WS 437 OF 2008; Margaret (Napao) Potane v National Development Bank (No. 2) (2013) N5099

• Jurisdiction: Papua New Guinea
• Judge: Gauli AJ
• Judgment Date: 28 February 2013
• Citation: (2013) N5099
• Court: National Court
• Year: 2013
• Judgement Number: N5099

Full Title: WS 437 OF 2008; Margaret (Napao) Potane v National Development Bank (No. 2) (2013) N5099

National Court: Gauli AJ

Judgment Delivered: 28 February 2013

N5099

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS 437 OF 2008

BETWEEN:

MARGARET (NAPAO) POTANE

Plaintiff

AND

NATIONAL DEVELOPMENT BANK

Defendant

(NO. 2)

Wabag: Gauli AJ

2012: 19 November

2013: 28 February

DAMAGES – Breach of contract – Sale of mortgage property – Assessment on damages – General damages – Exemplary damages – Special damages – Interest and costs – Damages claim must be pleaded in the statement of claim – Plaintiff has the onus to prove damages rather than generalization of claims.

Cases Cited:

Papua New Guinea

PNG Aviation Services Pty Ltd v. Geob Karri [2009] SC1002

Harding v. Teperoi Timbers Pty Ltd [1988] PNGLR 128

Ibi Enei v. Rimbunan Hijau Limited (2011) N4402

Papua New Guinea Banking Corporation v. Jeff Tole (2002) SC694

Ceocon Limited v. National Fisheries Authority (2002) N2182

Joseph Kupo v. The State (2011) N4478

Abel Tmbe v. Independent Sate of Papua New Guinea (1997) SC518

Koimi v. The State [1995] PNGLR 535

Fred Angoman v. IPBC of PNG (2011) N4363

The Commissioner General of Internal Revenue v. Julian Paul Leach ( Judgement delivered on 24 September1998) N1779

Felix Kua v. Clement Patiken (2010) N4103

Trevor Yaskin v. Wallya Abilio (2006) N3108

Overseas Cases

Bonham Carter v. Hyden Park Hotel Ltd (1948) 64 TLR 177

Hadley v Baxendale (1854) 9 Ex. 341

Rookes v Barnard [1964] AC 1129

Strom Bruks Aktie Bolag v. Hutchinson [1905] AC 515

Stedman v Swan Tours (1951) 95 Sol Jo 727

Counsel:

Mr. Paul Ouse, for the Plaintiff

Ms. Veronica Yabone, for the Defendant

JUDGMENT ON ASSESSMENT OF DAMAGES

28 February, 2013

1. GAULI AJ: This is a trial on assessment on damages. Judgement on liability on damages had been entered against the defendant in my judgment after running a trial in September 2011, while the claim on specific performance was dismissed. It is trite law that the purpose of awarding damages is to put the injured party in a position that he would have been had there been no breach : see PNG Aviation Pty Ltd -v- Geob Karri [2009] SC1002.

2. The proceedings arose out of a breach of contract of a mortgage sale of a commercial property namely Section 35 Allotment 05 at Sabama in Port Moresby, National Capital District between January and April 2008. The plaintiff’s bid of K235,000.00 was accepted and the contract of sale signed and executed by both parties. Two weeks before the appointed date of settlement of the mortgage sale on the 4th of April 2008, defendant alleged that the mortgagor has exercised his right of redemption under Clause 13.9.1 of the Contract of Sale, by paying off all his outstanding loans to the defendant, the National Development Bank.

3. However, there was no documentary proof from the defendant that the mortgagor actually paid off all his outstanding loans and the title of the property transferred back to the mortgagor. The mortgagor was not called to testify in court nor filed an affidavit that he had in fact settled his debts. Mere allegation by the defendant, without any documentary evidence of proof that the mortgagor has paid off all his debts, is insufficient to convince the Court that the mortgagor had in fact exercised his right of redemption. He who alleges has the onus of proving what he alleges but the defendant has failed to prove that.

4. The plaintiff had gone to the extent of incurring expenses from the time she lodged her bid for the mortgage sale up to the time she became aware that the sale had fallen through. The alleged expenses were incurred based on the defendant’s advice in the process of the settlement of the said contract of sale. I therefore found the defendant liable for the breach of a contract of sale and ordered that the plaintiff should have his damages assessed.

5. On the 16th November 2012, the plaintiff gave notice to set down the matter for trial on assessment of damages. The trial was conducted on the 19th November 2012. At the trial on assessment on damages, the plaintiff Mrs. Margaret Potane relied on her own Affidavit sworn and filed on the 2nd November 2012 and the Affidavit of Mr. Pato Potane sworn on 31 October 2012 and filed on 02 November 2012. These affidavits were tendered by consent of the defence counsel.

6. The defence, without calling witnesses, relied on the evidence given during the substantive hearing of the claim on liability, particularly the two affidavits of the witness Solomon Kiage marked Exhibit “B” and “C”. Defence has no new evidence at this trial on the assessment of damages. Having received submissions from both parties, I now proceed on assessment of damages.

ONUS OF PROOF

7. In assessing damages, although the defendant was found liable for the breach of contract, the general law is that the plaintiff has the onus of proving the damages she claimed to have suffered. The damages can be awarded where breach of contract has caused disappointment, distress, anxiety and or frustration caused to a party. The award of damages is not automatic but at the discretion of the court. The law has been established in Harding v. Teperoi Timbers Pty Ltd [1988] PNGLR 128 at 132, where late Kidu CJ, said:

“If the contracting party breaks his contract, damages can be given for the disappointment, the distress, the upset and frustration caused by the breach.”

8. And His Honour held that:

“(1) Where at the time of making a contract it is within the contemplation of the contracting parties that a foreseeable result of a breach of contract will be to cause vexation, frustration or distress, then if a breach occurs which does bring about that result, damages are recoverable under this heading.”

9. The law is that the plaintiff must prove the alleged damages. It is not sufficient to make general allegation in a statement of claim and expect the Court to award damages. The damages must be pleaded and proven by evidence in court. In Bonham Carter v. Hayden Park Hotel Ltd (1948) 64 TLR 177 at 178, Lord Goddard said:

“The plaintiff must understand that if they bring action for damages, it is for them to prove their damages. It is not enough for them to write down particulars and so to speak, throw them at the head of the Court, saying ...... ‘This is what I have lost, I ask you to give me these damages, they have to prove it.’”

DAMAGES CLAIMED

10. In this trial, the damages the Plaintiff claimed to have suffered have been pleaded in her statement of claim and they include:

1) General damages for breach of contract.

2) Exemplary damages.

3) Special damages.

4) Interest and Costs.

11. Under the head of special damages, the plaintiff claims –

· Ten (10%) deposit (K23,500.00).

· Stamp duty paid to the IRC (K11,760.00).

· Fire Insurance paid to MMI (K6,912.78).

· Air Fares between Hagen – POM – Hagen (K5,000.00).

· Hotel & Private Accommodations (K5,000.00).

· Vehicle Hire and fuel costs (K10,000.00).

ISSUES:

12. The main issue to be decided here is: Whether the plaintiff should be awarded the above damages she claimed to have suffered? I will consider this issue as I discuss each of the damages.

1. GENERAL DAMAGES.

13. The plaintiff claim a sum of K500,000.00 for general damages. Her bid for the property on mortgage sale was K235,000.00, which was accepted by the defendant and the contract executed. The amount she now claims is almost twice the amount of her contract of sale of the property.

14. The plaintiff submitted that the Court should follow the decision of the Supreme Court in PNG Aviation Services Pty Ltd v. Geob Karri (supra). In that case, the Supreme Court said at paragraph 14:

“When assessing damages in contract, the Court seeks to put the injured party in the position that party would have been in but for the breach of contract. In other words, the object is to put the plaintiff in the same position as if the contract was performed”.

15. The defence submitted that the plaintiff’s claim is for the value of the property as a result of the breach. In PNG Aviation Services -v- Geob Karri (supra), the State terminated the lease agreement and offered an alternative location for the appellant to operate from. The appellant refused for the reasons that the location was not conducive for business and the rentals in the alternative location were higher. The appellant offered that if they were to move to a new location the State would have to meet the relocation fee. The State then withdrew the offer for the alternative location and terminated the lease agreement. As a result of the termination, the Plaintiff’s business ceased to operate. The plaintiff successfully sued the defendant and was awarded the damages.

16. The present case involves a mortgage sale and the plaintiff knew very well that the mortgagor could redeem the property at any stage of the sale process and nothing was conclusive until the title was given to her....