N5594

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO 1059 OF 2007

CHRISTOPHER S KONDAI
Plaintiff

V

LON SIKE, MANAGING DIRECTOR, PORT MORESBY INSTITUTE OF MATRICULATION STUDIES
First Defendant

PORT MORESBY INSTITUTE OF MATRICULATION STUDIES
Second Defendant

Madang: Cannings J
2014: 14 February, 4 April, 9 May

DAMAGES – breach of contract – assessment of damages following entry of default judgment – failure by employer to pay final entitlements upon resignation of employee – whether plaintiff entitled to general damages for hardship and distress – whether plaintiff entitled to exemplary damages.

The plaintiff obtained default judgment against the defendants. The second defendant is his former employer, and the first defendant was sued in his capacity as manager of the second defendant. The plaintiff established a cause of action in breach of contract, arising from the defendants' failure to pay all contractual entitlements due to him upon his resignation. At this trial on assessment of damages the plaintiff claimed three categories of damages: (1) special damages of K71,587.22, (2) general damages of K10,000.00 and (3) exemplary damages of K5,000.00, being a total claim of K86,587.22. 

Held:

(1)	As for special damages: (a) the claim for unpaid annual leave pay of K2,150.00 was upheld, (b) the claim for unpaid long service leave pay of K1,242.22 was upheld, (c) the claim for unpaid Nasfund contribution of K2,795.00 was upheld, (d) the claim for unpaid accommodation allowance of K65,400.00 was refused; the total amount awarded was K6,187.22.

(2)	The claim for general damages was excessive. K3,000.00 was awarded.

(3)	The conduct of the defendants did not warrant an award of exemplary damages. Nothing was awarded.

(4)	The total award of damages was K9,187.22. In addition, interest of K4,086.48 was awarded. The total judgment sum was K13,273.70. The parties were ordered to bear their own costs.

Cases cited

The following cases are cited in the judgment:

Abel Tomba v The State (1997) SC518
Alex Latham & Kathleen Latham v Henry Peni (1990) N1463
George Kala v Joseph Kupo (2009) N3677
George Podas v Divine Word University (2011) N4395
Goma & 703 Ors v Protect Security (2013) SC1300
James Koimo v The State [1995] PNGLR 535
Kenneth Bromley v Finance Pacific Ltd (2001) N2097
Mairi Hoi v Arthur Somare (2012) N4749

ASSESSMENT OF DAMAGES

This was a trial on assessment of damages.

Counsel

B B Wak, for the plaintiff
D F Wa'au, for the defendants

9th May, 2014 

1. CANNINGS J: The plaintiff Christopher S Kondai obtained default judgment against the defendants. The second defendant, Port Moresby Institute of Matriculation Studies, is his former employer, and the first defendant Lon Sike was sued in his capacity as manager of the second defendant.

2. The plaintiff was employed as a teacher at the second defendant's Madang campus from March 2003 to September 2006. By the entry of default judgment he established a cause of action in breach of the contract of employment, arising from the defendants' failure to pay all contractual entitlements due to him upon his resignation.

3. At this trial on assessment of damages the plaintiff claimed three categories of damages: (1) special damages of K71,587.22, (2) general damages of K10,000.00 and (3) exemplary damages of K5,000.00, being a total claim of K86,587.22. Mr Wa'au for the defendants submitted that all claims were unsupported by any credible evidence, that the plaintiff had not proven his losses and that he should be awarded nothing.

1	SPECIAL DAMAGES

4. There are four components to this claim. I am satisfied that each component has been adequately pleaded in the statement of claim and should therefore be assessed on its merits.

(a)	Unpaid annual leave pay of K2,150.00. The plaintiff has proven that he was not paid salary in respect of the periods that he was entitled to recreation leave. K2,150.00 is awarded.

(b)	Unpaid long service leave pay of K1,242.22. The plaintiff has proven that he was not paid any money in lieu of furlough upon the expiry of his period of employment. K1,242.22 is awarded.

(c)	Unpaid Nasfund contribution (employer's share) of K2,795.00. The defendants conceded that during the period of the plaintiff's employment, no amounts in respect of either the employee's or the employer's contributions were remitted to any authorised superannuation fund, such as Nasfund. Their failure to make any deductions from the planitff's salary does not, in my view, excuse them from their obligation under the Superannuation (General Provisions) Act 2000 to remit the employer's contribution. I consider that this is a proper claim, particularly in light of the recent decision of the Supreme Court in Goma & 703 Ors v Protect Security (2013) SC1300, which supports the proposition that a person has a cause of action against a former employer who has not complied with a statutory obligation to remit employer contributions to an authorised superannuation fund. K2,795.00 is awarded.
 
(d)	Unpaid accommodation allowance of K65,400.00. I accept the evidence of the defendants that provision of accommodation was not a term of the oral contract of employment. This is not a proper claim. Nothing is awarded.

The total amount of special damages awarded is K2,150.00 + K1,242.22 + K2,795.00 = K6,187.22.

2	GENERAL DAMAGES

5. The plaintiff claims K10,000.00 on account of inconvenience, frustration, distress and anxiety caused by the conduct of the defendants. I agree that, in principle, this is a proper claim, for the reasons I set out in George Podas v Divine Word University (2011) N4395, which are consistent with those of Makail J in Mairi Hoi v Arthur Somare (2012) N4749.

6. However the amount claimed is excessive. The plaintiff should have taken more active steps towards reaching an amicable resolution with his former employer, and he has not diligently prosecuted the matter since obtaining default judgment. Nevertheless I am satisfied that the defendants' continuing breach of contract and their failure to take the court proceedings seriously inevitably caused unnecessary distress. K3,000.00 is awarded.

3 	EXEMPLARY DAMAGES

7. Mr Wak submitted that the plaintiff should be awarded K5,000.00 exemplary damages due to the defendants' failure to pay anything to the plaintiff despite several requests and follow-ups.

8. Exemplary damages are a special category of damages which are awarded for the purpose, not of compensating a plaintiff, but of punishing a defendant – the wrongdoer – for a particularly egregious or wilfully wrongful act. Exemplary damages are intended to provide a deterrent against similar conduct by others (Alex Latham & Kathleen Latham v Henry Peni (1990) N1463; James Koimo v The State [1995] PNGLR 535; Abel Tomba v The State (1997) SC518; Kenneth Bromley v Finance Pacific Ltd (2001) N2097; George Kala v Joseph Kupo (2009) N3677).

9. The conduct of the defendants was not so unreasonable or unconscionable as to warrant an award of exemplary damages. Nothing is awarded.

SUMMARY OF DAMAGES AWARDED

Special damages: K6,187.22
General damages: K3,000.00
Exemplary damages: 0

Total = K9,187.22.

INTEREST

10. 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 will be calculated in respect of the period from the date of entry of default judgment, 16 October 2008, to the date of this judgment, 9 May 2014, a period of 5.56 years, by applying the formula D x I x N = A, where:

•	D is the amount of 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 K9,187.22 x 0.08 x 5.56 = K4,086.48.

COSTS

11. 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 there is no clear winner. The plaintiff has on the one hand succeeded in obtaining an award of damages but on the other hand the defendants have succeeded in convincing the court that only 10.61% (K9,187.22 out of K86,587.22) of his claim had merit; 89.39% of the claim was without merit. The defendants have succeeded in showing that the bulk of the claim was misconceived. The parties will bear their own costs.

ORDER

(1)	The defendants shall pay to the plaintiff damages of K9,187.22 plus interest of K4,086.48, being a total judgment sum of K13,273.70.

(2)	The parties shall bear their own costs.

Judgment accordingly.
____________________________________________________________
Kunai & Co Lawyers: Lawyers for the Plaintiff		
Meten Lawyers: Lawyers for the Defendants