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Kaieso v Memi [2011] PGNC 163; N4445 (15 November 2011)

N4445

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 831 OF 2008

BETWEEN

KENA KAIESO
Plaintiff

AND

BELDEN MEMI trading as BELDEN MEMI & ASSOCIATES
VALUERS, AUCTIONEERS & REAL ESTATE AGENTS
First Defendant

AND

STAINER SAPU
Second Defendant

Goroka: Ipang AJ
2011: 25 October & 15 November

CIVIL LAW – Trial on assessment of interests – Order 12 Rule 38 of the National Court Rules –application of Judicial Proceedings (Interest on Debts and Damages) Act, Chapter 52 –interests calculated at 8% per annum –whether interests in the sum of K6, 597.26 be paid in half or in full is non issue. The issue is; can plaintiff invoke s.1 of Judicial Proceedings (Interest on Debts and Damages) Act as legal basis for his interest, to be assessed and determined.

CIVIL LAW – Principal claim of K20,000.00 settled out of Court on the 24th July, 2009 – no Court order or Judgment on principal claim of K20,000.00 – Judgment for consequential reliefs for costs and interests entered on the 9th June, 2011 almost a year later – whether s.1 of Judicial Proceedings (Interest on Debts and Damages) Act, Chapter 52 applicable. In proceedings were interest is the sole cause of action - Powers of Court is limited – Gilsenan Melpa Pty Ltd v Tom Yalu [1993] PNGLR 132 followed.

Cases Cited:

Papua New Guinea cases

Kena Kaieso v Belden Memi t/a Belden Memi & Associates & 1 or WS No. 831of 2008 (dated 9th June, 2011)
Gilsenan Melpa Pty Ltd v Tom Yalu [1993] PNGLR 132
Walace v Motor Vehicles Insurance (PNG) Trust [1991] PNGLR 341
Cheong supermarket Pty Ltd v Muro, New Guinea Cocoa (Export) Co Pty Ltd v Bougainville Enterprises Pty Ltd [1987] PNGLR 24 N 583

Overseas Cases

F.A Pidgeon & Son v Danehurst Investments [1986] 1 Qd R 448
Green v Rozen [1955] 2 All ER 797

Legislations

Judicial Proceedings (Interest on Debt and Damages) Act, Chapter 52
Goods Act, Chapter 251

Counsel

Mr.K.Pilisa, for the Plaintiff
Mr.Belden Memi, in Person
Mr. Stainer Sapu, in Person

ASSESSMENT OF INTEREST

15th November, 2011

1. IPANG AJ: This is a trial on assessment of interest. His Honour Yagi.J on the 9th June, 2011 entered a summary judgment against the First and Second Defendants respectively for interests to be assessed and cost in the proceedings to be taxed, if not agreed. The issue of cost is not the matter of this proceeding.
   
2. At the hearing, the plaintiff relied on the following documents:
   
   1. The affidavit of the plaintiff sworn on the 29th October 2009 and filed on the 17th June, 2010.
   2. The affidavit of the plaintiff sworn on the 29th October, 2009 and filed on the 17th June, 2010.
   3. The Section 35 Notice under the Evidence Act filed on the 14th September, 2011.
   4. Notice of Trial filed on the 18th October, 2011
   5. The judgments of Yagi.J dated 9th June, 2011.
   6. Judicial Proceedings (Interest on Debts and Damages) Act, Chapter 52
      
3. The plaintiff claims interest based on the Court Orders granted on the 9th June, 2011 for interests and costs to be assessed pursuant to the Judicial Proceedings (Interest on Debts and Damages) Act, Chapter 52. The s.1 of this Act states;
   

1. Interest on certain debts and damages.

(1) Subject to Section 2, in proceedings in a Court for the recovery of a debt or damages the Court may order that there be included in the sum for which judgments is given interest at such rate as it thinks proper, on the whole or part of the debt or damages for the whole or part of the period between the date on which the cause of action arose and the date of the judgment.

4. In his affidavit sworn on 13 September, 2011 and filed on the 14th September, 2011 the plaintiff provided the calculation of his interest according to the Judicial Proceedings (Interest on Debts and Damages) Act as follows;
   

5. The formula used to calculate the interest plus the amount of K6,597.26 as the interest is not disputed by the First and Second Defendants. However, the First Defendant denied receiving plaintiff's letter marked as annexure "B". First defendant said there was no gain and no loss. He said he did his best and secured the title within 4 years and made the title available. He said after the title became available the plaintiff aborted the agreement which then resulted in the Court case. The First defendant also argued that it cost him money to fly down to Port Moresby to access the title. He said it costs money for airfares and accommodation.
   
6. In his Affidavit sworn on the 29th October, 2009 and filed on the 17 June, 2010, plaintiff deposed the following;
   
   1. That he entered in to a written agreement around 17th August, 2005 with the First Defendant who agreed to sell him the property at Section 115 Allotment 10 Goroka on behalf of the Second Defendant.
   2. The Second defendant did not have the title to the property which was vested in the National Housing Corporation, but he agreed to use my deposit to offset any outstanding monies to make the title available to me. The first defendant facilitated such sale.
   3. The property was offered for sale at K65, 000.00 and he was required to make deposit of 20 per cent. He made deposit of K20, 000.00 and entered into a written agreement.
   4. He then applied for a bank loan to pay up the balance. The bank loan was approved but was to be given to me on production of the Title Document. He was given a grace period of three months to produce the Title document.
   5. The defendants failed to produce the Title Documents to him, and the bank loan was cancelled. It was an important term of the agreement that the defendants would do all they could to enable me to get a bank loan. The best they could have done was produce the Title Document.
   6. He waited almost four (4) years for the Title of the property to be processed. It became apparent that the title was not forthcoming. He then rescinded the agreement and demanded the return of my deposit. Which the defendants refused or failed to return to him.
   7. On 18th July 2009, he filed a writ of summons in this matter against both defendants claiming a refund of K20, 000.00 and damages for inconvenience and suffering and for mesne profits.
   8. The defendants each respectively filed a Defence to the claim.
   9. After filing their defence the defendants decided to make a refund of his deposit of K20, 000.00. On or about 24th July 2009, the defendants presented a payment of K20, 000.00 to his lawyers which his lawyer has forwarded to him.
   10. He then instructed his lawyers to demand further payment from the defendants. Accordingly his lawyers wrote to the defendants on 04th August 2009 and 15th September 2009 respectively.
   11. He has been advised and verily believe that the defendant has not made any payments to his lawyers. Nor have they written to advise him of their position with respect to his costs, interest as at the date of swearing his affidavit.
   12. He has paid his lawyers legal fees and missed out on interest in the tune of K6, 400.00 and benefits he would have otherwise obtained had the defendants honored their part of the payment.
   13. Finally he says that he has not been given any receipts of payments by the defendants that they applied the K20, 000.00 towards offsetting any amounts of money owed to the National Housing Corporation before they could obtain a clear title to transfer to him.
       
7. Initially, at the time of filing his Writ of Summons (WS) dated 18th July, 2008 the claim was principally for the refund of K20, 000.00. Refer to the plaintiff's affidavit sworn on 29th October, 2009 and filed on the 17th June, 2010, especially paragraph 9. In paragraph 10, the plaintiff says each of the defendant respectively file a Defence to the claim. In paragraph 11, the plaintiff says after filing their defence, the defendants presented a payment of K20, 000.00. Plaintiff says on or about 24th July, 2009, the defendants presented a payment of K20, 000.00 to his lawyer and his lawyer forwarded the payment to him. He (Plaintiff) said he instructed his lawyer to demand further payment from the defendants. He said his lawyer wrote to the defendants on the 4th August, 2009 and 15th September, 2009. In paragraph 13 he said at the time of swearing his affidavit, defendants have not advised his lawyer or him of their position into his costs and interest.
   
8. It is clear from the Plaintiff's affidavit sworn that on the 24th July, 2009, the plaintiff's principal claim of K20, 000.00 was settled. In Kena Kaieso v Belden Memi ta Belden Memi & Associate Valuers, Autioners & Real Estate Agents and Stainer Sapu (dated 9th June, 2011), the plaintiff sought judgment for interest and cost of the proceedings. That was summary Judgment pursuant to Order 12 Rules 33 and 38 of the National Court Rules with interest and cost of the proceedings to be taxed if not agreed.
   
9. In order to understand and fully appreciate the decision and His Honour Yagi, J's analysis of reasons pertaining to the decision, I will set out most of the decision in full. In paragraph 23 of Yagi,J's judgment (supra), the following was stated:
   

23. The claim for interests and cost are consequential reliefs. They are not substantive reliefs. The substantive claim or relief is the "refund of K20, 000.00. These consequential claims are dependent upon the success of the substantive claim. Under normal circumstance, a plaintiff is entitled to interests and costs where judgment or an order is entered in his or her favour on a substantive relief. The substantive relief was settled out of Court without a judgment or order of the court. The question is can the plaintiff seek judgment on the consequential relief?

24. The plaintiff's counsel submits that Order 12 Rules 33 and 38 of the Court Rules grants power to the Court to enter judgment on consequential reliefs including interests and cost. I accept this submission. Firstly, Order 12 Rule 33 (2) is specific as to cost and entitles the plaintiff to judgment on costs alone where the principal claim is satisfied by the defendant and renders the proceedings unnecessary to be pursued any further. This rule states:

"33. Judgment for costs alone. (17/10)

(1) ....................................

(2) Whatever claims for relief are made by a plaintiff, where a defendants satisfies the claims of the plaintiff or complies with the demands of the plaintiff or for some other reason it becomes unnecessary for the plaintiff to continue the proceedings against that defendant, but the defendant is in default, the Court may, on application by the plaintiff, direct the entry of judgment against that defendant for cost.

(3) ...................................." (my emphasis)

25.And Rule 38, in my view, allows for a plaintiff to apply for summary judgment on any claims for relief including consequential reliefs such as interest. This provision provides:

"38 Summary Judgment. (13/2)

(1) Where on application by the plaintiff in relation to any claim for relief or any part of any claim for relief of the plaintiff –

(a) There is evidence of the facts on which the claim or part is based; and
(b) These is evidence given by the plaintiff or by some responsible person that, in the belief of the person giving the evidence, the defendant has no defence to the claim or part, no defence except as to the amount of any damages claimed, the Court may, by order, direct the entry of such judgment for the plaintiff on that claim or part, as the nature of the case requires.

(2) .................................
(3) ................................." (my emphasis)

26. In Cheong Supermarket Pty Ltd v Muro; New Guinea Cocoa (Export) Co Pty Ltd v Bougainville enterprises Pty Ltd [1987] PNGLR 24 N583, the Court held that a party claiming interest must plead in the statement of claim whether interest is claimed as of right under s.2 or generally under s.1 of the Judicial Proceedings (Interest on Debt and Damages) Act Chapter 52. Where a claim for interest is claimed as of right based on contract, interest may be awarded based on the agreed rate of interest, provided the details as to the rate of interest is sufficiently pleaded. A claim for interest under s.1 or in all other cases should result in an order for "interest to be assessed".

10. I share the same view as Yagi, J that Order 12 Rule 38 of the National Court Rules allows for a plaintiff to apply for a summary judgment on any claims for relief including consequential reliefs such as interest. It must be for both for the substantive claim and the consequential reliefs.
    
11. In this proceeding WS. No. 831 of 2008, the plaintiff in his Statement of Claim also claimed for interests. There is no judgment for the refund of K20, 000.00 which is the principal claim as the amount of the K20, 000.00 was settled out of court. The plaintiff through his lawyer is claiming interest under s.1 of the Judicial Proceedings (Interest on Debts and Damages) Act, Chapter 52.
    
12. The wording of s.1 of this Act, in my view makes it explicit or crystal clear in that it does not allow plaintiff to claim his interests under the given circumstances in which the principal claim for refund of K20, 000.00 debt has been settled out of court and furthermore there is no judgment or order of the Court as in regards to the sum of K20, 000.00.
    
13. The preamble to the Judicial Proceedings (Interest Debt and Damages) Act, Chapter 52 states. "Being an Act to make provision for interest on certain judgments."
    
    1. Subject to Section 2, in proceedings in a Court for the recovery of a debt or damages the Court may order that there be included in the sum for which judgment is given interest, at such rate as it thinks proper, on the whole or part of the debt or damages for the whole or part of the period between the date on which the cause of action arose and the date of the judgment.
       
14. Woods, J (as he then was) held in Gilsenan Melpa Pty Ltd v Tom Yalu [1993] PNGLR 132 at p.133 and I quote;
    

This latter piece of legislation makes it clear that interest under that section can only be awarded where there is an action and consequent order for the recovery of a debt or damages. Thus, the original action must be for the original debt; there cannot be an action merely for interest.

15. Having expressed the above, Wood, J quoted Connolly, J in F.A. Pidgeon & Son v Daneshurt Investment [1986] 1 Qd R 448 P. 451 and I adopt here;
    

"Lord Denning MR at p.661 of Tehno –Impex had said that the Act only applied where judgment was given for the principal sum. The restrictive language in which s.3 (1) (similar to our s.1) was framed reflects the fact that neither the Admiralty Court, nor courts of Chancery awarded interest except in respect of monies for which they were giving judgment. See Lord Brandon's speech at p.116, and of course it was the established view that courts of common law had no jurisdiction to award interest, contract apart, save pursuant to Statute. It follows that the plaintiff cannot obtain a judgment for interest in these circumstances pursuant to the Common Law Practice Act."

16. In Gilsenan Melpa Pty Ltd v Tom Yalu (supra), Woods,J (as he then was) makes it clear that under s.1 of the Judicial Proceedings (Interest on Debts and Damages) Act, interest under that section can only be awarded where there is an action and consequent order for the recovery of a debt or damages. The original action must be for the original debt; there cannot be an action merely for the interest. At page 135 his Honour said the Act(s.1) "does not cover a claim for the interest alone in such situations after the principal sum has been paid"
    
17. Other cases which affirmed that once a claim has been settled that cause of action has been discharged by the settlement are Caltex (Overseas) Ltd v Dent [1978] PNGLR 411 and Green v Rozen [1955] 2 A11 ER 797. The courts in both cases held that, "the Court only has jurisdiction to award interest on Judgment, it does not have jurisdiction to moneys owing if no judgment is entered."
    
18. The circumstance in this case is that the principal of K20, 000.00 was paid or settled on the 24th July, 2009. The consequential order for interests and costs was made on the 9th June, 2011 which is almost a year later. Definitely, s.1 of Judicial Proceedings (Debts and Damages) Act, cannot be applicable here as per Gilsenan Melpa Case (supra).
    
19. Here is the purported agreement:
    

"AGREEMENT

Between

Belden Memi and Associate Valuers, Auctioneers and Real Estate Agents of Port Office Box 208,GOROKA, Eastern Highlands Province (party A)

And

Mr. Kenna KAIESO (party B)

Of Post Office Box

With regards to purchase and transfer of a residential Property described legally as Allotment 10 Section 115

Goroka Town, Eastern Highlands Province.

1. Both parties acknowledged that a sum of K20, 000.000 as down payment was done by Party B towards purchasing the above described property and that is held by Party A.
   
2. Both parties agree to the final sale Price of the above mentioned property as at K65, 000.00.
   
3. Both parties agree that there shall be no charges in the final sale price after signing of this agreement.
   
4. Both parties agree that Final sale price includes the chattels and current tenancy agreement already existing.
   
5. Pay A shall pay the landlord or its agent or agents of the above mentioned property who will then use the K20, 000.00 down payments to pay off outstanding purchase arrears with The National Housing Corporation.
   
6. Party A shall provide the Original Land Title to Party B it is obtained from National Housing Corporation.
   
7. Party B shall after obtaining this Land Title proceed further to pay balance of K45, 000.00 to party A who shall then pay the Landlord or its agents or agents.
   
8. Party As shall assist party B to obtain any bank loan and or get funds out from any savings of Party B as to complete purchase of the above mentioned.
   
9. Party A shall advise the landlord or its agent or agents to take insurance cover with a reputable insurance company immediately.
   
10. If the property is partially or fully destroyed by fire in the absence of insurance, party A shall negotiate with the land lord or agent or agents to full reimburse the down payment of K20, 000.00 to party B.
    
11. In the event of sudden death of party B whilst the above mentioned property is still under transfer, party A shall inform the relatives of party B to complete sale or reimburse the down payment, after cost.
13. Both parties agree that the sale and purchase shall be completed.
    

Signed

For and on behalf of Party A by his duly appointed officer: _______(Signed)______

17/08/05"

20. Does the purported agreement above contain specific terms on the issue of interest? Our Goods Act Chapter 251 reiterates the common law rule that interest is only recoverable where the law specifically allows it or where there is a specific agreement to pay interest. In the case of Wallace v Motor Vehicles Insurance (PNG) Trust [1991] PNGLR 341, a motor vehicle accident occurred. Following the motor vehicle accident, a claim was lodged with the Motor Vehicle Insurance (PNG) Trust and was settled in respect of general damages only in the sum of K100.000.00 without any admission of liability by either party on terms which were reduced to writing. The terms of the agreement expressly excluded cost and interest on damages and provided that the matters expressly excluded from this settlement ... "shall be referred to the National Court of Justice of Papua New Guinea for final determination." These terms of the agreement conferred jurisdiction on the National Court in respect of cost and interests. The purported agreement does not contain specific clause on interest.
    
21. Having heard the initial argument raised by the plaintiff and the defendants brings to light the issue that needs to be solved. The issue is, whether should the interest which is agreed by both parties at K6, 597.26 be paid in full by the defendants or paid in half as argued by the defendants. That issue is now not an issue. The burning issue of course is; can the plaintiff invoke s.1 of Judicial Proceedings (Debts and Damages) Act to claim his interest?
    
22. From the plaintiff's affidavit sworn on the 29th October, 2009 and filed on the 17th June, 2010; this Court noted the attempt by plaintiff to recoup his K20, 000.00 from the First Defendant and the delay by the First Defendant to reimburse the plaintiff thus resulting in the commencement of the legal proceeding to claim the money. I find no problem with the plaintiff's argument. However, the circumstances of the plaintiff's case whereby K20,000.00 was settled out of Court and there was no judgment entered on the substantive claim of K20,000.00 for the plaintiff significantly ousted the application of s.1 of the Judicial Proceedings (Interest on Debts and Damages) Act, Chapter 52. Because of the aforesaid reasons and with backing of relevant case authorities cited, the plaintiff's claim of interest at K6, 597.26 is refused.
    

_______________________________

Pilisa Lawyers: Lawyer for the Plaintiff

Lawyer for the First Defendant: In Person
Lawyer for the Second Defendant: In Person