N4846

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS 603 OF 2008

BETWEEN:

JOSEPHINE KAVIE, MARY KAVIE, NORBERT KAVIE,
NITA KAVIE, BENEDICTA KAVIE, TIDAU JOHN KAVIE
and SIMON KAVIE as joint tenants
Plaintiffs/Cross Defendants

AND:

KAPA TOPAGUR
First Defendant/First Cross Claimant

AND:

TRADEWELL LIMITED
Second Defendant/Second Cross Claimant

Kokopo: Hartshorn J.
2012: July 11th, 16th

Assessment of damages

Facts:

This is a decision on the amount of damages to be awarded to the first defendant /first cross claimant Mr. Kapa Topagur, in respect of certain land and improvements erected thereon. The seven plaintiffs/cross defendants own the land and Mr. Topagur erected the improvements.

Case cited: 

William Mel v. Coleman Pakalia & Ors (2005) SC790 

Counsel:

Mr. P. P. Yange

16th July, 2012

1. HARTSHORN J: This is a decision on the amount of damages to be awarded to the first defendant /first cross claimant, Mr. Kapa Topagur against the plaintiffs/ cross defendants, seven related persons to whom I will refer to as the Kavies.

2. I allowed this hearing to assess damages to proceed in the absence of representation on behalf of the Kavies as I was satisfied that the lawyers for the Kavies had been properly notified of the date and time of hearing.

3. The background to this claim is that it concerns a dispute in respect of certain land and improvements erected thereon. The Kavies own the land and Mr. Topagur erected the improvements.

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 cross claim

5. From a perusal of the cross claim, I find that the facts and cause of action are not pleaded satisfactorily. It was only after careful consideration that I formed the view that there are sufficient facts pleaded and there is a cause of action upon which Mr. Topagur is able to rely. The cross claim pleads that Mr. Topagur, for the reasons set out in paragraph 8 of the defence, is entitled to the value of improvements in the sum of K354,000. Counsel for Mr. Topagur submitted that Mr. Topagur's cause of action was in equity. The fact that Mr. Topagur built the improvements however, which I understand is acknowledged by the Kavies, does not of itself oblige the Kavies to pay him for the improvements. 

6. Paragraph 8 contains 15 subparagraphs of pleading which are given as reasons why the Kavies cannot rely upon a lease agreement entered into in May 2000. Amongst these subparagraphs there is a reference to a sublease agreement between the Kavies and Mr. Topagur for K 4,000. A perusal of that sublease in the evidence that was tendered on behalf of Mr. Topagur reveals that of the K 4,000 rental per month, K 2,000 was to be retained by Mr. Topagur as part payment towards the structural improvements on the land. In my view this is evidence from which it can be implied that there was an agreement between the Kavies and Mr. Topagur for the Kavies to pay Mr. Topagur for the improvements. The remainder of paragraph 8, referred to, contains facts by which it can be implied that there has been a breach of that agreement by non-payment by the Kavies. The cause of action then is for breach of agreement or contract for non-payment of the value of the improvements.

Damages

7. As to the calculation of damages for breach of contract, I refer to the following passage from Chitty on Contracts, volume 1, General Principles, 28th ed. at page 1271:

"Damages for a breach of contract committed by a defendant are a compensation to the claimant for the damage, loss or injury he has suffered through that breach. He is, as far as money can do it, to be placed in the same position as if the contract had been performed. This implies a "net loss" approach in which the gains made by the claimant as a result of the breach (e.g. savings made because he is relieved from performing his side of a contract which has been terminated for breach; savings in taxation; benefits obtained from partial performance; or the salvage value of something left in his hands) must be set off against his losses arising from the breach (after he has taken reasonable steps to minimise those losses)."	

8. This statement as to damages for breach of contract is applied in most common law jurisdictions of which this country is one.

Improvements

9. Mr. Topagur submits that he should be awarded K 405,000 as this is the amount for which the improvements were valued in January 2010 and the lawyer for the Kavies agreed with the valuation as being the valuation of the improvements at that time.

10. As referred to, there was an agreement by the Kavies to pay for the improvements. There is no date of that agreement, but given that it is evidenced in the sublease dated 4th November 2003, it can be implied that the agreement occurred at about that time. As to the amount that it was agreed that the Kavies were to pay for the improvements, it can also be implied that this amount was the value of the improvements at that time. I am of this view as I consider it unlikely that it would have been agreed that Mr. Topagur would be entitled to the increase in the value of the improvements at the time that full payment for the improvements had been made when the amount to be paid for the improvements was being paid by instalments. Equally in such a circumstance, I consider it unlikely that it would have been agreed that Mr. Topagur would have received less for the improvements if in fact the value of the improvements had decreased at the time that full payment for the improvements was made.

11. As to the value of the improvements in November 2003, there is no evidence of a valuation of the improvements at that time. A calculation has to be arrived at from the evidence tendered. In the first lease agreement entered into with Mr. John Kavie, it was agreed by Mr. Topagur that if Mr. Kavie bought the improvements at the end of that lease in December 2002, he would pay Mr. Topagur K 124,000. Given that the value of the improvements in January 2010 is K 405,000, it can be estimated that the value in November 2003, if the value increased by an equal progression, was K 155,125. I will in the circumstances however, fix the value agreed to be paid in November 2003 at K175,000. Further, as referred to, Mr. Topagur according to his evidence, entered into a lease with the Kavies commencing in November 2003 and ending in December 2007. The rental as referred to, was K 4,000 per month; K 2,000 of which Mr. Topagur retained as part payment for the structural improvements. When these 48 payments of K2,000 are deducted from the value of K 175,000, the balance is K 79,000.

12. I am satisfied that Mr. Topagur has proved that he is entitled to this sum and I award that amount to him accordingly.

Orders

13. Judgment is ordered for the first defendant first cross claimant on his cross claim against the plaintiffs cross defendants in the sum of K 79,000. No orders as to interest or costs are made as they have not been claimed.

____________________________________________________________

Motuwe Lawyers: Lawyers for the Plaintiffs/Cross Defendants 
Warner Shand Lawyers: Lawyers for the Defendants/Cross Claimants