Dalas Property Management Ltd v Amrak Construction & Consulting (PNG) Ltd [2022] PGNC 476; N9980 (14 October 2022)

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ASSESSMENT OF DAMAGES – delay in completion of construction – breach of agreement – whether frustration of contract – claim for reimbursement of progress payments

The plaintiff engaged the defendant to construct his swimming pool for K220,000.00 and made progressive payments of K178,600.00. Defendant delayed in the construction resulting in the plaintiff’s termination of the contract. The plaintiff claims that the defendant only undertook 30% work on the project to the value of K 57,892.45 before contract was terminated and thus claims the reimbursement of K120,707.00.
Held:

(1) The fact that damages cannot be assessed with certainty does not relieve the defendant who is wrongdoer the necessity of paying damages.

(2) In the Court’s own estimate, the defendant shall pay to the plaintiff damages of K88,000.00.

(3) Interest to be calculated from date of the issue of the Writ being the 3 June 2019 to 29 September 2022 at the rate of 8%.

Counsel:
Mr. Joe Sunungu, for the Plaintiff
Mr. Clifford Zazeng, for the Defendant

1. LINGE A J: This is a ruling on assessment of damages for breach of contract following a trial of the cause of action. Liability had been established against the defendant for breach of the contract by failing to undertake the contract within the specified completion period.

2. The plaintiff made progressive payments of K178,600.00 to the defendant which is 85% of total contract cost of K220, 000.00, for the construction of the swimming pool before the termination of the contract. The plaintiff claims that the defendant only undertook 30% work on the project to the value of K57,892.45 before contract was terminated and claims for reimbursement of the balance of the advance payment totalling K120,707.00.

Submission
3. Parties appeared for submission on assessment of damages on the 29 September 2022.

4. Mr. Sunungu of counsel for the plaintiff submits that the defendant only undertook 30% of construction work on the pool which amounts to the value of K57,892.45 at the time of termination of the contract. However, during the same period the plaintiff made advance payments in the amount of K178, 600.00 and submits that the plaintiff is entitled to the reimbursement of advance payments in the amount of K120, 707.55.

5. Mr. Zazeng of counsel for the defendant contends that the Costs Assessment report by Dalas Property Management Limited dated 26 March 2019 on which the plaintiff relies for his reimbursement claim, is not signed, is unverified and is based on assumptions. He submits that it does not relate to the costs breakdown to prove the facts alleged.

6. The general principles for assessment are settled. A passage in the headnotes in Peter Andoi t/a Rai Coast Electrical Services v Modilon General Hospital & Ors [2018] N7199, aptly summarized the law as:

“The general principles for assessment of debt are the same as those for assessment of damages; the plaintiff has the onus of proving his losses, it is not sufficient to rely on assertions in the statement of claim; corroboration of a claim is required; the fact that debt cannot be assessed with certainty does not necessarily relieve the wrongdoer of the necessity of paying some amount of debt.”

7. In Reid v Murray Hallam & Allcad Pty Ltd [1995] N1337, Kapi DCJ stated: “Assessment of damages involves consideration of the terms of contract and assessing the damages that flow from the breach of the terms of contract”

8. This assessment follows trial where I found the defendant to be in breach of the contract for failing to complete the swimming pool within the three (3) months contract period. It is not in dispute that the plaintiff had made progressive payments to the defendant. The total amount paid as at the date of contract termination is K178,600.00 which constitutes 85% of the total contract value.

9. The evidence in support of the reimbursement claim is contained in the Report by the plaintiff’s Engineer Emmanuel Aiyopi titled Cost Assessment Report dated 26 March 2019, which is Annexure “M” to Affidavit of David Rakadui filed on the 15 July 2019.

10. The summary of the Report concludes at page 5 a total refundable amount of K120, 707.55:

Item	Summary	PGK
A	Total Contract Sum	220, 000.00
B	Total Paid to Amrak Const. To date	178, 600.00
C = A – B	Contract Value Remaining Balance	41, 400.00
D	Total Value of Work Completed	57, 892.45

B – D	Total paid beyond actual work done	120, 707.55
B - D	Total Refundable Amount	120, 707.55

11. In assessing the Cost Assessment Report, I am mindful that it is not an independent report, but one made for the sole benefit of the plaintiff and at the behest of the plaintiff. It is prepared by the Engineer of the plaintiff who would naturally owe a duty of care and loyalty to the plaintiff irrespective of whether he was an inhouse employed engineer or under contract.

12. Counsel for the defendant questions the veracity and reliability of the plaintiff’s engineer Cost Assessment Report as the only basis for the plaintiff’s reimbursement claim. However, he led no evidence to prove otherwise.

13. In his pleading in Defence the defendant admitted to having received K125,875.00. He cross claimed that the plaintiff owed him K55,000.00 under the contract. However, the defendant abandoned the crossclaim and in evidence he admitted to receiving K178,600.00.

14. I will disallow the defendant’s objection to the Cost Assessment Report on the basis that such was not raised at trial. The defendant’s case at trial rest on the assertion that the delay was wholly caused by the delay in transportation of cosmetic materials required for the completion of the pool from Australia which I had found to be unsupported by credible evidence including no receipts of payment nor itemized or list of cosmetic materials bought from Australia. The defendant has lost the right to argue.
15. The plaintiff also claims in the statement of claim that the defendant undertook only 30% of contract at the time of termination. This pleading is not supported by evidence in particular the formula or how the calculation was made to arrive at the percentage. I therefore have not taken this plaintiff’s claim into my consideration.

16. The Supreme Court in Mel v Pakalia [2005] PGSC 36; SC 790, stresses as one of the requirements in assessing damages that “It is not sufficient to make assertion in a statement of claim and then expect the court to award what is claimed. The burden of proving a fact is upon a party alleging it, not the party who denies it. If an allegation forms an essential part of a person’s case, that person has the onus of proof.” See also, Yooken Paklin v The State (2001) N2212.

17. In assessing whether the plaintiff is entitled to the claim for reimbursement progress payments in building-based contracts, the general rule is progress payments are made on key milestone of a project or stages of the construction. The progress payments are tied to the achievement of certain milestones. Usually, the schedule for these payments is outlined in contract and are rarely not refundable but can be set off against any damages awarded or to mitigate the loss: Pilkington v Wood [1953] 1Ch 770.

18. In this case I am satisfied of the payment of K178,600.00 by the plaintiff to the defendant. The progress payment schedule has not been tendered to me but having perused the Construction Contract Agreement of 26 July 2018 between the parties, I find that Clause 5.2 sets out the payment schedule as:

19. The plaintiff led no evidence at the trial to confirm if the schedule of payment was strictly followed. I estimate from the evidence that at least 60% of the work has been completed. Whereas the K178,600 paid constitute about 81% of the total contract cost.

20. Clearly payments were made which apparently are disproportionate and not reflective to the amount of work as per the schedule. The fact that damages cannot be assessed with certainty does not relieve the wrongdoer of the necessity of paying damages. In the absence of precise evidence, the Court must do its best: Mangope Paraia v The State (1995) N1343.

21. I will make an assessment even in the absence of clear evidence as I am of the view that the plaintiff is entitled to something. In so doing I consider the decision of His honour Cannings J in Suan v Dumba (2013) PGNC211; N5428 in order to arrive at an appropriate amount. See also Mand v. Lypita [2021] PGNC 106; N8857 and Lyn v. Yaku [2017] PGSC 6, SC1574).

22. In the end I will make my own assessment based on what I consider to be an estimate of work undertaken by the defendant. In my view the defendant had undertaken 60% of the contract when terminated. The plaintiff is entitled to be refunded the balance of the contract payment.

23. Pursuant to the Judicial Proceedings (Interest on Debts and Damages) Act Chapter No 52. to be calculated from date of the issue of the Writ being the 3 June 2019 to 29 September 2022 at the rate of 8%.

Judgment accordingly
_______________________________________________________________
Eagles Lawyers: Lawyers for the Plaintiffs
Lakakit & Associates: Lawyers for the First Defendants

National Court of Papua New Guinea

Dalas Property Management Ltd v Amrak Construction & Consulting (PNG) Ltd [2022] PGNC 476; N9980 (14 October 2022)