Steven Naki v AGC (Pacific) Limited (2006) N5015

• Jurisdiction: Papua New Guinea
• Judge: Cannings J
• Judgment Date: 07 October 2006
• Court: National Court
• Citation: (2006) N5015
• Docket Number: WS NO 1256 OF 1999
• Year: 2006
• Judgement Number: N5015

Full Title: WS NO 1256 OF 1999; Steven Naki v AGC (Pacific) Limited (2006) N5015

National Court: Cannings J

Judgment Delivered: 7 October 2006

N5015

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS NO 1256 OF 1999

STEVEN NAKI

Plaintiff

V

AGC (PACIFIC) LIMITED

Defendant

Kimbe: Cannings J

2005: 21 September, 7 October,

2006: 20 October

DAMAGES – breach of contract – chattel mortgage agreement – breach by finance company – plaintiff/borrower’s claim for loss of profits – trial on assessment of damages – need for plaintiff to corroborate claims – plaintiff awarded damages, plus interest and costs.

The plaintiff entered into a contract, a chattel mortgage agreement, with the defendant finance company, to enable him to purchase a truck. He told the finance company that he would use the truck for profit-making purposes. He acquired the truck and was in the course of repaying the loan when the finance company cancelled the agreement. The truck was consequently repossessed. The plaintiff says he had entered into contracts with other parties, which required him to use the truck. He had to forego those contracts and the profits he would have generated when the truck was repossessed. He succeeded in an earlier trial in establishing liability for breach of contract against the finance company. This was a trial on assessment of damages.

Held:

(1) In a civil action, the purpose of an award of damages is to put the innocent party in the same position, as far as possible, they would have been in if the wrongdoer (in this case the finance company) had not committed the wrongful act (the breach of contract).

(2) If a plaintiff claims damages for profits lost as a result of a breach of contract, the plaintiff bears the onus of proving on the balance of probabilities how those profits would have been earned.

(3) If a plaintiff claims that contracts had been entered into with other parties on the strength of the contract that has been breached, there should be clear evidence of the existence of such contracts, irrespective of whether they are in writing.

(4) If there is insufficient evidence to conclude that such contracts with other parties had been entered into, the plaintiff may nevertheless prove that there was a reasonable probability that other profit-earning activities would have continued, notwithstanding those arrangements being loose or casual in nature.

(5) In the present case, the plaintiff was unable to prove that he had entered other, binding, contracts on the strength of the contract breached by the defendant. However, he proved that there was a reasonable probability that he would have been able to continue other profit-earning activities.

(6) The plaintiff was awarded damages, representing loss of profits, of K63,665.61, plus interest of K37,384.45, being a total judgment sum of K101,050.06; plus costs.

Cases cited

The following cases are cited in the judgment:

Albert Baine v The State (1995) N1335

Cheong Supermarket Pty Ltd v Pery Muro [1987] PNGLR 24

Coecon v National Fisheries Authority (2002) N2182

Dia Kopio v Employment Authority of Enga and Others (1999) N1865

Graham Mappa v PNG Electricity Commission [1995] PNGLR 170

Jonathan Mangope Paraia v The State (1995) N1343

Kolaip Palapi and Others v Sergeant Poko and Others (2001) N2274

Kopung Brothers Business Group v Sakawar Kasieng [1997] PNGLR 331

Livingston v Raywards Coal Co [1880] 5 App Cases 25

MVIT v Pupune [1993] PNGLR 370

MVIT v Tabanto [1995] PNGLR 214

Obed Lalip and Others v Fred Sikiot and The State (1996) N1457

Peter Wanis v Fred Sikiot and The State (1995) N1350

Steven Naki v AGC (Pacific) Ltd (2005) N2782

Tabie Mathias Koim and 28 Others v The State and Others [1998] PNGLR 247

The State v Keboki Business Group Incorporated and Morobe Provinsel Gavman [1985] PNGLR 369

Veltro Ltd and Vicky Vagikapi v Steven Liu Huang and Others OS No 478 of 2006, 12.09.06

Waima v MVIT [1992] PNGLR 254

Yange Langan and Others v The State (1995) N1369

Yooken Paklin v The State (2001) N2212

ASSESSMENT OF DAMAGES

This was a trial on assessment of damages for breach of contract.

Counsel

B Takin, for the plaintiff

J E Aisa, for the defendant

20th October, 2006

1. CANNINGS J: This is a case about assessment of damages for breach of contract. Liability was established against the defendant following a trial. A separate hearing has been held to assess the amount of damages, if any, that the defendant has to pay the plaintiff. The plaintiff, Steven Naki, is a small businessman based in Kimbe, West New Britain Province. The defendant, AGC (Pacific) Ltd, is a finance company. On 5 February 1999 the plaintiff entered into a mortgage chattel agreement with the defendant, to facilitate his purchase of an Isuzu truck from Kimbe Kar Sales, a division of KBSA Ltd. The defendant was to provide K30,000.00 to Kimbe Kar Sales, and the balance, K24,990.00, of the total purchase price of K54,990.00 was contributed by the plaintiff. The plaintiff was to pay back the principal of K30,000.00, plus interest, to the defendant in monthly instalments of K1,875.00 over two years. Kimbe Kar Sales released the truck to the plaintiff on the day the agreement between the plaintiff and the defendant was entered into, 5 February 1999. The plaintiff claims that three days later, on 8 February 1999, he started using the truck to perform a four-year contract with a landowner company, Karato Ltd, and NBPOL for the transport of oil palm seedlings and NBPOL employees. In March 1999 he started repaying the loan to the defendant. He made four instalments in the period from March to June 1999. The defendant then repudiated the contract by refusing to accept any more repayments and repaying to the plaintiff what he already paid it, and not paying Kimbe Kar Sales K30,000.00 as agreed. The plaintiff had to return the truck to Kimbe Kar Sales, then had to pay Kimbe Kar Sales K4,500.00 to buy back the vehicle that he had traded in to get the truck. In the first trial, the plaintiff established a cause of action in breach of contract, committed by the defendant in June 1999 by its refusal to accept further repayments from the plaintiff and its failure to provide finance to Kimbe Kar Sales (Steven Naki v AGC (Pacific) Ltd (2005) N2782, National Court, Cannings J).

2. The plaintiff is now claiming damages of K400,980.81, comprising K14,660.81 special damages and K386,320.00 general damages. The general damages are said to be profits he would have earned under his four-year contract with Karato Ltd and NBPOL, which he had to forego when he returned the truck to Kimbe Kar Sales. The defendant says the plaintiff should be awarded nothing except for K4,500.00 he paid Kimbe Kar Sales to get back the vehicle he had traded in prior to taking delivery of the Isuzu truck. The defendant argues that the plaintiff has not proven the existence of any other contract and in any event did not mitigate his losses.

THE EVIDENCE

3. This trial was conducted on affidavit evidence only. The plaintiff tendered eight affidavits and the defendant two. All were admitted into evidence by consent of the parties. In the table below, column 1 gives the exhibit number of the affidavit, column 2 describes the deponent and date of the affidavit and column 3 summarises the contents of the affidavit.

TABLE 1: SUMMARY OF AFFIDAVITS

Exhibit	Deponent/date	Contents
A	Steven Naki, plaintiff, 17.02.05	States that in 1998 he was approached by the chairman, Casper Valuka, of a landowner company, Karato Ltd, regarding a contract to transport seedlings and workers for two oil palm estates being developed under a joint venture agreement with NBPOL – based on the negotiations he had with Karato Ltd, he entered into the chattel mortgage agreement with the defendant on 5 February 1999 – then entered into a verbal contract with Karato Ltd to provide transport with new truck for the estates known as ‘Karato Eu’ and ‘Karato Mini’, located within Kavugara and Navarai plantations – provides details of profits lost due to his inability to perform the contract, caused by repossession of Isuzu truck: K32,512.00 (transporting seedlings) + K453,024.00 (transporting workers) = K485,536.00 – also deposes to losses directly connected with Kimbe Kar Sales: lost his deposits on the truck (K1,946.08 + K6,480.00) and insurance (K1,734.73) and had to buy back the vehicle he had traded in (K4,500.00), a total of K14,660.81. Annexed to the affidavit is a statement by Frank J Lewis, senior project manager, OPIC, dated 31.03.00: “This is to confirm that OPIC engages private truck owners to cart seedlings for smallholder growers. There are no contracts written but if the operators are efficient and reliable the supply of work can usually be sufficient to keep the trucks operating fully. Steven Naki was involved in this work prior to his truck being repossessed”.
B	Steven Naki, plaintiff, 12.04.05	States that he performed the contract with Karato Ltd for three months before the truck was repossessed.
C	Casper Valuka, former chairman/current director, Karato Ltd, 11.10.04	...