Enfi (PNG) Ltd v Kurumbukari Ltd [2016] PGSC 91; SC1711 (17 June 2016)

SC1711

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA 57 of 2015

BETWEEN:
ENFI (PNG) LIMITED
Appellant

AND:
KURUMBUKARI LIMITED
Respondent

Waigani: Hartshorn, Yagi and Polume-Kiele JJ
2016: 28^th April,
: 17^th June

Appeal of an assessment of damages

Cases cited:

Administration of the Territory of Papua and New Guinea [1965-66] PNGLR 311
Opai Kunangel v The State [1985] PNGLR 144
Jonathan Mangape Paraia v. The State (1995) N1343
Frank Onga v. The General Manager Engineering Management Pty Ltd (2003) N2321
Tiensten v Independent State of Papua New Guinea [2014] SC1468
Agnes Kapipi v. Andrew Andu (2015) N6125
Masket Iangalio v National Development Bank Limited (2016) SC1499

Counsel:

Mr. P.K. Kunai, for the Appellant
Mr. G. Pipike, for the Respondent

17^th June, 2016

1. HARTSHORN, J. This is a decision on an appeal of an assessment of damages by the National Court which ordered the appellant to pay the respondent the total sum of K1, 328,390.26, being K1, 145,164.02 as damages and K183, 226.24 in interest.

2. The respondent’s claim in the National Court was for a breach of a fixed price written contract for the construction of bridges and road diversions along the Lae to Madang highway. The respondent succeeded in establishing liability for a breach of contract against the appellant for its refusal to pay anything other than the fixed price of the contract despite the contract being substantially varied with the appellant’s consent. The decision on liability was not appealed.

3. The grounds of appeal are that the primary judge erred in law and fact:

a) “in awarding a judgment sum in favour of the (respondent) for the sum of K 1,145,164.02 in damages for additional works performed as a result of the variation in the contract when there is no express agreement between the parties on what should be the price over and above the agreed contract price of K1,509,154.02”;

b) “in accepting the (respondent’s) evidence and making such an award when there is no direct evidence adduced by the (respondent) to substantiate which invoices are for works done in respect of the contract and which ones are for works done because of the variation in the contract”;

c) “by making an award in favour of the (respondent) which was so excessive and almost doubled the contract price that cannot be regarded as reasonable costs for the additional works done after the contract was varied by the parties”; and

d) “in holding that the (respondent’s) claim be reduced by 20% only when the rate of reduction should have been higher because of the insufficiency of the evidence adduced by the (respondent) to prove his claim and in view of the evidence adduced by the (appellant) in rebuttal, so that any amount allowed for additional works should be reasonable.”

4. As to the first ground of appeal the appellant submits that notwithstanding that the primary judge found that there was a variation to the contract, there is no evidence of consideration or price for the variation and so the respondent must prove its damage.

5. The respondent submits that this ground of appeal implies that the primary judge should have revisited his decision on liability. I agree. The primary judge had already determined that the appellant was liable to pay damages being a reasonable amount for the additional work performed in addition to the contract, notwithstanding that the parties had not agreed on a price for the additional work. This issue was not for determination by the primary judge at the hearing to assess damages. This ground of appeal is dismissed.

6. As to the second ground of appeal the appellant submits that there was no direct evidence of the respondent to differentiate which invoices it relied upon were for works performed under the contract and which were for works performed under the variation to the contract.

7. The respondent submits that the primary judge did not err in his consideration of the respondent’s evidence.

8. From a perusal of the primary judge’s comments and the evidence I am satisfied that the primary judge was entitled to conclude and find as he did.
In this regard I refer to the following passage reproduced in the recent decision in Agnes Kapipi v. Andrew Andu (2015) N6125 from the judgment of Kandakasi J. in Frank Onga v. The General Manager Engineering Management Pty Ltd (2003) N2321:

“As noted in Coecon Limited (Receiver/Manager Appointed) vs. The National Fisheries Authority of Papua New Guinea and The Independent State of Papua New Guinea (supra), a plaintiff can discharge his burden of prove (sic) by calling credible evidence. If he is able to do that in relation to what he alleges then, there is no reason why there should (not) be a finding in his favour unless, the defendant is able to rebut it by other credible evidence. Apparent in this is the fact that, once a plaintiff establishes his case on the balance of probabilities, the burden then shifts to the defendant to rebut it. If the plaintiff (sic) (defendant) fails to discharge that burden, it is open to the Court to act on the evidence of the plaintiff.”

9. Further, I refer to the case of Jonathan Mangape Paraia v. The State (1995) N1343, a decision of Injia J (as he then was) in which His Honour referred to two earlier English cases in regard to the Court assessing damage on the evidence before it:

“As Vaughan Williams LJ put it in Chaplin v Hicks [1911] UKLawRpKQB 104; [1911] 2 KB 786 at p. 792:

"The fact that damages cannot be assessed with certainty does not relieve the wrongdoer of the necessity of paying damages."

In the circumstances of the instant case, it the duty of the Court to arrive at a probable value of the house. As Devlin J said in Biggin v Permanite [1951] 1 KB 422 at 438:

"Where precise evidence is obtainable, the Court naturally expects to have it (but) where it is not, the Court must do the best it can."

10. In this instance, it was conceded by counsel for the appellant that there was no evidence on behalf of the appellant to the effect that the evidence given on behalf of the respondent contained invoices in respect of work performed under the contract as distinct from work performed in the variation of the contract.

11. From a perusal of the affidavit evidence of Messrs Dedmai and Opotio, I am satisfied that the primary judge was able to find in favour of the respondent as he did. His Honour did this on the evidence before him and he did the best that he could in circumstances where precise evidence was not available. This is particularly so given the absence of evidence on behalf of the appellant to rebut that some of the invoices relied upon by the respondent were in respect of work that had been performed during the contract as distinct from the variation of the contract.

12. Consequently, this ground of appeal is dismissed.

13. As to the third and fourth grounds of appeal, the appellant’s submissions are that as the primary judge was not satisfied from the evidence as to the respondent’s claim given that he reduced the amount claimed by 20%, the primary judge should not have awarded an amount almost double the contract price and further, should have given more of a discount than 20% because of the insufficiency of the evidence given on behalf of the respondent.

14. The respondent repeats its submission that it made in respect of the second ground of appeal and submits further that the primary judge should not have given the discount that he did or if he were to give a discount then it should have been less than 20%. I note however, that the respondent has not filed a cross appeal or notice of contention in respect of this point.

15. In essence the appellant’s complaint is that the evidence of the respondent was insufficient for the primary judge to make the finding that he did. I have addressed this question when considering the second ground of appeal. I am satisfied for the reasons mentioned that the primary judge was entitled to conclude as he did on the evidence before him and that he did not fall into error in so doing.

16. Consequently for the above reasons the appeal should be dismissed.

Orders

17. It is ordered that:

a) This appeal is dismissed;

b) The appellant shall pay the respondent’s costs of and incidental to this appeal to be taxed if not agreed.

18. YAGI, J. I have had the benefit of reading the draft judgments of Hartshorn J and Polume-Kiele J. I agree with the reasons and conclusions reached by their Honours. I have nothing further to add.

19. POLUME-KIELE, J: This is a decision on an appeal on assessment of damages arising from a decision of his Honour Cannings J delivered on 21st April 2015 in the proceedings, WS 1596 of 2009. His Honour awarded damages in the sum of K1, 145, 164.02 and interest of K183, 226.24 in favour of the respondent.

20. The claim in the National Court was for breach of a fixed price written contract for the construction of bridges and roads diversions along the Lae to Madang Highway. Judgment on liability was entered for the respondent on the 25^thApril 2012. This appeal concerns the assessment of damages payable only, not the liability of the appellant.

Grounds of appeal

21. The notice of appeal contains four grounds of appeal, which is particularised as follows:

a) His Honour erred in law and fact in awarding a judgment in favour of the Respondent/Plaintiff for a sum of K1, 145,164.02 in damages for additional works performed as a result of the variation in the contract when there is no express agreement between the parties on what should be the price over and above the agreed contract price of K1, 509, 154.02;

b) His Honour erred in law and fact in accepting the Plaintiff’s evidence and making such an award when there is no direct evidence adduced by the Plaintiff to substantiate which invoices are for works done in respect of the written contract and which ones are for works done because of the variation in the contract;

c) His Honour erred in law and fact by making an award in favour of the Respondent/Plaintiff which was so excessive and almost doubled the contract price that cannot be regarded as reasonable costs for the additional works to be done after the written contract was varied by the conduct of the parties;

d) His Honour erred in law in holding that the Respondent’s claim be reduced by 20% only when the rate of reduction should have been higher because of the insufficiency of the evidence adduced by the Respondent/Plaintiff to prove its claim and in view of the evidence adduced by the appellant in rebuttal, so that any amount allowed for additional works should be reasonable.

22. In relation to ground 1of the appeal, the appellant submits that his Honour did not have regard to evidence of the appellant which demonstrated that there was no express agreement between the parties on what should be the price over and above the agreed contract price of K1,509,154.02

23. The respondent on the other hand submits that the Court should dismiss the appeal, because the grounds of appeal raised by the appellant either raised issues which were not live in view of the undisturbed judgment the respondent had secured against the appellant or were not competent.

24. In relation to ground 2 of the appeal, the appellant submits that his Honour gave undue weight to the respondents’ evidence when no direct evidence has been adduced to substantiate which invoices are for works done in respect of the written contract and which are for works due to the varied contract.

25. The respondents submit that this Court should dismiss this appeal, because there was no error of law or fact. The trial judge did not err in his deliberations of the respondent’s evidence. His Honour gave undue weight to the evidence by the respondent in terms of actual reasonable costs for additional works performed by the respondents after the contract was varied by the conduct of the party. This ground of appeal raised no issues warranting disturbance of the decision of the primary Judge.

26. The reasons for dismissing the appeal are as follows:

a) First, as the respondent contends, and as his Honour noted in the primary judgment, the appellant clearly seeks to raise issues which are no longer live, and cannot be the subject of this appeal. His Honour made plain in his judgment which is repeated here that:

i) The respondent had successfully established liability against the appellant on 25^th June 2012. The defendant breached the contract, as varied, by refusing to pay anything over the original contract price.

ii) The only issue remaining for determination between the parties was the plaintiff is entitled to damages in the sense that the plaintiff is entitled to an award that will represent the reasonable price of the extra works and services that it performed.

iii) In other words, the Court was required only to assess damages.

27. The issue of liability of the appellant had been determined – adversely to him – on 25^th June 2012.

28. With regard to the third and fourth grounds of appeal, it is clear from the primary judgment that his Honour did not disregard evidence or submissions of the appellant. For instance in his decision, his Honour noted, for example:

a) The appellant’s contention that nothing should be awarded as there is no evidence to support the proposition that the plaintiff suffered any damage as a result of the wrongful actions of the defendant. This submission was rejected as it fails to meet the fundamental finding of the court in the earlier judgment. The defendant’s refusal to pay anything to the plaintiff in addition to the original contract price was found to be a breach of the original contract price for which the defendant was liable in damages.

b) The evidence of the defendant’s logistics manager, Tian Tao, that there were instances of wasted expenditure and down time of heavy equipment hired by the plaintiff, which should be excluded from calculation of the reasonable and discounted the amount of K286, 291 from the amount claimed by the plaintiff.

c) Upholding the appellant’s submission that nothing should be awarded for the second category of damages (profit margin) as his Honour considered that this claim is vague and unsubstantiated.

29. His Honour also observed, however, that the respondent has a valid claim but will discount it by 20 per cent for two reasons. Firstly, though the plaintiff has adduced evidence of invoices issued which support calculation of the figure claimed; there is insufficient evidence that each and every invoice is, to the full extent of the invoice directly related to the extra work and services necessitated by the contract variation.

30. A trial Judge cannot be criticised for evaluating evidence, choosing to accept some evidence, and/or choosing to reject other evidence. It is the task of the trial Judge to engage in that exact exercise. A trial Judge cannot be criticised for forming a view as to the relevance or otherwise of evidence before the Court. In this case the evidence of the respondent contained in the affidavit of Mr Opotio, sworn 18 of March 2014 with details of outstanding invoices which were payable and due to suppliers as a result of additional works done on a varied term of the contract (see The Administration of the Territory of Papua and New Guinea [1965-66] PNGLR 31) where this court was satisfied for the reasons that the plaintiff has produced credible evidence of its damages and the defendant has not rebutted that evidence (see also Masket Iangalio v National Development Bank Limited (2016) SC1499)

32. Further, the appellant’s complaint that a trial Judge has failed to give “proper” weight to the evidence; this complaint usually follows a decision of the trial Judge to either discount or reject evidence of the complaining party gives rise to a question of fact. For a party to challenge factual findings; the Supreme Court must grant leave under section 4(2)(c) of the Supreme Court Act 1986, Opai Kunangel v The State [1985] PNGLR 144, Tiensten v Independent State of Papua New Guinea [2014] SC1468. In this case, no leave has been granted to raise questions of fact.

33. Finally, the order his Honour made was within the evidence adduced by the respondent as plaintiff at first instance against the appellant on 25^th June 2012. The defendant breached the contract, as varied, by refusing to pay anything over the original contract price. Evidence produced by the plaintiff in the form of affidavit with detailed of invoices do demonstrate that the amount ordered was owing, which evidence was accepted by his Honour. Therefore the decision of the primary Judge, who dealt carefully and properly with the issues and material before him, found that the plaintiff is entitled to an award that will represent the reasonable price of the extra works and services that it performed.

34. For the foregoing reasons, this appeal should be dismiss.

35. I order as follows:

(1) The appeal is dismissed.

• (2) The appellant shall pay the respondent’s costs of and incidental to this appeal to be taxed if not agreed.

_____________________________________________________________
Kunai & Co. Lawyers: Lawyers for the Appellant
GP Lawyers: Lawyers for the Respondent