evidence to contradict, rebut or challenge the evidence contained in Mr. Kiage’s later affidavit.

12. Accordingly, in the absence of any evidence to the contrary, the plaintiff submits that the court should make a presumption of fact, ie an inference that the latest statement represents the plaintiff’s position as at the date of trial. This is the common sense approach it is submitted.

13. Finally, the plaintiff submits that if there is a conflict on the evidence which is denied, it is for the court to decide which evidence it prefers to accept and in this case the lack of any challenge to the later affidavit is highly relevant.

14. As to the contention of the defendant concerning the discrepancies in the two statements annexed to the affidavits of Mr. Kiage, it is the case as submitted by the plaintiff, that Mr. Kiage was not cross-examined as to the discrepancies and the defendant has not filed any evidence to contradict or rebut the evidence in the later affidavit of Mr Kiagi which includes the later bank statement. In the absence of any evidence to rebut Mr. Kiage’s later evidence, the court is entitled to make a presumption of fact that the latest statement contained in Mr. Kiage’s evidence represents the plaintiff’s position. In this regard I refer to Chard v. Chard (otherwise Northcott) [1955] 3 All ER 721 at 726, Halsbury’s Laws of England 4^th Ed Vol 17(1) para 576, and Administration of the Territory of Papua and New Guinea v. Grant [1965-66] PNGLR 311.

15. I am satisfied for the above reasons that the evidence of Mr. Kiage in Exhibit 3 is to be preferred. The plaintiff has produced credible evidence of its damages and the defendant has not rebutted that evidence.

Orders

16. I order as follows:

a) judgment for the plaintiff in the sum of K297, 821.61 together &##60;&<;ɘʔ< ـwi6h interest at 11%t 11% per annum on that sum f9 ry &##160;;ټ&##160;;ټ < &160;;#1600&#160  ʔ&1160 #160;&#160 2013,

b) the defendafendant is to pay laint costs of and incidental to & < &#160 ; &##10;& &##160;;die e

c) time is abridged.

_______________________________________________________
Ashurst Lawyers: Lawyers for the Plaintiff br>Kuawyer Lawyers fors for the the DefenDefendant