Finance Corporation Ltd v Dr Uke Kombra, Secretary for the Department of Education and the Independent State of Papua New Guinea (2020) N8285

• Jurisdiction: Papua New Guinea
• Judge: Anis J
• Judgment Date: 28 April 2020
• Court: National Court
• Citation: (2020) N8285
• Docket Number: WS No 1449 of 2018 (COMM)
• Year: 2020
• Judgement Number: N8285

Full Title: WS No 1449 of 2018 (COMM); Finance Corporation Ltd v Dr Uke Kombra, Secretary for the Department of Education and the Independent State of Papua New Guinea (2020) N8285

National Court: Anis J

Judgment Delivered: 28 April 2020

N8285

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS No. 1449 of 2018 (COMM)

BETWEEN:

FINANCE CORPORATION LIMITED

Plaintiff

AND:

DR UKE KOMBRA, SECRETARY for the Department of Education

First Defendant

AND:

THE INDEPENDENT STATE OF PAPUA NEW GUINEA

Second Defendant

Waigani: Anis J

2019: 15th August

2020: 28th April

CONTRACT – claim for specific performance based on breach of contract and court order – claim for damages based on breach of contract – contract partly written and partly oral – written irrevocable letters of authorities to deduct pay from government employees – oral agreement/arrangement between the parties – processing of pay deductions by the defendants concerning their employees’ loan agreements with the plaintiff - consideration based on 5% fortnightly deduction per employee which is deducted and received by the defendants as service fees

BREACH OF COURT ORDER – existing court order – mandatory injunctions in place for continuation of existing contractual arrangements between the plaintiff and the defendants’ employees – claim for specific performance

DAMAGES – assessment of damages – considerations

INTEREST - pre-judgment and post judgment interests – sections 4(2) and 6(1) and (2) of Judicial Proceedings (Interest on Debts and Damages) Act 2015 discussed – 2% fixed interest rate per annum applicable to damages awards that are awarded against the State

CONTEMPT OF COURT – claim that the first defendant was duly served or knew of the court order – claim that the first defendant had deliberately disobeyed the court order – elements of contempt of court discussed – clarity of the court order and personal service of the court order considered - standard of proof – beyond reasonable doubt – whether the plaintiff has discharged the required standard of proof

Case Cited:

Pamela Ipi Pangu v. Ian Ellery (2007) N3227

Joshua Kalinoe v. Paul Paraka (2014) SC 1366

Stephen Asivo v Bank of South Pacific Ltd (2009) N3754

Yondu Coffee Producers Ltd v. Fred Punangi (2017) N7128

Ace Guard Dog Security Services Ltd v. Lindsay Lailai (2003) N2459

NCDC v. Robert Dademo (2013) SC1260

Alphonse Willie v. Simon Kaupa (2016) N6553

Thomas Aiwara v. Cocoa Board of PNG (2017) N6788

Francis Pinje v. Jeffery Kera (2018) N7557

Ian Augerea v. Todagia Kelola (2014) N5582

Solomon Tato v. Samson Akuani (2016) SC1511

Gabrial Miai Bizei v. Joseph Gabut (2019) SC1793

Counsel:

Mr A Edo, for the Plaintiff

Ms B Kulumbu, for the Defendants

JUDGMENT

28th April, 2020

1. ANIS J: The trial for this matter proceeded by way of affidavits on 22 August 2019. No witnesses were called to testify or cross-examined at the hearing. The only person called to the witness-stand was the first defendant. He was asked to take his plea in response to the charge, contempt of court, which had been laid against him. He entered a plea of not guilty and the trial proceeded.

2. Affidavit evidence tendered by the parties were consented to. Presentation of submissions followed immediately on the same day after the parties closed their cases. I reserved my ruling thereafter to a date to be advised. Parties have been notified so I will rule on it now.

FACTS

3. The claim is in two folds. The first is for specific performance, breach of contract and court order, and for damages suffered as a result. The second claim is a charge for contempt of court. It is made against the first defendant.

4. The plaintiff is a licensed financial institution under the Banking and Financial Institutions Act 2000. It conducts its business as a lender of finance. As for this case, it has over the years been lending monies to employees of the State including those in the Department of Education. The contractual arrangement is this. The plaintiff provides its loan facilities to the State employees. If an employee wishes to obtain loan from the plaintiff, he or she would be required to firstly fill in the plaintiff’s application form. The application will be considered and either be approved or declined by the plaintiff based on its requirements. An essential part of the loan agreement is this. In addition to the plaintiff’s requirements as contained in its loan application, the employee is required to fill-in and also submit an irrevocable authority. The irrevocable authority consists of the employee’s express permission to the employer, which is the State, to deduct directly from the employee’s salary on a fortnightly basis, an allowable amount that is based on the loan agreement between the employee and the plaintiff, and to have that remitted directly to the plaintiff to offset the employee’s loan account. The next material term of the loan agreement is this. The defendants, in this case, the Department of Education, will be required to endorse the irrevocable authority and then take steps to commence fortnightly deductions on the salary of the employee concerned. For the defendants’ participation, the parties orally agreed as follows. For each fortnightly deduction for the duration of the loan agreement between the plaintiff and the employee, the defendants shall also deduct and receive a service fee of 5%. The said consideration applies to all employees who have loans with the plaintiff and who are employed with the Department of Education.

5. The plaintiff’s complaint arose on 11 October 2018. On that day, the first defendant issued an Internal Circular Instruction No. 6 of 2018 (Circular Instruction). In the Circular Instruction, the first defendant instructed the Department’s payroll section and I quote in part, not to accept, input and effect any new pay deductions from Financial Loan Companies until further notice. The plaintiff says that the Circular Instruction was issued in breach of the terms of the contract that exists between the parties. The plaintiff also claims that the Circular Instruction or that the actions of the first defendant, was in direct breach of an existing Court Order. By that, the plaintiff refers to earlier mandatory injunctive orders that had been issued by this Court. The Court Order is dated 2 April 2014 (Court Order of 2 April), and it was issued in proceeding WS 1363 of 2007. The plaintiff claims that the defendants have breached the Court Order of 2 April by their actions, and amongst others, by the action of the first defendant in issuing the Circular Instruction. The plaintiff claims that it has suffered damages as a result.

6. The second part of the plaintiff’s claim is the contempt of court charge. The alleged contemnor is Dr. Uke Kombra, the first defendant. As stated above, Dr Kombra has pleaded “not guilty”. The plaintiff’s charge is based on the Court Order of 2 April in proceeding WS 1363 of 2007. The plaintiff alleges that Dr Kombra, having known of the Court Order of 2 April, breached it, that is, when he issued the Circular Instruction on 11 October 2018. As such, the plaintiff submits that he should be found guilty of contempt of court and be punished.

COMMON GROUND

7. The parties do not take issue with the contract or the contractual arrangements that exist between themselves and the State employees. When I use the phrase “State employees”, I of course and for this case, specifically refer to employees within the Department of Education who have existing loans with the plaintiff. And when I use the phrase “contractual arrangements,” I make reference to the processes or practices that have been put in place in terms of loan applications, the loan application requirements, and also the 3 notable conditions for loan approvals as highlighted above under the sub-heading “FACTS”, between the plaintiff, the defendants and the State employees.

ISSUES

8. Let me address the issues in regard to the first part of the claim. The first issue relates to the Circular Instruction, that is, whether the Circular Instruction breached the Court Order of 2 April. The next issue is whether the defendants also breached the terms of the contract it has with the plaintiff in regard to the contractual arrangements. And the third issue, subject to the 2 issues, is whether the plaintiff has suffered as a result, and if so, the type relief that may be awarded. If damages is awarded then what would be the appropriate quantified sum?

9. In relation to the second claim, if I find the alleged contemnor “guilty”, then the matter will be further listed for hearing on the type of punishment that I should impose on him. After receiving submissions from the parties, I may choose to impose a fine, a prison term, or both upon in the contemnor. On the other hand, if I find the alleged contemnor, “not guilty,” then he will be acquitted forthwith.

MATERIAL TERMS - CONTRACT

10. As stated above and generally, the material terms of the contract and the contractual arrangements between the parties are not in dispute. I will address separately whether the terms of the contract were breached as alleged,...