Coecon Limited (Receiver/Manager Appointed) v The National Fisheries Authority of Papua New Guinea and The Independent State of Papua New Guinea (2002) N2182

• Jurisdiction: Papua New Guinea
• Judge: Kandakasi J
• Judgment Date: 28 February 2002
• Court: National Court
• Citation: [2002] PNGLR 506
• Year: 2002
• Judgement Number: N2182

Full Title: Coecon Limited (Receiver/Manager Appointed) v The National Fisheries Authority of Papua New Guinea and The Independent State of Papua New Guinea (2002) N2182

National Court: Kandakasi J

Judgment Delivered: 28 February 2002

N2182

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

W. S. 1617 of 2000

BETWEEN:

COECON LIMITED (Receiver/Manager Appointed)

Plaintiff

AND:

THE NATIONAL FISHERIES AUTHORITY OF PAPUA NEW GUINEA

First Defendant

AND:

INDEPENDENT STATE OF PAPUA NEW GUINEA

Second Defendant

WAIGANI: KANDAKASI J

2002: 4th, 28th February

PRACTICE & PROCEDURE – Assessment of damages after entry of judgement on liability by Consent – Principles governing assessment of damages – No issue on liability is to be taken – Where there is already a judgement in an action for damages for breach of contract the only issue at assessment of damages is the damages that flow from the breach – Plaintiff has burden to establish its damages on the balance of probabilities – Damages not pleaded in the statement of claim still in issue and may or may not be awarded – If a defendant takes no issue on matters not pleaded awards may be made subject to appropriate evidence.

PRACTICE & PROCEDURE – Claim by a defendant that a plaintiff has failed to mitigate its damages – Burden on the defendant to establish such failure

PRACTICE & PROCEDURE – Application for disqualification of judge – Application based on speculation – No notice of intended application given to the Court and the other side – Application for a judge to disqualify is a serious matter and must be supported by proper evidence and the relevant law on it – Good practice that the Court and the other party (ies) be notified of intended application before making the application – Application dismissed.

PRACTICE & PROCEDURE – Adjournments – Applications for adjournment of trial on day of trial – No prior notice of intention to make the application given to the Court and the other side – No evidence of steps taken to prepare for trial presented – No satisfactory explanation for failure to prepare and failure to comply with directions of the Court regarding preparation for trial – Application refused.

COURTS & JUDGES – Application for disqualification of a judge – Application based on no real evidence but only on speculation – Applicant conceding to having no basis and not raising any argument of any or any likelihood of bias of the judge – No prior notice of application given to the court and opposing side – It is a serious matter to ask a court or a judge to disqualify – Applications for disqualifications of judges must be made on good factual and legal basis and not on speculations or assumptions – Application dismissed.

DAMAGES – Assessment of damages after entry of judgement by consent – Plaintiff’s evidence on damages not rebutted and destroyed by any evidence or cross-examination – Submissions going into liability need not be considered – If claim established on balance of probabilities amounts claimed must be awarded – Plaintiff established each and every damage alleged – Total award of K18,740,108.60 made.

CONTRACT – Breach of construction contract – Implied term plant and equipment would be stood down on failure to pay progress claims – variation of terms of contract by express terms and conduct of parties – Liability resolved by consent judgement with damages to assessed – Issues of liability not open for contest on assessment of damages – Issues of remoteness of damages and mitigation of damages considered but found not established – Judgement for amounts claimed.

FACTS:

The plaintiff and the defendants entered into a written contract for the construction of a fisheries project for the first defendant. The contract was part performed by the plaintiff and it rendered progress claims in accordance with the contract to the defendants for payment. In breach of the contract, the defendants were not able to meet the progress claims. The parties therefore agreed to a variation of the contract both expressedly and by conduct to allow for the plaintiff to stand down plant and equipment at an agreed rate pending payment of the progress claims. The defendants delayed payment and the stand down continued up to a period of 7 months, by which time the plaintiff’s cash flow was seriously affected. The plaintiff therefore, terminated the contract. Shortly thereafter, the plaintiff’s secured creditor appointed a receiver/manager. An advertisement of that resulted in a termination of another construction contract the plaintiff had secured with the State.

By Writ of Summons with a detailed statement of claim with full particulars, the plaintiff sued the defendants for breach of contract. The second defendant conceded liability by formally endorsing an order by consent for judgement with damages to be assessed only against the second defendant with the claim against the first defendant being discontinued. The defendant sought to call evidence and take issue on liability over the plaintiff’s claim notwithstanding the consent judgement on liability. It also argued that the claims for stand down were remote and that the plaintiff failed to mitigate the loss.

Before the hearing for the assessment of damages could proceed, the defendant made two applications. The first was for the judge to be disqualified without any evidence or suggestion of bias or likelihood of the same against the judge. The second was for an adjournment of the proceedings without providing any evidence of steps taken for the hearing or without any evidence of any difficulty it would not overcome before the trial. No notice of its intention to make these applications were given to the Court or the plaintiff and the plaintiff was fully prepared with overseas counsel to proceed with the hearing. The applications were dismissed and the matter proceeded to a hearing and conclusion.

At the hearing the plaintiff produced evidence of each item of its damages and amended parts of its claim without any objection from the defendant. The defendant called no evidence in rebuttal and failed to destroy the plaintiff’s case by cross-examination.

HELD:

Application to disqualify

1. An application for a judge to disqualify is a serious matter and it must be made with the support of appropriate and convincing evidence and the relevant law on point and not on mere speculation.

2. The law on this kind of application is as set out in the Gobe Hongu Ltd v. National Executive Council & Ors N1964 by Mr. Justice Sevua.

3. In fairness, notice of such application must be given to the Court and the other side before making the application to avoid incurrence of expenses unnecessarily.

Application to adjourn

1. Notice of an intention to adjourn must be given in advance of its making to the Court and the other party (ies).

2. Evidence of steps taken to prepare for trial must be provided before any adjournment could be granted.

3. If no case is made out for a grant of an adjournment no order for adjournment should be made.

Assessment of damages

(a) General Principles

1. Where liability has been resolved by a consent judgement, a defendant is not at any liberty to take issue on any aspect of liability or a plaintiff’s entitlement to a particular item of damage pleaded.

2. This follows on from the fact that liability has already been determined and also because of the fact that consent judgments can not be set aside easily except on appeal on issue of fresh proceedings based on fraud or mistake.

3. A defendant is not however precluded from taking issue on any matter that is not pleaded in the statement of claim.

4. Where a defendant takes no issue on a matter not pleaded in the statement of claim to be introduced at the hearing the Court may allow such a claim if the evidence supports it.

5. In the case of a breach of contract, judgement on liability confirms breach of contract and leaves for assessment the damages that necessarily follow from such a breach.

6. For the purposes of assessing the plaintiff’s damages in cases where liability has been resolved either in default or by consent, the plaintiff is under an obligation to establish his damages on the balance of probabilities.

7. If a plaintiff is able to establish his damages on the required standard of prove, it must be awarded.

(b) Present Case

1. In the present case, the defendant was not at any liberty to take issue on liability after having consented to judgement with damages to be assessed.

2. The plaintiff produced evidence in support of each of the items specified in the statement of claim and later amended at the trial without any objection from the defendant.

3. An award of K18,740,108.60 was made on the basis of the evidence called and unrebutted by any evidence in rebuttal or any level of cross-examination.

Papua New Guinean Cases cited:

Paul Torato & Anor v. Sir Tei Abel & Ors [1987] PNGLR 403

Peter Lipsey v. The Independent State of Papua New Guinea [1993] PNGLR 405

PNG National Stevedores Pty Ltd and Bank South Pacific Ltd v. The Honourable Andrew Baing & Ors; PNG Harbours Board v. PNG National Stevedores Pty Ltd N1705

The Honourable Andrew Baing & Anor v. PNG National Stevedores & Ors SC627

Keith Reid v. Murray Hallam and Allcad Pty Limited N1337

Andale...