Lewis v Lae Builders & Contractors Ltd [2014] PGNC 377; N7554 (22 January 2014)

N7554

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 1447 of 2008

BETWEEN:
SCOTT LEWIS
Plaintiff

AND:
LAE BUILDERS & CONTRACTORS
LIMITED
Defendant

Kokopo: Hartshorn J.
2013: 20^th May
Waigani:
2013: 13^th June
2014: 22^nd January

Assessment of damages

Cases cited:

Jonathan Paraia v. State (1995) N1343
Yange Lagan v. State (1995) N1369
Tabie Koim v. State [1998] PNGLR 247
Kolaip Palapi v. Sergeant Poko (2001) N2274
Yooken Pakilin v. State (2001) N2212
William Mel v. Coleman Pakalia & Ors (2005) SC790
Rabaul Shipping Ltd v. Peter Aisi (2006) N3173
Porgera Joint Venture v. Robin Kami (2010) SC1060
Felix Kua v. Clement Patiken (2010) N4103
Robert Kapo v. Ayleen Bure & Ors (2010) SC1162
Mambo, trading as Mambo Maintenance v. Board of Management of Modilon General Hospital (2013) N4952

Counsel:

Mr. W. Donald, for the Plaintiff
Mr. L. Manua, for the Defendant

22^nd January, 2014

1. HARTSHORN J. The plaintiff sued the defendant for damages and ancillary relief for breach of contract of employment. This court on 17^th June 2011 ordered that default judgment be entered for the plaintiff and for damages to be assessed. The matter came on before me for an assessment of damages.

Assessment of damages – law

2. The onus is upon a plaintiff to prove its loss. The following passage from McGregor on Damages is cited by Injia J. (as he then was) in Yange Langan v. Independent State of Papua New Guinea, (1999) N1369:

“The plaintiff has the burden of proving both the facts and the amount of damages before he can recover substantial damages. This follows from the general rule that the burden of proving a factor is upon him, who alleges it and not upon him who denies it so that where a given allegation forms an essential part of a person's case, the proof of such allegation falls on him. Even if the defendant failed to deny the allegations of damage or suffers default, the plaintiff must still prove his loss”.

3. I also refer to the case of William Mel v. Coleman Pakalia & Ors (2005) SC790 in which the Supreme Court 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 entry of judgment on liability mainly in default of a defendant’s defence, clearly show the following:

1. The judgment resolves all questions of liability in respect of the matters pleaded in the statement of claim.

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.”

The claim

4. From a perusal of the statement of claim it appears that the facts are pleaded sufficiently clearly for the cause of action to be determined as being for breach of contract of employment by virtue of wrongful dismissal.

Damages

5. I now must determine whether the plaintiff has sufficiently proved the damages that he claims, being mindful of point 3 above in Coecon (supra) that in the case of a claim for damages for breach of contract as in this case, albeit an employment contract, such a judgment confirms there being a breach as alleged and leaves only the question of what damages necessarily flow from that breach.

6. The plaintiff claims the following:

a) salary to 1^st Sept 2007 K 122,906.28
b) accommodation and utilities 40,833.00
c) vehicle allowance 122,150.00
d) annual leave 9,871.66
e) leave fares 6,758.00
f) general damages between 300,000 - 500,000
g) punitive damages 10 million
h) special damages
i) accommodation 617,650.00
ii) medical expenses 2,874.06
iii) shipment of personal effects 18,378.10
iv) value of personal effects sold or lost 113,344.70
v) living allowances sent from USA 76,119.00
vi) mental distress between 50,000 - 100,000

7. As to the measure of damages for unlawful termination, in this instance the contract of employment was for a period of not less than two years. Pursuant to clause 17 of the contract, if the defendant wished to terminate the services of the plaintiff, one month notice of termination was required to be given with relocation costs back to the point of origin being paid.

8. Counsel for the plaintiff submitted that as the contract of employment does not provide for what will occur if the notice requirement is not complied with and that payment in lieu of notice is not provided for in the contract, any failure to give proper notice entitles the plaintiff to claim the balance of his contract and damages. No authorities were cited by counsel for the plaintiff that were specifically on point on the question of the damages to be awarded for unlawful termination.

9. Counsel for the defendant cited amongst others, the Supreme Court case of Porgera Joint Venture v. Robin Kami (2010) SC1060. In that case Injia CJ, after conducting a detailed consideration of relevant authority said in his judgment that was agreed to by Gabi J., the following:

“24. I consider that the common law principles on compensation for want of notice and want of disciplinary procedures in a private employment contract developed in Gunton, Janciuk, Boyo, Focsa set out above are persuasive, appropriate and applicable to the circumstances of this country and apply them to the case at hand. Much of the principles set out above relating to measure of damages for want of notice are already part of the common law as adopted and applied in this jurisdiction in many cases including the cases cited by counsel before us. ...............

25. I consider that in a private employment situation where an employee is employed under a written contract of employment for a fixed term and which contains a termination clause for termination with or without notice by either party, with or without reason, the measure of damages which the employee is entitled to receive is based on the salary and other entitlements that the employee would have received if the contract had been lawfully terminated.”

10. In the later Supreme Court case of Robert Kapo v. Ayleen Bure & Ors (2010) SC1162, the Court of which I was a member, reproduced the above passage from the judgment of Injia CJ as part of a larger passage that also concerned employment contracts that contained disciplinary procedure provisions.

11. The Court adopted and applied the principles in Kami’s case (supra) and stated that the passage cited was correct in law. This court is bound by decisions of the Supreme Court. I note also the recent National Court decision of Mambo, trading as Mambo Maintenance v. Board of Management of Modilon General Hospital (2013) N4952, a decision of Cannings J in which his Honour at para 8 said:

“8. If a fixed-term contract for service has a term of the contract allowing for termination on notice before the end of the period of the contract but that term is breached, the appropriate measure of damages in respect of lost income is the income that would have been earned by the innocent party during the notice period (Porgera Joint Venture Manager Placer (PNG) Ltd v Robin Kami (2010) SC1060, Madang Shipping & Stevedoring Agencies Ltd v Pete C Celso (2011) N4294).”

12. Given the above statements of the law I am satisfied that in this instance, as the notice period in clause 17 of the contract is one month, the plaintiff is entitled to one month's worth of lost income and entitlements, and the costs of relocation to the point of origin.

13. The plaintiff was on a salary of AUD $63,000 gross per annum to be paid in Kina at the exchange rate of the day. That is AUD $5,250 gross per month. The plaintiff is entitled to that amount in Kina less taxation together with other entitlements under the contract for one month: Kami’s case (supra).

14. The evidence of the defendant is that the effective termination of the plaintiff’s employment was on 16^th September 2006 and that on 1^st December 2006 the sum of K5,186.74 was paid into the account of the plaintiff at the ANZ Bank account no. 12341040. This amount was the balance of a calculation that represented outstanding pay, pro rata allowances, pro rata leave and one month’s pay in lieu of notice, less telephone and internet expenses. The defendant concedes that there was an incorrect deduction of pay and that one week’s salary remains owing to the plaintiff. That amount is K1,920.85. Further, the defendant concedes that the sum of K57.13 was inadvertently deducted and the plaintiff is entitled to this sum.

15. The plaintiff confirmed, in his answer to a question by the court, that he had received this amount, after initially answering to a question in cross-examination that he did not think that he had received an amount from the defendant. The amount was paid after the plaintiff had emailed his account details to an employee of the defendant on 4^th October 2006. The evidence indicates however that the payment was made on 15^th December 2006. This is by virtue of the ANZ Bank date receipt stamp on the deposit slip. I am satisfied from this evidence that the said payment was made on 15^th December 2006. Given this, the plaintiff is entitled to the sum of K1,977.98 under this heading.

16. The plaintiff claims for accommodation, utilities, vehicle allowance and annual leave. He is only entitled to these for a period of one month: Kami’s case (supra). Counsel for the plaintiff, in his submissions, states that neither party led any evidence as to the cost of accommodation or the value of the vehicle allowance benefit. It is for the plaintiff to prove his loss. There is no evidence of the cost of accommodation provided by the defendant. The plaintiff deposes that whilst he and his wife were staying at Vavagil Guest House, his contract was terminated. He then deposes that “we stayed another three months as per contract with the defendant.....” Then in annexure “U” to the affidavit of Sir Robert Sinclair, exhibit “C”, being a copy of a hand written facsimile from the plaintiff, the plaintiff states that the lease agreement for Varagil Guest House with the defendant ended on 30^th November 2006 unless both parties agreed to break the lease earlier and that the defendant “under Bob Sinclair, wrote no payment would be paid after Oct 30/06”.

17. It is apparent then that the defendant did pay for accommodation for the plaintiff for more than a month after the plaintiff’s termination. If however payment was not made, there is no evidence of the cost of the accommodation and there are no receipts in evidence.

18. As to the evidence that this court should accept in the proof of damages, in Yange Lagan v. State (supra), Injia J (as he then was) said:

“In my view, the minimum requirement in any action is for the plaintiff himself to give admissible evidence in support of his claim....... When the primary evidence of the plaintiff is lacking, there is a serious gap in the plaintiff's case, all other evidence being inadmissible as being hearsay or hearsay upon hearsay.”

19. Yange’s case (supra) has been cited with approval in numerous other cases including Tabie Koim v. State [1998] PNGLR 247, Kolaip Palapi v. Sergeant Poko (2001) N2274 and Yooken Pakilin v. State (2001) N2212.

20. In Rabaul Shipping Ltd v. Peter Aisi (2006) N3173, Lay J (as he then was), entirely agreed with Injia J’s “minimum requirement” observation but added that where a plaintiff is a company it can only give evidence by its officers and employees.

21. Here the evidence given by the plaintiff is the only evidence relied upon by him to prove his loss. In Jonathan Paraia v. State (1995) N1343, Injia J referred to the following observation of Devlin J in Biggin & Co Ltd v. Permanite Ltd [1951] 1 KB 422 at 438:

“Where precise evidence is obtainable, the Court naturally expects to have it (but) where it is not, the Court must do the best it can.”

22. Here however, there is no evidence relied upon to prove the loss that the court may take into account to do “the best it can.” Similarly, there is no evidence of the vehicle allowance benefit to which the plaintiff was receiving or that he incurred for one month.

23. As for annual leave, there is also no evidence. It is apparent though, that the plaintiff was paid a pro rata amount for leave in the payment that was deposited into his account. Consequently damages under these headings are refused.

Relocation expenses

24. The plaintiff and his wife are entitled to relocation back to their point of origin, which is California, USA in clause 10 of the contract, and for the defendant to pay the cost of shipment of their personal goods to the place of origin for a total of 5m3: clause 16.

25. The plaintiff contends that it was agreed that the personal effects would be shipped to Hawaii but they were not. He seeks the sum of K 18,378.10 being the costs of the shipment and K 113,344.70 being the value of the personal effects he sold and lost. Notwithstanding that these two sums are sought as special damages. I will consider them now.

26. The defendant contends that it has been ready and willing to meet its obligations under the employment contract to relocate the plaintiff and his wife to their point of origin which is California USA and to ship their personal effects. The defendant had arranged airline tickets and organised the shipping of the plaintiff's personal effects but the plaintiff wanted to remain in Papua New Guinea to fight the defendant. The evidence is that the defendant had purchased airline tickets for the plaintiff and his wife to travel from Rabaul/Kokopo to Port Moresby and then Port Moresby to Brisbane to Los Angeles, and that K 9,967.60 had been paid to Lae International Travel for this.

27. The plaintiff however, refused to travel and insisted that the travel be re-routed to Hawaii, that his personal items be shipped to Hawaii and that he be paid AUD$83,000 as his final entitlements. The defendant further contends that although it was not obliged to it did later agree to repatriate the plaintiff and his wife to Hawaii instead of California that the plaintiff did not and has not returned the Miscellaneous Charges Order for the costs of the airline tickets and did not advise the defendant of new dates of travel. Further, the plaintiff did not deliver his personal effects for shipment to Mr. Geoff Stevens of Customs Management Services.

28. The defendant's contentions are supported in part by evidence given by the plaintiff. In cross-examination, the plaintiff stated that he received airline tickets but gave them back a week later as they were not correct. Later in cross-examination, the plaintiff said that the reason he did not leave Papua New Guinea after receiving funds from relatives was that he wanted to stay and see “Sinclair in gaol.”

29. I am satisfied from the evidence that the defendant attempted to relocate the plaintiff and his wife and to ship their personal effects but that because of the plaintiff’s conduct, the defendant’s attempts at relocation and shipment were prevented. Counsel for the plaintiff submits that the defendant is at fault as the relocation and shipment has not occurred. However, in such circumstances, what other action could the defendant take apart from agreeing to the demands of the plaintiff to which he was not entitled? Presumably it is not being suggested that the defendant should in some way have forced the plaintiff and his wife onto a plane.

30. Given this I am satisfied that the plaintiff is entitled to the costs of the shipment of his personal effects to Hawaii for 5m3. Again, there is no evidence of the cost. Counsel for the plaintiff refers to an annexure “A” in the affidavit of the plaintiff filed 20^th March 2013 in regard to the sum of K18,378.10. This annexure however is concerned with other miscellaneous costs and not the specific costs of shipment of personal effects. So as there is no other evidence relied upon by the plaintiff to prove this loss that this court may take into account and there is no other method before the court to calculate the amount, damages for the cost of shipping of personal effects are refused.

31. As for the claim of K 113,344.70 being what the plaintiff claims is the value of personal effects that had to be sold or have been lost, as I have found that it was because of the plaintiff's own conduct that the personal effects were not shipped, the plaintiff is not entitled to these damages.

32. The plaintiff seeks general damages for wrongful dismissal in addition to damages that I have already awarded for unlawful termination above. This is misconceived and I refer to Kami’s case (supra) and Kapo v. Bure (supra) in this regard.

33. The plaintiff in his submissions states that he does not proceed with his claim for exemplary damages but proceeds with a claim for punitive damages. Counsel for the plaintiff did not rely upon any authority for this claim. I have had recourse to the following statement of Cannings J in Felix Kua v. Clement Patiken (2010) N4103:

“16. Better known as exemplary damages, punitive damages are a special category of damages which are awarded for the purpose, not of compensating a plaintiff, but of punishing a defendant – the wrongdoer – for a particularly egregious or wilfully wrongful act, as distinct from a less severe form of wrongful conduct. It provides a deterrent against similar conduct by others (Alex Latham & Kathleen Latham v Henry Peni (1990) N1463; James Koimo v The State [1995] PNGLR 535; Abel Tomba v The State (1997) SC518; Kenneth Bromley v Finance Pacific Ltd (2001) N2097; George Kala v Joseph Kupo (2009) N3677).”

34. Given this statement, notwithstanding the default judgment entered, and taking into account the evidence adduced including the evidence of the plaintiff and Sir Robert Sinclair in cross-examination, I am not persuaded to any extent that the actions taken by or on behalf of the defendant are such that the defendant should in some way be punished for its actions. There is no evidence of any particularly egregious or wilfully wrongful act that would warrant this court to contemplate such an award.

Special damages

35. The plaintiff claims various amounts for special damages. These amounts are for accommodation, legal fees, medical expenses, living allowances, costs of shipment of personal effects and the value of personal effects sold or lost. I have already dealt with the latter two claims.

36. As for these remaining claims for special damages, as I mentioned when considering the claim for the value of personal effects sold and lost, after considering all of the evidence, I am satisfied that the reason that the plaintiff and his wife did not leave Papua New Guinea was not because of the action or lack of action of the defendant, it was because of the plaintiff's own actions. In this regard the plaintiff admitted in cross-examination and re-examination that he left Papua New Guinea and re-entered in February 2007 when he obtained a business visa to reside in Papua New Guinea. This was confirmed again by the plaintiff in answer to a question by this court. Further, the plaintiff admitted to being employed by two other companies and to being paid the same salary and entitlements that he was receiving from the defendant. I am satisfied then that as the plaintiff was able to and did leave Papua New Guinea, his evidence that he and his wife could not leave because of the action or lack of action of the defendant and the alleged losses that they suffered as a consequence, must be the subject of quite considerable doubt.

37. Given this evidence and in all the circumstances, I am not satisfied that the plaintiff is entitled to the special damages he seeks. If he did suffer such loss, it was not as a consequence of the action or lack of action of the defendant. Put another way, I am not satisfied that these damages necessarily flow from the breach of the employment contract by the defendant.

38. A further claim is for mental distress. Again, if the plaintiff and his wife did suffer mental distress, I am not satisfied given the evidence that such distress was as a result of the action or lack of action of the defendant or that such damage necessarily flows from the breach of the employment contract.

39. As to costs, notwithstanding the general rule that costs follow the event, the plaintiff has obtained an award of damages but the award is minor compared with what was being sought. The defendant has successfully shown that the majority of the plaintiff's claim was without merit. In the circumstances therefore, I am satisfied that the appropriate order is for each party to bear their own costs.

Orders

40. It is ordered that:

a) the defendant shall pay to the plaintiff damages in the sum of K1,977.98 together with interest from the date on which the cause of action arose being 16^th September 2006 at the rate of 8% per annum until payment.

b) the parties shall pay their own costs.
_____________________________________________________________
Donald & Company Lawyers: Lawyers for the Plaintiff
Rageau Manua & Kikira Lawyers: Lawyers for the Defendant