Sorum v Aloi [2020] PGNC 193; N8416 (16 July 2020)

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AND:
DANIEL ALOI AS THE PROVINCIAL ADMINISTRATOR MADANG PROVINCIAL GOVERNMENT
First Defendant

AND:
PAULINE AINUI AS THE DIRECTOR HUMAN RESOURCE DIVISION OF MADANG PROVINCIAL ADMINISTRATION
Second Defendant

PETER TOROT AS THE DEPUTY PROVINCIAL ADMINISTRATOR IN CHARGE OF COMMUNITY AND LOCAL LEVEL GOVERNMENT AFFAIRS
Third Defendant

AND:
JOE YAMA AS THE TOWN MAYOR, MADANG URBAN LOCAL LEVEL GOVERNMENT
Fourth Defendant

DAMAGES - Assessment of damages – Breach of contract – Negligence – Unpaid Entitlements - Liability not in issue – Appropriate Amount for Each Head of Damages Claimed – General Damages for Breach of Employment Contract – Special Entitlement of Office- Exemplary Damages – Whether Appropriate in the Circumstances

INTEREST ON DAMAGES – Whether provincial government and local level government part of the state for purposes of the Judicial Proceedings (Interest on Debts and Damages) Act 2015

The Plaintiff was the former Town Manager of Madang. He was appointed through the Public Service process, but his appointment was refused by the Town Mayor. He successfully obtained a court order to commence work in a separate judicial review proceeding. After working for a period of time, he was not allowed to continue work as the town manager although his contract had one (1) year and 45 days left and he was on his base salary. He claims general damages for breach of contract and negligence, exemplary damages and unpaid special benefits. His claim was not defended and he obtained default judgment. He is now before the court for assessment of damages.

(1) When default judgement is entered against the defendant, it is conclusive as to the issue of liability (Coecon Ltd (Receiver-Manager Appointed) v National Fisheries Authority of Papua New Guinea (2002) N2182 and Patai v Niugini Lumber Merchants Pty Ltd (1997) N1602 followed).

(2) The role of the trial judge assessing damages after entry of default judgment is restricted to making a cursory inquiry into the circumstances in which liability was established 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 (Felix Kua v. Clement Patiken (2010) N4103 followed).

(3) General damages for stress and anxiety is not generally awarded in breach of employment contract, but in circumstances where the contract was based on statute and the defendants embarked on a course to frustrate the contract by refusing to allow the plaintiff to commence work and he had to obtain a court order, commenced unfounded disciplinary proceedings, placed him in a pool, an action which the court in the past has discouraged and then treating him differentially from other previous occupants of the position, plaintiff should be allowed general damages (Baboa v PNG Communication Workers Union(2006) N3043 followed).

(4) General damages for negligence was not awarded as the pleadings was lacking in particularity and the lack was not cured by the evidence tendered and consequently no award of damages for negligence was ordered.
(5) In circumstances where the contract was based on statute and the defendants embarked on a course to frustrate the contract by refusing to allow the plaintiff to commence work and he had to obtain a court order, commenced unfounded disciplinary proceedings against him, placed him in a pool an action which was not in the public interest and then treating him differentially from other previous occupants of the position, the plaintiff should also be allowed exemplary damages.

(6) The 2% cap on debts and damages in the Judicial Proceedings (Interest on Debts and Damages Act) 2015 is not applicable to Provincial Governments and Local Level Governments where the State is not a party to the proceedings.

Air Niugini Ltd v Kavieng District Development Authority (2019) N8158
Ambo v Woodford (2016) N6254
Baboa v PNG Communication Workers Union (2006) N3043
Coecon Ltd (Receiver-Manager Appointed) v National Fisheries Authority of Papua New Guinea (2002) N2182
Davidwestern Advertising Group Ltd v HIRI 152 Developments Ltd (2019) N8112
Felix Kua v. Clement Patiken (2010) N4103
Habolo Building & Maintenance Ltd v Hela Provincial Government (2016) SC1549
Himsa v Sikani, Commissioner of Correctional Services (2002) N2307
Lewis v Lae Builders & Contractors Ltd (2014) N7554
MAPS Tuna Limited v Manus Provincial Government (2007) SC857
Patai v Niugini Lumber Merchants Pty Ltd (1997) N1602
Rodao Holdings Ltd v Sogeram Development Corporation Ltd (2007) N5485
SCR No 1 of 1998; Reservation Pursuant to Section 15 of the Supreme Court Act (2001) SC672
Sorum v Kamo (2013) N5359.

1. NAROKOBI J: On 9 March 2020, default judgement was entered against the defendants pursuant to Order 12 Rules 25(b) and 28 of the National Court Rules on liability as pleaded in the statement of claim, subject to a trial on assessment of debts and damages. This is the court’s decision on assessment of damages after liability was entered by default.

2. The plaintiff, Mr Lau Sorum (I will be referring to either “the plaintiff” or “Lau Sorum” interchangeably in my judgement) was the Town Manager of Madang, working with the Madang Urban Local Level Government (MULLG). His employment as town manager was effectively terminated on 12 November 2015 when he was transferred to another position and stayed until his contract expired on 1 October 2016. The plaintiff commenced this proceeding against the defendants seeking damages for unpaid entitlements, breach of contract and negligence.

3. The defendants are – Mr Daniel Aloi, as the Provincial Administrator, Madang Provincial Government, First Defendant; Pauline Ainui as the Director Human Resources Division of Madang Provincial Administration, Second Defendant; Peter ToRot as the Deputy Provincial Administrator in charge of Community and Local Level Government Affairs, Third Defendant; Joe Yama as the Town Mayor, Madang Urban Local Level Government, Fourth Defendant; and Madang Urban Local Level Government, Fifth Defendant.

4. On 23 August 2018, the plaintiff filed his writ of summons and soon after served on all the defendants. No Defence was filed within the stipulated period in the National Court Rules, although there is evidence in the court file of appearance of counsels for the defendants from time to time at various stages of the proceedings.

5. As stated above default judgement was entered on 9 March 2020 with damages to be assessed.

6. Trial was conducted by affidavit. On 12 June 2020, trial was concluded by the plaintiff tendering his affidavit. On 16 June 2020, the plaintiff made submissions on assessment of damages, and I reserved my decision to today.

7. In my view the following are the issues I should deliberate on and determine:

8. I therefore consider the facts and law in relation to these issues I have identified as is applicable to the particular circumstances of this case.

9. The Plaintiffs case is basically to claim unpaid special entitlements for his position as town manager, general damages for breach of contract and negligence and exemplary damages for the manner in which he was treated.

10. In the plaintiff’s statement of claim, from paragraphs one (1) to eight (8), he pleads his legal capacity and of all the defendants and their various responsibilities in relation to their positions.

11. At paragraph nine (9) the SOC pleads that on 16 August 2012 the plaintiff secured employment with the Madang Provincial Administration as the town manager of MULLG. It is a designated Provincial Administration position under a written contract. The employment contract was for a period of three (3) years commencing 16 August 2012.

12. On 20 August 2012, the plaintiff wrote to the chairman of the Public Service Selection Committee, accepting the offer and expressed his wish to start as soon as possible (para 10, SOC). The acceptance was copied to the second, third and fourth defendants (para 11, SOC). The fourth defendant at the time was Mike Kamo, the predecessor of Mr Joe Yama.

13. Mike Kamo refused to allow the plaintiff to assume his role as town manager and as a result the plaintiff took out judicial review against the defendants in OS (JR) 158 of 2013 (para 13, 14 and 15, SOC).

14. The court declared that the Provincial Administrator was the appointing authority and not the MULLG. The court then ordered that the plaintiff was to assume office by 12 noon on 1 October 2013 (para 16 and 17, SOC).

15. The plaintiff assumed office about one (1) to two (2) hours after 12 noon on 1 October 2013 (para 17, SOC).

16. At para 18 of the SOC the plaintiff pleads “...when the court ordered the plaintiff to assume office on the 1^st October 2013, the plaintiffs three-year period commenced on that date and which contract shall expire on or about 1^st October 2015.”

17. On 22 April 2015 the Fourth Defendant held a special assembly meeting with ward members and raised several allegations against the plaintiff and requested the Fourth Defendant to suspend the Plaintiff.

18. The first defendant then charged and suspended the plaintiff. After his response, the charge was uplifted, but the plaintiff was not advised to return to the position of Town Manager (para 20 and 21, SOC).

19. On 12 November 2015, the first defendant, on the influence of the fourth defendant, decided to remove the plaintiff from the position of Town Manager and placed him as the special project officer to coordinate the management of JICA funded Madang Town Market. However, there was still reluctance and refusal by the Town Mayor and this arrangement did not materialise (para 22, SOC).

20. At para 23.1, 23.2 and 23.3 of the SOC the plaintiff provides the particulars of the breach of contract in that there was no reason provided to him to stop him from assuming his role when there was one (1) year, 45 days left in his contract, and it was also in direct breach of the order made on 30 September 2013 in OS 158 of 2013.

21. The plaintiff also pleads negligence against the second defendant on the basis that the second defendant failed to advice the first defendant that the contract between the plaintiff and the first defendant was still in existence (para 24.1, 24.2 and 24.3).

22. The plaintiff further pleads negligence against the third defendant on the basis that he failed to advise the first defendant that there was still a contract in existence with the plaintiff so that he would not have embarked on the course he did to transfer the plaintiff (para 24.4, 24.5, 24.6 and 24.7).

23. The plaintiff then pleads at para 26 that the position of Town Manager came with special perks and privileges. On 12 February 2000, in a Special Madang Urban Local Level Government Assembly in meeting number 1 of 2000, the Assembly resolved that as an incentive to town managers, it would fund perks and privileges through resolution number 2 of 2000, the following:

24. The plaintiff says that during his tenure as town manager he did not benefit from these perks and privileges owing to the collective efforts of the defendants to prevent him from settling in as Town Manager (para 27 and 28, SOC).

25. The plaintiff as a result claims general damages for breach of contract, general damages for negligence, payment of the perks and privileges, exemplary damages, interests and costs.

26. The plaintiff relies on his own affidavit filed on 29 March 2020, that is the affidavit of Lau Sorum. After going through the affidavit, I am satisfied that it confirms the matters pleaded in the statement of claim, and in the interests of brevity, I will not repeat them, but there are a few factual matters that I wish to highlight.

27. The plaintiff joined the public service on 4 May 1981 in New Ireland and continued to serve for over 37 years (para 2, affidavit).

28. In 2006, Lau Sorum formally joined the Madang Provincial Administration attached to the Madang District Administration. During the course of his employment career with the Madang Provincial Administration, attached to the Madang District, he acted in several capacities, including being the executive assistant to the then Town Manager Chapau Lili, Deputy Town Manager under Town Manager John Barre and subsequently as the acting Town Manager after resignation of Town Manager John Barre (para 3, affidavit).

29. During his time as acting town manager, he was paid some of the special entitlements of town manager. He attaches a copy of agreement signed by the predecessor of the current fourth defendant and the plaintiff, dated 10 January 2011, stating that he was entitled to housing allowance of K1,500 per month (para 4, affidavit).

30. Mr Sorum was appointed as town manager on 16 August 2012 and due to refusal by the then fourth defendant, Mike Kamo to allow him to assume office, he did not take up his position and sought judicial review in OS 158 of 2013 (para 7 to 9, affidavit). This decision is reported as Sorum v Kamo [2013] PGNC 162; N5359.

31. At paragraph 11 of Mr Sorum’s affidavit he attaches a copy of the contract for the position of town mayor, and he says that it is undated because he was told not to put any dates on it. This occurred on 1 October 2013.

32. At paragraph 12, Mr Sorum attaches a copy of the resolution number 02/2000 outlining the perks and privileges of the office of town mayor. The relevant part reads:

A brief was provided by the Town Mayor in which the old rates were listed along side the proposed new rates taking into account CPI increases.

As it is an integral part of that position there was not much discussion held bu the following perks and privileges are confirmed as being part and parcel of the Town Manger’s position at the MULLG.

then, MULLG should provide accommodation allowance at reasonable market price. Like a 3 bedroom fully furnished house now would be K1,500 – K2,000 per month.

be paid. Rates will depend on type of vehicle e.g. 4 wheel drive vehicle rate from K2.50-K5.00 per km. Others K1.00 – K2.00 per kilometre.
_________________________________________________________
RESOLUTION NO. 02/2000

AS IT IS PART AND PARCEL OF THE POSITION, PERKS AND PRIVILEGES AS OUTLIBED ABOVE ARE NOW CONFIRMED AT THE NEW RATE.

33. Mr Sorum says that when he was appointed as town manager, he did not fully enjoy all the perks and privileges of office (para 15, affidavit).

34. At paragraph 45, Mr Sorum says that he had one (1) year and 45 days left in his contract before he was transferred to another position and the contract that he was entitled to, was never performed thereon.

35. When I asked him during submission as to whether he continued to receive his base salary despite not performing his duty as town manager, he answered in the affirmative.

36. At paragraph 55, Mr Sorum says that if he continued in office, he would still be enjoying the perks and privileges given to him by the MULLG Resolution and therefore he would have been entitled to the following allowances commencing 1 October 2016 to 1 October 2019:

No	Type	Rate	Period	Amount
1	Vehicle	K900 per day	X365x3 years	K985,500.00
2	Housing	K1,500 to K2,000 per month	X 36 months	K54,000
3	Entertainment	K1,500	X 3 years	K4,500
4	Telephone	K1,000	X 3 years	K3,000
5	Utility	K1,000	X36 months	K36,000
			Total	K1,083,000.00

37. In his submission Mr Sorum relies on the case of Boas v Gelen (2014) N5649 to submit that failure by the defendants to file their defence in respect of this claim entitles the court to assume that the claims are presumed to be proven.

38. Mr Sorum also points the court to the decision of Himsa v Sikani, Commissioner of Correctional Services (2002) N2307 that deemed the practise of placing officers in the pool in the public service an illegal practise.

39. For general damages for breach of contract Mr Sorum submits that decision of the defendants had great negative impact on him amongst his colleagues, his community and the immediate family. He relies on the case of Rodao Holdings Ltd v Sogeram Development Corporation Ltd (2007) N5485 and argues that in that case breach of contract attracted general damages for K50,000 and since that case was decided some time ago, he should be entitled to damages in the range of K200,000 to K250,000.

40. In respect of special entitlements of the office, which Mr Sorum refers to as the “perks and privileges” of office he says that although vehicle and housing is not a condition of employment under the Public Services Management Act 1995 as well as the relevant Public Service General Orders, given the status of the position of Town Manager and duties associated with such position within the MULLG, the MULLG decided to create an incentive to attract qualified persons to this position through one of its Assembly Resolution number 02 of 2000. This resolution is annexed as Annexure E to the affidavit of Mr Sorum.

41. Mr Sorum submits that the Resolution is still effective to this day, and has not been rescinded. According to Mr Sorum previous town managers like Anton Yagama, James Yali and John Barre have enjoyed these special entitlements except him.

42. Mr Sorum states that he should be entitled to K1,083,000.00 composed of the following:

No	Type	Rate	Period	Amount
1	Vehicle	K900 per day	X365x3 years	K985,500.00
2	Housing	K1,500 to K2,000 per month	X 36 months	K54,000
3	Entertainment	K1,500	X 3 years	K4,500
4	Telephone	K1,000	X 3 years	K3,000
5	Utility	K1,000	X36 months	K36,000
			Total	K1,083,000.00

43. To support this head of damages, Mr Sorum relies on the case of Tapu Construction Ltd v JT (Ramu) Construction Ltd (2012) N4811. He says that the special entitlement is a debt due and owing to him as was found in that case.

44. In terms of negligence, the plaintiff does not plead a specific figure, but argues that second defendant was negligent as she was Director Human Resources and failed to advise the First Defendant of the existence of the court order, ordering the plaintiff to assume work as town manager.

45. The plaintiff says the third defendant was also negligent as he should have advised the First Defendant not to terminate the plaintiff’s employment status. No specific figure for general damages is claimed for their negligence.

46. In support of his contention for negligence, the plaintiff relies on the case of Limitopa v State [1988-89] PNGLR 364 and Haygit v David (2018) N7367.

47. The plaintiff also claims exemplary damages for the sum of K10,000.00 from each defendant. He says that OS 158 of 2013 was crystal clear in that the appointing authority is the Provincial Administration. The influence as exerted by the Fourth Defendant on the First Defendant to arrive at such a decision and further the failure by the second and third defendant in not advising the First Defendant of the decision in OS 158 of 2013 is tantamount to a serious failure jointly and severally.

48. I accept the plaintiff’s evidence set out in his affidavit, except for a few matters, which I will point out when determining the issue of appropriate damages to award.

49. When default judgement is entered against the defendant, it is conclusive as to the issue of liability (Coecon Ltd (Receiver-Manager Appointed) v National Fisheries Authority of Papua New Guinea (2002) N2182; Patai v Niugini Lumber Merchants Pty Ltd (1997) N1602).

50. The National Court in Papua New Guinea has awarded general damages for breach of employment contract, see Baboa v PNG Communication Workers Union (2006) N3043. This case involved an employment contract, not a management contract as was in the case of Rodao Holdings Ltd v Sogeram Development Corporation Ltd (2007) N5485, and therefore, general damages awarded in Rodao Holdings Ltd v Sogeram Development Corporation Ltd is not appropriate to consider in the circumstances of this case.

51. Despite entry of default judgement, plaintiff is still required to provide evidence to substantiate his or her loss, and it would be preferable if that evidence is corroborated (Patai v Niugini Lumber Merchants Pty Ltd (supra)).

52. In terms of exemplary damages, the following explanation is a useful guide from 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).”

53. Exemplary damages was considered in the case of Ambo v Woodford (2016) N6254 but not awarded for the following reason:

“Whilst it is clear that in this case that the defendants had acted wrongfully nevertheless, in my view there is no evidence that the defendants acted with any recklessness, malice or deceit. Therefore, I would not award any amount for exemplary damages.”

54. The converse would therefore be true that if the defendant acted with recklessness, malice or deceit then it would be an appropriate case for exemplary damages.

55. For purposes of calculating interest on debts and damages, the relevant law is the Judicial Proceedings (Interests on Debts and Damages) Act 2015.

56. After considering the law relevant to the issues, I apply them to the issues in the following manner.

57. I follow the National Court’s ruling in Coecon Ltd (Receiver-Manager Appointed) v National Fisheries Authority of Papua New Guinea and Patai v Niugini Lumber Merchants Pty Ltd and hold that once default judgement has been entered, all issues of liability are considered as determined.

58. Nevertheless, I have taken the course Cannings J took in Kua v Patiken (2010) N4103where he held:

“The role of the trial judge assessing damages after entry of default judgment is restricted to making a cursory inquiry into the circumstances in which liability was established 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.”

59. So I find that in this case from the evidence and the statement of claim that the facts and the cause of action are reasonably clear and should be regarded as proven, subject to the issue of damages for negligence, which I will deal with later.

60. General damages for breach of employment contract are not generally awarded. This was the course followed in Lewis v Lae Builders & Contractors Ltd (2014) N7554. That is not to say that they have been awarded, and here I refer to the case of Baboa v PNG Communication Workers Union (2006) N3043, where general damages of K10,000 was awarded for breach of employment contract for inconvenience suffered.

61. In this particular case, since liability has been settled by default, I proceed on the premise that there is a breach of employment contract and it is not an issue now. I accept the plaintiff’s evidence and pleadings that since his employment, up until his contract period expired, the defendants have engaged in a conduct that has prevented the plaintiff from performing his appointed role, and that he had a period of one (1) year 45 days remaining before he was placed in the general public service pool and made to wait until his term of contract expired.

62. In the first instance, after his appointment through the public service process, he was not allowed to assume office, prompting him to bring the matter to court (Sorum v Kamo (2013) N5359). This resulted in the court deciding in his favour, ordering the defendants to allow him to commence work.

63. After he commenced work, he was disciplinarily dealt with. The disciplinary charges were found to be baseless after he responded to the allegations, and he again resumed work.

64. It was not long thereafter, and the plaintiff was placed in the pool and not allowed to perform his appointed role, despite continuing to be on his base salary and importantly despite his contract continuing to operate. This particular type of practice has been discouraged by the court in Himsa v Sikani, Commissioner of Correctional Services (2002) N2307.

65. I consider that this must have caused the plaintiff considerable inconvenience, stress and anxiety and he should be entitled to general damages in the particular circumstances of this case. I place a caveat that general damages for breach of employment contract is not usually awarded for breach of employment contract.

66. I determine that the appropriate damages for breach of contract in this particular case is K20,000.00. Baboa v PNG Communication Workers Union was decided some 14 years ago, I would therefore increase the amount for two reasons – effluxion of time and for the egregious conduct of the defendants as alluded to above.

67. On the third issue, as I said previously, I accept the plaintiff’s submission, that upon entry of default judgment the issue of liability is resolved, and so the resolution 2 of 2000 of the fourth defendant is considered as legally binding.

68. There may be an issue as to whether the occupants of town manager should only be entitled to what is stipulated in their contract, and no other entitlements. But the defendants chose not to file any defence and raise this argument and so I am left with the issue of liability being resolved in the way that it has been by default.

69. I also note from the evidence that this entitlement has been in existence since 1997, and was increased in 2000, and that as the evidence stands, other occupants of the office of town manager have been paid these allowances and continue to be paid.

70. I would presume that these are budgeted items and the national government and provincial government have not taken issue with the payment of these allowances when the MULLG accounts are audited every year.

71. Obviously this does not obviate the need for the court to consider each item individually and determine their reasonableness in the circumstances of this case.

72. For housing allowance, I note that he is paid housing allowance of K5,000 a year from his basic salary, so I deduct that from his claim of K54,000 an amount of K15,000 (K5,000 per year for three years) and award a sum of K39,000.

73. I accept the claim for entertainment allowance and award K4,500 as being reasonable.

74. I accept the claim for telephone allowance and award K3,000 as being reasonable.

75. Although the sum of K36,000 for utility is acceptable on the face of it, I will discount it by 50% as there is no evidence that the plaintiff pushed for this entitlements during the currency of his contract as he did for his housing allowance, so I award K18,000 as being reasonable. Although he says he wrote several letters (para 44 of Mr Sorum’s affidavit), these letters are not in evidence.

76. For vehicle allowance, I reject the amount claimed for vehicle at K900 a day, totalling K985,500 as being unreasonable. After carefully studying Resolution 2 of 2000 and considering the facts of the case in the plaintiff’s affidavit, it does not say that the plaintiff is entitled to vehicle hire at K900 a day. All it says is that if he is not provided a vehicle, then the MULLG will hire a car at various rates.

77. Granted that he is entitled to a vehicle from the MULLG, I consider that a sum of K5,000 a year, similar to housing allowance that he receives in his base salary would be appropriate and I award a total of K15,000 being the total for the three years.

78. I would as a result award a total of K79,500 for his special entitlements as town manager.

79. On the fourth issue of general damages for negligence, after reading the SOC and the plaintiff’s affidavit on the alleged negligence of the second and third defendants, I am not able to see a clear nexus from their actions and that of the First Defendant, so I do not award any amount for this claim.

80. There is no corroborating evidence to suggest that the second and third defendants failed to advise the first defendant to perform the contract with the plaintiff. It is also likely that they did advise the first defendant and he failed to take up their advice.

81. I would therefore dismiss the claim for negligence as being insufficiently pleaded and lacking in corroborating evidence.

82. Exemplary damages is awarded to punish 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 (Felix Kua v. Clement Patiken).

83. I consider that the first, fourth and fifth defendants should be responsible for exemplary damages for not fulfilling a court order and having conducted a path to frustrate a lawful contract, duly sanctioned by the court. I therefore award a fixed sum of K10,000 in exemplary damages.

84. I would have awarded a higher sum if the plaintiff was not paid his basic salary throughout the period of the contract.

85. As I alluded to above, the plaintiff was lawfully appointed to the position of town manager. He was not allowed to perform his role and as a result he had to take the matter to court. After the court ordered the defendants to facilitate his entry to office, he again encountered difficulty.

86. He faced disciplinary charges which were subsequently thrown out as baseless after his responded to the charges.

87. There was a period of time left in his employment term and he was displaced and put in the general pool, a practice the court in the past says should be discouraged (see Himsa v Sikani and the State).

88. The plaintiff was also given differential treatment to the other previous occupiers of the position of town manager as he was not paid the special benefits of town mayor.

89. Also of great concern to the public is the fact that there are two people being paid for the same position. In the plaintiff’s affidavit, he says that the fourth defendant opted to have the deputy town manager Philp Possanau act as the town manager. The public was paying for two people, for the same job, a considerable waste of public funds.

90. The defendants have behaved in a manner that frustrated a lawful contract and was not in the public interest and I find that a case for exemplary damages has been made out and an award of K10,000 will send a message to the defendants to observe the law and treat people fairly.

91. Since the plaintiff also claims interest, I also have to decide how I should determine the issue of interests on the three categories of damages I have awarded.

92. The Judicial Proceedings (Interests on Debts and Damages Act), limits interest to 2% against the State for pre-judgment interests on recovery of debts and damages. Section 4 provides:

(1) Subject to Section 5, in proceedings in a court for the recovery of a debt or damages, the court may order a rate as it thinks proper to be applied to the sum for which judgment is given interest, 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), including proceedings arising out of a breach of express or implied contract or mercantile usage, are taken against the State, the rate of any interest under that subsection shall not exceed 2% yearly.

(3) The maximum rate of interest in Subsection (2) applies notwithstanding that the proceedings against the State arose out of a breach of express or implied contract or mercantile usage and the relevant interest rate in the contract or mercantile usage is higher than 2%...”

93. In the same Act, Section 6 also provides for post-judgement interest against the state at a maximum of 2%:

(1) Subject to Subsections (2) and (3), where judgment is given or an order is made for the payment of money, interest shall, unless the court otherwise orders, be payable at the prescribed rate from the date when the judgment or order takes effect on such of the money as is, from time to time, unpaid.

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

94. My question is whether a provincial government and a local level government is subject to the Judicial Proceedings (Interests on Debts and Damages) Act. The question arises because the provincial government and the local level government are named as defendants in this matter and not the independent state of Papua New Guinea. The issue is whether the provincial government and local level government is part of the “State.” The Act does not define the meaning of State. The Interpretation Act Ch no 2 defines the State at Section 3 as “The Independent State of Papua New Guinea.”

95. I note that for purposes of the Claims By and Against the State Act 1996, the Supreme Court has taken different positions with respect to different provisions in the legislation. In SCR No 1 of 1998; Reservation Pursuant to Section 15 of the Supreme Court Act (2001) SC672 the Supreme Court held that for purposes of Section 13 of the Claims By and Against the State Act, the provincial government was part of the state. In MAPS Tuna Limited v Manus Provincial Government (2007) SC857, the Supreme Court held that where the State is not a party, and the only party is the provincial government, then for purposes of Section 5 notice, it is not necessary to give notice to the State. MAPS Tuna Limited was followed in Habolo Building & Maintenance Ltd v Hela Provincial Government (2016) SC1549, where the Supreme Court made obiter remarks that where only the provincial government is sued, it is not necessary to give section 5 notice. In other words, a provincial government is not part of the state.

96. In my respectful view, the position on the application of the Claims By and Against the State Act should be read consistently with the Judicial Proceedings (Interests on Debt and Damages) Act as interpreted in the Supreme Court cases of MAPS Tuna Limited v Manus Provincial Government and Habolo Building & Maintenance Ltd v Hela Provincial Government.

97. The Organic Law on Provincial and Local Level Government 1995 (Organic Law) provides for the law-making powers of the provincial government and local level government. Where the national government invokes Section 41 of the Organic Law that the Act relates to a matter of national interest, then a provincial government or a local level government may not legislate on the subject matter.

98. I note that Section 1(2) of the Judicial Proceedings (Interests on Debt and Damages) Act states relevantly:

“(2) For the purposes of Section 41 of the Organic Law on Provincial Governments and Local-level Governments, it is declared that this Act relates to a matter of national interest.”

99. Does this mean that the Act is intended to extend to the provincial government and local level government? This is unclear from the Act itself, for the reason that the subsequent provisions of the Act does not go on further to define the state.

100. This to me suggest that the operation of sub-section 1(2) of the Act is only intended to prevent provincial governments and local-level governments to legislate in a way that will affect the national government on this issue. Parliament did not intend to extend the application of the Act to provinces and local level governments on the rate of interest on debts and damages unless the state is named as a defendant. If it did, it would have said so in the legislation. This conclusion is buttressed by inference to Section 6(5) of the Act, where it states:

...(5) Notwithstanding anything in this section, where the judgment given or the order made is given or made against the State —

(b) to avoid any doubt, no interest is payable on taxed costs until a certificate of taxation is served on the State; and

101. A certificate of judgement is regulated by the Claims By and Against the State Act. Section 6 appears to be saying that interest or at least post judgement interest cannot be claimed unless a certificate of judgement is endorsed by the Solicitor General. It has been held by this court that a certificate of judgement is not applicable to District Development Authority by Anis J in Air Niugini Ltd v Kavieng District Development Authority (2019 N8158 for the reason advanced in his Honour’s own decision in the case of Davidwestern Advertising Group Ltd v HIRI 152 Developments Ltd (2019) N8112:

“16. The first material fact to note, in my view, is that the State or the Independent State of Papua New Guinea is not named as a party to this proceeding. In my view, section 3 of the Interpretation Act is expressly clear. The 6th defendant is not the Independent State of Papua New Guinea as defined under section 3. It may be a public body or an entity of the State. However, it is not, in my view, the State as defined by the Act of Parliament, namely, by the Interpretation Act. The Supreme Court in Habolo Building and Maintenance Ltd v. Hela Provincial Government (2016) SC1549, also expressed its view on point, which I find to be accurate, and I quote in part,

20. It has been presumed that the appellant was obliged to give a Section 5 notice before commencing the proceedings. In fact, a Section 5 notice was not necessary as there was no claim against “the State”. If a person sues a provincial government, as distinct from the State, and does not sue the State, it is not necessary to give a Section 5 notice.”

102. I see no reason why this reasoning should not be extended to provincial governments and local level governments. It would be strange for the Solicitor General to endorse a certificate of judgement where he or she has not appeared as a lawyer representing any of the parties.

103. This will cause undue hardship and stress on a successful litigant in a proceeding arising from the delay in the process of getting the certificate of judgement signed, where the state is not a party.

104. Imagine also the different provinces, and so many local level governments being involved in litigation, and the costs of travel to Port Moresby to get their certificate of judgement endorsed and further having to inundate the office of the Solicitor General.

105. I therefore find that the cap of 2% in the Judicial Proceedings (Interests on Debts and Damages) Act, the requirement for endorsement of certificate of judgement by the solicitor general and for taxed costs, do not apply to the provincial government and the local level government as they are a separate legal entity mandated by the Organic Law to sue and be sued and in this particular case, the State is not named as a party.

106. As a result of this conclusion I now follow the method of calculation in Baboa v PNG Communication Workers Union with necessary modifications as outlined below to determine the appropriate interest to award.

107. For the general damages and exemplary damages, interest is calculated from the date of service of the writ (28 August 2018) to the date of judgment (16 July 2020). I determine that interests should be 8% and so interest on damages should be:

108. For special damages it is from the date of the cause of action to the date of judgement ie 16 July 2020. I determine that the date for the cause of action should be 1 October 2016, when the contract expired. I further determine that interest for this category should be 4%. Damages on special should be calculated as follows:

109. The total interests on the judgement sum is therefore K16,607.50 made up of K4,550 being for interest on general and exemplary damages and K12,057.50 being for interest on special damages.

110. In consideration of the facts, the issues and the law, I make the following orders in relation to this matter:

8. Time is abridged.
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National Court of Papua New Guinea

Sorum v Aloi [2020] PGNC 193; N8416 (16 July 2020)