Home | Databases | WorldLII | Search | Feedback Supreme Court of Papua New Guinea

Telikom PNG Ltd v Nambawan Trophy Ltd [2022] PGSC 53; SC2245 (31 May 2022)

SC2245

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SC REV NO 8 OF 2020

TELIKOM PNG LIMITED
Applicant

V

NAMBAWAN TROPHY LIMITED
Respondent

Waigani: Cannings J, Kariko J, Anis J
2022: 29^th March, 31^st May

DAMAGES – assessment of damages for breach of contract after trial on liability – whether trial judge erred in making estimate of damages – whether sufficient credible evidence in support of awards – whether sufficient reasons given for assessment

The applicant sought review by the Supreme Court of the decision of the National Court to award the respondent K1.03 million damages for breach of contract. The applicant argued that the trial judge erred in law and fact in three ways: (1) awarding damages without credible evidence supporting the claims; (2) failing to show details of the calculations, resulting in a denial of natural justice; (3) failing to find that the respondent was required to keep a proper record of transactions.

Held:

(1) The trial judge correctly set out the requirement that the respondent, as plaintiff in the National Court, bore the onus of proof regarding its losses and invoked the principle that where the best evidence in terms of primary documents is not available the Court will do the best it can. There was credible evidence supporting the assessment of the three categories of damages awarded.

(2) The trial judge gave sufficient reasons for the estimates arrived at and awarded significantly less than the amounts claimed.

(3) The respondent was obliged under the Companies Act to keep full financial records but whether it had discharged that obligation was not the issue before the Court. A finding that it had failed to discharge that obligation did not mean that it should be awarded nothing.

(4) Upholding the applicant’s arguments would mean that a plaintiff who succeeded in establishing liability for breach of contract which was unable to adduce full and complete primary evidence in support of its losses, would receive nothing in damages. That would be contrary to the interests of justice, a result that should be avoided.

(5) The application for review was dismissed and the National Court’s award of damages was affirmed.

Case Cited

The following cases are cited in the judgment:

Langan v The State (1999) N1369
Nae Ltd v Cameron Construction Ltd (2012) N5346
Nambawan Trophy Ltd v Telikom (PNG) Ltd (2017) N7683
Nambawan Trophy Ltd v Telikom (PNG) Ltd (2020) N8403
Onga v Engineering Management Ltd (2003) N2321
Paraia v Yansuan (1995) N1343

Counsel:

C Karaiye, for the Applicant
B Nutley, for the Respondent

31^st May, 2022

1. BY THE COURT: Telikom PNG Ltd applies to the Supreme Court for review of an assessment of damages by the National Court. The plaintiff in the National Court, which is the respondent in this Court, is Nambawan Trophy Ltd. It sued Telikom for breach of a distributorship agreement. The case went to trial and Nambawan succeeded with judgment in its favour (Nambawan Trophy Ltd v Telikom (PNG) Ltd (2017) N7683). A separate trial on assessment of damages resulted in an award of K1,030,000.00, ie K1.03 million (Nambawan Trophy Ltd v Telikom (PNG) Ltd (2020) N8403), which comprised:

• damages for construction, transportation and demolition of phone huts: K700,000.00;
  
• loss of profit, revenue and commission: K250,000.00; and
  
• other heads of damage: K80,000.00.
  

2. The application for review sets out seven grounds of review, which have been grouped into three categories for the purposes of the hearing. Telikom argues that the trial judge erred in law and fact in three ways:

(1) awarding damages without credible evidence supporting the claims (grounds of review 1, 2, 3 & 6);

(2) failing to show details of the calculations, resulting in a denial of natural justice to Telikom (grounds of review 4 & 5);

(3) failing to find that Nambawan was required to keep a proper record of transactions (ground 7).

(1) AWARDING DAMAGES WITHOUT CREDIBLE EVIDENCE

3. Telikom argued that Nambawan was obliged to keep proper records of receipts, invoices, dockets and other acceptable financial records or audited reports to justify and prove its losses in constructing phone huts in Port Moresby and Lae. However, it only provided estimates based on quotations and no credible evidence to support its claim of K2,776,524.76 and it failed to prove its losses and should have been awarded nothing.

4. We dismiss this argument. The trial judge emphasised that the onus was upon Nambawan to prove its losses, as pointed out in numerous PNG cases including Langan v The State (1999) N1369, Onga v Engineering Management Ltd (2003) N2321 and Nae Ltd v Cameron Construction Ltd (2012) N5346. His Honour set out the general principle for awarding damages for breach of contract, that damages is in the nature of compensation for the damage, loss or injury that a plaintiff has suffered through the breach of contract: the plaintiff is to be placed in the same position, in terms of net loss, as if the contract had been performed. This was the correct approach to take.

5. His Honour pointed out that the claim for K2,776,524.76 under the first head of damages was based on the construction, transportation and demolition of 35 mobile phone huts. Nambawan relied upon a quotation issued by BCMS Solutions Ltd and expert evidence of Mr Monogenus and evidence from a company official, Allan Guia, who testified that Nambawan actually constructed 19 phone huts for Telikom, pursuant to the contract, and then incurred costs in dismantling them when the contract was repudiated. His Honour emphasised that the evidence presented by Nambawan was not rebutted by Telikom.

6. His Honour acknowledged that the amount claimed was an estimate and invoked the common law principle adopted by Injia J, as he then was, in Paraia v Yansuan (1995) N1343: where precise evidence is obtainable, the Court naturally expects to have it but where it is not, the Court must do the best it can. His Honour took into account that Allan Guia gave evidence of only 19 structures being used for Telikom and for this reason awarded much less than what was claimed: K700,000.00.

7. As for loss of profit, revenue and commission, his Honour noted that Nambawan’s claim was based on invoices rendered for commission and inventory accounts of Nambawan that showed a trail of transactions. His Honour acknowledged Telikom’s argument that it was far preferable to have primary documents in evidence for the purpose of calculating loss of profit and operational costs but again invoked the principle in Paraia v Yansuan and significantly reduced the amount claimed and awarded K250,000.00.

8. As for other heads of damage, his Honour took the same approach as for the previous two heads of damage and awarded K80,000.00.

9. We find no error in the approach taken by his Honour. It was in line with established authority, logical and just. It is not correct to say that there was no credible evidence in support of the amounts awarded. We find no error of fact or law was made by the trial judge in the way contended for by Telikom. Grounds of review 1, 2 3 and 6 are dismissed.

(2) FAILING TO SHOW DETAILS OF CALCULATIONS

10. Telikom’s argument is that the trial judge’s failure to show details of his calculations meant that his Honour failed to give reasons for his decision on the awards of damages and this amounted to a breach of the rules of natural justice.

11. This is a frivolous argument. His Honour gave considered reasons for the estimated damages for each of the three categories of damages. For each category, the amount awarded was significantly less than the amount claimed. There was no breach of natural justice. Grounds 4 and 5 are dismissed.

(3) FAILING TO FIND THAT NAMBAWAN WAS REQUIRED TO KEEP PROPER RECORDS

12. Telikom argued that Nambawan had breached its statutory obligation under the Companies Act to keep a proper record of transactions and that his Honour erred by failing to take into account that statutory failure and by failing to hold that Nambawan was under a greater obligation than a natural person to keep proper records.

13. These are interesting issues but they are tangential to the central issue before the National Court, which was whether Nambawan had proven its losses on the balance of probabilities. The issue was not whether Nambawan was in breach of the Companies Act.

14. Upholding the applicant’s arguments would mean that a plaintiff who succeeded in establishing liability for breach of contract which was unable to adduce full and complete primary evidence in support of its losses, would receive nothing in damages. That would be contrary to the interests of justice, a result that should be avoided.

15. We reiterate that the process of reasoning adopted by the trial judge was consistent with authority, sensible and reasonable and involved no error of law or fact. Ground 7 is dismissed.

CONCLUSION

16. All grounds of review are dismissed. The application for review will be dismissed. Costs will follow the event.

ORDER

1. The application for review of the order of the National Court of 21 May 2020 in WS No 1161 of 2011 is dismissed.
   
2. The order of the National Court of 21 May 2020 in WS No 1161 of 2011 is affirmed.
   
3. The applicant shall pay the respondent’s costs of the application on a party-party basis which shall if not agreed be taxed.

_____________________________________________________________
Morgens Lawyers: Lawyers for the Applicant
Goodwin Bidar Nutley Lawyers: Lawyers for the Respondent