United Enterprises Ltd v Allan [2024] PGNC 105; N10762 (25 April 2024)

N10762

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS (JR) NO. 410 OF 2015

BETWEEN
UNITED ENTERPRISES LTD
Plaintiff

AND
BENNY ALLAN, MINISTER FOR LANDS AND PHYSICAL PLANNING
First Defendant

AND
ROMILLY KILA PAT, SECRETARY FOR LANDS AND PHYSICAL PLANNING
Second Defendant

AND
BENJAMIN SAMSON, ACTING REGISTRAR OF TITLES
Third Defendant

AND
AKU ENGINEERING LIMITED
Fourth Defendant

AND
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Fifth Defendant

AND
ARROW TRADING LIMITED
Sixth Defendant

Waigani: Gavara-Nanu J
2018: 21^st September
2023: 14^th December
2024: 25^th April

DAMAGES – Default judgment – Assessment of damages - National Court Rules; Order 16 r 7 – Ordering damages under Order 16 r 7 – Judicial Review proceedings – Breach of mandatory statutory duties – Breach of Constitutional rights - Constitution; ss. 37 and 53 -Pre-requisites to be met for damages to be ordered – Order 16 r 3 – Claim for damages – Exemplary damages – Principles discussed - Order 8 Divisions 1 and 2 – Pleadings – Damages ordered for the plaintiff.

Cases Cited:
Papua New Guinean Cases

Banz Kofi Fektori Pty Ltd v. Apa [2002] PGNC 11; N2374
Covec (PNG) Ltd v. Kama (2020) PGSC 9; SC1912
Donigi v. Base Resources Ltd [1992] PNGLR 110; [1992] PGSC 5
Ibi Enei v. Rimbunan Hijau Ltd [2011] PGNC 142; N4402
Obed Lalip and Others v. Fred Sikiot and The State (1996) N1457
PNG Aviation Services Pty Ltd v. Karri [2009] PGSC 24; SC1002
Rimbunan Hijau (PNG) Ltd v. Ibi Enei [2017] PGSC 36; SC1605
Robmos Ltd v. Fredrick M Punangi (2017) N6585
Toglai Apa & Ors v. The Independent State of Papua New Guinea [1995] 43
United Enterprises Ltd v. Benny Allan & Ors [2018] PGNC 452
Yange Lagan and Others v. The State (1995) N1369

Overseas Cases

Cassell & Co. Ltd v. Broome [1972] UKHL 3; [1972] 1 All ER 801
Chaplain v. Hick [1911] UKLawRpKQB 104; [1911] 2 KB 786
Hall Brothers Steamship Co. v. Young [1939] 1 KB 748
Rookes Barnard [1964] UKHL 1; [1964] 1 All ER 367
Uren v. John Fairfax & Sons Pty Ltd (1966) 117 CLR 149
Whietfield v. De Lauret & Co. Ltd [1920] HCA 75; (1920) 29 CLR 71

Counsel
I. R. Shepherd, for the Plaintiff
N. Yano, for the First, Second, Third & Fifth Defendants

25^th April 2024

1. GAVARA-NANU J; The substantive judgment in favour of the plaintiff was delivered on 21^st September, 2018. The delay in delivering this judgment on assessment of damages is due to my oversight. I have explained this to the parties, and I am greatly indebted to them for their understanding.
   
2. The plaintiff’s claim for damages in the substantive proceeding was based on the failure by the third defendant to perform his statutory duty by not registering a property in Kimbe, West New Britain Province, under the plaintiff’s name. It is not disputed that the plaintiff finalized the purchase of the property on 14 April, 2004 and although it was entitled to be registered as the owner of the property then, the property went through several sales, the last of which was to the sixth defendant. The third defendant and other agents of the State were directly involved in those sales, by allowing and facilitating the sales. In each of those sales, the purchaser became a registered owner of the property.
   
3. It is common ground that the sixth defendant purchased the property in good faith and has made substantial improvements to the property. See, United Enterprises Ltd v. Benny Allan & Ors [2018] PGNC 452.
   
4. It is also a common ground that all the relevant supporting documents for the plaintiff to be registered as the owner of the property were duly lodged with the third defendant by the plaintiff upon purchasing the property. The affidavit of Mr Peter Downes, the Managing Director of the plaintiff, sworn on 15^th November, 2016, affirms that the plaintiff finalized the purchase on 14 April. 2004. In a letter dated 6^th April, 2009, the plaintiff reminded the third defendant about the property still not being registered under its name, but the third defendant seemingly ignored that letter. At the trial, no explanation was given by the third defendant for not registering the property under plaintiff’s name and for allowing the property to go through several sales after the plaintiff had purchased it.
   
5. In its substantive application for review under Order 16 r 5 of the National Court Rules, the plaintiff sought, among others, cancellation of the sixth defendant’s title, alternatively, damages. Given the circumstances of the case, the Court, following trial, decided in favour of granting the alternative relief, viz; damages against the defendants after finding them liable.
   
6. The alternative relief of damages was granted pursuant to Order 16 r 7 of the National Court Rules, which provides as follows:

7. Claim for damages. (UK. 53/7)

(1) On an application for judicial review the Court may, subject to Sub-rule (2), award damages to the applicant if—

(a) he has included in the statement in support of his application for leave under Rule 3 a claim for damages arising from any matter to which the application relates; and

(b) the Court is satisfied that, if the claim had been made in an action begun by the applicant at the time of making his application, he could have been awarded damages.

(2) Order 8, Division 2, shall apply to a statement relating to a claim for damages as it applies to a pleading.

7. Consequently, pursuant to Order 8 Division 2 of the National Court Rules, as required under Order 16 r 7 (2) of the National Court Rules, the Court directed the plaintiff to file its statement of claim for damages. The defendants were also ordered to file their defence. These orders were made for the purposes of determining and assessment of damages for the plaintiff.

8. Accordingly, the plaintiff filed its statement of claim on 12^th October, 2018. The defendants filed their defence on 2^nd November, 2018, through the Office of the Solicitor General.

Submissions

1. By the plaintiff
   

9. The plaintiff in its submissions emphasized the fundamental principle that damages should put it in the position it would have been had it been the registered proprietor of the subject property when it completed the purchase of the property on 14 April, 2004. Mr. Shepherd, counsel for the plaintiff argued that the plaintiff is entitled to general and exemplary damages. He submitted that award of damages to the plaintiff is consistent with claims for damages under s. 151 of the Land Registration Act, 1981, for breach of a statutory duty by the third defendant, as in this case. He relied on Robmos Ltd v. Fredrick M Punangi (2017) N6585. In that case, Kandakasi J (as he then was), had before him a claim for damages based on anticipated profits for not being awarded a tender, viz; profits it might have made from the tender contract had the contract been awarded to it. His Honour held that in such a situation the party would at common law be entitled to recover damages for being deprived of the benefits under the contract, regardless of any uncertainty in assessing damages, including loss of profit. Mr. Shepherd also relied on Chaplain v. Hick [1911] 2KG 786.
   
10. In this case, the plaintiff is also claiming anticipated and actual losses as well as future losses. The plaintiff relies on three affidavits, two by Mr. Downes, sworn on 15^th November, 2016 and 19^th June, 2018 and the other by Mr. Peter Impey, a certified accountant, sworn on 24 October, 2018. Mr. Impey provided estimated past economic losses based on possible rental returns the plaintiff might or could have earned from the property. The estimated rental returns were for the period commencing 2010 to 2018, based on gross rental returns, on the assumption that substantial improvements could have been made to the property in accordance with the property design provided by the plaintiff, less 30% for overheads.
    
11. In his affidavit sworn on 15^th November, 2016, Mr. Downes deposed among others, that the plaintiff had engaged David Richardson Architects Limited to do the design for a possible commercial development of the property. The design is annexed to the affidavit.
    

By the defendants

12. The defendants have in their defences raised s. 151 of the Land Registration Act, and s. 5 of the Claims By and Against The State Act, 1996 to deny liability for damages for the plaintiff. Regarding the defence under s. 151 of the Land Registration Act, they argued that because the plaintiff’s claims arose out of the failure by the third defendant to carry out his statutory duty by not registering the property under the plaintiff’s name, the process prescribed under s. 151 of the Land Registration Act, should have been invoked by the plaintiff. Thus, it was submitted that, having failed to invoke this process, the plaintiff’s claim for damages is an abuse of process and should be dismissed. Regarding the defence raised under s. 5 of the Claims By and Against the State Act, it was argued that because the State is a defendant, notice under s. 5 of the Claims By and Against the State Act, should have been given to the State to claim damages against it. They argued that the plaintiff’s failure to comply with this mandatory requirement is another reason the plaintiff’s claims should be dismissed for abuse of process.
    
13. Regarding the claim for exemplary damages, it was argued that s. 12 (1) of the Claims By and Against the State Act, prohibits the claim.
    
14. It is instructive to reproduce s. 12 of the Claims By and Against the State Act. It provides as follows:
    

12. JUDGEMENTS AGAINST THE STATE.

(1) No exemplary damages may be awarded against the State unless it appears to the court that, regardless of the nature of the claim, there has been a breach of Constitutional rights so severe or continuous as to warrant an award of exemplary damages.

(2) Notwithstanding anything in the National Court Rules, a court giving judgement against the State may not include any order as to time or method of payment for satisfaction of the judgement.

(3) Where in a claim against the State the State is in default within the meaning of the National Court Rules, then notwithstanding that a plaintiff’s claim for relief is for a liquidated demand, judgement shall not be entered against the State for the sum claimed unless the claim relates to a debt only, and in all other cases judgement shall be entered for damages to be assessed and, where appropriate, for costs.

15. The defendants argued that the cases the plaintiff relied on are irrelevant because they were based on contract. In this case, the claims are based on administrative law, viz; Order 16 r 7 of the National Court Rules.
    
16. It was also argued that claims for past and future economic losses are too remote, and uncertain and should be dismissed.
    
17. Regarding the evidence of Peter Impey, it was argued that his rental return estimates should be rejected because there are no supporting documents to base the estimates. Furthermore, the estimates are excessive and speculative. It was argued that the estimates should be supported by credible evidence which the plaintiff failed to produce. They relied on Yange Lagan and Others v. The State (1995) N1369 and Obed Lalip and Others v. Fred Sikiot and the State (1996) N1457. It was also argued that pleadings are unclear and confusing, thus rendering the claim for damages without proper basis and a reasonable cause.
    
18. It was also submitted that the State cannot be held liable for the plaintiff’s claims because the claims are really against the third defendant as they arise directly under s. 151 of the Land Registration Act. They relied specifically on s.151 (6) to argue that any payment of damages for the plaintiff is the responsibility of the Secretary for Lands and Physical Planning, not the State. Under s. 151 (6), any damages for the plaintiff would be paid by the Secretary for Lands and Physical Planning out of Assurance Fund.
    
19. The arguments based on s. 151 of the Land Registration Act, are clearly to fall back on or made in the alternative, in case the plaintiff is successful in its claims.
    

Consideration and reasons for decision

20. Having considered the arguments by counsel, I should state at the outset that I find the defendants’ arguments based on s. 151 of the Land Registration Act and s. 5 of the Claims By and Against the State Act, are misconceived and should be rejected. The reason is the Court’s power to award damages in this instance is conferred by Order 16 r 7 of the National Court Rules in a judicial review proceeding. This is a special power given to the Court and is exercised independently of s. 151 of the Land Registration Act and s. 5 of the Claims By and Against the State Act. The exercise of this power is discretionary and the grant of relief by way of damages under Order 16 r 7 of the National Court Rules is not automatic or as a matter of course. A plaintiff invoking Order 16 r 7 to seek damages must first meet certain criteria before the relief can be granted. Firstly, pursuant to Order 16 r 7 (a), damages (relief) must be pleaded in the Statement in Support filed under Order 16 r 3. Secondly, pursuant to Order 16 r 7 (b), the Court must be satisfied that in the circumstances of the case, had the relief (damages) been sought in an action commenced by a writ, the plaintiff could have been awarded the relief sought. Thirdly, it must be manifestly clear from the material before the Court that liability lies against the defendant. The last criterion should be determined in the findings made by the Court in its final decision in a trial, pursuant to which damages would be assessed. In this case, the Court is satisfied that all the criteria have been met by the plaintiff. See, United Enterprises Ltd v. Allan (supra). Therefore, clearly s. 151 of the Land Registration Act and s. 5 of the Claims By and Against the State are irrelevant. The processes and the requirements under these two provisions are also different and thus are mandatory. The process under s.5 of the Claims By and Against the State Act is invoked to commence civil claims against the State.
    
21. Consequently, I reject the defendants’ arguments based on s. 151 of the Land Registration Act and s. 5 of the Claims By and Against the State Act.
    
22. I am also unable to accept the defendants’ argument that plaintiff’s claims should be dismissed for being speculative and lacking supporting evidence and are not based on contract. It suffices to say that there is material upon which damages can be assessed for the plaintiff.
    
23. I also reject the defendants’ argument that the plaintiff is not entitled to exemplary damages. The reason is the plaintiff’s claims arise out of serious statutory breaches by the third defendant and other agents of the State. When one looks at the breaches by the third defendant, they were connected to other statutory breaches by other State agents. There was a chain or a series of breaches by State agents which justifies an award of exemplary damages. In every sale of the property, each purchaser became a registered owner of the property, and each sale was made possible by the actions of each of those State agents, including the third defendant. The State agents involved in the sales besides the third defendant were those who were involved in processing stamp duties, obtaining Ministerial Approvals, processing Transfer Instruments, availing the owners’ copies of the lease for each sale, settlements in each sale and so on. Plainly, the actions of each State agent in that regard were equally serious.
    

Assessment of damages

24. The principle that damages should as nearly as possibly put the plaintiff in the same position as if it had not suffered the damages is a fundamental guiding principle in the assessment of damages. In my view, this principle applies to both general and exemplary damages. The principle must apply to cases in which there has been serious statutory breaches by public officials in the discharge of their functions and responsibilities and in which there has been serious abuse of power as in this case. More so, where the plaintiff like in this case has suffered irreparable damages. I elaborate these points later in my judgment. In my opinion, while the purpose of exemplary damages is punitive, which is to punish the wrong doer, such damages are essentially, for all practical purposes compensatory to redress the party that is unjustly and unfairly wronged. In this regard, I am of the respectful opinion that Windeyer J; in Uren v. John Fairfax & Sons Pty Ltd (1966) 117 CLR 149 in differentiating between aggravated and exemplary damages made the same point. His Honour said:
    

“The formal distinction is, I take it, that aggravated damages are given to compensate the plaintiff when the harm done to him by a wrongful act was aggravated by the manner in which the act was done: exemplary damages, on the other hand, are intended to punish the defendant, and presumably to serve one or more of the objects of punishment – moral retribution or deterrence.”

(My underlining).

25. Therefore, in my view it is proper to apply this fundamental principle when considering exemplary damages for the plaintiff. Applying the principle in this case would serve two important purposes. First, it should serve to deter those likeminded public officials discharging public functions from committing similar statutory breaches. Second, it would fairly compensate and redress the plaintiff for being unjustly and unfairly wronged. See, Toglai Apa & Ors v. The Independent State of Papua New Guinea [1995] PNGLR 43. In that case, the plaintiffs whose properties were destroyed by the police in a raid of their village claimed among others, exemplary damages against the State. The trial judge’s comments in refusing exemplary damages against the State are relevant. His Honour said:
    

“Halsbury (4th Ed Vol 12 Para 1190) speaks of exemplary damages as being intended to punish the defendant and vindicate the strength of the law. But Salmond and Heuston on Torts (18th Edition chp. 32) says that Court decisions show, caution must be exercised in making such awards since exemplary damages bring a criminal element into the civil law without the safeguards of criminal procedure. That is, a criminal penalty is imposed following on a "conviction" without the trial and the defences of the criminal system. Because of this, such penalties can lead to excessive awards, and unmerited windfalls for the Plaintiff. The learned authors point out that It must be remembered that an obligation to pay a large award by way of compensatory damages has itself a punitive element in it, just as does the rule, that costs follow the event, when costs go to a successful claimant. A recent decision, Bradford Council v Arora 1991 2WLR 1377 also made this point.

The decisions in Rookes and Broome cases also determined the particular common law circumstances in which exemplary damages may be awarded. That is, for oppressive, arbitrary or unconstitutional actions; when aggravated general damages are insufficient and when a statute provides for such an awards. Section 58 of the Constitution plainly provides for such an award, and the actions of the police officers were obviously oppressive and unconstitutional.

A wronged Plaintiff as here is clearly entitled to substantial damages by way of compensation. But a Plaintiff is not entitled as of right to exemplary damages. The discretion of awarding exemplary damages, which are non compensatory but penal, lies with the Court. That is the situation in Common Law and under the Constitution. It is therefore a matter for determination whether the Defendants in this case should be penalised by such an award of as well as meeting an award of damages in compensation.

There is nothing new in law in holding an employer or superior liable for the faults of his employee carried out in course of employ, even when that employer or superior may be entirely without fault himself. That is the nature of vicarious liability. An employer can be held liable in damages for his servant’s wrongdoing”.

(My underlining)

26. Then his Honour relevantly said:
    

“In brief, vicarious liability for exemplary damages is reserved for those cases where the employer or superior can be said to be linked by some act of omission or commission as a participant in the wrongful action. I believe the Courts in Papua New Guinea should and does endorse exemplary damages in such situations”.

(My underlining)

27. Also, given that breach of statutory duty by the third defendant was not isolated from other statutory breaches by other State agents; it is in my view proper for liability to lie against the State for both general and exemplary damages.
    
28. The decision in Uren v. John Fairfax & Sons Pty Ltd (supra) did not follow the House of Lords decision in Rookes v. Barnard [1964] UKHL 1; [1964] 1 All ER 367, where it was held among others that exemplary damages should be limited to defamation cases and cases where there were oppressive, arbitrary or unconstitutional actions by the servants of the government and so on. That decision was followed by Cassell & Co. Ltd v. Broome [1972] UKHL 3; [1972] 1 All ER 801. The English position regarding exemplary damages appears to differ from that of Australia.
    
29. Interestingly, prior to Rookes v. Barnard (supra), in Hall Brothers Steamship Co. v. Young [1939] 1 KB 748 at 756, it was held that sums payable by “way of damages” are sums which fall to be paid by reason of some breach of duty or obligation whether that duty or obligation is imposed by contract, by the general law or legislation. To me, this view widens the fundamental guiding principle discussed above to cover exemplary damages.
    
30. The Australian position is consistent and is relevant to Papua New Guinea circumstances given that breach of statutory duties by agents of the State is prevalent in public institutions, including the Department of Lands and Physical Planning. The Australian position is clearly conducive to the development of the underlying law in Papua New Guinea. In Whitfield v. De Lauret & Co. Ltd [1920] HCA 75; (1920) 29 CLR 71, at 77 Knox CJ, relevantly said: -
    

“Damages may be either compensatory or exemplary. Compensatory damages are awarded as compensation for and are measured by the material loss suffered by the plaintiffs. Exemplary damages are given only in case of conscious wrongdoing in contumelious disregard of another’s rights”.

(My underlining)

31. In any case, whatever way one looked at damages, whether general or exemplary, in their fundamental character, they are compensatory. Whether a matter complained of be a breach of contract or tort or duty or obligation imposed either by general law or by a statute or legislation; the primary theoretical notion always is to put the plaintiff in as good position, so far as money can do it, as if the matter complained of and the damage suffered had not occurred. This fundamental principle by its primary notion and character is overarching. The principle may be guided, controlled and or limited by various considerations, but the central idea underpinning the notion is compensation and redress for the wrong done, thus giving satisfaction and redress to the wronged party. Thus, in this case contumelious actions of the third defendant and other agents of the State in allowing and facilitating the property to go through several sales and ignoring the plaintiff’s right to be registered as the proprietor of the property in my view justifies an award of exemplary damages to the plaintiff. The award as I said, must be enough to deter other like-minded State agents from abusing their powers and committing similar wrongs and to sufficiently compensate the plaintiff for the wrong suffered.
    
32. The defendants also relied on s. 12 (1) of the Claims By and Against The State Act, to deny liability for exemplary damages against the State.
    
33. Notably, this provision does not place a complete bar to exemplary damages being awarded against the State, there are exceptions in the provision under which exemplary damages may be awarded against the State viz; where there has been severe or continuous breach of Constitutional rights. Thus, a mere breach of a Constitutional right would be insufficient ground to award exemplary damages against the State. In this case, there were severe and continuous statutory as well as Constitutional breaches by the third defendant and other agents of the State. Regarding the Constitutional rights, the plaintiff was deprived of its property rights under s. 53 to own and enjoy the property he had purchased and the failure by the third defendant to protect that right under s. 37 of the Constitution by not registering it as the owner of the property.
    
34. My observations regarding exemplary damages simply emphasize and highlight their compensatory nature, besides being punitive. The observations are aimed at bringing balance to the types of matters the court must consider in deciding exemplary damages, which must be fair and reasonable compensation to the plaintiff for the damage or wrong suffered. The observations are aimed at assisting the court determine what is a fair amount to be awarded to the plaintiff in exemplary damages given the types and the nature of wrongs it has suffered.
    
35. Consequently, having regard to these considerations I make following orders in general and exemplary damages for the plaintiff:
    

A. General Damages

(i) Actual Losses

36. There is undisputed evidence that the plaintiff purchased the property for K22,000. This obviously was the unimproved value of the property. The stamp duty was K444.00 with estimated legal costs at K500.00. Thus, the total amount expended by the plaintiff in purchasing the property was K22, 944.00. According to the plaintiff, by 2018, the unimproved value of the property had increased to K680,000.00. I am not sure whether this amount includes any improvements that may have been made to the property by those who held title before the sixth defendant. This is a matter the Court must consider. Allowing for contingencies such as improvements by other owners before the sixth defendant, I consider the fair amount for the unimproved value of the property by 2018 is K475,000.00. This amount is inclusive of any amounts expended by the plaintiff on the property. Thus, I award K475, 000.00 to the plaintiff under this head.
    
    • (ii) Past loss of profit.
      
37. This claim is based on loss of profit resulting from the statutory breaches by third defendant and other agents of the State, which resulted in the loss of possible annual rental returns. The claim is based on the estimates given by Peter Impey using the improvements made to the property by the sixth defendant. The amount claimed is K1,812,424. The defendants argued that this is highly speculative and there are no documents to support the claim, it should therefore be dismissed. Whilst there is some merit in the defendants’ argument, I have no doubt that had the plaintiff been the registered owner of the property from the beginning, some tangible improvements could have been made like those made by the sixth defendant. One matter that brings this claim within the realm of possibilities, thus making the claim not too remote is the proposed property development plans by the plaintiff. In these circumstances, I think the amount claimed should not be awarded in total, but a reduced amount, considering possible contingencies. I consider that K1,200,000.00 which is almost two third of the amount claimed is a fair amount to award. Thus, I award K1,200, 000. 00 to the plaintiff under this head.
    
    • (iii) Future loss of profit
      
38. The defendants argued that this claim is too remote and uncertain and should be dismissed. They relied on their principal argument that such claim may be justified if it was based on contract. They argued that in this case, there is no contractual rights for the plaintiff upon which the claim can be based.
    
39. The plaintiff relied partly on PNG Aviation Services Pty Ltd v. Karri [2009] PGSC 24; SC1002. In that case, there was relationship between the plaintiff and the defendant, which was contractual in nature, thus the plaintiff had the basis to claim anticipatory damages. In this case, I find that facts disclose a similar situation. The plaintiff had for all practical purposes purchased the property and had the right to be the registered proprietor of the property. But that right was denied by the third defendant and other agents of the State who allowed and facilitated the property to be sold several times after the plaintiff had bought it. The actions of the third defendant and other agents of the State denied the plaintiff from being registered as the owner of the property. In the circumstances, there is basis to make an award for future losses. The plaintiff claims K4, 783, 822.00. Allowing for possible contingencies and many years having passed since the purchase of the property, I consider the fair amount for the plaintiff is K2, 000, 000.00. Thus, I award K2, 000,000.00 to the plaintiff under this head.
    
    2. Exemplary damages.

40. The Court has in the exercise of its discretion determined that the plaintiff is entitled to exemplary damages. The question now is quantum. This question should be decided with the assistance of the relevant case law. In this respect, I respectfully adopt the views expressed by Knox CJ in Whitfield v. De Lauret & Co. Ltd (supra), thus the overarching factor to consider in deciding quantum is the conscious wrong doing and the contumelious and continuous disregard by the third defendant and other agents of the State of the plaintiff’s right to be registered as the owner of the property and the sustained and reckless disregard of that right demonstrated by allowing and facilitating several sales of the property after the plaintiff bought the property. The circumstances of this case resemble those in the case of Ibi Enei v. Rimbunan Hijau Ltd [2011] PGNC 142; N4402. In that case, the defendant, a well-known foreign owned timber company operating in Papua New Guinea illegally used the plaintiff’s customary land, the surrounding beaches and seabed as its log pond and to load logs on barges for 8 years. The Court found the defendant had in that period exported at least K60, 000,000.00 worth of round logs. In that case, the defendant also breached its mandatory duty under the Forestry Act, to respect and protect the rights of the customary landowners in its logging operations. There was continuous and reckless disregard of the rights of the customary landowners, especially the plaintiff by the defendant. There was also continuous and deliberate disregard by the defendant of the terms of a Memorandum of Understanding between it and the plaintiff that the ownership of the subject customary land was in dispute, which the defendant continued to ignore. The court in its judgment said:

“In this case, there is undisputed evidence that when the defendant executed the MOU, it was fully aware that the plaintiff was disputing Warata clan’s claim of ownership over the land.

The defendant had deliberately breached Clause 4 of the MOU when it continued to pay the monthly rental fees for the land to Warata clan when the issue of ownership of the land was not yet resolved.

Clause 4 of the MOU expressly stated that in the event of a dispute over ownership of the land, the monthly rental fees for the land were to be paid into a Trust Account. Clause 4 is in these terms:

4. That should there be a dispute over the true Customary Landownership, the rental fee of K500.00 per month be paid into a Trust Account – (Passbook). The trustee to be the Local Land Court Magistrate Magarida.

This breach of the MOU is a circumstance of aggravation because the breach was deliberate, the defendant's actions in that regard amounted to reckless disregard of the plaintiff's rights and interests. The defendant had in so doing also acted in breach of s. 46 of the Forestry Act and the scheme of the Act. Section 46 provides:

s. 46. The rights of the customary owners of a forest resource shall be fully recognized and respected in all transactions affecting the resource.

The plaintiff has also pleaded that the defendant had acted in breach of the Land Act. In that regard, the Court has found that the defendant in trespassing and continuing to trespass onto the land for eight years breached ss. 144 and 145 of the Land Act.

From the evidence it is clear that the defendant was more interested in its logging activities, including exporting logs for its own enrichment than being concerned with the interests of the landowners, hence its reckless disregard of the rights and interests of the plaintiff. As I said, the defendant carried on its logging activities unabatedly on the land for eight years without meaningfully addressing the plaintiff's concerns. Such an attitude requires deterrence: Mark Hosea Sinai Customary Legal Representative of Buekau clan v. Kei Buseu Kampani Pty Ltd & Ors N935. The defendant is a well established and well known logging company which is extensively involved in logging businesses throughout Papua New Guinea and such unscrupulous logging practices should be met with equally strong punitive damages against the defendant. The damages awarded should also provide general deterrence to other logging companies from engaging in similar practices”.

41. The plaintiff was awarded K150,000.00 in exemplary damages. The defendant appealed the decision in Rimbunan Hijau (PNG) Ltd v. Ibi Enei [2017] PGSC 36; SC1605. In dismissing the appeal, the Supreme Court in commenting on the award for exemplary damages said:

“In addition to damages, there should be an award of exemplary damages that is reflective of the trespassers gain from the illegal use of land both to punish and to deter the particular offenders and others who might be inclined to repeating such conduct and behaviour for one’s commercial or other interests. If general damages already represent one third of the total income generated from an illegal entry, occupation and use of any customary land, exemplary damages should reflect the amount assessed in general damages.

Having regard to all of the above, we are of the view that the learned trial Judge could have awarded more in exemplary damages. His honour however, decided to award K150, 000.00. Again, there is no cross appeal against this award. We are of the view that, such an award if not more was called for. In these circumstances, we do not see any basis let alone any merit in the various appeal grounds against the award of exemplary damages. Accordingly, we order a dismissal of these grounds”.

(My underlining)

42. In this case, the defendants have also raised s. 12 (1) of the Claims By and Against The State Act. This provision prohibits award of exemplary damages against the State, unless there was a severe breach of Constitutional rights of the plaintiff or where although such breach was not so severe, the breach was continuous. In this case, I have found that there were both severe and continuous Constitutional and statutory breaches by the third defendant and other agents of the State thus denying the plaintiff’s right to own and enjoy the property and the protection of the law regarding those rights under ss. 37 and 53 of the Constitution.

43. Under s. 53 of the Constitution, which is headed - “Protection from unjust deprivation of property” - the plaintiff was unjustly and unlawfully “deprived” of being the owner of the property by the third defendant and other relevant agents of the State by allowing and facilitating the sale of the property to other buyers. In my opinion the word “deprivation” in s. 53 has a wide and generic meaning and it includes actions of the defendants which deprived the plaintiff's rights to the property, viz; the use and the enjoyment of the property.

44. Section s. 37 of the Constitution, is headed – “Protection of the law”. – In my view, these words also have a wide and generic meaning, thus in this case, the third defendant and other relevant agents of the State failed to accord the plaintiff full protection of the law by allowing and facilitating the property to go through several sales after the plaintiff had bought the property. This had resulted in the plaintiff not being registered as the owner of the property. In Donigi v. Base Resources Ltd [1992] PNGLR 110; [1992] PGSC 5, the Supreme Court in considering s. 53 of the Constitution said:

"The Constitution, s 53, carries the heading: 'Protection from the unjust deprivation of property'. The detailed provisions of the section itself vary markedly from the recommendations of the Constitution Planning Committee. However Ch 5, paras 85-91 of the Committee's Final Report (Part I) make it clear that what the Committee was concerned with was the limitation on the power of government to distribute wealth by means of the compulsory acquisition of property from citizens. In its final form in the legislation the provision as to acquisition of property was widened to include forfeiture, extinction or determination of any right or interest in property. The key word is 'compulsorily' which I think implies the exercises of some power conferred by statute on the State or an instrumentality of State. In my view the section is not directed at the decision of the court which adjudicates, declares or determines pre-existing rights. The word 'deprivation' in the heading sheds further light to the subject. A person is not deprived of property unless he is stripped of something to which he is entitled. The judgement of a court which determines that a person's claim to be entitled to possession is not recognised at law or is recognised only to a limited extent (for instance until the happening of some supervening event such as a contrary claim by someone with a better right) does not deprive a person of that interest. On the other hand the powers exercisable under legislation such as the Land Acquisition Act 1974 (to which the Constitutional Planning Committee referred) do have the effect of stripping the landowner of the land to which he is entitled, and of substituting that right to land with a right to compensation. Thus it is that s 53(2) provides for just compensation to be made by the appropriating authority. It is quite inapposite to consider the applicant company as being in any way an 'authority'. It's action in seeking to enforce its right to possession may not be characterised as an act of expropriation. For these reasons I conclude that s 53 of the Constitution is inapplicable to the present case."

(My underlining)

45. In Covec (PNG) Ltd v. Kama (2020) PGSC 9; SC1912; the appellant trespassed into respondent’s customary land and extracted sand, gravel and stones which it later processed and used for its construction work along the highlands highway. The appellant did not obtain permission from the respondent, the landowner before moving into the land and extracting the raw material from the land. The attempted interventions by the respondent were ignored by the appellant. The appellant even issued proceedings in support of its claims. The dispute also resulted in tribal fights. The trial judge awarded K1,000,000.00 in exemplary damages to the respondent. The Supreme Court in affirming the award made reference to its decision in Rimbunan Hijau (PNG) Limited v. Ibi Inei (supra) and expressed a view that the circumstances of the case in Covec were on “a bit more on the worse end”. In the substantive judgment of the court in this proceeding, viz; United Enterprises Ltd v. Benny Allan & Ors (supra), in noting the pertinent facts and circumstances of the case, the court said:

“This case has a long history. The following background facts are not in dispute. By an Order of the National Court, a company called Holman Corporation Limited was placed in liquidation in 2002. By a contract of sale dated 6 November, 2003, the plaintiff agreed to purchase the property from the liquidator, after the property was offered for sale on public tender. The Transfer Instrument was stamped and approved by the delegate of the first defendant on 6 February, 2004 and the settlement occurred on 14 April, 2004.

On 24 May, 2004, the owner’s copy of the State Lease together with the stamped and approved Transfer Instrument, were lodged with the third defendant for registration of the transfer of the title to the plaintiff. These documents were never returned to the plaintiff’s lawyers and the plaintiff has never been registered as the proprietor of the property.

In the interim, the officers of the Department of Lands and Physical Planning including the third defendant allowed the property to go through a number of sales. The details of those sales are as follows:

(i) 05 December, 2007 transfer from Cape Holman Corporation Ltd to Kina Real Estate & Auctioneers Limited;

(ii) 14 April, 2008 transfer from Kina Real Estate & Auctioneers Limited to Nangha Enterprises Ltd;

(iii) 28 April 2008, transfer from Kina Real Estate & Auctioneers Limited to Aku Engineering Limited (fourth defendant).

Subsequently, Aku Engineering Limited sold the property to the sixth defendant. The Transfer of the title from Aku Engineering Limited to the sixth defendant was registered on 26 April, 2013. The sixth defendant at all material times was not aware of the plaintiff’s interests in the property and the fact that the property had previously been through several sales”.

46. The court then said:

“The proceeding was issued on 10 July 2015, however the sixth defendant first became aware of it on or about 5 July, 2016, when it was served with court documents. The first to fifth defendants did not defend the case. They, especially the third defendant have not filed any affidavits in defence of the plaintiff’s claims, including explaining how and why the property went through a number of sales, including the sale to the sixth defendant, while the matter was with the third defendant for the title to be registered under plaintiff’s name”.

(My underlining)

47. Apart from the sixth defendant, other defendants, including the State showed little or no interest at all in defending the plaintiff’s claims. These were reflected in the attitudes displayed by the first to fifth defendants, which included failing to appear on Directions hearings and even at the trial. In reflecting on such conduct by the defendants, the court said:

“The defendants were all served with the relevant court documents including the Notice of Trial.

During Directions hearings, the State lawyers appeared in Court only a few times. The fourth defendant on the other hand did not appear at all in any of the Directions hearings. The lawyer for the State nonetheless certified the Review Book together with the lawyers for the plaintiff and the sixth defendant.

On 23 April, 2018, when the matter returned to Court for the last Directions hearing, counsel for the State, Mr. Yano was present in Court. On that day the matter was fixed for trial on 20 June, 2018.

The affidavit of service filed by the plaintiff’s lawyers, shows that the Notice of Trial (giving the trial date) was served on the State on 30 April, 2018.

However, on 20 June, 2018, the lawyer for the State did not attend the hearing, only counsel for the plaintiff and the sixth defendant attended. The Court having satisfied itself that the State and the fourth defendant had been made fully aware of the trial date, proceeded to hear the matter with only counsel for the plaintiff and the sixth defendant presenting arguments on behalf of their respective clients”.

48 It is trite law that failure by lawyers to attend to cases properly and diligently for their clients does not relieve the clients of any adverse findings made against them by the court. For example, where costs and or damages are ordered against them. In this case, the defendants must bear the consequences of their failures to attend court hearings and defend the plaintiff’s claims, particularly by their lawyers which has led to the adverse findings being made against them. In this case it is the State which the Court has found liable for the plaintiff’s exemplary damages because of the actions of its servants and agents, including the third defendant.

49. The actions of the third defendant and the other agents of the State were not just breaches of their mandatory statutory duties, their actions also essentially amounted to abuse of power. The fact that they were all public officials discharging public functions on behalf of the State made their actions very serious. They abused their delegated powers by facilitating several sales of the property which the plaintiff had already purchased and therefore was by law entitled to be registered as the owner of the property. The plaintiff was denied that right by the third defendant and his co-agents of the State. Thus, the several sales of the property while the plaintiff was waiting to be registered as the owner of the property, and the failure by the third respondent to respond to the reminder letter by the plaintiff that it was still waiting to be registered as the owner of the property in my view makes this case worse and lot more serious than Covek. Moreover, this case was not limited to breaches of plaintiff’s mandatory statutory rights by the third defendants and other agents of the State under the Land Act 1996, they included breaches of the plaintiff’s Constitutional right as discussed above.

50. The exemplary damages being punitive in nature, the cardinal principle is that damages awarded must fit the seriousness of the actions of the third defendant and his co-agents of the State in callously and recklessly disregarding the plaintiff’s legal statutory and Constitutional rights to be registered as the owner of the property. The award must in this regard serve both as deterrence and as a means to redress and compensate the plaintiff for being unfairly and unjustly wronged.
    
51. I am mindful of the principle that exemplary damages must account for the awards in general damages and there must be an element of relativity between exemplary and general damages. That said, there is no iron cast rule that an amount awarded in exemplary damages must be less or more than the amounts awarded in general damages. In my view the proper test is the nature, the seriousness, the gravity and the magnitude of damage(s) suffered by the plaintiff which warrant exemplary or punitive damages. In this case, I have found that the wrongs suffered by the plaintiff have far reaching effects on the plaintiff as a corporate and business entity, The wrongs it suffered far outweigh ordinary considerations for exemplary damages. The plaintiff in this case was totally innocent of any blame for the actions of the third defendant and his co-agents of the State. Additionally, the third defendant cannot claim ignorance of the plaintiff’s right to be registered as the owner of the property because he had all the documents from the plaintiff for the property to be registered under its name. There was plaintiff’s letter of reminder to the third defendant that it was awaiting to be registered as the owner of the property, the letter was continuously ignored by the third defendant. There was clear and blatant lack of prudence shown by the third defendant in the discharge of his duties. In the circumstances, I consider that the fair amount to award in exemplary damages is K2,500,000.00. Thus, I award K2,500,000.00 to the plaintiff under this claim.
    
52. The plaintiff has also claimed special damages, however, there are no supporting documents such as receipts and invoices in support of the claims. These claims need to be strictly proved. See, Banz Kofi Fektori Pty Ltd v. Apa [2002] PGNC11; N2374. In Ibi IInei v, Rimbunan Hijau (PNG) Limited (supra), the plaintiff proved that he incurred special damages by way of accommodation, PMV fares and meals, but was not able to produce receipts, the Court was prepared to estimate the amounts spent and an award was made. In that case, the plaintiff was a simple villager with no education, the court was therefore willing to accept his claims and awarded an estimated amount. There was undisputed evidence that he was travelling to Port Moresby from his village to attend court proceedings. In this case, the plaintiff is a corporate entity thus having the capacity to keep records of such expenses, which it could have provided to substantiate its claims. In any case, these claims are covered by past losses for which an award has been made. I therefore make no award under this claim.
    
53. The total amount awarded to the plaintiff both in general and exemplary damages is K6,175,000.00, with interest at 2%. Given that the delay in delivering this judgment is due to my oversight, the interest will be calculated from the date of substantive trial which is 21^st September, 2018 to the date of the trial for assessment of damages which is 14^th December, 2023.
    
54. The first to third and fifth defendants will pay for the costs of and incidental to the trial for assessment of damages for the plaintiff, which are to be taxed if not otherwise agreed.
    

Orders accordingly.

Ashurst Lawyers: Lawyers for the Plaintiff
Solicitor General: Lawyers for the First, Second, Third & Fifth Defendants
Ketan Lawyers: Lawyers for the Sixth Defendant