Moberry Investments Ltd v Hardware Haus Ltd [2022] PGNC 211; N9633 (23 May 2022)

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DEBT – breach of contract- debt due pursuant to invoices rendered and unpaid under subcontract-defendant failure to honor invoices.

JUDGMENT AND ORDERS- default judgment-assessment after default judgment-whether particulars of debt pleaded.

The plaintiff signed various sub-contracts with the defendant and issued invoices at various stages of each of the projects. The defendant paid all the invoices, except the last 8 invoices of which part-payment of K129,414.56 was made for one (1) leaving an unpaid balance of K30,592.36 which when added to the other seven (7) unpaid invoices gives a total of K254,188.34. The defendant failed to file defence and the plaintiff obtained liquidated default judgment of K254,188.34 plus interest on the 10 September 2020 and on 9 April 2021 the Court set aside the Order for liquidated default judgment of 10 September 2020 and, in its stead, entered default interlocutory judgment in favour of the plaintiff with damages to be assessed.

(1) The defendant shall pay to the plaintiff a debt of K254,188.34 plus interest of K44,402.87, being a total judgment sum of K298,591.21; and

(2) Costs of and incidental to the proceedings be borne by the defendant, to be taxed if not agreed; and

Cases Cited:
PNGBC v Tole [2002] SC694
Mel v Pakalia [2005] SC790
Reid v Murray Hallam & Allcad Pty Ltd [1995] N1337
Wahuna v Barton [2017] SC1636
Steven Naki v AGC (Pacific) Ltd (2005) N2783
Shell PNG Ltd v Speko Investment Ltd [2004] PGSC 16
Keam Investments Ltd v Toyota Tsusho PNG (trading as Ela Motors) [2019] N7859
Peter Andoi t/a Rai Coast Electrical Services v Modilon General Hospital & Ors [2018] N7199
Kumagai Gumi Co Ltd v National Provident Fund Board of Trustees (2006) SC837
Niugini Civil & Petroleum v West New Britain Development Corporation Ltd (2008) N3292
Balakau v Amet [2013] N5313
Binnen Construction Limited v Buka Golai Malai & Others (2014) N5775

Counsel:
Mr. P. Pato, for the Plaintiff
Mr. P. Tabuchi, for the Defendant

1. LINGE A J: A ruling on trial on assessment of debts for breach of contract following entry of Default Judgement on the 13 April 2021. The debts are unpaid invoices rendered by the plaintiff to the defendant pursuant to subcontract between the plaintiff and the defendant wherein the plaintiff was engaged by the defendant under its trading name Kwikbuilt PNG, to undertake work on several construction projects in Western Highlands including the now Jiwaka Province under its Education Infrastructure Development Policy. The defendant settled payments except eight (8) Invoices for projects completed in 2014 and 2015.

2. The plaintiff filed the Writ on the 28 February 2020 and served the same on the defendant on the 28 February 2020. The Court granted liquidated default judgment of K254,188.34 plus interest to the plaintiff on the 10 September 2020. On the 9 April 2021 the Court set aside the Order of 2 March 2021 and liquidated default judgment order of 10 September 2020 and, in its stead, entered default interlocutory judgment in favour of the plaintiff with damages to be assessed. This now is the assessment of debt and damages.

3. The defendant filed its Notice of Intention to Defend belatedly on the 7April 2021, and thereafter no leave was sought to file defence.

4. On 10 September 2021 the Supreme Court dismissed the plaintiff’s application for leave to appeal the set aside order of the 9 April 2021 and therefore Order of 9 April 2021 for default interlocutory judgment in favour of the plaintiff with damages to be assessed is the proper order of the Court.

5. Counsel for the plaintiff submits that the elements of the existence of contract had not been disputed. That there was an offer which was clear and precise in its terms, which was unconditionally accepted by the plaintiff, and valuable consideration was given. Counsel refers to Shell PNG Ltd v Speko Investment Ltd (2004) PGSC 16 and Keam Investments Ltd v Toyota Tsusho PNG (trading as Ela Motors) [2019], in which the Court held:

“An offer is an expression of willingness to contract made with the intention that it shall become binding on the person making it, as soon as it is accepted by the person to whom it is addressed”.

6. He submits that the above principle applies in this case whereby the defendant offered plaintiff sub-contracts for plaintiff to develop educational infrastructure at high schools, secondary and primary schools in Jiwaka and Western Highlands Province. That plaintiff accepted the offer by executing sub-contracts for the said infrastructure developments in the Western Highlands and Jiwaka Province schools. Counsel submits there was an intention to create legal relations, and this was indeed created and legally binding on the parties.

7. Mr. Pato also submits that there were various sub-contracts given out by the defendant and the plaintiff issued invoices at various stages of each of the projects. The defendant paid all the invoices, except the last 8 invoices. Of these 8 invoices, a part-payment of K129,414.56 was made for invoice described as SCC2015-174 out of the sum of K160,006.36 leaving an unpaid balance of K30,592.36. Adding the other 7 unpaid invoices as described in the evidence of Paul Taim to the K30,592.36 adds up to K254,188.34.

8. He refers to Steven Naki v AGC (Pacific) Ltd (2005) N2783, wherein the Court upon referring to AG Guest, Chitty on Contracts, 27 Edition, Sweet & maxwell, 1994, pp 88-90 observed that the essential elements of a contract are:

9. He submits that the National Court also observed that the elements of a cause of action in breach of contract are:

10. Counsel thus submits that the elements of contract exist, and that the defendant failed to fulfill his obligation to settle what he owes the plaintiff. The amount of debt set out in the table below incorporates the references and details of the unpaid and partly paid invoices rendered by and owing to the plaintiff totalling K254,188.34. These amounts are deposed to in affidavit evidence.

Invoice #	Amount (K)	Amount Paid (K)	Balance (K)	Annexure
SCC2014-137	17,203.21	Nil	17,203.21	“I”
SCC2014-138	6,945.71	Nil	6,945.71	“J”
SCC2015-157	53,554.29	Nil	53,554.29	“K”
SCC2015-168	58,341.21	Nil	58,341.21	“L”
SCC2014-139	53,443.94	Nil	33,443.94	“M”
SCC2015-158	27,056.06	Nil	27,056.06	“N”
SCC2015-174	160,006.36	129,414.50	30,591.86	“O”
SCC2015-156	28,171.79	Nil	28,171.79	“P”
		Total Due	255,308.07

11. Counsel also submits that the total debt due under the sub-contracts is K255,308.07, but the plaintiff claims the amount of K254,188.34 due to its own oversight and/or miscalculation.

12. Counsel submits that interest is applicable in the normal course of events for the debt under the Judicial Proceedings (Interest on Debts and Damages) Act Chapter No 52, to commence on date of the issue of the writ on the 28 February 2020 to 5 May 2022 at the rate of 8% to be K44, 402.87.

13. Mr. Tabuchi of Counsel for the defendant submits that the pleadings fall short, and this can be ascertained upon a cursory glance of the Statement of Claim (“SOC”) that reveals that it does not meet the test. Thus, as a legal consequence, Court ought not to allow evidence. He relies on the ruling in the Supreme Court decision in PNGBC v Tole [2002] SC694, which held that no evidence of those contracts can therefore be allowed by the Court as these have not been pleaded.

14. Additionally, Counsel submits that the invoices are invoices in a vacuum in that, even if assuming the contracts in the affidavit of Paul Berry Taim filed 24 July 2020 can be allowed (which it is submitted cannot be), those invoices do not relate to any of those contracts.

15. Counsel refers to the passages in Mel v Pakalia [2005] SC 790 wherein the Supreme Court addressed the role of the trial judge in this way:

“Turning back to the issue raised above as to the role of the trial judge after entry of judgment, we consider the following to be the correct approach:

(iii) only if the facts or cause of action pleaded do not make sense or would make as assessment of damages a futile exercise should the judge enquire further and revisit the issue of liability”.

16. He submits therefore that based on the forgoing and since damages can only be properly assessed on proper credible evidence before the Court proving that damages arose, assessment of damages would be a futile exercise otherwise.

17. Counsel further relies on Wahuna v Barton [2017] SC1636, in which the full Supreme Court at [15], relevantly said:

“15. If the appellants are alleging breach of contract, they must plead all the necessary facts giving rise to firstly, the formation of a contract, that is who entered into the contract, the terms of the contract, secondly, its breach and finally, relief sought, be it damages or specific performance. In this case the appellants have failed to plead the relevant facts giving rise to a cause of action for breach of contract...”

18. Assessment in this case is for debt due and payable to the plaintiff pursuant to contract. There is no claim for damages. It is important to maintain the distinction as stated in Kumagai Gumi Co Ltd v National Provident Fund Board of Trustees (2006) SC 837 and followed in Niugini Civil & Petroleum v West New Britain Development Corporation Ltd (2008) N3292; N5775; Jeffrey Balakau v Sir Arnold Amet (2013) N5313; Binnen Construction Limited v Buka Golai Malai & Others (2014) N5775.

“A sum that one person is bound to pay another. Debt normally has one or other of two meanings. It can mean an obligation to pay money, or it can mean a sum of money owed.”

20. The general principles for assessment are settled as is summarise in Peter Andoi t/a Rai Coast Electrical Services v Modilon General Hospital & Ors [2018] N7199, (headnotes) that:

“The general principles for assessment of debt are the same as those for assessment of damages; the plaintiff has the onus of proving his losses, it is not sufficient to rely on assertions in the statement of claim; corroboration of a claim is required; the fact that debt cannot be assessed with certainty does not necessarily relieve the wrongdoer of the necessity of paying some amount of debt.”

21. The ruling of Kapi DCJ in Reid v Murray Hallam & Allcad Pty Ltd [1995] N1337, as “Assessment of damages involves consideration of the terms of contract and assessing the damages that flow from the breach of the terms of contract”

Assessment
22. Having regard to the principles and my duty as a trial judge in undertaking assessment, it is my finding that the facts and the cause of action are pleaded and identified with sufficient clarity and specificity, are reasonably clear and make sense sufficient for me to assess the debt. The defendant had not filed a defence to traverse nor any disputing affidavit. Hence, I do not consider it necessary to revisit the issue of liability.

23. I consider that there is sufficient evidence of agreement to enter into a legally binding relationship in which the defendant promised to pay the plaintiff specific contract prices for each of the projects. For instance, defendant promise to pay a sum of K143,000.00 and K704,000.00 to the plaintiff for Minj High School and Paglum High School respectively. The evidence is contained in annexures “B” and “F” of Paul Taim’s affidavit, both items 7 of the Schedule to the respective sub-contract. or annexure.

24. I accept that the eight (8) invoices the subjects of this assessment, relates to invoices for projects completed in 2014 and 2015 and from evidence these invoices range from part or progress payment for cartage and erection to final payment claims rendered by plaintiff from time to time.

25. It was a term of each of the sub-contract that consideration for the projects would pass to the plaintiff on production of tax invoices. I find there is correlation between the job requisitions or details of projects and the eight (8) invoices rendered and that there was failure by the defendant to settle the eight (8) Invoices, the basis on which this cause of action was instituted for K254,188.34.

26. The Judicial Proceedings (Interest on Debts and Damages) Act Chapter No 52. Section 1 (1) provides, “Subject to Section 2, in proceedings in a court for the recovery of a debt or damages the court may order that there be included in the sum for which judgment is given interest at such rate as it thinks proper, 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.”

27. I adopt the formular for calculation used in Niugini Civil & Petroleum v West New Britain Development Corporation Ltd (supra), to calculate from date of the issue of the writ being the 28 February 2020 to 5 May 2022 at the rate of 8% per annum to be K44,402.87.

(1) The defendant shall pay to the plaintiff a debt of K254,188.34 plus interest of K44,402.87, being a total judgment in the sum of K298,591.21; and

(2) Costs of and incidental to the proceedings to be borne by the defendant, to be taxed if not agreed; and

Judgment accordingly
________________________________________________________________
Parker Legal Lawyers: Lawyers for the Plaintiffs
Young & Williams Lawyers: Lawyers for the Defendants

National Court of Papua New Guinea

Moberry Investments Ltd v Hardware Haus Ltd [2022] PGNC 211; N9633 (23 May 2022)