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Kupo v Independent State of Papua New Guinea [2011] PGNC 40; N4285 (5 January 2011)

N4285

PAPUA NEW GUINEA
IN THE NATIONAL COURT OF JUSTICE

WS 1634 OF 2002

BETWEEN:

JOSEPH KUPO
Plaintiff

AND:

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Defendant

Waigani: Hartshorn J.
2010: 9th June,
2011: 5th January

DAMAGES - Assessment of damages – Wrongful termination of employment – part payment under Deed of Release - Liability not in issue

Facts:

The Plaintiff's employment as Commissioner of Police was terminated in September 2002. He commenced this proceeding against the defendant seeking damages for wrongful termination of employment. A Deed of Release and Settlement (Deed) was entered into between the parties as to the plaintiff's claim for entitlements under his contract of employment and general damages but not for exemplary damages. The plaintiff was only paid part of the agreed settlement. He then amended his Statement of Claim to seek from the defendant the balance owing under the Deed, the entitlements allegedly due under the contract and the Police Act and exemplary damages. Default judgment was entered for the plaintiff with damages to be assessed. This is now the decision on assessment of damages.

Held:

(1) Judgment is ordered for the plaintiff against the defendant in the sum of K1,890,176. 39.

(2) The defendant shall pay interest at the rate of 8% per annum on K1,890,176. 39 or on the balance remaining, from 19th October 2006 until payment in full,

(3) The defendant shall pay the plaintiff's costs of and incidental to the proceeding to be taxed if not agreed.

Cases cited:

William Mel v. Coleman Pakalia & Ors (2005) SC790
PNG Aviation Services Pty Ltd v. G. Karri (2009) SC1002

Counsel:

Mr. J. Haiara and Mr. D. Levy, for the Plaintiff

5th January, 2011

1. HARTSHORN J: The plaintiff was the Commissioner of Police. His employment was terminated in September 2002. The plaintiff commenced this proceeding against the defendant seeking damages for wrongful termination of employment. A Deed of Release and Settlement (Deed) was entered into between the parties as to the plaintiff's claim for entitlements under his contract of employment and general damages but not for exemplary damages. The plaintiff was only paid part of the agreed settlement.

2. The plaintiff then amended his statement of claim to seek from the defendant:

a) the balance owing under the Deed,

b) entitlements allegedly due under the contract and the Police Act and

c) exemplary damages.

3. Default judgment was entered for the plaintiff with damages to be assessed. Consequently the hearing before me was for an assessment of damages. Counsel for the plaintiff relied upon affidavits and filed written submissions. There was no appearance on behalf of the defendant. As I was satisfied that the lawyers for the defendant were aware and had been given notice of the hearing, I allowed the hearing to proceed in the absence of representation on behalf of the defendant.

Assessment of damages – law

4. The Supreme Court in William Mel v. Coleman Pakalia & Ors (2005) SC790 stated:

"The principles that apply to a trial on assessment of damages following entry of default judgment were summarised by Kandakasi J. in Coecon Ltd (Receiver/Manager Appointed) v National Fisheries Authority (2002), National Court, N2182.

His Honour stated:

A survey of the authorities on assessment of damages after entry of judgment on liability mainly in default of a defendant's defence, clearly show the following:

1. The judgment resolves all questions of liability in respect of the matters pleaded in the statement of claim.

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

3. In the case of a claim for damages for breach of contract as in this case, such a judgment confirms there being a breach as alleged and leaves only the question of what damages necessarily flow from the breach.

4. The plaintiff in such a case has the burden to produce admissible and credible evidence of his alleged damages and if the Court is satisfied on the balance of probabilities that the damages have been incurred, awards can be made for the proven damages.

5. A plaintiff in such a case is only entitled to lead evidence and recover such damages as may be pleaded and asked for in his statement of claim.

The Supreme Court adopted and applied those principles in Papua New Guinea Banking Corporation v Jeff Tole (2002) SC694, Amet CJ, Sheehan J, Kandakasi J.

Kandakasi J. applied those principles recently in the National Court in Desmond Huaimbukie v James Baugen (2004) N2589. We believe His Honour succinctly and correctly stated the law. We elaborate on the first principle by saying that once default judgment is entered, the facts as pleaded and their legal consequences in terms of establishing the cause of action as pleaded must be regarded as proven. (See Keith Reid v Murray Hallam and Allcad Pty Ltd (1995) N1337, National Court, Kapi DCJ and Andale More and Manis Andale v Henry Tokam and The State (1997) N1645, National Court, Injia J.)........................

Turning back to the issue raised above as to the role of the trial judge after entry of default judgment, we consider the following to be the correct approach:

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

if it is reasonably clear what the facts and cause of action are, liability should be regarded as proven; 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 claim

5. From a perusal of the further amended statement of claim it appears that the facts are pleaded sufficiently clearly for the causes of action to be determined as being for wrongful termination of employment and for breach of the Deed.

Damages

6. I now must determine whether the plaintiff has sufficiently proved the damages he claims.

Deed

7. It is pleaded that pursuant to the Deed, the defendant agreed to pay K2,676,687.71 in the settlement of the plaintiff's contractual claim referred to in Part E(1) of the Deed and that the defendant only paid K 736,511.32 to the plaintiff.

8. The evidence in this regard is that of the plaintiff in his affidavit of 6th April 2008 in which he deposes to receiving only K 786,511.32 from the defendant, not K 736,511.32. Copies of the Deed are annexed to 2 affidavits of the plaintiff.

9. The Deed is purportedly signed by the Solicitor General and the plaintiff. Given the pleadings and the state of the evidence, there being a lack of both on behalf of the State, I am satisfied that the plaintiff has properly proved his entitlement to the sum of K1,890,176.39 being the balance owed to him under the Deed.

Contract and Police Act entitlements

10. The plaintiff claims damages for loss of accrued entitlements for 28 years service calculated in accordance with clauses of his employment contract and provisions of the Police Act. He submits that he is entitled to so claim as clause 1 of the Deed expressly states that the Deed was in respect of the plaintiff's contract entitlement only and does not include his entitlements for 28 years service preserved by clause 1.5 of the contract and s. 11 of the Police Act.

11. Clause 1 of the Deed however, is not as submitted. Clause 1 states that the plaintiff "....shall discontinue his claim for the relief of Contract Entitlements stated in paragraph E(1) of the Deed in the proceeding W. S. No. 1364 (sic) of 2002."

12. Clauses 2, 3, 4 and 5 of the Deed then purport to set out the further terms of the agreement between the plaintiff and the defendant. I state at this juncture that the drafting of the Deed leaves much to be desired.

13. The relevant parts include:

a) in clause 2 that, "The Defendant shall pay the Plaintiff.....in full and final settlement of all matters, allegation, claims, demands, causes of action, sums of money and any other liability arising out of, in respect of or relating to the Writ of Summons in the first cause of action pleaded regarding Contract Entitlements,....."

b) in clause 3 that, "The Plaintiff shall accept ...... in full and final settlement of his claim, and all matters in issue set out in the Writ of Summons regarding Contract Entitlements...."

14. Given that the drafting of the Deed is all inclusive with the use of, "arising out of, or in respect of or relating to" in clause 2 and, "full and final settlement of his claim, and all matters...." in clause 3, that "Contract Entitlements" and "claim" are not defined and the inclusion of a comma after "claim" in clause 3, my reading of the Deed leads me to the conclusion that it is a settlement of all claims of the plaintiff arising out of or in respect of or relating to Contract Entitlements and general damages in the proceeding and excludes a claim for exemplary damages.

15. Consequently, I am not satisfied that the plaintiff is able to claim for the damages calculated under the contract and Police Act as he has, as these claims are either, arising out of, or in respect of or relating to Contract Entitlements in clause 2 of the Deed or they are included in the full and final settlement of the plaintiff's claim in clause 3 of the Deed. This claim of damages is refused.

Exemplary damages

16. Pursuant to s. 12 (1) Claims By and Against the State Act (Claims Act), no exemplary damages may be awarded against the State unless it appears to the court that regardless of the nature of the claim, there has been a breach of Constitutional rights so severe or continuous as to warrant such an award.

17. Counsel for the plaintiff did not cite any authority in support of the claim for exemplary damages. I have had recourse to the Supreme Court case of PNG Aviation Services Pty Ltd v. G. Karri (2009) SC1002, in which the question of exemplary damages before s. 12 (1) Claims Act came into force, was considered. The Court agreed with the observation that exemplary damages are not normally available for breach of contract. Further, the kind of conduct that would warrant an award of exemplary damages has been commonly described as contumelious or in other words, spiteful or disgraceful.

18. Given these observations, when the wording of s. 12 (1) Claims Act is considered, I am of the view that no exemplary damages may be awarded against the State unless it appears to the court that there has been a contumelious, or spiteful or disgraceful breach of Constitutional rights that is so severe or continuous as to warrant such an award.

19. On the pleadings and the evidence, whilst the conduct of the State and its relevant employees may be considered unreasonable, I am not of the view that it is such that this Court may award exemplary damages. Accordingly, the claim for exemplary damages is refused.

20. The plaintiff also claims for general damages for hardship, frustration, loss of reputation and inconvenience. As to these claims, my comments above concerning the coverage of the Deed are sufficient to dispose of them.

21. As to interest, given that the amount of damages to be awarded represents the balance due under the Deed, interest should run from when the breach of the Deed was pleaded.

22. As to costs, notwithstanding that the plaintiff claims them on a solicitor client basis, paragraph 6 of the Deed provides for the defendant to pay costs with no mention of them being on a solicitor client basis. Consequently, costs shall be paid on a party to party basis.

Orders

23. The orders of the Court are:

a) judgment is ordered for the plaintiff against the defendant in the sum of K1,890,176.39,

b) the defendant shall pay interest at the rate of 8% per annum on K1,890,176.39 or on the balance remaining, from 19th October 2006 until payment in full,

c) the defendant shall pay the plaintiff's costs of and incidental to the proceeding to be taxed if not agreed.

__________________________________________________
Steeles Lawyers: Lawyers for the Plaintiff
Office of the Solicitor-General: Lawyers for the Defendant