Smy Luluaki Limited and Moses Luluaki v Paul Paraka Lawyers and Pacific Star Limited Trading as the National Newspaper and the Independent State of Papua New Guinea (2012) N4685

• Jurisdiction: Papua New Guinea
• Judge: Cannings J
• Judgment Date: 18 May 2012
• Court: National Court
• Docket Number: WS NO 313 of 2009
• Citation: (2012) N4685
• Year: 2012
• Judgement Number: N4685

Full Title: WS NO 313 OF 2009; SMY Luluaki Limited and Moses Luluaki v Paul Paraka Lawyers (removed) and Pacific Star Limited trading as the National Newspaper and the Independent state of Papua New Guinea (2012) N4685

National Court: Cannings J

Judgment Delivered: 18 May 2012

N4685

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS NO 313 OF 2009

SMY LULUAKI LIMITED

First Plaintiff

MOSES LULUAKI

Second Plaintiff

V

PAUL PARAKA LAWYERS

First Defendant – Removed

PACIFIC STAR LIMITED

TRADING AS THE NATIONAL NEWSPAPER

Second Defendant

THE INDEPENDENT STATE OF PAPUA NEW GUINEA

Third Defendant

Madang: Cannings J

2011: 16 December,

2012: 18 May

DAMAGES – defamation – publication of defamatory statements in newspaper – distinction between awards of damages to individual persons and companies – whether proof of damage to reputation is necessary

This trial on assessment of damages for defamation arose out of publication in a newspaper of an article defamatory of the plaintiffs. The first plaintiff is a company involved in construction and management of community health projects and the second plaintiff is the company’s sole director and shareholder. In earlier parts of the proceedings the plaintiffs, having consented to removal of the first defendant, a law firm, as a party, established a cause of action in defamation against the second defendant, the newspaper publisher (by trial), and the third defendant, the State (by default judgment). At this trial, the plaintiffs argued that publication of the article had the effect of destroying their reputations and that they had lost a substantial amount of business. They claimed damages of approximately K47.3 million.

Held:

(1) As there were two defendants (which were not joint tortfeasors as there were two separate tortious acts giving rise to liability) and two plaintiffs (one of which was a company and the other an individual person) it was necessary to make an award of damages against each defendant in favour of each plaintiff.

(2) Unlike a human person a company has no feelings and is not entitled to be compensated for personal suffering. However, a company might have a reputation, injury to which will give rise to a right to damages. A company will also be entitled to aggravated damages if the defendant has defamed the company in bad faith, and it will also be compensated for direct monetary losses caused by publication of defamatory statements about the company.

(3) The purposes of an award of damages for defamation in favour of a human plaintiff are: to protect and vindicate the personal reputation of the plaintiff, to provide solace for wounded feelings and to compensate the plaintiff for past and prospective losses.

(4) The second defendant was ordered to pay damages of K10,000.00 to the first plaintiff (which fell well short of proving that it lost business of the magnitude claimed) and K50,000.00 to the second plaintiff.

(5) The third defendant was ordered to pay damages of K5,000.00 to the first plaintiff and K5,000.00 to the second plaintiff.

(6) Interest was payable on each of those sums calculated at the rate of 8% per annum from the date of filing of the writ to the date of judgment.

(7) Though the plaintiffs succeeded in obtaining damages, because of the extravagant nature of their claims, only a small proportion of which was proven, the parties were ordered to pay their own costs.

Cases cited

The following cases are cited in the judgment:

Arlene Pitil v Rutis Clytus, Nancy Simeon, Margaret Luku and Islands Recruitment Management Services Enterprises Limited (2003) N2422

Arsenio Rodriguez Samiano v Roger Chris Dekuku (2001) N2057

David Coyle, Rimbink Pato & Alfred Manase v Loani Henao [2000] PNGLR 17

Kamea Gabe v Jack Clunn and Pacific Gold Studios Pty Ltd [1995] PNGLR 153

Lin Wan Xin and Lin Brothers Pty Ltd v Wang Yanhong, Xiao Zhichun and Lin Sheng (2001) N2160

Moresby Claim Adjustment Partners Ltd v Wyatt Gallagher Basset (PNG) Ltd [2003] PNGLR 24

PNG Aviation Services Pty Ltd v Michael Thomas Somare and The State (2000) SC658

PNG Aviation Services Pty Ltd, Douglas Neil Valentine, York Andrew Mendoza and Walter Andrew Lussick v Michael Thomas Somare and The State [1997] PNGLR 515

SMY Luluaki Ltd & Moses Luluaki v Paul Paraka Lawyers, Pacific Star Ltd & The State (2011) N4360

Tei Abal v Anton Parau [1976] PNGLR 251

Theresa Joan Baker v Lae Printing Pty Ltd [1979] PNGLR 16

Wayne Cross v Wess Zuidema [1987] PNGLR 361

TRIAL

This was a trial on assessment of damages for defamation.

Counsel

M Luluaki in person, for the plaintiffs, with leave of the Court

R Mann-Rai, for the second defendant

18 May, 2012

1. CANNINGS J: This is an assessment of damages for defamation following an earlier determination of liability against two parties, the second defendant, Pacific Star Ltd, publisher of The National newspaper, and the third defendant, the State. The first defendant, Paul Paraka Lawyers, was removed as a party earlier in the proceedings and no determination of liability was made against it.

2. The first plaintiff, SMY Luluaki Ltd, is a company involved in construction and management of community health projects and the second plaintiff, Moses Luluaki, is the company’s sole director and shareholder. The plaintiffs sued the defendants following publication of an article in The National about court proceedings the company and Mr Luluaki had instituted against the State for breach of contract.

3. Liability was established against Pacific Star following a contested trial, at which it was determined that the article contained defamatory imputations in respect of both plaintiffs and that none of the defences of fair comment, truth or qualified privilege applied. Liability was established against the State by default judgment (no defence having been filed) and confirmed by the court’s rejection of an application to set aside the default judgment. The circumstances in which liability was established are set out in the judgment, SMY Luluaki Ltd & Moses Luluaki v Paul Paraka Lawyers, Pacific Star Ltd & The State (2011) N4360.

THE DEFAMATORY ARTICLE

4. The article was on the top of page 4 in the Wednesday 8 December 2004 edition of The National. A teaser headline appeared on the front page: “Lawyers probe K16.3m claim PAGE 4”. The same headline appeared in large print at the top of page 4:

Lawyers probe K16.3m claim

5. Beneath that was a smaller headline:

Million-kina claim being squeezed out of alleged K400,000 contract

6. The article, which had no by-line, read as follows:

State lawyers are puzzled over how an inflated claim of K16.3 million can be made against the State from a purported contract worth just K400,000.

Ironically, the proponent of this claim, SMY Luluaki Ltd, has been pursuing the claim seeking an out of court settlement for K16,226,160 with the offices of the Attorney-General and the Solicitor-General.

But lawyers appointed by the State to challenge every claim and award against the State have noted inconsistencies in the claim and had advised the Attorney-General Francis Damem and acting Solicitor-General Francis Kuvi not to settle the claim.

Instead, the government lawyers had opted to challenge a purported consented default judgment order endorsed by Justice Don Sawong on April 21, 2004, in Madang with the view of saving the State K16.3 million.

The lawyers have prepared all necessary documents and are ready to counter the consented default judgment, which Mr Damem and Mr Kuvi had denied knowledge of any settlement of the State’s liabilities.

This is just one of the many court challenges taken out by the State-appointed lawyers who had saved over K500 million from the public purse through investigations they have been instructed to carry out since April last year.

[The] Attorney-General has been the man behind the reviews of all the claims and awards against the State, and his lawyers had so far done a commendable work in their efforts to reduce the State’s liability which stands close to K1.5 billion in both civil and land matters.

The claim by SMY Luluaki Ltd was launched against the State on June 13, 2003, claiming damages of K800,000 for alleged breach of contract following a purported letter of acceptance dated March 27, 2002 from the director of the office of the Rural Development Mathew Tepu, who accepted the company’s offer to construct 100 septic tanks around Madang town. The value of the contract was only up to K400,000.

However on Dec 10, 2002, the acting deputy director of the Department of Planning and Rural Development Samuel Pulipet wrote to SMY Luluaki advising that the letter of acceptance was null and void for breaches of Public Finances (Management) Act.

It was noted that SMY Luluaki did not carry out any work or implemented the construction of the 100 septic tanks at any time even to this date.

The State lawyers had found that the letter of acceptance was for the construction of...