N4949
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO 1040 OF 2011

TONY RATENGMAI
Plaintiff

V

ERNEST DOR, MANAGER, ACES VENTURE LIMITED
First Defendant

ACES VENTURE LIMITED
Second Defendant

Madang: Cannings J
2012: 23 October, 7 December,
2013: 30 January

DAMAGES – breach of contract – assessment of damages for unlawful repudiation of building contract – partial completion of contract 

The plaintiff entered into an oral contract with the second defendant to build a 300-metre length of fence under which the defendant was to provide the building materials and an excavator to dig the trench and the plaintiff was to provide labour and be paid a certain amount for each metre built plus an hourly rate. The defendant failed to provide the excavator but the plaintiff commenced work, digging the trench with manual labour. After the plaintiff completed 162 metres the defendant repudiated the contract and paid the plaintiff the agreed sum of K6.00 per metre but refused to pay the hourly rate. The plaintiff commenced proceedings claiming damages for breach of contract. Liability against the second defendant was established by default judgment. A trial was held to assess damages. Three categories of damages were claimed: (1) the unpaid hourly payment of K275.00 per hour = K26,400.00; (2) loss of income = K828.00; and (3) general damages, 20,000.00, a total claim of K47,228.00.

Held:

(1)	The unpaid hourly payment was actually a claim for debt. The claim was reasonable, so the amount claimed was awarded: K26,400.00.

(2)	The claim for lost opportunity to earn income due to the unlawful repudiation was granted generally but discounted by 50%: K414.00.

(3)	As the plaintiff was a sole trader and the income generated by the contract was significant it was reasonable to award damages for pain, suffering and stress caused by the abrupt, unlawful termination of the contract: K2,000.00.

(4)	The court awarded a total amount of debt and damages of K28,814.00 and interest of K3,227.17, being a total judgment sum of K32,041.17.

Cases cited

The following cases are cited in the judgment:

PNG Aviation Services Pty Ltd v Geob Karri (2009) SC1002
Rabaul Shipping Limited v Peter Aisi (2006) N3173
Re Fisherman's Island [1979] PNGLR 202
Rodao Holdings Ltd v Sogeram Development Corporation Ltd WS No 521 of 2001, 23.02.07
William Mel v Coleman Pakalia (2005) SC790

TRIAL

This was a trial on assessment of debt and damages for breach of contract.

Counsel

W Akuani, for the plaintiff
B W Meten, for the defendant

30 January, 2013 

1. CANNINGS J: This is an assessment of debt and damages for breach of contract after entry of default judgment against the second defendant due to failure to file a defence. The plaintiff Tony Ratengmai and the second defendant Aces Venture Ltd entered into a contract in January 2010 under which the plaintiff was to build for Aces Venture a 300-metre length of fence on the site of the Pacific Marine Industrial Zone project in the north coast area of Madang Province.

2. The plaintiff says that Aces Venture was to provide the steel posts and other building materials and an excavator to dig the trench for the cement brick foundation and the plaintiff was to provide labour and erect the fence. The contract was formed by oral agreement between the plaintiff and Aces Venture's manager Ernest Dor. The agreement was that the plaintiff would be paid K6.00 for each metre of fence built plus an hourly rate of K275.00 for labour. The plaintiff says that Aces Venture failed to provide the excavator but he commenced work anyway, engaging local men to dig the trench with manual labour. It was back-breaking work but after working for eight hours a day for 12 days they managed to complete 162 metres only to be interrupted by Aces Venture who suddenly told him to stop and took over the remaining 138 metres, thus repudiating the contract. Aces Venture paid the plaintiff the agreed sum of K6.00 per metre but refused to pay the alleged hourly rate, so the plaintiff commenced proceedings against Aces Venture and Mr Dor claiming damages for breach of contract. Three categories of damages are claimed:

(1) the unpaid hourly payment of K275.00 per hour x 8 hours per day x 12 days = K26,400.00;

(2) loss of income for the part of the fence that the plaintiff was prevented from completing: K6.00 x 138 metres = K828.00; and

(3) general damages, K20,000.00,

being a total claim of K47,228.00.

(1)	UNPAID HOURLY PAYMENT

3. Mr Meten for Aces Venture submitted that the plaintiff should be awarded nothing as there is no evidence of any agreement to pay an hourly rate. The agreement was to pay the plaintiff by the metre, not by the hour. I agree that it seems an unusual arrangement to pay by both the metre and the hour as it provides an incentive to protract the building of the fence but the problem for the defendants is that they did not defend the claim in the first instance and default judgment was entered against Aces Venture. Once default judgment is entered it is not appropriate to revisit the question of liability unless a cursory examination of the facts and cause of action pleaded in the statement of claim reveals that they do not make sense or would make an assessment of damages a futile exercise (William Mel v Coleman Pakalia (2006) SC790). I consider that the facts and the cause of action have been pleaded with sufficient clarity so it is not appropriate to revisit the question of liability. That means the plaintiff's version of events, including the claim that the contract provided for payment by the hour as well as by the metre, is regarded as proven.

4. I reject Mr Meten's submission that there is no evidence of the agreement as the plaintiff has deposed in an affidavit admitted into evidence that he was engaged by Aces Venture at the hourly rate of K275.00 in addition to payment by the metre. 5. If one side of a case presents evidence on a disputed fact and the opposing side presents no evidence to contradict it the court is obliged to make a finding of fact that is supported by that evidence unless the evidence is so incredible that it would not be reasonable to accept it (Re Fisherman's Island [1979] PNGLR 202, Rabaul Shipping Limited v Peter Aisi (2006) N3173). The evidence about the hourly rate is not that incredible (and is probably explained by the breakdown of the excavator) so I accept it and find as a fact that it formed part of the contract and that the plaintiff and his men worked on the project for eight hours a day for 12 days. The amount which was not paid and for which Aces Venture is liable is K275.00 per hour x 8 hours per day x 12 days = K26,400.00. As this is an amount due for work done under the contract it is actually an award of debt rather than damages.

(2)	LOSS OF INCOME

6. Mr Meten submits that the plaintiff should be awarded nothing in respect of the 138 metres of fence that he did not build as this would amount to him being paid for doing nothing. With respect that argument overlooks the purpose of an award of damages for breach of contract, which is to put the innocent party in the same position he would have been in if the contract had been performed according to its terms (PNG Aviation Services Pty Ltd v Geob Karri (2009) SC1002). If this contract had been performed by both parties the plaintiff would have earned 138 metres x K6.00 per metre = K828.00. He would have also if he kept working at the same rate he had been working previously earned another K22,488.80 in respect of the hourly rate, however he has made no claim for that. It is the sum of K828.00 that he is seeking. It is a reasonable claim, which can be described as damages for lost opportunity to earn income due to the unlawful repudiation of the contract, however it needs to be discounted by 50% to take account of costs and disbursements including wages to workers, so the amount awarded is K414.00.

(3)	GENERAL DAMAGES

7. Mr Meten submits that the claim for general damages is vague and unsupported by the evidence. I agree to a large extent with his submission but I consider that there is sufficient evidence in the plaintiff's affidavit, and again there is no evidence to controvert the natural inference arising from it, that the plaintiff suffered distress, inconvenience and frustration. The plaintiff is a local landowner and it is reasonably to be expected that it came as a shock and was a serious disruption to his reasonable expectations when the fencing contract was abruptly terminated. He is entitled to be compensated for that separate and discrete 'injury' (Rodao Holdings Ltd v Sogeram Development Corporation Ltd WS No 521 of 2001, 23.02.07). How much compensation is he entitled to? There is very little to go on. There is no evidence to prove that he suffered high blood pressure or other health problems or to show the nature and extent of his pain and suffering. So only a modest, nominal figure is justified. I award K2,000.00.

SUMMARY OF DEBT AND DAMAGES ASSESSED

1 Unpaid hourly payment: K26,400.00; plus
2 Loss of income: K414.00
3 General damages: K2,000.00

being a total amount of K28,814.00.

INTEREST

8. Interest will be awarded at the rate of 8 per cent per annum on the total amount of damages under Section 1(1) of the Judicial Proceedings (Interest on Debts and Damages) Act Chapter No 52. Interest is calculated from the date of filing of the writ, 9 September 2011, (as the precise date on which the cause of action accrued is not clear from the evidence) to the date of this judgment, a period of 1.4 years, by applying the following formula:

•	D x I x N = A

Where:

•	D is the amount of debt and damages assessed;
•	I is the rate of interest per annum;
•	N is the appropriate period in numbers of years;
•	A is the amount of interest.

Thus K28,814.00 x 0.08 x 1.4 = K3,227.17.

COSTS

9. The general rule is that costs follow the event, ie the successful party has its costs paid for by the losing party on a party-to-party basis. In this case the plaintiff has succeeded with the bulk of his claim and it is appropriate that he get his costs.

ORDER

10. The Court orders that:

(1)	the second defendant pay to the plaintiff debt and damages of K28,814.00 plus interest of K3,227.17, being a total judgment sum of K32,041.17; and

(2)	the second defendant shall pay the plaintiff's costs on a party-party basis which shall if not agreed be taxed.

Judgment accordingly.
__________________________________
Akuani Lawyers: Lawyers for the plaintiff
Meten Lawyers: Lawyers for the defendant