Diritala v Jeffrey [2009] PGNC 240; N3927 (1 October 2009)

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DAMAGES – breach of contract – failure of purchaser of motor vehicle to pay full purchase price – plaintiff claims damages for: balance of purchase price, special damages, general damages etc.

The plaintiff entered into a contract to sell his motor vehicle to the defendant for K8,000.00. The defendant took possession of the vehicle, repaired and improved it, used it extensively but paid the plaintiff only K2,400.00. The defendant then sold the vehicle but still did not pay the balance of the purchase price. The plaintiff commenced proceedings against the defendant but the defendant did not defend the matter and default judgment was entered against him with damages to be assessed. This is the trial on assessment of damages.

Cheong Supermarket Pty Ltd v Pery Muro [1987] PNGLR 24
Livingston v Raywards Coal Co [1880] 5 App Cases 25

1. CANNINGS J: The plaintiff, Lucius Diritala, has successfully sued the defendant, Joe Jeffrey, for breach of contract and has come to the court for an assessment of damages.

2. In November 2002 the plaintiff and the defendant entered into an oral contract under which the plaintiff agreed to sell his Mitsubishi L200 double-cab utility to the defendant for K8,000.00. The defendant took possession of the vehicle, repaired and improved it, used it extensively but paid the plaintiff only K2,400.00. The defendant then sold the vehicle but still did not pay the balance of the purchase price.

3. The plaintiff commenced proceedings against the defendant in the National Court, claiming damages for breach of contract. The defendant did not defend the matter and default judgment was entered against him with damages to be assessed. This is the trial on assessment of damages. The plaintiff is claiming three categories of special damages and four categories of general damages, totalling K43,347.57.

4. The defendant paid the plaintiff only K2,400.00 of the agreed purchase price of K8,000.00. He failed to pay all of the amount due within a reasonable time after he took possession of the vehicle. This is the primary breach of contract that he has committed. There is ample proof of this in the plaintiff's affidavit, which comprises the evidence in this case.

5. The plaintiff is claiming K5,747.57 for the hire of a vehicle necessitated by the breach of contract. I cannot see any merit in this claim. The purpose of an award of damages is to put the innocent party in the same position, as far as possible, as he would have been in if the wrongdoer had not committed the wrongful act (Livingston v Raywards Coal Co [1880] 5 App Cases 25). A useful question to ask is therefore: would the damage being claimed for happened if it was not for the wrongful act (in this case, the breach of contract)? Put another way: is there a cause-and-effect relationship between the wrongful act and the damage?

6. Here, there is no cause-and-effect relationship between the breach of contract (failing to pay the full purchase price) and the hire of a vehicle. If the contract had not been breached (ie if the defendant had paid the full purchase price) the plaintiff would still have had to pay for the hire of the vehicle.

7. The plaintiff says that because the defendant did not pay him the full purchase price, he was short of money and had to borrow K2,000.00. I can see that there is a cause and-effect relationship between the breach of contract and running short of money but the sort of injury claimed for is too remote.

8. The plaintiff is claiming K10,000.00 on account of the defendant having unlawful possession of the vehicle. I see no merit in this claim. There is evidence that at the time the plaintiff sold the vehicle to the defendant it was unroadworthy. The defendant took it to a workshop for repair, with the plaintiff's consent. Property in the vehicle passed to the defendant at that point. The defendant did not have unlawful possession of it.

9. The plaintiff seeks K5,000.00 damages as he says that the defendant made alterations to the vehicle without his consent. This claim is flawed for the same reason that the claim for damages for unlawful possession is flawed: the plaintiff sold the vehicle to the defendant. That is what the contract was about. The defendant was entitled to alter the vehicle. The plaintiff's claim might have merit if he were able to show that it was a term of the contract of sale that property in the vehicle did not pass until the full purchase price was paid. However, this was an oral contract and I am not satisfied that that was a term of the contract.

10. The plaintiff seeks K5,000.00 damages as he says that the defendant changed the registration of the vehicle without his consent. This claim is flawed for the same reason given for rejection of the two previous claims: the plaintiff sold the vehicle to the defendant.

11. The plaintiff seeks K5,000.00 damages as he says that the defendant sold the vehicle unlawfully. This claim is flawed for the same reason given for rejection of the three previous claims: the plaintiff sold the vehicle to the defendant.

12. I will now assess a special type of general damage that was not expressly claimed in the statement of claim, but which I consider can be accommodated within the claim for general damages, as it has impliedly been sought: a claim for the distress and frustration endured by the plaintiff as a result of the defendant's breach of contract. The plaintiff has testified that the defendant's failure to abide by the contract caused him great inconvenience, hardship, distress and anxiety. This is understandable. He has tried to get the matter settled out of court but the defendant has been uncooperative.

13. I award general damages calculated at half of the unpaid balance of the purchase price (K5,600.00): K2,800.00.

No	Category of claim	Amount claimed (K)	Amount awarded (K)
1	Special damages – balance of purchase price	5,600.00	5,600.00
2	Special damages – vehicle hire	5,747.57	0
3	Special damages – loan repayments	2,000.00	0
4	General damages – use of vehicle	10,050.00	0
5	General damages – alteration to vehicle	5,000.00	0
6	General damages – change of registration	5,000.00	0
7	General damages – illegal sale of vehicle	10,000.00	0
8	General damages – distress, frustration etc	0	2,800.00
	Total	43,347.57	8,400.00

14. In the statement of claim the plaintiff claimed interest. The relevant law is Section 1(1) of the Judicial Proceedings (Interest on Debts and Damages) Act Chapter No 52, which states:

Subject to Section 2, in proceedings in a court for the recovery of a debt or damages the court may order that there be included in the sum for which judgment is given interest, at such rate as it thinks proper, on the whole or part of the debt or damages for the whole or part of the period between the date on which the cause of action arose and the date of the judgment.

15. As Bredmeyer J pointed out in Cheong Supermarket Pty Ltd v Pery Muro [1987] PNGLR 24, this section confers a four-fold discretion on the Judge: (1) whether to grant interest at all; (2) to fix the rate; (3) to grant interest on the whole or part of the debt or damages for which judgment has been given; and (4) to fix the period for which interest will run.

1 A plaintiff should in the normal course of events receive interest. There is nothing that takes this case out of the ordinary in that regard. The Court will order that interest be included in the sum for which judgment is given.

2 The rate of interest commonly used is 8%. In view of current economic conditions in the country I think 8% is the proper rate of interest.

3 Interest should be payable on the whole of the sum of damages for which judgment is given.

4 I regard the commencement date of the appropriate period as the date of service of the writ, 3 March 2004. The end of the period is the date of judgment, 1 October 2009. The appropriate period, for the sake of mathematical convenience, is 5.6 years.

18. The general rule is that costs follow the event, ie the successful party has its costs paid for by the losing party on a party-to-party basis. The question of costs is a discretionary matter. There are no special circumstances in this case that warrant departure from the general rule.

National Court of Papua New Guinea

Diritala v Jeffrey [2009] PGNC 240; N3927 (1 October 2009)