Debela v Nuau [2023] PGNC 251; N10323 (13 June 2023)

N10323

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO 1251 OF 2019

BETWEEN
JAMES DEBELA
Plaintiff

AND
LOHIAL NUAU, ACTING SECRETARY FOR DEPARTMENT OF PETROLEUM & ENERGY
First Defendant

AND
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Second Defendant

Waigani: Makail, J

2023: 07^th February & 13^th June

LIABILITY – Breach of contract of employment – Written contract – Contractual entitlements – Provision for payment for salary and allowances – Non-payment of fees – Breach of – Liability established

ASSESSMENT OF DAMAGES – Award of damages – Loss of salary and allowances – Special damages – Out of pocket expenses – General damages for mental stress, anxiety, and hardship – Proof of – Tax discounted from award for loss of salary

Cases Cited:
Feria v. Lange (2009) N3559
James Liwa v. Marcus Vanimo & Ors (2018) N3486
Warivama v. Sapau (2013) N5319
Lapune Aine v. The State (2011) N4389

Counsel:
Mr. Z. Kamaso with Mr. I. Kwaimani, for Plaintiff
Mr. R. Kebaya, for Defendants

JUDGMENT

13^th June, 2023

1. MAKAIL J: This is a trial on the papers on liability and assessment of damages for breach of contract of employment.

Allegation of Breach of Contract

2. On 3^rd October 2019 the plaintiff filed a writ of summons and alleges that on 01^st September 2009 he was appointed as the Team Leader for Public Relations and Awareness on the PNG LNG Project in Angore PDL 8 and Hides PDL 1 respectively.

3. The plaintiff was appointed purposely to drive the awareness regarding the forum process to the affected landowners on the eve of the signing of the Umbrella Benefit Sharing Agreement (UBSA) and Landowner Licensed Based Benefit Sharing Agreement (LBBSA) that underpinned the first PNG-LNG Project to prepare the landowners well for events that was to unfold prior to and after the signing of the agreements.

4. The reason for the plaintiff’s appointment was that he was a local from the PNG-LNG Project Area and that he was educated and was well placed to understand the culture and history of the affected landowners and communicate effectively with them.

5. On 01^st September 2009 the plaintiff signed a written contract of employment with the second defendant (Contract) through the Office of the first defendant to provide various coordination, managerial, advisory and consultancy services as set out in the Terms of Reference to Schedule 1 of the contract from 01^st September 2009 to 31^st August 2010.

6. The plaintiff performed the contract by carrying out awareness with his team in the affected Project Areas on the forum process and led the affected LNG Upstream landowners to Kokopo, East New Britain province for the signing of the UBSA.

7. After the signing of the UBSA, the plaintiff was retained by the second defendant as the Public Relations and Awareness Team Leader leading up to the signing of the LBBSA in the same year of 2009 and events thereafter on various contract variations through the approval of the then Secretary of the Department of Petroleum and Energy.

8. On 01^st October 2014 the plaintiff rendered a final invoice for his outstanding entitlements in the sum of K329,000.00 to the predecessor of the first defendants for settlement.

9. On 14^th May 2019 the defendants paid a sum of K22,168.70. The balance of K306,832.00 remains due and outstanding.

10. By reason of the failure to pay the balance, the defendants are on breach of the contract and the plaintiff seeks:

(a) Loss of salary and entitlements in the total sum of K306,832.00.

(b) Special damages (Out of pocket expenses) in the sum of K27,000.00

(c) General damages for emotional stress and hardship, to be assessed.

(d) interest at rate of 2% per annum.

(e) legal costs.

First Defendant’s Defence

11. On 27^th November 2019 the first defendants filed a defence. According to the defence, it was denied that the plaintiff was employed as Team Leader for Public Relations and Awareness on the PNG LNG Project in Angore PDL 8 and Hides PDL 1 respectively. On the other hand, he was employed on a Short-Term contract of employment as a Field Liaison Officer with the Clan Vetting Project of the Department of Petroleum and Energy.

12. Further, it denies that the plaintiff is owed salary and entitlements and says that it has paid salary and entitlements to the plaintiff on a fortnightly basis during the duration of the contract. Finally, it denies any loss or damages alleged by the plaintiff.

Second Defendant’s Defence

13. The second defendant did not file a defence.
Parties Evidence

14. The plaintiff relies on the following affidavits:

(a) His affidavits sworn 05^th November 2020 and filed 16^th November 2020, and
(b) His affidavit sworn and filed on 02^nd May 2022.

15. The defendants did not file and rely on any affidavit in response to the claim.

16. Despite the first defendant’s defence that the DPE has paid salary and entitlements to the plaintiff and does not own any salary and entitlements, disappointingly, he has not filed any affidavits to back this defence.

17. It leaves the plaintiff’s assertions in his affidavits uncontroverted, and it will be the findings of the Court that on 01^st September 2009 the plaintiff was appointed as the Team Leader for Public Relations and Awareness on the PNG LNG Project in Angore PDL 8 and Hides PDL 1 respectively.

18. The plaintiff was appointed purposely to drive the awareness regarding the forum process to the affected landowners on the eve of the signing of the Umbrella Benefit Sharing Agreement (UBSA) and Landowner Licensed Based Benefit Sharing Agreement (LBBSA) that underpinned the first PNG-LNG Project to prepare the landowners well for events that was to unfold prior to and after the signing of the agreements.

19. The reason for the plaintiff’s appointment was that he was a local from the PNG-LNG Project Area and that he was educated and was well placed to understand the culture and history of the affected landowners and communicate effectively with them.

20. On 01^st September 2009 the plaintiff signed a contract of employment with the second defendant (Contract) through the Office of the first defendant to provide various coordination, managerial, advisory and consultancy services as set out in the Terms of Reference to Schedule 1 of the contract from 01^st September 2009 to 21^st August 2010.

21. The plaintiff performed the contract by carrying out awareness with his team in the affected Project Areas on the forum process and led the affected LNG Upstream landowners to Kokopo, East New Britain province for the signing of the UBSA.

22. After the signing of the UBSA, the plaintiff was retained by the second defendant as the Public Relations and Awareness Team Leader leading up to the signing of the LBBSA in the same year of 2009 and events thereafter on various contract variations through the approval of the then Secretary of the Department of Petroleum and Energy.

23. On 01^st October 2014 the plaintiff rendered a final invoice for his outstanding entitlements in the sum of K329,000.00 to the predecessor of the first defendants for settlement.

24. On 14^th May 2019 the defendants paid a sum of K22,168.70. The balance of K306,832.00 remains due and outstanding.

Issue

25. The question that falls for determination is whether the defendants have a contractual obligation to meet in terms of paying salary and entitlements to the plaintiff for the services he has rendered to them and that, they have defaulted.

Liability

26. The first observation to make is that, according to clause 3.1 of the contract, the initial period of the contract is for seven months from the commencement date to the completion date. The commencement date is 01^st September 2009 and completion date is 1^st April 2010. However, clause 3.1 also gives the first defendant discretion to extend the period of employment for a further four months and it appears, consistent with this clause, the plaintiff remained at work until 31^st August 2010.

27. The second observation to make is the salary and entitlements to which the plaintiff claims are due and outstanding, are provided in the contract as follows:

(a) Clause 6.1 and Schedule 2.2 – Salary at K35,000.00 per month.

(b) Clause 6.2 and Schedule 2.3 – Allowances for Business Costs and Transport Costs of K5,000.00 per month.

(c) Clause 6.2 and Schedule 2.4 – Incidental Allowances at rate of K150.00 per day will be paid to the plaintiff when time is spent out in the LNG Project Areas.

(d) Clause 5.5 – Pro rata leave.

28. I am satisfied that the salary and allowances outlined above are contractual entitlements and the defendants have a contractual obligation to meet in terms of paying them when they fall due. I am further satisfied that the defendants defaulted in meeting these contractual obligations and are in breach of the contract.

29. There will be a judgment on liability against the defendants, with damages to be assessed.

Assessment of Damages

30. According to orders sought in the prayer for relief in the statement of claim, the plaintiff seeks:

(a) Loss of K306,832.00.

(b) Special damages (Out of Pocket Expenses) in the sum of K27,000.00.

(c) General damages for hardship, emotional stress, inconvenience, and frustration.

(d) Interest at the rate of 2% pursuant to the Judicial Proceedings (Interests on Debts and Damages) Act, 2015.

(e) Legal costs.

Loss of K306,832.00

31. The plaintiff quantifies the loss as follows:

(a) Clause 6.1 and Schedule 2.2 – Salary at K35,000.00 per month.

(b) Clause 6.2 and Schedule 2.3 – Allowances for Business Costs and Transport Costs of K5,000.00 per month.

(c) Clause 6.2 and Schedule 2.4 – Incidental Allowances at rate of K150.00 per day will be paid to the plaintiff when time is spent out in the LNG Project Areas.

(d) Clause 5.5 – Pro rata leave – K27,500.00.

Total K517,000.00

32. The plaintiff assets that he is entitled to a total sum of K517,000.00 but is not claiming it. Instead, he is claiming a sum of K329,000.00 based on the invoice he rendered to the predecessor of the first defendant in a letter dated 01^st October 2014. The predecessor of the first defendant supported by the Minister for Petroleum and Energy acknowledged and directed that the DPE settle the claim for salary and entitlements.

33. Out of the sum of K329,000.00, the defendants pay a sum of K22,168.70. The balance due and owing is K306,831.30. However, the sum claimed will not be awarded as a matter of course and further, that it is unopposed by the defendants. Furthermore, a judgment on liability against the defendants does not relieve the plaintiff from the burden of proving his loss.

Salary at K35,000.00 per month

34. Based on the Court’s finding that the plaintiff performed the contract, the claim for lost salaries will be allowed at K35,000.00 per month for 11 months. This comes to K385,000.00. Income tax is mandatory under Section 11 of the Income Tax Act, 1959. Clause 6.2 of the contract provides that the plaintiff is responsible for paying income tax. There is no evidence of how much income tax is paid but according to Table C of Schedule 1 of the Income Tax (Salary or Wage Tax) (Rates) Act, 1979, where the fortnightly income exceeds K9,615.00, the rate of income tax is K3,478.63 plus 42 toea for each K1.00.

35. The plaintiff’s fortnightly is K17,500.00. This will attract an income tax of more than K3,478.63. Rounding the rate of income tax to the nearest whole number is K4,000.00 per fortnight for income tax. For 11 months or 22 fortnights is K88,000.00. Deduct this sum from K385,000.00 gives K297,000.00. This sum is awarded.

Allowances for Business Costs and Transport Costs of K5,000.00 per month

36. The plaintiff makes no claim for this allowance, and it is disregarded.

Incidental Allowances at rate of K150.00 per day will be paid to the plaintiff when time is spent out in the LNG Project Areas.

37. The plaintiff makes no claim for this allowance, and it is disregarded.

Pro rata leave – K27,500.00

38. The plaintiff makes no claim for this allowance, and it is disregarded.

Special damages (Out of Pocket Expenses)

39. Learned counsel for the plaintiff concedes that special damages must be strictly proved. I agree. In this case, the plaintiff failed to produce invoices and receipts of payments but submits that a sum of K3,000.00 based on para. 22 of the statement of claim should be adopted and for nine years of chasing up payment, it will give a total sum of K27,000.00. Learned counsel for the defendants concedes that the Court award the sum of K27,000.00.

40. The Court notes that learned counsel for the plaintiff correctly accepts that the plaintiff bears the onus of proof and must produce invoices and receipts of payments including details of the out-of-pocket expenses to succeed in proving special damages. It is not enough to say, this is what I have lost, and I should be paid this much. The Court further notes that the plaintiff did not produce invoices and receipts of payments to corroborate the claim. Even in his two affidavits, he does not outline the details of the out-of-pocket expenses. It may be that he had been chasing up on the payment with the officers of the first defendant over nine years, but this assertion falls short of establishing the costs he has incurred.

41. The other consideration which both learned counsel overlooked is the period of nine years which the plaintiff had spent chasing up payment with the defendants. Until the part payment of K22,168.70 on or about 03^rd October 2018 he took no steps to sue the defendants. One of the principles of assessment of damages is the duty of the plaintiff to mitigate the loss. In this case, the plaintiff did not take steps to sue the defendants and contributed to the delay. In my view, he has failed to mitigate the loss. For these reasons, I will award a nominal sum of K5,000.00.

General damages for emotional stress, anxiety, and hardship

42. Learned counsel for the plaintiff refers to past comparable awards and submits that the plaintiff had endured nine years without payment of his dues. The stress level increased when he made many requests to the defendants to pay his dues, but they failed. Learned counsel submits a sum of K500,000.00 is a fair and reasonable sum to award.

43. The Court notes that the cases cited by learned counsel such as Feria v. Lange (2009) N3559 where K30,000.00 was awarded, are quite significantly higher than James Liwa v. Marcus Vanimo & Ors (2018) N3486 where the plaintiff was awarded K5,000.00 for mental distress, frustration and inconvenience. The Court also notes that in Warivama v. Sapau (2013) N5319 K5,000.00 was awarded to the plaintiff as general damages for mental distress, frustration, and inconvenience in a case where the plaintiff’s motor vehicle sustained damage in a motor vehicle accident. This sum included inflation.

44. The plaintiff’s affidavits do not show the degree of mental distress and inconvenience he endured but I accept that he has some considerable stress and hardship for not being paid the dues for giving a lot to the cause of the PNG LNG Project which is now a success today. Consistent with the past awards, I will also include inflation as was held in the Lapune Aine v. The State (2011) N4389 for increases in costs of goods and services and award a global sum of K10,000.00. This sum is awarded.

Interest

45. Interest is awarded at the rate of 2% on the total judgment sum of K312,000.00 (K297,000.00, K5,000.00 and K10,000.00) from the date of filing of writ of summons of 3^rd October 2019 until final settlement under Sections 4(1) & (2) and 6 of the Judicial Proceedings (Interest on Debts and Damages) Act, 2015.

Costs

46. Finally, the plaintiff seeks costs of the proceedings. The defendants’ learned counsel takes no position on costs. The general rule is that costs shall follow the event. It means the successful party shall have its costs paid by the losing party, on a party-party basis. For this reason, it is ordered that the defendants shall pay the plaintiff’s costs of the proceedings, on a party-party basis, to be taxed, if not agreed.

Final Order

47. The terms of the final order of the Court are:

1. Judgment on liability is entered against the defendants.

2. Judgment is entered against the defendants in the total sum of K312,000.00.
   
3. The defendants shall pay interest at the rate of 2% on the total judgment sum of K312,000.00 (K297,000.00, K5,000.00 and K10,000.00) from the date of filing of writ of summons of 03^rd October 2019 until final settlement under Sections 4(1) & (2) and 6 of the Judicial Proceedings (Interest on Debts and Damages) Act, 2015.

4. The defendants shall pay the plaintiff’s costs of the proceedings, on a party-party basis, to be taxed, if not agreed.

________________________________________________________________
Marubu Lawyers: Lawyers for Plaintiff
Solicitor General: Lawyers for Defendants