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Supreme Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]
SCA NO. 42 OF 2023
BETWEEN:
EDASAVE CORPORATION LIMITED
Appellant
V
NATIONAL CAPITAL DISTRICT COMMISSION
First Respondent
AND
TOAMI KULUNGA in his capacity as the Commissioner of Police, ROYAL PAPUA NEW GUINEA CONSTABULARY
Second Respondent
AND
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Third Respondent
Waigani: Yagi J, Anis J, & Berrigan J
2023: 30th November
2024: 29th February
APPEAL AGAINST DECISION ON ASSESSMENT – general damages for breach of contract - whether there was sufficient evidence before the trial Court to assess loss of profits and renovations or improvements carried out on the leased property – whether trial judge was permitted to exercise discretion outside what was ordered by the Supreme Court or what was pleaded in the Statement of Claim- ‘actual losses’ and ‘reasonably foreseeable’ – whether appellant had met these two pre-requisites – whether the trial Judge erred - consideration - ruling
Cases Cited:
Papua New Guinean Cases
Rodao Holdings Ltd v. Sogeram Development Corporation Ltd (2007) N5485
PNG Aviation Services Pty Ltd v Geob Karri (2009) SC1002
Lalip and Ors v Sikiot (1996) N1457
Mel v Pakalia (2005) SC790
Yooken Pakilin and 1 Or v. Wauglo and Ors (2001) N2212
Langan and Ors v. The State (1995) N1369
Overseas Cases
Hadley v Baxendale [1854] EWHC Exch J70
Counsel:
H Leahy, for the Appellant
M Mukwesipu, for the First Respondent
A Kajoka, for the Second and Third Respondents
29th February 2024
1. BY THE COURT: This is an appeal against a decision by Tamade AJ (trial Judge) on assessment of damages. Her Honour’s decision was delivered on 6th of April 2023 in proceeding WS (CC3) No. 732 of 2014, Edasave Corporation Limited v. National Capital District, Toami Kulunga and the State (WS 732). In summary, the trial Judge was not satisfied that the appellant had adduced sufficient evidence to establish its losses and therefore refused the appellant’s claim for damages.
BACKGROUND
2. The appellant filed WS 732 on 2 July 2014. The appellant had alleged that it had suffered, amongst others, general damages for breach of contract by the actions or inactions of the respondents, when its leased premises called “Sea Kiosk” was demolished on 11 March 2014. The land or property the Sea Kiosk had occupied was owned by the first respondent. It was described as Portion 2031, Granville, further West Side of Ela Beach, Port Moresby (the Property/Sea Kiosk/rented premises).
3. On 1 January 2011, the appellant and the first respondent entered into a lease agreement (the Lease/Contract) for the Property. Premised on the Lease, the appellant was permitted to rent the Property on a monthly rent of K5,000. The appellant, however, claimed that on 11 March 2014, during the tenure of the Lease, the first respondent and its servants and agents, including members of the police force, entered the Sea Kiosk and willfully and unlawfully destroyed it. So, on 2 July 2014, the appellant filed WS 732. It sought as relief, damages, exemplary damages, interest, and costs of the proceeding. The matter was tried before Her Honour Polume-Kiele J, and on 6 July 2018, Her Honour delivered her final decision (decision of 6 July 2018) dismissing the claim. Her Honour’s final orders read:
(i) No reasonable cause of action is disclosed against the defendants.
(ii) Costs follow the event, costs to be taxed if not agreed.
4. The appellant, aggrieved by the decision, filed an appeal described as SCA 125 of 2018, Edasave Corporation Limited v. National Capital District Commission and the State (SCA 125). Upon hearing the appeal and in an ex tempore ruling on 17 December 2019, the Supreme Court upheld the appeal, and in so doing, made the following orders (SC order of 17 December 2019):
5. Proceeding WS 732 was then heard by the trial Judge. The trial on assessment was conducted on 2 September 2022, and on 22 September 2022 the parties presented their closing arguments. Then on 6 April 2023, the trial Judge delivered a written decision where Her Honour dismissed the claim. The final orders read:
6. The present appeal stems from the said decision (Appealed decision). We summarise that by making references to the following excerpts at paragraphs 19, 21, 22, 24, 25, 27 and 28:
19. It would appear that the Plaintiff refused to vacate the premises in time as notified by NCDC and thereby did nothing only at the day of the demolition, it brought in a valuer to observe the demolition and write a report on loss of business. The Plaintiff had effectively contributed to its own losses by not heeding the warning and not vacating the premises in time.
......
21. I also find that the Plaintiff has not proven any actual loss of business profits from the demolition and actual loss of improvements from the demolition. The Plaintiff’s evidence is largely hearsay and speculative, uncorroborated by any Profit and Loss Statement, there is no bank Statements, there is no verification from its accountants and or there is no convincing evidence that this is a formal business that was making profits prior to the demolition. To say that all its financial records were kept on the premises and destroyed is far from good and prudent business practice and cannot be believed by the Court as the Plaintiff did nothing to keep in a safe custody it’s records. I also find that other records can be retrieved from its bank and its accountants etc, but the Plaintiff failed to produce those.
......
22. I am of the view that the Plaintiff has not made out a case for any damage at all in its claim as the evidence is insufficient and clearly lacking. The Claim for future economic loss is not an actual loss as ordered by the Supreme Court and that is refused. The claim for Special Damage has not been pleaded in the Statement of Claim and has been vehemently opposed by NCDC and therefore that is also refused.
......
24. Exemplary damage is penal in nature in addition to the wrongdoer paying damages. I find that an award of exemplary damage is unwarranted in this case as I have found that the Plaintiff had sufficient notice of the eviction and did nothing thereby contributing to its own losses. The claim for exemplary damage is refused.
25. The Plaintiff therefore has not made out a claim for actual loss reasonably foreseeable. This could have been a claim for the improvement on the property subject to the terms of the lease agreement, that to my mind is an actual loss reasonably foreseeable however this has not been made out on the evidence and on the required civil standard of proof. In the words of the Court in Lalip for himself and on behalf of Kulap and Minalo v Sikiot[5]:
“Just because the Plaintiff has obtained (default) judgement does not mean that he is entitled as of right to receive damages. He must prove the damages suffered by credible evidence.”
......
27. Following the Supreme Court decision in Wapi v Ialy[6], the Supreme Court said this with particular emphasis underlined:
“Given the above, we are of the view that where a judgment, be it default or otherwise, has been entered, and a primary judge determines, after concluding a hearing to assess damages, that the plaintiff has not sufficiently proved his loss or that no cause of action is disclosed in the statement of claim or that the pleadings are defective or that the claim is frivolous or vexatious or is an abuse of process, he is entitled to refuse to make an award of damages. This is in accord with him being able to consider the question of liability for the damages claimed. To dismiss the entire proceeding however, in the absence of any application to set aside, as in this case, the effect of which is to review the decision to enter judgment and to set such judgment aside, is in our respectful view, to fall into error.”
28. As the Plaintiff has not proven its losses, actual losses reasonably foreseeable as ruled by the Supreme Court, the Plaintiff’s claim for damages is refused.
GROUNDS OF APPEAL - GENERAL
7. There are 9 grounds of appeal pleaded in the Notice of Appeal filed 27 April 2023. They are contained at pages 4, 5 and 6 of the AB. Grounds 3.1, 3.2. 3.3, 3.4. 3.5 and 3.7 concern challenges on alleged failure by the trial Judge to engage herself with the principles of assessment of damages, in her various decisions in refusing to make any award of damages in favour of the appellant. We will address them below.
8. Ground 3.6 concerns the appellant’s initial claim for loss of goodwill. We find the ground inconsequential and dismiss it given that the appellant had abandoned this relief at the hearing before the trial Judge.
9. Ground 3.9 states that the trial Judge erred in mixed fact and law by not “fairly engaging with and considering” the reasons of the decisions of Justice Polume-Kiele of 6 July 2018, the SC order of 17 December 2019, and witness Raymond Wang’s affidavit filed 25 May 2021. With respect, we find the framing of this ground to be, amongst others, misconceived and untenable. The only relevant order which the trial Judge was obliged to observe to assess damages in WS 732 was the SC order of 17 December 2019 in SCA 125, that is on the basis of any actual losses of the Appellant which were reasonably foreseeable.
GROUNDS 3.1, 3.2. 3.3, 3.4. 3.5 AND 3.7
10. In addressing these 6 grounds of appeal, we propose to begin by ascertaining whether the trial Judge was obligated to consider damages beyond or outside what was pleaded in the Statement of Claim (SoC) in WS 732. We have partly answered this question above where we referred to the Supreme Court’s decision in SCA 125 and ruled that the trial Judge was bound to award damages within the scope of what the Supreme Court had ruled in SCA 125. When we consider the relief sought in the SoC, the final relief sought were, (i), Damages, (ii), Exemplary Damages, (iii), Interest, and (iv) Costs.
11. At this point, we note that relief ‘Exemplary Damage’ was not pursued by the appellant in any of the grounds of appeal. We also draw our attention back to the SC order of 17 December 2019 which reads in part, The matter is remitted to the National Court before a different judge for an assessment of damages to be paid by the Respondents to the Appellant for any actual losses of the Appellant which were reasonably foreseeable. [Underlining ours]. So, the Supreme Court’s order was for assessment of damages premised only on the actual losses that were reasonably foreseeable. Exemplary Damage was outside the precincts of considerations that were before the primary judge as per the Supreme Court’s order.
12. As for damages for breach of contract, the appellant sought compensation, which was pleaded at para. 19 of the SoC, which states, and we quote in part:
(i) Loss of profits @ K82,000.00 per month for the unexpired term of the Lease. And for the 5 year renewal.
(ii) Destruction of improvements effected by the Plaintiff to the Premises – K2,500,000.
13. The trial Judge, in our view, was obligated as well as confined by the SC order of 17 December 2019, which was to assess actual losses that were reasonably foreseeable as pleaded in the SoC. In this case, it was the 2 alleged losses that were pleaded at para. 19 of the SoC ( the 2 alleged losses). We note that the trial Judge had acknowledged and stated that at para. 8 of Appealed Decision.
14. Moving on, we note that the ‘reasonably foreseeable’ requirement was not a serious issue that was before the trial Judge. It appears obvious at the time when the parties signed the Lease that if the first respondent was to breach its terms and conditions, that the appellant may suffer damages such as loss of profits which was reasonably foreseeable. However, the real issue before Her Honour was whether the 2 alleged losses were ‘actual losses’ that ‘were suffered’ or ‘incurred’ by the appellant, and if so, how much compensation or damages should be awarded.
15. Cannings J in Rodao Holdings Ltd v. Sogeram Development Corporation Ltd (2007) N5485, stated, which we adopt herein:
16. When assessing damages for breach of contract special principles apply. These come from the leading common law case on damages for breach of contract, Hadley v Baxendale (1854) 9 Exch 341, the principles of which were explained in the other leading common law case Victoria Laundry v Newman [1949] 2 KB 528. Hadley v Baxendale has been considered in PNG in, for example, Tetley v The Administration (1971) No 647, pre-Independence Supreme Court, Frost SPJ and in the Coecon case. I consider that the principle of Hadley v Baxendale and the Victoria Laundry cases are appropriate to the circumstances of PNG, and therefore can be safely applied as part of the underlying law. The special principles are:
16. In Hadley v Baxendale [1854] EWHC Exch J70, the Court of Exchequer held, and we quote:
Now we think the proper rule is such as the present is this: Where two parties have made a contract which one of them has broken, the damages which the other party ought to receive in respect of such breach of contract should be such as may fairly and reasonably be considered either arising naturally, i.e., according to the usual course of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties, at the time they made the contract, as the probable result of the breach of it. Now, if the special circumstances under which the contract was actually made where communicated by the plaintiffs to the defendants, and thus known to both parties, the damages resulting from the breach of such a contract, which they would reasonably contemplate, would be the amount of injury which would ordinarily follow from a breach of contract under these special circumstances so known and communicated. But, on the other hand, if these special circumstances were wholly unknown to the party breaking the contract, he, at the most, could only be supposed to have had in his contemplation the amount of injury which would arise generally, and in the great multitude of cases not affected by any special circumstances, from such a breach of contract. For such loss would neither have flowed naturally from the breach of this contract in the great multitude of such cases occurring under ordinary circumstances, nor were the special circumstances, which, perhaps, would have made it a reasonable and natural consequence of such breach of contract, communicated to or known by the defendants. The Judge ought, therefore, to have told the jury, that, upon the fats then before them, they ought not to take the loss of profits into consideration at all in estimating the damages. There must therefore be a new trial in this case.
Rule absolute.
17. Hadley v Hexendale (supra) has been applied in this jurisdiction. We see no reason to depart from its principles.
18. When assessing damages in contract, this Court in PNG Aviation Services Pty Ltd v Geob Karri (2009) SC1002 also stated at para 14 of its decision, which we also adopt, as follows:
14. When assessing damages in contract, the court seeks to put the injured party in the position that party would have been in but for the breach of contract. In other words, the object is to put the plaintiff in the same position as if the contract was performed. That statement of general principle for the assessment of damages for breach of contract is usually based on the decision in Robinson v Harman [1848] EngR 135; (1848) 1 Exch 850 at 855[1848] EngR 135; [1848] EngR 135; , 154 ER 363 at 365, approved by the High Court of Australia in The Commonwealth v Amann Aviation Pty Ltd [1991] HCA 54; (1991) 174 CLR 64 at 80, as set out by the trial judge who noted that both counsel agreed with that statement.
19. As for the 2 alleged losses raised under the grounds of appeal, the trial Judge had to consider whether the appellant suffered loss of profits to its business, and also, loss of improvements to the rented premises that was destroyed? To assess that, the trial Judge had to first establish, (i), whether the appellant was making profits at the material time, and (ii), the improvements that the appellant had made to the rented premises. The trial Judge, however, found that the appellant failed to adduce sufficient evidence on the balance of probabilities to show (i), its actual profits and losses at the material time, and (ii), the improvements that had been carried out on the rented premises.
20. Having looked at the considerations and findings of the trial Judge, we must say that we are unable to arrive at a different conclusion or outcome. The test, as ordered by the SC was for “actual losses” that may have been suffered by the appellant at the material time. The evidence that was put before the trial Court, as found by Her Honour, did not constitute sufficient evidence of actual losses concerning the 2 alleged losses. The appellant, as found by the trial Judge which we concur, did not provide any primary documentations such as statements of its annual returns, or company records of profits or losses made in the previous years, or company bank records, or evidence that the appellant was a registered taxpayer and had been paying tax to the Internal Revenue Commission of Papua New Guinea. The appellant also failed to show primary source documents of the improvements that had been done to the rented Property.
21. Consequently, (or due to insufficiency of evidence that had been adduced by the appellant before the trial Court), trial Judge was unable to establish on the balance of probabilities, firstly, whether the 2 alleged losses constituted “actual losses”, and secondly, sufficient proof, on the balance of probabilities, to assess how much should be awarded for each of the 2 alleged losses. In other words, the failure by the appellant to prove actual losses (i.e., loss of profits and loss of improvements made to the rented premises) made it not at all possible for the trial Court to then proceed to assess how much award or compensation should be granted for each of the 2 alleged losses. The trial Judge, in our view, was correct in relying on case authorities including Lalip and Ors v Sikiot (1996) N1457, Mel v Pakalia (2005) SC790, Yooken Pakilin and 1 Or v. Wauglo and Ors (2001) 2212 and Langan and Ors v. The State (1995) N1369.
22. These cases have stated, amongst others, as follows:
"The Plaintiff must understand that, if they bring actions for damages, it is for them to prove their damages. It is not enough to write down particulars and so to speak, throw them at the head of the Court, saying .............."This is what I have lost, I ask you to give me these damages, "they have to prove it."
[Yooken v Wauglo (supra)]
23. These principles continue to apply and are valid.
24. Further, we note that the trial Judge, premised on the express decision of the Supreme Court in SCA 125, could not have made any ‘Global Award’. To do so would have been inconsistent with and contrary to the express terms of the SC order of 17 December 2019. Her Honour’s power on assessment, as stated, was limited to assessing only actual losses. The 2 alleged losses were the only identified or pleaded losses under the heading ‘General Damages for breach of contract’ which we have addressed above herein.
25. We therefore dismiss the 6 grounds of appeal.
GROUND 3.8
26. In regard to ground 3.8, the appellant is alleging bias or pre-conceived view by the trial Judge before reaching her final decision.
27. The relevant document to consider for our purpose is the transcript of proceeding of WS 732 dated 2 September 2022.
28. In observing, we note the following. The trial Judge was addressing the State’s alternative submission on award of damages for breach of contract. Counsel Mr. Mileng submitted that a global sum or award of K50,000 should be awarded. Later, Mr. Mileng confirmed that the award was speculative. At lines 30 and 40, page 834 of the AB, we note the following exchanges:
“HER HONOUR: All right, I take it, you are saying that is a speculative amount?
MR MILENG. Yes, your Honour.
HER HONOUR: There is no reasoning behind it but you are saying it is an overall compensatory in that, well, they cannot prove their losses but they are entitled to something so the first defendant should give them 50,000. That is what you are saying?
MR MILENG: Yes your Honour, that is what we are saying.”
29. We also observe that Mr, Mileng’s said alternative submission was made on the basis that that was what the first respondent, and not the State, should pay. The said submission had caught the first respondent’s counsel Mr. Mukwesipu by surprise. In response, the first respondent, amongst others, maintained its position which was its denial that the appellant had established damages for beach of contract.
30. We observe that the appellant’s main contention under this ground is that there was an admission or acknowledgment by the respondents of the losses that had been suffered by the appellant when they offered to pay the K50,000.
31. We begin our assessment by quoting the actual ground of appeal because its wording is crucial to the findings that we will make. Ground 3.8 reads:
“3.8 With respect, Her Honour erred on a question of mixed fact and law when on 22 September 2022 and while hearing Appellant’s counsel’s closing speech, Her Honour uttered words to the effect that after hearing from the Appellant’s witness (Raymond Wang’s), she had formed a judgment in the case which was decisive of the case, when Her Honour had not, at that stage of the proceedings, “ [Underlining ours]
32. We have considered the exchanges between the bench and bar relied upon by the appellant to establish bias. And in so doing, we must say that we find the allegation raised under this ground of appeal to be factually incorrect and false. Her Honour did not “uttered words to the effect that after hearing from the Appellant’s witness (Raymond Wang’s), she had formed a judgment in the case which was decisive of the case...” as alleged.
33. In our view, this ground of appeal is unwarranted and baseless, and that being so, we dismiss it.
34 We will also make the following remarks in closing. The submission by the State for payment of K50,000 as damages was made in the alternative, that is, under the heading “Global Award”. It was not made as an admission or acknowledgment of damages as alleged by the appellant. The transcripts of the proceeding, as we have cited above, confirm this, thus, the submission by the appellant in that regard is, with respect, factually incorrect. We also refer to our earlier decision made above herein regarding whether or not the trial Judge could have exercised her discretion and made a ‘Global Award’. We have answered that in the negative.
SUMMARY
35. In the end, having dismissed all the grounds of appeal, the appeal shall therefore fail with costs.
ORDERS OF THE COURT
36. We make the following orders:
The Court orders accordingly.
________________________________________________________________
Pacific Legal Group: Lawyers for the Appellant
National Capital District Commission Legal Division: Lawyers for the First Respondent
Solicitor General: Lawyer for the Second and Third Respondents
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