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PNG Nambawan Trophy Ltd v Tabuan Investments Ltd [2009] PGNC 280; N5349 (11 September 2009)

N5349

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 623 OF 2003

BETWEEN:

PNG NAMBAWAN TROPHY LIMITED
Plaintiff

AND:

TUBUAN INVESTMENTS LIMITED
Defendant

Waigani: Hartshorn J.
2009: 16th April,
: 11th September

Assessment of Damages

Case cited:

William Mel v. Coleman Pakalia & Ors (2005) SC790

Counsel:

Mr. H.J. Leahy, for the Plaintiff

11th September, 2009

1. HARTSHORN J. PNG Nambawan Trophy Limited agreed to sell to Tubuan Investments Limited certain land upon which there were residential units, for K 170,000. Tubuan paid a deposit of K 20,000. The balance of the purchase price was to be paid by 36 equal monthly payments of K 4,166.66 plus interest at the rate of 25% per annum.

2. Tubuan was allowed early occupation of the property for an agreed occupation fee of K 1,793.33 per month.

3. Tubuan agreed to pay PNG Nambawan the total sum of K 5,963.99 per month in payment of the purchase price instalment and occupation fee. Such payments were made until July 1999 but no payments were made thereafter. In addition, Tubuan removed 9 of the residential units without PNG Nambawan's authority.

4. PNG Nambawan commenced this proceeding in May 2003 against Tubuan for specific performance, damages and other related relief. PNG Nambawan now seeks damages and possession. Default judgment was entered against Tubuan on 21st October 2003 with damages to be assessed.

5. The hearing before me was for an assessment of damages. Tubuan has not taken any part in these proceedings since November 2004. Upon being satisfied that sufficient notice of the hearing had been given to Tubuan, the hearing proceeded in the absence of representation on behalf of Tubuan.

Assessment of damages – law

6. The Supreme Court in William Mel v. Coleman Pakalia & Ors (2005) SC790 stated:

"The principles that apply to a trial on assessment of damages following entry of default judgment were summarised by Kandakasi J. in Coecon Ltd (Receiver/Manager Appointed) v National Fisheries Authority (2002), National Court, N2182.

His Honour stated:

A survey of the authorities on assessment of damages after entry of judgment on liability mainly in default of a defendant's defence, clearly show the following:

1. The judgment resolves all questions of liability in respect of the matters pleaded in the statement of claim.

2. Any matter that has not been pleaded that is introduced at the trial is a matter on which the defendant can take an issue on liability.

3. In the case of a claim for damages for breach of contract as in this case, such a judgment confirms there being a breach as alleged and leaves only the question of what damages necessarily flow from the breach.

4. The plaintiff in such a case has the burden to produce admissible and credible evidence of his alleged damages and if the Court is satisfied on the balance of probabilities that the damages have been incurred, awards can be made for the proven damages.

5. A plaintiff in such a case is only entitled to lead evidence and recover such damages as may be pleaded and asked for in his statement of claim.

The Supreme Court adopted and applied those principles in Papua New Guinea Banking Corporation v Jeff Tole (2002) SC694, Amet CJ, Sheehan J, Kandakasi J.

Kandakasi J. applied those principles recently in the National Court in Desmond Huaimbukie v James Baugen (2004) N2589. We believe His Honour succinctly and correctly stated the law. We elaborate on the first principle by saying that once default judgment is entered, the facts as pleaded and their legal consequences in terms of establishing the cause of action as pleaded must be regarded as proven. (See Keith Reid v Murray Hallam and Allcad Pty Ltd (1995) N1337, National Court, Kapi DCJ and Andale More and Manis Andale v Henry Tokam and The State (1997) N1645, National Court, Injia J.)........................

Turning back to the issue raised above as to the role of the trial judge after entry of default judgment, we consider the following to be the correct approach:the trial judge should make a cursory inquiry so as to be satisfied that the facts and the cause of action are pleaded with sufficient clarity; if it is reasonably clear what the facts and cause of action are, liability should be regarded as proven; only if the facts or the cause of action pleaded do not make sense or would make an assessment of damages a futile exercise should the judge inquire further and revisit the issue of liability."

The claim

7. From a perusal of the statement of claim, I find that the facts and cause of action are pleaded sufficiently and it is clear that the action is for damages for breach of contract and loss suffered as a consequence.

8. PNG Nambawan claims damages for breach of contract, unlawful removal of property, refurbishment, mesne profits and interest. In addition, possession of the property is claimed.

Breach of contract for sale

9. The facts established by the default judgment amongst others are that the parties entered into a contract for Tubuan to purchase the property from PNG Nambawan. The affidavit of Mr. Frankie Gui has a copy of the signed contract annexed.

10. The purchase price was K 170,000 and Tubuan made an initial payment of K 20,000. The balance was to be paid by 36 instalments of K 4,166.66. Clause 11.1 (d) of the contract provided that if Tubuan went into early occupation it would pay PNG Nambawan, "an occupation fee agreed between the parties". Further, at clause 11.1 (e), Tubuan was also required to keep the Property in good repair. Clause 10.4 provided that if the improvements on the Property are damaged or destroyed before completion, Tubuan shall not make any objection, or rescind the contract unless the damage or destruction is wilfully caused by PNG Nambawan.

Occupation by Tubuan

11. The parties agreed that Tubuan, in addition to purchasing the Property would also take occupation. This is pleaded in the statement of claim and Frankie Gui deposes to this fact. The occupation fee per month agreed was K 1,793.33. A total of K 5,963.99 per month of instalment of purchase price and occupation fee were to be paid by Tubuan to PNG Nambawan. Tubuan made such monthly payments from November 1998 until July 1999. Tubuan went into occupation of the Property on or about 1st November 1998 and remains in occupation.

12. The Contract for Sale has never been completed. Stamp Duty, the payment of which was the responsibility of Tubuan under the Contract was never paid, statutory approval was never obtained and completion did not occur. PNG Nambawan, as it was entitled, issued a notice to complete. The Contract was never completed as stamp duty and ministerial approval fees were never paid by Tubuan as was required. PNG Nambawn's commencement of proceedings, terminated the Contract.

Improvements

13. The improvements on Allotments 19 and 20 Section 316 Hohola consisted of 2 rows each of 9 residential units and on Allotment 31 Section 250 Hohola, a 3 bedroom and two 2 bedroom units.

14. In or about October 2000 while Tubuan was in occupation under the Contract, one row of 9 units located on Allotment 19 section 316 Hohola was completely dismantled and removed. This is pleaded in the statement of claim and deposed to by Frankie Gui.

15. There is in evidence a valuation of the property at Allotments 19 and 20 Section 316 Hohola in 1999 and in 2005 by a Registered Valuer.

Damages

16. As to the calculation of damages for breach of contract, counsel for PNG Nambawan cited the following passage from Chitty on Contracts, volume 1, General Principles, 28th ed. at page 1271:

"Damages for a breach of contract committed by a defendant are a compensation to the claimant for the damage, loss or injury he has suffered through that breach. He is, as far as money can do it, to be placed in the same position as if the contract had been performed. This implies a "net loss" approach in which the gains made by the claimant as a result of the breach (e.g. savings made because he is relieved from performing his side of a contract which has been terminated for breach; savings in taxation; benefits obtained from partial performance; or the salvage value of something left in his hands) must be set off against his losses arising from the breach (after he has taken reasonable steps to minimise those losses)."

17. This statement as to damages for breach of contract is applied in most common law jurisdictions of which this country is one.

18. The amount claimed for damages for breach of the contract is K98,754.09. This is calculated by allowing for the deduction of K 20,000 paid and 9 instalments of K5,963.99. I note that that instalment payment includes an occupation fee component which is dealt with later. Notwithstanding this however, in my view, by claiming this amount, no account is taken of the value of the Property that PNG Nambawan still owns. PNG Nambawan submits that had the Contract been performed it would have been better off by as much as K98,754.09. This submission fails to take into account that PNG Nambawan would no longer own the Property. Consequently I refuse the claim for K 98,754. 09.

19. The amount claimed for damages for the removal of the 9 residential units is K533,955.50 and is based on the affidavit evidence of an architect, on the cost of replacement. I allow this amount claimed.

20. The amount claimed for damages for refurbishment of the property on Allotment 20 is K 300,000 again based on the affidavit evidence of an architect. I allow this amount claimed.

21. The amount claimed for mesne profits between August 1999 to 30th April 2009 is K697,786.83 being 117 months x K 5,963.99. As previously stated, the sum of K5,963.99 includes an instalment of purchase price as well as a monthly occupation fee. However, the total amount of the unpaid occupation fee from August 1999 up to 30th April 2009 is calculated at K 209,819.61. Given that the occupation fee was the amount agreed, that is the amount upon which mesne profits will be calculated. I allow a claim for K209,819.61.

22. I am satisfied that PNG Nambawan has proved the amounts for the total sum of K1,043,775.10 and I award that amount to PNG Nambawan accordingly.

Orders

23. The formal Orders of the Court are:

a) judgment is ordered for the Plaintiff against the Defendant in the sum of K1,043,775.10.

b) the Defendant is to give possession of the property situated at Allotments 19 and 20 Section 316 Hohola and Allotment 31 Section 250 Hohola to the Plaintiff forthwith.

c) the Defendant shall pay the Plaintiff's costs of and incidental to the proceedings.

d) argument as to interest to be awarded is adjourned to a date to be fixed.
_____________________________________________________________
H. J. Leahy Lawyers: Lawyers for the Plaintiff