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Valentine Buri (trading as Linwah Hire) v Kolong [2021] PGNC 346; N9191 (11 May 2021)

N9191

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 665 OF 2020

BETWEEN
VALENTINE BURI t/as LINWAH HIRE
Plaintiff

AND:
REX KOLONG
First Defendant

AND:
JAMES NEAPUKAL as the Chief Executive Officer of Nawaeb District Development Authority
Second Defendant

AND:
HON. KENNEDY WENGE, MP, AND CHAIRMAN- Nawaeb District Development Authority
Third Defendant

AND:
NAWAEB DISTRICT DEVELOPMENT AUTHORITY
Fourth Defendant

Lae: Dowa J
2021: 9^th & 12^th August & 12^th

JUDGEMENT & ORDERS – Default judgment – Effect of Default judgment– Relevant principles governing assessment of damages after entry of default judgement - All matters pleaded stands established – Plaintiff still obliged to prove by appropriate evidence damages and losses suffered.

Public Finance (Management) Act-Duty of servants and agents of state agents and district development Authority to explain engagement of goods and services-Apportionment of liability where servants/employees of state agents failing to provide explanation for debt.

Cases cited:

Albert vs. Aine (2019) N7772
Coecon Ltd (Receiver Manager) vs. The National Fisheries Authority of PNG (2002) N2182
PNGBC vs. Jeff Tole (2002) SC694
William Mel vs. Coleman Pakalia (2005) SC790

Counsel:

K. Aisi, for the Plaintiff
No Appearance for the Defendants

DECISION

12^th August, 2021

1. DOWA J: This is a judgment on assessment of damages. The issue of liability was resolved by entry of default judgment on 11^th June 2021.
   

Facts

2. The Plaintiff runs a hire car business and trades under the registered business name Linwah Hire.
   
3. In December 2013 the Plaintiff entered a vehicle hire agreement with the Defendant for hire of his motor vehicle, a Toyota Landcruiser Reg. No. LBA 919. The rate for the hire was fixed at K1,000.00 per day. The vehicle was used for the period, December 2013 to June 2015. Monthly invoices were rendered. The invoices were not settled, in time and it accumulated to the sum of K452,800.00.
   
4. The parties entered a second hire agreement in September 2017 for the Hire of the Plaintiff’s vehicle, a Toyota Landcruiser Reg. No. LBJ 341. The Plaintiff issued an invoice for K46,500.00 which is also due and outstanding.
   
5. On 11^th May 2018, the Defendant paid K85,000.00. The balance of K414,300 remains outstanding.
   

The Proceedings

6. The Plaintiff instituted these proceedings to recover the outstanding debt. Copies of the Writ of Summons were served on the Defendants respectively on 1^st September 2020.

7. On 15^th September 2020, Luthers Lawyers filed a Notice of Intention to Defend on behalf of all the Defendants. The Defendants, however, did not file a defense to the proceedings.
   
8. On 11^th June 2021, default judgment was entered against the Defendants in damages to be assessed.
   
9. The matter was then fixed for assessment of damages, which was heard on 9^th August 2021, and I reserved my ruling which I now deliver.
   

Issues

10. The issues for consideration are:
    
    1. What is the effect of default judgment?
    2. Whether the Defendants are liable to pay for the entire invoices.
    100. Whether each of the Defendants be liable, to settle the judgment debt.
         

What is the effect of Default Judgment?

11. The law on the effect of default judgment is settled in this jurisdiction. A trial Judge must satisfy himself with the principles summarized in the cases; Coecon Ltd (Receiver Manager) v The National Fisheries Authority of PNG (2002) N2182, PNGBC v Jeff Tole (2002) SC694, William Mel v Coleman Pakalia (2005) SC790, and Albert v Aine (2019) N7772. In Albert v Aine, Kandakasi DCJ at paragraphs 7 & 8 of his judgment said:

“7. Fourthly, the law on the effect of the entry of default judgment is clear. In Coecon Limited (Receiver/Manager Appointed) v. The National Fisheries Authority of Papua New Guinea (2002) N2182, I summarised the principles that govern an assessment of damages after the entry of default judgement in the following terms:

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

1. The judgement resolves all questions of liability in respect of the matters pleaded in the statement of claim.
   
2. Any matter that has not been pleaded but 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 judgement 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.”
   
8. The Supreme Court in PNGBC v. Jeff Tole (2002) SC694 adopted and applied this summation of the principles. Later, the decision of the Supreme Court in William Mel v. Coleman Pakalia (2005) SC790, did the same. Additionally, however, the Court in that case went further by noting several decisions of the National Court in which the principles were adopted and applied. It then added the following:
   

“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.”

13. The Plaintiff’s total claim is for a liquidated sum of K499,300.00 for outstanding invoices. The Defendants paid K85,000.00 in May 2018, with a promise to settle the balance of K 414,300.00. The Defendants were served copies of the Writ on 1^st September 2020. The Defendants have engaged a law firm, Luther’s lawyers who filed a Notice of Intention to defend on behalf of all the Defendants. A warning letter was sent to the Defendants’ lawyers before an application for default judgment was made.

14. On 14^th May 2021, the Court gave specific directions to the First, Second and Third Defendants to appear in Court on 7^th June 2021 and defend the application for default Judgment. These directions were served on the Defendants’ lawyers on 2^nd June 2021.

15. On 7^th June 2021, the Second and Third Defendants did not turn up or appear in Court, either personally or through their lawyers. Only the First Defendant appeared in Court. The First Defendant filed an affidavit on 7^th June 2021. The First Defendant admitted that the Plaintiffs vehicle was hired by the Second and Third Defendants and given to him to use for work purposes. He confirmed using the Plaintiff’s vehicle for the periods alleged in the statement of claim.

16. Again, on 7^th June 2021, the Court directed the Second and Third Defendants to attend Court on 11^th June 2021, and address the court, whether they will oppose the application for default Judgment. The Defendants’ lawyers were again advised on 9^th June 2021. However, the Defendants chose not to attend Court. The Court then proceeded to deal with the Plaintiff’s application for default Judgment and entered Judgment in damages to be assessed.

17. In the circumstances, I am satisfied that default judgment is in order, and I will proceed with the assessment of damages.

Whether the Defendants are liable to pay for the entire invoices

18. Mr Aisi for the Plaintiff submits that the Defendants are liable to settle the entire invoices being served on the Defendants. The Defendants have made no appearance in Court to defend the proceedings.

19. Although liability has been settled, the Plaintiff has the onus of proving his claim with credible evidence on the balance of probabilities.

21. The Plaintiff, Valentine Buri, is a businessman and trades under the business name Linwah Hire. Linwah Hire is a registered business name. The Plaintiff is also a registered taxpayer with Internal Revenue Commission, having been registered and issued with a Tax Registration Certificate, TIN No. 500608779.

22. The evidence shows, the Plaintiff is the proprietor of two motor vehicles, both Toyota Land cruisers, Registration No. LBA 919 and LBJ 341.

23. On 1^st December 2018, the Defendants entered a motor vehicle hire agreement, to hire the Plaintiff’s motor vehicle, Reg. LBA 919 at the daily rate of K1,000.00. The vehicle was kept by the First Defendant, a Senior Police Officer, based at Situm Police Station at the direction and with the authority of the Third and Fourth Defendants. The vehicle was used by the First Defendant for the fourth Defendant’s work for the district, until June 2015.

24. The Plaintiff rendered monthly invoices for 18 months. The total amount outstanding for the invoices was K452,800.00. On 11^th May 2018, the Defendants paid K85,000.00. The balance of K367,800.00 has been outstanding since.

25. In September 2017, the Defendants hired the Plaintiff’s other vehicle for a few weeks. The total amount of invoice issued is K46,500.00. This invoice has not been settled.

26. The Plaintiff has attached some invoices and statements showing the outstanding debt in his affidavit. The Plaintiff’s evidence is supported by evidence filed in the proceedings by the First Respondent, Rex Kolong. In the circumstances, I am satisfied on the balance of probabilities that the Plaintiff is owed a sum of K414,300.00 by the Defendants. I will accordingly assess and award judgment in favor of the Plaintiff for the sum of K413,300.00.

Who should pay the judgment debt?

27. The First, Second and Third Defendants are officers of the State, and they are servants and agents of the Fourth Defendant. The Fourth Defendant would be vicariously liable for the actions of the First, Second and the Third Defendants under section 1 of the Wrongs (Miscellaneous Provisions) Act. In the present case, the Plaintiff’s vehicles were hired specifically for official purposes. Mr Rex Kolong deposed in his affidavit that he was instructed by the Fourth Defendant, through the Second and Third Defendants to retrieve all the official vehicles for the Nawaeb District, which were not returned to the Government pool.

28. Although, Mr Kolong provided some explanation, the Court requested the Second and Third Defendants to appear in Court to explain, why the hire period was too long and did not have a specific term. It was a loose arrangement and committed the Fourth Defendant to incur substantial financial expense. Was it budgeted for? The Fourth Defendant could do well by purchasing its own vehicles with part of the money it is now adjudged to settle. The Second and Third Defendants did not turn up in Court to provide an explanation. They did not file any documents to justify the expenditure.

29. In the absence of any explanation, it is difficult to say whether the Defendants have made any resolutions for the hire, or whether they have followed the financial instructions under the Public Finances (Management) Act.

30. I find the actions of the Second and Third Defendants irresponsible as public servants. They have done very little to protect the interest of the Fourth Defendant. In my view, it is necessary to make the Second and Third Defendants accountable for their actions/inactions. Since they are Defendants in the proceedings, they should be ordered to pay a portion of the judgment.

31. Accordingly, I will make an order that the Second and Third Defendants be ordered to pay 20% of the Judgment debt in equal proportions, whilst the Fourth Defendant pay the balance.

GST

32. The invoices do not state the GST component. Whilst, the Plaintiff is a registered Taxpayer, it will take some time before the judgment debt is settled. In the premises, I am inclined to deduct the GST component of the claim. By way of calculation, the Plaintiff is entitled to an award of K414,300 less GST component of K37,663.64 leaving the balance of K376,636.36.

Interest

34. The Plaintiff is entitled to interest at the rate of 2% from the date of Writ of Summons, which is K7,532.73. The total award is K384,169.09.

Cost

35. The Plaintiff has succeeded in its claim. He is entitled to cost of the proceedings to be taxed, if not agreed.

Orders

36. The Court orders that:

1. Judgment is entered for the Plaintiff in the sum of K384,169.09 inclusive of interest.
   
2. The Judgment debt shall be paid by the Second, Third and Fourth Defendants in the following proportions:
   
   1. The Fourth Defendant shall pay K307,335.27
   2. The Second Defendant shall pay K38,416.91
   100. The Third Defendant shall pay K38,416.91
        
3. The Fourth Defendant shall pay the Cost of the proceedings to be taxed, if not agreed.
   
4. Time be abridged.

_____________________________________________________________
Kelly Naru Lawyers: Lawyers for the Plaintiff
Luthers Lawyers: Lawyers for the Defendant