Y. Rengle Trading Ltd v Kupiane Gold Resources Ltd [2019] PGNC 390; N8138 (2 December 2019)

N8138

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS. NO. 932 OF 2018

BETWEEN
Y. RENGLE TRADING LIMITED
Plaintiff

AND

KUPIANE GOLD RESOURCES LIMITED
Defendant

Waigani: Makail, J
2019: 14^th, 27^th November & 2^nd December

ASSESSMENT OF DAMAGES – Contract – Breach of contract – Assessment of damages – Damages flowing from breach of contract – Claim for principal – Claim for contractual interest – Regular interest – Default penalty interest – Proof of
Cases Cited:

Nil

Counsel:
Mr. E. Wamb, for Plaintiff
Mr. R. Mann-rai, for Defendant

JUDGMENT

2^nd December, 2019

1. MAKAIL, J: Default judgment was entered against the defendant with damages to be assessed on 4^th September 2019. That judgment has not been quashed on appeal and the matter returns for assessment of damages. This means that any submissions made by the defendant and not addressed in this judgment will go to the issue of liability which has been resolved by the entry of default judgment.

2. The plaintiff lent a sum of K200, 000.00 to the defendant to assist its directors to pay for their daily expenses pending sale of landowners 2.5% equity shares and Kupiayan Investment properties following a successful legal proceedings. Following the sale, it would repay the sum borrowed with interest.

3. According to the letter dated 22^nd June 2012, which captures this agreement, interest of 15% will be charged on the principal for each month for three months and thereafter, interest will be charged at 20% for the remaining months where the principal remains unpaid.

4. The sale of the assets did not take place within three months (July to September 2012) and by October 2012, the directors of the defendant instituted legal proceedings against a third party. Along the way, there was a Mediated Agreement signed, then it was challenged by way of another legal proceedings and eventually, by 4^th June 2018, the defendant ended up not repaying K200,000.00 to the plaintiff with interest.

5. There is no dispute between the parties that the defendant is indebted to the plaintiff in the sum of K200,000.00. This is the principal. Therefore, there will be a judgment in the sum of K200,000.00 in favour of the plaintiff forthwith.

6. The interest component of the agreement is the one that is being contested by the defendant. Other than pointing out that there are two conflicting amounts put forward by the plaintiff as interest, one set out in the writ of summons and statement of claim as K3, 250,000.00 and the other in an email dated 24^th August 2018 as K2.2 million, the defendant does not deny the interest rates set out in the letter of 22^nd June 2012.

7. In addition, these sums are not conclusive and binding on the Court to accept and the Court will assess interest having regard to the terms of the agreement between the parties. Secondly, the defendant attempts to introduce the commercial bank interest rates like for example, Bank South Pacific Limited’s (BSP) Interest Bearing Term Deposit (IBTD) of 10% per annum for six years to arrive at a sum of K122,400.00. Again, the proposed rate of 10% overlooks the rate of interest that was agreed between the parties in 2012.

8. It is a useful reminder that in contract law parties are bound by the terms of the contract and where there is disagreement, parties must go back to the contract to resolve the disagreement. Similarly, where there is a breach of the contract, damages will ordinarily flow from the breach.

9. In the present case, parties are bound by the terms of the agreement of 22^nd June 2012. Where interest is due on the principal of K200, 000.00, a rate of 15% is charged on the principal for each month for the first three months. Thereafter, 20% interest per month is charged until the principal is settled. The rate of 20% represents the default penalty interest for the defendant’s default in repaying the principal within three months from the date of advance.

10. The plaintiff submits that this is how regular interest and default penalty interest should be calculated based on the agreement:

(a) The principal: - K200, 000.00

(b) Interest for repayment

period: - 15% of K200,000.00 = K30,000.00 per month

3 months x K30,000.00 = K90,000.00

(c) Default Penalty Interest: - 20% of K200,000.00 = K40,000.00 per month 87 months x K40,000.00 = K3,480,000.00

Total - K200,000.00 + K90,000.00 + K3,480,000.00 = K3,770,000.00

11. The plaintiff’s application and calculation of interests is consistent with the terms of the agreement on regular interest and default penalty interest. On the other hand, the proposals put forward by the defendant are outside the terms of the agreement and will be rejected. There will be a judgment for interest in the sum of K3, 570,000.00 in favour of the plaintiff.

12. The final judgment sum to be entered in favour of the plaintiff is K3, 770,000.00 to be settled by the defendant forthwith. As the plaintiff will be benefiting from the contractual interest, if paid, there is a judgment for statutory interest at the rate of 2% from the date of judgment until final settlement under the Judicial Proceedings (Interests on Debts and Damages) Act 2015. Finally, the defendant shall pay the plaintiff’s costs of the proceedings, to be taxed, if not agreed.
Judgment and orders accordingly.
________________________________________________________________
Edward Wamb Lawyers: Lawyers for Plaintiff
Mann-rai Lawyers: Lawyers for Defendant