Kautu v Bogan [2020] PGNC 463; N8726 (9 October 2020)

N8726

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 632 OF 2019

BETWEEN:
ALBERT KAUTU
Plaintiff

AND:
CHARLIE BOGAN, FRANCISCA MOERE & NIDE BOGAN for and on behalf of WAPICGUHU LAND GROUP
Defendant

Lae: Dowa AJ
2020: 18^th August & 9^th October

DAMAGES – assessment of damages after entry of default judgment – plaintiff claims damages for breach of contract resulting in loss of income and expenses – most of plaintiffs claims not pleaded with sufficient clarity - plaintiff has the onus of proving each head of the damages with credible evidence, and in accordance with the pleadings – law on pleadings discussed and considered – plaintiff awarded damages with interest and costs

Cases Cited:
Papua New Guinea Cases

Coecon v National Fisheries Authority (2002) N2182
Enaia Lanyat v State (1996) N1481
Jonathan Mangope Paraia v The State (1995) N1343
Lagan v The State (1995) N1369
Obed Lalip v Fred Sekiot and The State (1996) N1457
Papua New Guinea v Tole (2002) SC694
Peter Wanis v Fred She and The State (N1350)
Yooken Paklin v The State 92001) N2212

Overseas Cases

Bonham v Hyden Park Hotel Ltd (1948) 64 T LR
Counsel:

The Plaintiff In Person
The Defendant In Person

RULING

9^th October, 2020

1. DOWA AJ: This is an assessment of damages. Default judgment was entered for the Plaintiff on 21^st May 2020.
   
2. The trial on assessment of damages was conducted on 7^th September 2020, and I reserved my decision which I now deliver.
   

Facts

3. On or about 22^nd March 2015, the Plaintiff entered into an agreement with the Defendants to purchase a portion of Customary Land known as “Asu” situated at Butibum village, Lae, Morobe Province. The Defendants are customary land owners of the said land.
   
4. The parties agreed that the purchase price of the land was fixed at K50,000.00.
   
5. The Plaintiff paid K25,000 up front and took possession of the land. The Plaintiff agreed to pay the balance of K25,000 as soon as a title of the property was transferred.
   
6. The Plaintiff intended to use the land to build affordable accommodation houses to the working community in Lae, (which the Defendants dispute).
   
7. The Plaintiff proceeded to obtain a commercial loan of K140,000 from Kina Bank to kick start his housing project.
   
8. About two months into the construction phase, the Defendant, Charlie Bogan wrote to the Plaintiff to cease further development on the land, terminating the agreement.
   
9. Immediately thereafter, the Plaintiff requested the refund of the K25,000. The Defendants paid up K10,000 and the balance of K15,000 is still outstanding.
   
10. This is now the basis of the Plaintiffs claim. In the statement of claim the Plaintiff claims the following heads of damages:
    
    1. K15,000.00 balance of purchase price
    2. General damages for breach of contract
    100. Special damages
    4. Interest
    5. Cost
       
11. Even though the Defendants were served, they failed to file their Defence. On May 2020 Default Judgment was entered for the Plaintiff.
    
12. At the trial, the Defendants made submissions on both issues of liability and quantum.
    

Issues

13. The issues for consideration are two-fold:
    
    1. What is the effect of default judgment
    2. Is the Plaintiff entitled to damages as claimed.
       

Effect of Default Judgment

14. The law on the effect of default judgment is settled in this jurisdiction. A trial Judge must satisfy himself with the principles summarised in the cases; Coecon Ltd (Receiver Manager) v The National Fisheries Authority of PNG (2002) N2182, PNGBC v Jeff Tole (2002) SC 694, and Albert v Aine (2019) N7772. In Albert v Aine, Kandakasi DCJ at paragraphs 7 & 8 of his Judgment said:

“7. Fourthly, the law on the effect of the entry of default judgment is clear. In Coecon Limited (Receiver/Manager Appointed) v. The National Fisheries Authority of Papua New Guinea (2002) N2182, I summarised the principles that govern an assessment of damages after the entry of default judgement in the following terms:

“A survey of the authorities on assessment of damages after entry of judgement on liability mainly in default of a defendant’s defence, clearly show the following:

1. The judgement resolves all questions of liability in respect of the matters pleaded in the statement of claim.
2. Any matter that has not been pleaded but 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 judgement 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.”
8. The Supreme Court in PNGBC v. Jeff Tole (2002) SC694 adopted and applied this summation of the principles. Later, the decision of the Supreme Court in William Mel v. Coleman Pakalia (2005) SC790, did the same. Additionally, however, the Court in that case went further by noting several decisions of the National Court in which the principles were adopted and applied. It then added the following:

“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.”

15. In the present case I have thoroughly examined the pleadings and the cause of action. I have also considered the process and steps taken in the entry of default judgment. I am satisfied that the default judgment is in order and to that extent liability is proven.”
    

Burden of Proof

16. Whilst the issue of liability is settled, the Plaintiff is still required to prove its damages with credible evidence. Ref: Yooken Paklin v The State (2001) N2212, Peter Wanis v Fred Sikiot and The State (N1350), Enaia Lanyat v State (1996) N1481 Obed Lalip v Fred Sekiot and The State (1995) N1457; Jonathan Mangope Paraia v The State (1995) N1343.

Evidence

17. The Plaintiff relies on his Affidavit sworn 25^th June and filed 25^th June 2020 tendered in the evidence and marked as Exhibit P1.

18. The Plaintiff says he owns a business name “Lovo Rental House”. He entered into a contract for the purchase of a customary land on 22^nd March 2015. The land known as Asu is located at Butibum village, containing 5000 square meters from the Defendants, for a sum of K50,000. He said he specifically purchased the property to set up rental homes. After paying the initial deposit he moved into the property and started developing it.

19. He obtained a loan of K140,000 from Kina Bank to construct rental - houses. After commencement of initial work, the Defendants, led by Charlie Bogan terminated the contract for the Sale of the Land.

20. The Defendants then returned K10,000 of the initial deposit with the balance of K15,000.00 remain outstanding.

21. The Plaintiff gave evidence that as a result of the unlawful termination of the contract, he suffered loss. He claims in the monetary terms the following:

1. K 15,000.00 being the outstanding balance of the purchase price
2. K245,307.38 being outstanding loan amount from Kina Bank

100. K 9,240.00 being for monies expended for earth moving expenses

4. K 1,831.94 being for building materials (cement)
5. K 15,158.57 being for fencing materials
6. K 5,000.00 for labour costs
7. K 50,000.00 being for loss of income
   

K311,379.32 Total damages

Defendants Case

22. Mr Charles Bongan, for the Defendants submitted that the Plaintiff is not entitled to claim the damages for the following reasons:

1. The Plaintiffs contract was terminated because the Plaintiff did not keep to the terms of the initial agreement.
   
2. The property was purchased for a family residential home, and not for “Lovo Rent Home”.
   

100. The Defendants were to retain the frontage, whilst the Plaintiff was entitled to the back, containing an area of 50m x 50m.
     

4. The Plaintiffs decision to fence the whole area 150 x 100 m was not the intention and was subject to further confirmation.
   
5. The Plaintiff was yet to be issued with a title, and the contract was terminated early with a refund of K10,000 with the balance yet to be paid.
   
6. The alleged loan obtained by the Plaintiff is a matter for the Plaintiff, and they are not responsible.
   
7. The alleged cost for early earthworks and fencing is not substantial and that the Plaintiff was exaggerating in his claims.
   
8. And finally, the Defendants submit, they have a crossclaim against the Plaintiff for cutting down the trees and destroying the environment.
   

Assessment

23. I have considered the pleadings, evidence and submissions made by both parties.

24. Whilst the Plaintiff has secured default judgment on liability, the Plaintiff has the onus of proving each head of the damages with credible evidence, and in accordance with the pleadings.

25. In Lagan v The State (1995) N1369, Injia J (as he then was) adopted the words of Lord Coddard CJ in Bonham v Hyden Park Hotel Ltd (1948) 64 T LR 177 at page 177 and said:

“Plaintiffs must understand that, if they bring actions for damages, it is for them to prove their damage; it is not enough to write down particulars and, so to speak, throw them at the head of the Court, saying: ‘This is what I have lost, I ask you to give me these damages.’ They have to prove it.”

26. On the issue of pleadings, the Supreme Court settled the law in the case, Papua New Guinea v Tole (2002) SC694. In their judgment, the court said:

” First Two Issues – Pleadings

The first two issues are closely related. They involve the issue of pleadings so they are being dealt with together. The law on pleadings in our jurisdiction is well settled. The principles governing pleadings can easily be summarized in terms of, unless there is foundation in the pleadings of a party, no evidence and damages or relieves of matters not pleaded can be allowed. This is the effect of the judgements of this Court in Motor Vehicles Insurance (PNG) Trust v. John Etape [1995] PNGLR 214 at p.221 and Motor Vehicles Insurance (PNG) Trust v. James Pupune [1993] PNGLR 370 at pp. 373 –374. These judgements re-affirmed what was always the position at common law and consistently applied in a large number of cases in our country. The list of such cases is long but reference need only be made to cases like that of Repas Waima v. Motor Vehicles Insurance Trust [1992] PNGLR 254 and Carmelita Mary collins v. Motor Vehicles (PNG) Insurance Trust [1990] PNGLR 580 at p. 582 for examples only.

This position follows on from the objects behind the requirements for pleadings. As the judgement in Motor Vehicles Insurance (PNG) Trust v. James Pupune (supra) at p. 374 said in summary, pleadings and particulars have the object or functions of:

"1. they furnish a statement of the case sufficiently clear to allow the other party a fair opportunity to meet it;

2. they define the issues for decision in the litigation and, thereby, enable the relevance and admissibility of evidence to be determined at the trial; and
3. they give a defendant an understanding of a plaintiff's claim in aid of the defendant's right to make a payment into court. See Dare v. Pulham [1982] HCA 70; (1982) 148 CLR 658 at 664."

It is clear law that, where a plaintiff’s claim is special in nature, such as a claim for loss of salaries or wages, they must be specifically pleaded with particulars. Unless that is done, no evidence of matters not pleaded can be allowed and relief granted. That is apparent from the judgements in the James Pupune and John Etape cases. These cases adopted and applied principles enunciated in those terms in authorities such as Ilkiw v. Samuel [1963] 2 All ER 879, per Diplock L J at pp. 980-891 and Pilato v. Metropolitan Water Sewerage and Drainage Board (1959) 76 WN (NSW) 364, per McClemens J at 365. This follows in turn from the fact that, our system of justice is not one of surprises but one of fair play. Reasonable opportunity must be given to each other by the parties to an action to ascertain fully the nature of the other’s case so that, if need be, a defendant can make a payment into Court.”

27. I adopt and apply the above principles to the present case, in assessing the Plaintiffs various heads of damages.

K15,000 – balance of Purchase Price

28. The Plaintiff paid K25,000 being the initial deposit on the purchase price of K50,000.00. The Defendants refunded K10,000.00 on termination. There is no dispute, K15,000.00 remains outstanding. This claim is not disputed and I award same.

K245,307.38 – Outstanding Loan and interest

29. The Plaintiff says he obtained a loan of K140,000.00 to build a rented accommodation, under the business name Lovo Rental House. Due to the termination of the agreement, he has suffered loss, as he could not continue with the project, on the property and he has defaulted on the loan, which is now outstanding in the sum of K245,307 with interest accruing daily. In my view, the claim is remote. The clan land usage Agreement dated 12^th February 2015 signed between the Plaintiff and the Defendants show, the property was to be used for a family dwelling home, and not for conducting a rental accommodation as a business. Secondly, the “Lovo Rental Homes” business name was only recently registered as a business, on 12^th November 2019 after the commencement of these proceedings. Thirdly, a loan arrangement is a matter or contractual relationship between the Plaintiff and the Kina Bank. The Defendants are not a party to that agreement. Finally, the evidence shows, the contract for the purchase of the customary land was terminated a few weeks after the signing of the agreement, and no substantial improvement was done on the property. If the loan was taken, and monies were spent elsewhere, it is a matter for the Plaintiff and the Financier. Finally, the Plaintiff did not clearly plead in his Statement of Claim, that he would seek damages under this head of damages. For these reasons, I find the Plaintiff is not entitled to this claim. I make no award in respect of this claim.

Special Damages

30. I note from the Plaintiff’s submissions that he is making various claims for expenses which fall under the head of special damages. I note the Plaintiff did not specifically plead the amounts in the statement of claim. Generally, the Plaintiff is not entitled to make a claim for amounts not pleaded. However, the evidence from both parties show the Plaintiff moved onto the property and did some initial earthworks and construction of a perimeter fence and incurred some expenses. In the circumstances, I am prepared to make some allowance for proven expenses subject to further concessions.

K9,240.00 Expenses for Hire of Earthmoving Machinery

31. The Plaintiff says, he hired a backhoe at the hourly rate of K350 for 24 hours totalling K9,240.00. The Plaintiff attached an invoice from Tawa Plumbing Services dated 24^th March 2015 for K9,240.00. Since the Defendants have allowed the Plaintiff early possession and have conceded that some early work on the property was commenced, I have no reason to reject the invoice. However, the Plaintiff has not specially pleaded the amount in the Statement of Claim. The claim comes under the head of special damages. Due to the lack of pleading for specific amounts, I will only allow 50%. I will award K4,620.00.

K1,831.94 – Builders Mix and River Gravel

32. The Plaintiff claims K1,831.94 for the purchase of River Gravel and Builders Mix from PNG Ready Mixed Concrete Limited. The Plaintiff attaches an invoice dated 26^th March 2015 for the amount claimed. This claim is proven under the general heading of special damages. Again, this claim was not particularised in the Statement of Claim, I will only allow 50% of the claim. I will award of K915.97.

K15,158.57 – Fencing Materials

33. The Plaintiff claim K15,158.57 for fencing materials. The Plaintiff provided an invoice dated 27^th March 2015 from Atlas Steel (POM). It appears the materials were purchased for the fencing of the property. I accept the amount subject to deductions for lack of pleadings. This amount is substantial, and the Plaintiff should have pleaded the specific figures. I note there is some evidence from the defendant that these fencing materials being purchased and used at the premises. For these reasons I will again allow 50% and award K7,579.29.

K5,000 – Labour

34. The Plaintiff claims K5,000 for initial labour. I have no doubt, labour was involved, and the sum of K5,000 is reasonable. However, there was no specific pleading for this claim. I will therefore allow K2,500 only being a reasonable sum.

K50,000.00 – Loss of Income

35. The Plaintiff claims K50,000.00 for loss of income. I reject this claim for two reasons: Firstly, there is no specific pleading on loss of business. Secondly, there is no evidence supporting the claim:

General Damages

36. The Plaintiff made a claim for general damages for breach of contract in the statement of claim but offered no evidence and made no submissions. I will not make any award under this head of damages.

Summary
37. In summary, the total sum awarded is K 30,615.26 which comprise of:

1. K15,000.00 - balance of purchase price
2. K 4,620.00 - hire of earthmoving machine

100. K 915.97- gravel

4. K 7,579.29 – fencing material
5. K 2,500.00- labour
   

K30,615.26 - Total

Interest

38. I will allow interest at 8% on K30,615.26 from the date of filing of writ, 24^th May 2019 to 9^th October 2020 (503 days). Interest is calculated at the daily rate of K 6.71 for 503 days which amounts to K3,375.13. The total judgment sum is K33,990.39.

Cost

39. The Plaintiff claims cost of the proceedings. I will allow cost of the proceedings in favour of the Plaintiff.

Orders

1. There shall be judgment for the Plaintiff in the sum of K 33,990.39.
2. Post judgment interest shall accrue at the rate of 8% until settlement.
3. The Defendant shall pay the cost of the proceedings to be taxed, if not agreed.
4. Time be abridged
   

________________________________________________________________
Albert Kautu: Plaintiff in Person
Charlie Bogan: Defendant in Person