Leeway East Enterprise Limited trading as Marlow Shipping and Jacob Sareng v Daniel Danaben in his capacity as Manager of Binnen Slipway Limited and Binnen Slipway Limited and Madang Development Corporation and Madang Provincial Government (2013) N4951

• Jurisdiction: Papua New Guinea
• Judge: Cannings J
• Judgment Date: 30 January 2013
• Court: National Court
• Citation: (2013) N4951
• Docket Number: WS NO 563 of 2009
• Year: 2013
• Judgement Number: N4951

Full Title: WS NO 563 of 2009; Leeway East Enterprise Limited trading as Marlow Shipping and Jacob Sareng v Daniel Danaben in his capacity as Manager of Binnen Slipway Limited and Binnen Slipway Limited and Madang Development Corporation and Madang Provincial Government (2013) N4951

National Court: Cannings J

Judgment Delivered: 30 January 2013

N4951

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS NO 563 OF 2009

LEEWAY EAST ENTERPRISE LIMITED

TRADING AS MARLOW SHIPPING

First Plaintiff

JACOB SARENG

Second Plaintiff

V

DANIEL DANABEN IN HIS CAPACITY AS MANAGER

OF BINNEN SLIPWAY LIMITED

First Defendant

BINNEN SLIPWAY LIMITED

Second Defendant

MADANG DEVELOPMENT CORPORATION

Third Defendant

MADANG PROVINCIAL GOVERNMENT

Fourth Defendant

Madang: Cannings J

2012: 5 October, 23 November,

2013: 30 January

DAMAGES – breach of contract for repair of income-earning asset – claims for special damages, general damages, business losses – need for plaintiff to corroborate claims – plaintiff awarded damages, plus interest

The first plaintiff engaged the second defendant to repair its motor vessel for a fixed sum. The repairs were not carried out to the plaintiffs’ satisfaction so they commenced proceedings, claiming damages for breach of contract. Liability was established by entry of default judgment. There was a trial on assessment of damages. The plaintiffs sought special damages of K3,416,900.00, general damages of K100,000.00 and business losses of K4,462,873.00, a total claim of K7,979,773.00, plus interest and costs.

Held:

(1) The plaintiffs failed to adduce sufficient evidence to support most of the claims.

(2) The court awarded zero special damages, zero general damages and K50,000.00 for business losses, a total of K50,000.00 plus interest of K23,120.00, being a total judgment sum of K73,120.00.

(3) The parties were ordered to bear their own costs as the bulk of the plaintiffs’ claim was misconceived and unsupported by the evidence.

Cases cited

The following cases are cited in the judgment:

Albert Baine v The State (1995) N1335

Bal Bar v Maima Kora (2008) N3290

Coecon Ltd (Receiver/Manager Appointed) v National Fisheries Authority (2002

Dobiam Kope v Tourism PNG Ltd (2010) N4138

Graham Mappa v ELCOM (1992) N1093

Hadley v Baxendale (1854) 9 Exch 341

Jonathan Mangope Paraia v The State (1995) N1343

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

Martin Piaore v Ian Barr (2009) N3786

Pius Pup v Joseph Kupo (2010) N3897

PNG Aviation Services Pty Ltd v Geob Karri (2009) SC1002

PNGBC v Jeff Tole (2002) SC694

Rodao Holdings Ltd v Sogeram Development Corporation Ltd WS No 521 of 2001, 23.02.07

Tetley v The Administration (1971) No 647

Victoria Laundry v Newman [1949] 2 KB 528

William Mel v Coleman Pakalia (2006) SC790

Yooken Paklin v The State (2001) N2212

TRIAL

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

Counsel

T M Ilaisa, for the plaintiffs

B Tabai, for the defendants

30 January, 2013

1. CANNINGS J: This is an assessment of damages for breach of contract following entry of default judgment. The contract was between the first plaintiff Lee Way East Enterprise Ltd (“Leeway”) and the second defendant Binnen Slipways Ltd (“Binnen”) for the repair of a 14.5-metre wooden passenger-cargo boat, MV Relax, owned and operated in the waters of Madang Province by Leeway. Other parties are the second plaintiff Jacob Sareng (a director and manager of Leeway), the first defendant Daniel Danaben (the manager of Binnen), the third defendant Madang Development Corporation (which owns and controls Binnen) and the fourth defendant Madang Provincial Government (which owns and controls Madang Development Corporation).

2. Leeway engaged Binnen to repair MV Relax, which was unseaworthy due to its running aground on the Rai Coast in April 2005. The contract was constituted by an oral agreement between Mr Sareng and Mr Danaben and acceptance by Leeway of a written quote by Binnen to repair the boat for K30,000.00, which was required to be paid up-front together with an outstanding bill for K18,000.00 that Leeway had with Binnen. Pursuant to that agreement Leeway paid Binnen K48,000.00 and the boat was slipped (put on a slipway) in preparation for repair. That happened on 19 December 2006, which is the date on which the contract was entered into. Those are the undisputed facts. As to what happened after the boat was slipped there are two versions of events.

WHICH VERSION OF EVENTS FORMS THE BASIS OF ASSESSMENT OF DAMAGES?

3. The plaintiffs in their statement of claim allege that Binnen, despite agreeing to complete the repairs within three months, exhausted the funds in two weeks and did not commence repairing the boat until July 2007, only after the plaintiffs supplied parts and materials worth K81,121.00, and did not complete the work, which was done in an incompetent, unprofessional and inefficient manner, until 1 March 2008. An affidavit by Mr Sareng was adduced in evidence in support of those allegations. He deposed that he took out a bank loan and sold personal assets including his family home and motor vehicles to raise funds for the parts and materials. He also purchased a new engine for the boat and paid the wages of Binnen’s employees to speed up the work.

4. The defendants say through affidavits by Mr Danaben and Binnen’s Technical Supervisor Daniel Tariowai that the actual cost of repairs was much more than the original quote of K30,000.00. When the boat was slipped it was realised that the keel was badly damaged. They deny misapplying any of the K48,000.00 upfront payment. Mr Tariowai said that Mr Sareng was advised to pay more money but he chose to supply materials instead, so Binnen had to wait for him to provide the materials before work resumed; and that was what caused the delay. When the boat was floated the propeller shaft could not be aligned with the engine as it was bent. Mr Sareng provided a new shaft and arranged for his own people to work on the engine. Binnen only worked on the structure of the boat. Binnen did the work diligently and professionally and the boat was un-slipped on 27 December 2007.

5. Because default judgment has been entered it is not appropriate to revisit the question of liability unless a cursory examination of the facts and cause of action pleaded in the statement of claim reveals that they do not make sense or would make an assessment of damages a futile exercise (William Mel v Coleman Pakalia (2006) SC790). I consider that the facts and the cause of action have been pleaded with sufficient clarity, so it is not appropriate to revisit the question of liability. That means the plaintiffs’ version of events, to the extent that the facts and cause of action were pleaded, are regarded as proven. Damages will be assessed on the basis that Binnen breached the contract by not carrying out the repairs within three months and not completing the work, which was done in an incompetent, unprofessional and inefficient manner, until 1 March 2008.

THE CLAIM

6. The plaintiffs claim three categories of damages:

· special damages of K3,416,900.00;

· general damages of K100,000.00; and

· business losses of K4,462,873.00,

being a total claim of K7,979,773.00, plus interest and costs.

1 SPECIAL DAMAGES

7. Mr Ilaisa for the plaintiffs submitted that this claim comprises two broad components:

(a) particular claims totalling K509,400.00; and

(b) reconstruction costs K2,907,410.00.

(a) Particular claims

These are:

(i)	Initial upfront payment	:	K 48,000.00
(ii)	Bank loan	:	115,490.00
(iii)	Wages for workers	:	75,000.00
(iv)	Family savings	:	150,000.00
(v)	Electrical wiring	:	21,000.00
(vi)	New engine	:	100,000.00
Total claim	:	K 509,400.00

8. Special damages are intended to compensate the innocent party for loss or damage incurred that is not presumed by the law to have been incurred. It is a special sort of damage that must be expressly pleaded and proved (PNGBC v Jeff Tole (2002) SC694, Bal Bar v Maima Kora (2008) N3290, Martin Piaore v Ian Barr (2009) N3786, Pius Pup v Joseph Kupo (2010) N3897, Dobiam Kope v Tourism PNG Ltd (2010) N4138). None of the claims (i) to (vi) was expressly pleaded in the statement of claim. I reject all of them for that reason, and there are other reasons they must be rejected:

(i) The sum of K48,000.00 is the upfront payment that Leeway paid to Binnen to get the boat slipped and the repair work done. It does not represent any damage that flowed from the breach of contract. Besides that, K18,000.00 of that sum had nothing to do with the repair contract. It represented an outstanding debt that Leeway owed Binnen.

(ii) The sum of K115,490.00 is said to be the amount outstanding on a loan of K70,000.00 that Mr Sareng and his wife took out with Bank South Pacific in 2004 for the purpose of “completion of refitting and reconstruction of workboat” (presumably MV Relax). The argument is that Mr Sareng could not service...