Solomaya Finance Ltd v Linda Kuri

• Jurisdiction: Papua New Guinea
• Judge: David, J
• Judgment Date: 10 November 2017
• Citation: (2017) N7057
• Court: National Court
• Year: 2017
• Judgement Number: N7057

Full : WS No 114 of 2016; Solomaya Finance Limited v Linda Kuri (2017) N7057

National Court: David, J

Judgment Delivered: 10 November 2017

N7057

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS No.114 of 2016

BETWEEN:

SOLOMAYA FINANCE LIMITED

Plaintiff

AND:

LINDA KURI

Defendant

Waigani : David, J

2017 : 9 & 10 November

DAMAGES – breach of contract – loan agreement – assessment of damages following entry of default judgment – damages under loan agreement - general damages – post-judgment interest – costs of proceedings.

Cases cited:

Coecon Ltd (Receiver/Manager Appointed) v National Fisheries Authority (2002) N2182

Papua New Guinea Banking Corporation (PNGBC) v Tole [2002] PGSC 8; SC694

Rodao Holdings Limited v. Sogeram Development Corporation Limited (2007) N5485

William Mel v Coleman Pakalia (2005) SC790

Otto Benal Magiten v Bilding Tabai (2010) N3916

Counsel:

Alida Gubag with Dakan Doiwa, for the plaintiff

JUDGMENT

9 & 10 November, 2017

1. DAVID, J: INTRODUCTION: This is a decision after a trial on assessment of damages for breach of contract following the entry of default judgment in favour of the plaintiff on 7 December 2016. The plaintiff essentially claims from the defendant a total amount of K620,000.00 being the principal amount claimed of K300,000.00 plus interest of K300,000.00 and general damages of K20,000.00 plus further interest at the rate of 2% per annum on the post judgment amount until payment. By a writ of summons endorsed with a statement of claim filed on 17 February 2016, the plaintiff claims that pursuant to a loan agreement entered into between the parties dated 20 January 2015, the plaintiff lent to the defendant at her request a total amount of K300,000.00 covering six occasions spread over a period of about 6 months from 20 January 2015 to 5 June 2015 with substantial interest payable on each occasion over three fortnights which the defendant has failed to repay despite being demanded to settle.

2. Despite being served with a notice of trial giving notice of the date and time of trial on 25 October 2017, the defendant failed to appear at the trial so the plaintiff was granted leave to conduct the trial in the absence of the defendant: see Affidavit of Service of John Eka sworn and filed on 26 October 2017.

EVIDENCE

3. In order to substantiate its damages, the plaintiff relied on the Affidavit in Support of Yank Ruth sworn on 31 July 2016 and filed on 2 September 2017 (Exhibit “A”).

ISSUE

4. The main issue that I need to decide is what amount of damages is the plaintiff entitled to receive, if any?

LAW

5. Ms Gubag has made reference to a number of case authorities discussing the principles involved in assessing damages after the entry of default judgment or generally and I have considered them. Amongst them is the National Court decision of Rodao Holdings Ltd v Sogeram Development Corporation Ltd (2007) N5485 where Justice Cannings, after referring to decisions of the Supreme Court and National Court namely, Papua New Guinea Banking Corporation v Jeff Tole (2002) SC694, William Mel v Coleman Pakalia and Others (2005) SC790 and Coecon Ltd (Receiver/Manager Appointed) v National Fisheries Authority (2002) N2182 laid out the key principles in relation to the role of the trial judge when assessing damages. These are:

“14. …The trial judge's role is:

· to make a cursory inquiry so as to be satisfied that the facts and the cause of action are pleaded with sufficient clarity; and

· if the facts and cause of action are reasonably clear, liability should be regarded as proven, ie the default judgment resolves all questions of liability in respect of the matters pleaded in the statement of claim;

· only if the facts or the cause of action pleaded do not make sense or would make an assessment of damages a futile exercise should the judge inquire further and revisit the issue of liability;

· the plaintiff has the burden of producing admissible and credible evidence of the alleged damages;

· any matter that has not been pleaded but is introduced at the trial is a matter on which the defendant can take an issue on liability.

General principles for assessment of damages

15. Other general principles to apply when the court is assessing damages can be summarised as follows:

· The plaintiff has the onus of proving his loss on the balance of probabilities. It is not sufficient to make assertions in a statement of claim and then expect the court to award what is claimed. The burden of proving a fact is upon the party alleging it, not the party who denies it. If an allegation forms an essential part of a person's case, that person has the onus of proving the allegation. (Yooken Paklin v The State (2001) N2212, National Court, Jalina J.)

· Corroboration of a claim is usually required and the corroboration must come from an independent source. (Albert Baine v The State (1995) N1335, National Court, Woods J; Kopung Brothers Business Group v Sakawar Kasieng [1997] PNGLR 331, National Court, Lenalia AJ.)

· The principles of proof and corroboration apply even when the defendant fails to present any evidence disputing the claim. (Peter Wanis v Fred Sikiot and The State (1995) N1350, National Court, Woods J.)

· The same principles apply after default judgment is entered and the trial is on assessment of damages – even when the trial is conducted ex parte. A person who obtains a default judgment is not entitled as of right to receive any damages. Injury or damage suffered must still be proved by credible evidence. (Yange Lagan and Others v The State (1995) N1369, National Court, Injia J.)

· If the evidence and pleadings are confusing, contradictory and inherently suspicious, the plaintiff will not discharge the onus of proving his losses on the balance of probabilities. It is conceivable that such a plaintiff will be awarded nothing. (Obed Lalip and Others v Fred Sikiot and The State (1996) N1457, National Court, Injia J.)

· Where default judgment is granted, for damages to be assessed on a given set of facts as pleaded in a statement of claim, the evidence must support the facts pleaded. No evidence will be allowed in support of facts that are not pleaded. (MVIT v Tabanto [1995] PNGLR 214, Supreme Court, Kapi DCJ, Hinchliffe J, Sevua J; Waima v MVIT [1992] PNGLR 254, National Court, Woods J; MVIT v Pupune [1993] PNGLR 370, Supreme Court, Kapi DCJ, Jalina J, Doherty J; Tabie Mathias Koim and 28 Others v The State and Others [1998] PNGLR 247, National Court, Injia J.)

· The court must be alert to vague claims, unsupported by corroborating evidence, as they might be false claims. The court must only uphold genuine claims. (Kolaip Palapi and Others v Sergeant Poko and Others (2001) N2274, National Court, Jalina J.)

Special principles regarding damages for breach of contract

16. When assessing damages for breach of contract special principles apply. These come from the leading common law case on damages for breach of contract, Hadley v Baxendale (1854) 9 Exch 341, the principles of which were explained in the other leading common law case Victoria Laundry v Newman [1949] 2 KB 528. Hadley v Baxendale has been considered in PNG in, for example, Tetley v The Administration (1971) No 647, pre-Independence Supreme Court, Frost SPJ and in the Coecon case. I consider that the principle of Hadley v Baxendale and the Victoria Laundry cases are appropriate to the circumstances of PNG, and therefore can be safely applied as part of the underlying law. The special principles are:

· The general principle that the purpose of an award of damages is to put the innocent party in the same position, as far as money can do, as if the guilty party had not committed a wrongful act, is qualified substantially when assessing damages for breach of contract.

· The qualification is that the innocent party only gets the amount of his actual losses that were reasonably foreseeable at the time the contract was formed.

· What is taken to have been reasonably foreseeable at the time the contract was formed depends on two things: (a) the sort of knowledge that any reasonable person would be expected to have; and (b) knowledge of special circumstances outside the ordinary course of things.”

6. I adopt the above summaries as reflecting the correct principles of law to be applied in assessing damages after the entry of default judgment or generally.

APPLICATION OF THE PRINCIPLES OF LAW TO FACTS

7. From the pleadings supported by the affidavit evidence of Yank Ruth, I am satisfied that there is no need to revisit the question of liability given the facts and cause of action are reasonably clear so liability should be regarded as proven upon the entry of default judgment on 7 December 2016.

8. So what amount of damages should I award? There are two types of remedies for which the defendant is liable upon the entry of default judgment; the first is to be considered under the loan agreement; and the second is for general damages.

DAMAGES UNDER THE LOAN AGREEMENT

9. The plaintiff is a company registered under the Companies Act and Yank Ruth is the sole director and shareholder of the company: annexure “A” of...