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National Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
WS No. 1047 OF 2011
BETWEEN
INTERACT MARKETING LIMITED
Plaintiff
V
TELIKOM PNG LIMITED
Defendant
Lae: Sawong, J.
2014: 18th November,
2015:11th August & 9th September
CIVIL―Assessment of damages―Whether issue of liability should be revisited on trial of assessment of damages― Whether terms of contract sufficiently established―Whether damages proven―Failure to mitigate―Damages reduced.
Facts
The plaintiff and defendant made an agreement for the plaintiff to build 50 billboards around the county for the defendant to be leased by the defendant. The defendant paid an advance of K150,000. The plaintiff built 20 billboards then commenced invoicing the defendant for their rental, which the defendant refused to pay. Default judgement was entered against the defendant in November 2012 and these proceedings set down for assessment of damages. The issues for trial included who owned the billboards, whether rental claimed was excessive and whether the plaintiff did incur K87,158 additional costs for construction of the billboards beyond the K150,000 advanced.
Held
1. The billboards are owned by the plaintiff, at [30;
2. The plaintiff's claim of K27,390 per month for rental of the 20 billboards was reasonable, at [40];
3. The defendant is liable to the plaintiff for the additional construction cost of K87,158.35, at [45];
4. The arrangement for rental of the billboards came to an end around July 2008 but the defendant continued to enjoy commercial benefit
from them, at [45-46];
5. The plaintiff should have mitigated its loss, at [50];
6. Rental awarded for the period January 2008 but only up to June 2009 plus the additional cost of construction of the billboard of
K87,158.85 at total of K580,178.85 plus interest and costs, at [51-54].
Case Cited:
Papua New Guinea Cases
Coecon Limited (Receiver – Manager Appointed) v National Fisheries Authority of Papua New Guinea (2002) N2182.
KL Engineering Constructions (PNG) Limited v Daman Sara Forest Products (PNG) Limited N2250
Obed Lalip and Others v Fred Sikiot and The Independent State of Papua New Guinea (1996) N1457
Yange Lagan & Others v Independent State of Papua New Guinea [1995] N1369.
Overseas Cases
Moffit P. in Bennett v Jones & Another [1977] 2 NSWLR 355 at page 369
Counsel:
M.R. Mugarenang, for the Plaintiff
N. Asimba, for the Defendant
9th September, 2015
1. SAWONG, J.: Introduction: On 15th November 2012, the plaintiff obtained default judgment against the defendant for damages to be assessed. The trial on assessment was conducted on 18th November 2014. At the trial the parties consented to admit all affidavits filed by each of their witnesses. None of witnesses were called to be cross-examined by each of the parties despite each party filing a notice to cross-examine each of the deponents. The Court then gave directions for the parties to file written submissions. Both parties have filed written submissions.
2. On 11th August 2015, counsel made brief oral submissions.
3. This ruling is on assessment of damages of the plaintiff's claim.
Brief facts
4. In July 2007, the plaintiff and the defendant entered into an agreement for the plaintiff to construct 50 bill boards for the defendant throughout Papua New Guinea to advertise and market the defendant's products and services and for the defendant to lease the bill boards from the plaintiff after the bill boards were erected.
5. The defendant paid a sum of One Hundred Fifty Thousand Kina (K150,000.00) to the plaintiff to commence constructing the billboards around the country.
6. The plaintiffs built only 20 billboards at various locations around the country by the end of 2007.
7. The plaintiff then issued invoices for each of the 20 billboards at a monthly rental fee of Twenty Seven Thousand Three Hundred and Ninety Kina (K27, 390.00) per month for the period January to December 2007, January 2008 to December 2008, January 2009 to December 2009, January 2010 to December 2010 and January 2011 to September 2011.
8. Apart from a payment of K150, 000.00, the defendant refused to pay any rentals for the various billboards resulting in these proceedings being instituted by the plaintiff against the defendant.
9. On 15th November 2012, the plaintiff obtained default judgment on liability against the defendant.
Evidence for the Plaintiff
10. The plaintiff's evidence is set out in the; Affidavits of John Anis sworn 28th January 2012, and filed 30th January 2012 the affidavit of John Anis sworn 7th May 2012 and 8th May 2012; another affidavit of John Anis sworn 3rd April 2013 filed on 18th April 2013 and Affidavit of Jerry Valboa Damoi sworn 24th May 2014 and filed on 7th July 2014 and an undated letter from the Investment Promotion Authority to the Lawyers for the plaintiff concerning Interact Marketing Limited.
11. In the first affidavit Mr. Anis deposes to the circumstances of the discussions and agreement the parties entered into. It also contains various annexures. In it he deposes as follows:
Annexure "E" are copies of the receipts and invoices relating to the payments of the various services listed in this paragraph.
Annexed and marked as annexure "H" are copies of the invoices that had been issued to Telikom from 2008 till September 2011.
h). When Telikom did not pay the invoices, it engaged lawyers to pursue the matter in court. Prior to my lawyers filing the writ they wrote to Telikom through letter dated 12th July 2011 to get the defendant to settle the matter without going to court. This letter was followed up by another letter on 21st July 2011 where detailed and specific documentation on the claim was submitted at the request of the defendant and was given time to respond by 5th August 2011. If there was no such response the Plaintiff would file a writ. The defendant never responded by the due date. Annexed and marked as annexure "I" are the copies of letters his lawyers have written.
12. The next piece of evidence is a further affidavit by Mr John Anis sworn on 7th May 2012 and filed on 8th May 2012. This affidavit is in support of application for default judgment and contains a number of letters exchanged between the parties on proposed settlement of the matter.
13. The third item of evidence, is another affidavit of John Anis sworn on 3rd April 2013 and filed on 18th April 2013. The evidence in this affidavit is reproduced below, as follows:
" a) I did depose to two (2) previous affidavits, one was sworn on 20th January 2012 and filed on 30th January 2012, court document no.4 and the other was sworn on 7th May 2012 and filed on 8th May 2012, court document no:8. This affidavit is in addition to my previous 2 affidavits and adopt for the purposes of the trial on assessment of damages the materials contained in my two previous affidavits and make them part of this affidavit.
Morobe Province sites
Madang Province Sites
National Capital District Sites
Western Highlands Province Sites
East New Britain Province Sites
Eastern Highlands Province Sites
Annexed and marked as annexure "A "are copies of the acquisition agreements for the 20 sites referred to in paragraph 4 of my affidavit
14. The final piece of evidence for the plaintiff is the affidavit of Jerry Balboa Daimo, the former Marketing Manager of Telikom PNG Ltd sworn on 24th May 2014. His evidence is as follows:
The defendant's evidence
15. The defendant's evidence consists of the affidavits of:
16. These are summarized by Mr Asimba in his written submissions. I adopt his summaries as follows:
(a) Mr Anthony Kali, filed on 8 October 2013. Briefly, Mr Kali is a former employee of the Defendant and was in-charge of overseeing the construction of the billboards. Mr Kali deposes that, the Plaintiff was engaged to construct billboards up to a sum of K150,000.00. He deposes that, there is no agreement saying the Plaintiff is the owner of the billboards. He also deposes that, there is no agreement saying that the Defendant is to lease and pay monthly rentals to the Defendant for the use of these billboards. Nor, did Mr Kali receive notices from the landowners authorizing the Defendant to release any monthly rental payments to the Plaintiff or for the Plaintiff to collect rentals on their behalf. For these reasons, the Defendant did not pay any rentals to the Plaintiff;
(b) Mr Philip Aeava, filed on 8 October 2013. Mr Aeava is a former employee of the Defendant and was employed as the Defendant's Chief Legal Advisor. By virtue of the position he held, he had access to the Defendant's records and confirms that, there are no records proving or conferring ownership of the billboards on the Plaintiff, nor records showing that, the Defendant is to lease the billboards and pay a fee as rentals to the Plaintiff. For these reasons, the Defendant never paid the Plaintiff's invoices. Philip also confirms that, the Defendant paid a sum of K147,840.00 being for the payment of the Plaintiff's services; and
(c) Mr Johnson Emeck, filed on 3 October 2013. Mr Emeck is an employee of Western Pacific Lawyers, the Defendant's lawyers. He deposed that, on 15 August 2013 he attended the Registry of Titles Office located within the Department of Lands and Physical Planning at Waigani. He conducted searches to ascertain if there were leases registered in the Plaintiff's name. He deposes that, there are no leases registered in the Plaintiff's name. Then on 12 September 2013, Mr Emeck attended IPA Companies Office at Konedobu and conducted a search to verify if the Plaintiff had truly lodged its Annual Returns for the years, 2008, 2009, 2010 and 2011 as deposed by Mr Anis in paragraph 10 of his Affidavit of 3 April 2013 ('Affidavit No. 3'). Mr Emeck deposes that, according to IPA Companies Office's records, the only Annual Return lodged by the Plaintiff is for the year, 2005.
Issues
17. The issues, agreed by the parties for resolution by this Court are set out in the statement of agreed and disputed facts and legal issues. These are:
18. Before I address these issues, I should make a few remarks in regard to attempts by Mr Asimba to revisit the issue of liability. In both his written and oral submissions Mr Asimba urged the Court to revisit the issue of liability. He submitted that the role of a trial judge when assessing damages following an entry of default judgment is as stated by the Supreme Court in William Mel v Colman Pakali, Commissioner of Police and the Independent State of Papua New Guinea (2005) SC 790. He submitted that the role of the trial judge following entry of default judgment is that:
19. During his oral submissions on this aspect I indicated to him that the issue of liability was not an issue to be determined by the Court as agreed by the parties in their statement of agreed and disputed facts and legal issues.
20. Having heard him, I indicated to Mr Asimba during his submissions that applying the three criteria set out by the Supreme Court in Mel's case, I was of the view that the submission he was advancing was futile and that I should not revisit the issue of liabilities. I held that view because during submissions I made a cursory examination of the Statement of Claim and noted that the facts and cause of action were pleaded with sufficient clarity to establish liability. Accordingly I indicated to him that I would not revisit the issue of liability and accepted that liability was no longer an issue.
21. Further, default judgment was obtained way back in November 2012 as the defendant had not filed its defence within time or at all. The defendant could have applied to the Court to set aside the default judgment or it could have appealed against that decision. It chose not to take any of these courses.
22. Since completing the trial, and hearing submissions I have not changed my view on the issue of liability. Accordingly I decline to revisit the issue of liability.
23. Before I address the several issues agreed to between the parties it is necessary to state some general principles of law. There are no issues between the parties that even if a person has obtained default judgment, a party is not entitled as of right to receive any damages. Injury or damages suffered must still be proved by admissible evidence. See Yange Lagan & Others v Independent State of Papua New Guinea [1995] N1369.
24. Further it is settled where a question on liability was resolved by default judgment, the plaintiff is still obliged to prove its damages on the required standard of proof being on the balance of probabilities. Those damages must be proved by admissible credible evidence. See Coecon Limited (Receiver – Manager Appointed) v National Fisheries Authority of Papua New Guinea (2002) N2182.
25. In Obed Lalip and Others v Fred Sikiot and The Independent State of Papua New Guinea (1996) N1457, the Court held that where, the evidence and the pleadings are confusing, contradictory and inherently suspicious, the plaintiff will not have discharged the onus approving its losses on the balance of probabilities. It is conceivable that such a plaintiff will be awarded nothing.
26. Similar sentiments were expressed in Yooken Paklin v The Independent State of Papua New Guinea (2001) N2212 where the Court held that the plaintiff has the onus of proving its loss on the balance of probabilities. It is not sufficient to make an assertion in a statement of claim and then expect the Court to award what is claimed. The onus 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 that particular allegation.
27. Turning now to the issues. The first issue to determine is who owns the billboards?
28. As to this issue, Mr Mugarenang submits that the issue is not about ownership of various piece of land – rather it is the issue of ownership of the billboards, which were constructed on those 20 different locations. He submits that the evidence from the plaintiff as set out in Exhibit P3 and supported by the evidence of Jerry Damoi shows that the billboards were owned by the plaintiff and that the defendant was to rent those billboards from the plaintiff on a monthly basis or on agreed commercial rate for each billboard.
29. Mr Asimba on the other hand submits to the contrary. He submits that the plaintiff has not produced any evidence that the plaintiff had entered into sub lease agreements or lease in approved forms contained in any of its affidavits tendered in Court to proof the assertions that the plaintiff owns the billboards.
30. I have considered the submissions that have been made by the parties on this issue.
31. In my view, there is a misconception by the defendant. The issue here is not about the ownership of land or pieces of land where the bill boards were constructed on – the issue is ownership of the billboards. On this aspect I accept the evidence of the plaintiff and its witnesses. Mr Anis in his affidavit (Exhibit P3) gives evidence that he constructed the billboards on 20 different sites all over the country. In paragraph four (4) of the same affidavit he sets out the various locations and attaches copies of various tenancy agreements with various owners of the various sites. The plaintiff's evidence is supported by the evidence of Mr Damoi. Mr Damoi was the principle person who entered into discussions, agreements on behalf of the defendant at a relevant material time. He was the person responsible for discussing and entering into the agreement with the plaintiff. I accept his evidence of what was agreed. The defendant has not produced any contradictory evidence contradicting this aspect of the plaintiff's evidence. I do not accept the evidence of the defendant witness because they were not directly involved with the discussions and entering into the agreement with the plaintiff. Moreover, terms of the letter from the defendant dated 17th December 2007 supports the plaintiff's version. It contradicts the evidence of the defendant's witnesses.
32. Accordingly I find on the evidence that the twenty (20) billboards are owned by the plaintiff.
33. The next issue is whether the total rental amount of Twenty Seven Thousand Three Hundred and Ninety Kina (K27,390.00) per month for 20 billboards issued by the plaintiff is reasonable or not.
34. The plaintiff's evidence on this aspect comes from several sources. The primary piece of evidence is in the first affidavit of John Anis (Exhibit P1). There he states, inter alia, that after the plaintiff constructed these billboards, the defendant would rent the billboard, at a standard commercial rate.
35. Mr. Anis then deposes about the standard commercial rate for each billboard; the rent was for each double sided billboard, the rent was K1, 500.00 per month and for each one sided billboard rent was K1, 200.00 per month. This evidence is reflected in the various invoices the plaintiff raised for each billboard for each month over the period 2008 to 2011. Further, Mr. Anis also deposes what other businesses were paying on rentals for other billboards created by other businesses. He says that a comparison between the rental figures the plaintiff was charging for its billboards with what other business were paying for their billboards, shows that the rental charged by the plaintiffs are far below market rates and were reasonable.
36. Mr. Mugarenang submits that both Mr. Anis and his witness Mr. Damoi and the letter from the defendant dated 17th December 2007 shows that the plaintiff was to charge a standard commercial rate for each of the billboards to fetch a monthly lease rental for each billboard.
37. Mr. Mugarenang relied on the judgment of His Honour Gavara-Nanu, J. in KL Engineering Constructions (PNG) Ltd v Daman Sara Forest Products (PNG) Limited N2250.
38. Mr. Asimba has not made any submissions on this aspect.
39. The authorities Mr. Mugarenang relied on are not squarely on point. The decision in KL Engineering and the other authorities relate to calculating interest in a commercial related dispute. In my view, those authorities are not helpful.
40. Mr. Mugarenang submits that the defendant has not offered any evidence to suggest what is reasonable and what is not reasonable rental fee for either each billboard or all the billboards.
41. The plaintiff in its evidence sets out in each monthly invoice the rent to be paid for each billboard at each of the twenty locations. They range from one thousand five hundred kina (K1,500.00) per month per each double side billboard to one thousand two hundred kina (K1, 200.00) per month for each one sided billboard. These added up to twenty four thousand nine hundred kina (K24, 900) per month. GST of 10% was then added onto it, thus bringing the total figure to twenty seven Thousand three hundred and ninety kina (K27, 390.00) per month.
42. In my view there is overwhelming evidence from the plaintiff, which evidence, is not contradicted by the defendant as to what would be a fair rental for the various billboards constructed at the various different locations across the country. The evidence from the plaintiff shows the commercial rate for billboards in other locations in the country paid by other users of billboards. The rate the plaintiff had applied is by comparison to those rates not unreasonable. In my view the commercial rental of twenty seven thousand three hundred and ninety kina (K27,390.00) per month for the 20 billboards was not an unreasonable amount. Accordingly this is not an unreasonable and excessive amount.
43. The next issue is whether or not the plaintiff actually incurred extra costs of eighty seven thousand one hundred fifty eight kina thirty five toea (K87, 158.35) to complete the construction of the billboards.
44. As to this aspects of the claim Mr. Mugarenang submits that the plaintiff has produced evidence as set out in paragraph 7 of Mr. Anis's affidavit (Exhibit P1) showing that the plaintiff had incurred a total amount of Two Hundred Thirty Seven Thousand One hundred Fifty Eight Kina Thirty Five Toea (K237, 158. 35) in actual expenses in constructing the twenty (20) billboards right across the country. Mr. Mugarenang submits that all the receipts of expenses relating to the constructions of the twenty (20) billboards are annexed to Mr. Anis' affidavit. He submits that the amount of Eighty Seven Thousand One Hundred Fifty Eight Kina Thirty Five Toea (K87,158.35) was the amount the plaintiff incurred which was over and above the money that had been advanced to the plaintiff by the defendant. In other words the figure of Eighty Seven Thousand One Hundred Fifty Eight Kina Thirty Five Toea (K87, 158. 35) is a difference after deducting the sum of One Hundred Fifty Thousand Kina (K150, 000.00) from the Two Hundred Thirty Seven Thousand One Hundred Fifty Eight Kina Thirty Five Toea (K237,158.35) being the actual cost of actual construction of the 20 billboards.
45. Mr Asimba has not address this particular issue specifically.
46. As to this issue in my view the evidence is overwhelmingly in favour of the plaintiff. Mr. Anis in paragraph 7 of his affidavit (Exhibit P1) stated clearly the total amount he had incurred in constructing the 20 billboards. The plaintiff has produced receipts of all the expenses. The defendant has produced no evidence challenging or contradicting the evidence on this aspect.
47. Accordingly I find that the defendant is liable to the plaintiff for that sum, namely the sum of Eighty Seven Thousand One Hundred and Fifty Eight Kina thirty five toea (K87, 158.35).
48. As to the last issue or whether the plaintiff is entitled to be awarded Five Hundred Seventy Five Thousand One Hundred and Ninety Kina (K575,190.00), Mr Mugarenang submits that this claim is for loss of income for the period of 42 months commencing 2008 and ending in September 2011. The plaintiff has given evidence as to how he has calculated these figures.
However, it is not clear from all the evidence how long this arrangement between the parties was to last. In other words, there is no evidence how long the rental period was to last. Nevertheless, there is some evidence that the agreement between the parties came to a head around 22 July 2008, when Mr Anis sent an email to Mr Kali in response to an email sent by Mr Kali the previous day, ie on 21 July 2008,
49. In his email of 21 July 2008, Mr Kali wrote:
"Good morning John,
I have completed Lease agreements which are ready for signing.
All additional work has been deferred due to the issues that you are familiar about.
All billboards installed by Interact Marketing have to go into lease or MOU between Landlords and Telikom. I hope you understand as Telikom will not go into a sub lease as we own the billboards.
I anticipate that we sort this out immediately and further advise that you speak with Mr. Isaac Umbu, our Principle Legal Officer.
Regards.
Anthony".
50. On the next day, Mr Anis responded by saying:
"Hi Anthony,
I will start removing all your billboards as you can install them in your own locations identified by Telikom as Interact has already paid and signed agreements with the landowners. Your Billboards will be removed commencing this Thursday and I will advise of their location.
I suggest you discuss this issue as a matter of urgency with your Management. I will commence with the interact billboards in Lae. IF YOU THINK YOU WILL GO AND SIGN AGREEMENTS WITH THE LAND OWNERS AT THE BACK OF INTERACT than you are completely mistaken.
Cheers
John Anis
Note: Mr Loko, I have decided to copy this correspondence to as I do not seem to be getting any feedback from the Legal of the marketing department."
51. From these, I infer and find that the arrangement between the parties came to an end around July 2008.
52. It is not clear from Mr Anis or from the defendant if any of the billboards were pulled down or not. However, in my view, the continual sending of invoices by the plaintiff to the defendant for the whole of 2008, for 2009, 2010 and 2011, indicate that the billboards had not been pulled down and that the defendant continued to benefit from their use financially for those periods. On that basis, I make a finding that the defendant did enjoy financial or commercial benefit from the use of these twenty (20) billboards without paying any rent to the plaintiff for their use.
53. However, it is trite law that, a plaintiff or defendant should mitigate or minimize its loss. In this case, by end of July 2008, it should have been obvious to the plaintiff that there were issues which were going to affect the relationship between the parties. It was therefore obligated to mitigate or minimize its potential loss. It did not do that and instead continued to send invoices, which were ignored by the defendant.
54. For those reason, I would award damages to the plaintiff this way:
Grand Total of K580, 178.85.
Interest
55. As to interest, the plaintiff has claimed interest of 8%. The principles relating to awarding of interest are set out in the Supreme
Court in National Capital Commission v Dademo. I bear those principles in mind. I would award interest at 8% on the judgment sum from the date of filing of the Writ of Summons
to today, a sum of K184, 650.84.
56. There will be Judgment in favour of the plaintiff against the defendant in the total sum of K760, 829. 69 comprising:
& further expenses incurred
Grand Total of K760,829.69
54. The defendant shall pay the taxed costs of the plaintiff.
_____________________________________
Muromu Lawyers: Lawyer for the Plaintiff
Western Pacific Lawyers: Lawyer for the Defendant
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