N8733

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 1263 OF 2017

BETWEEN:
HAVERU BUILDING & MAINTENANCE LIMITED
Plaintiff

AND:
DESMOND ANTAKITE Sued as the Council President of Kainantu Local Level Government Council
First Defendant

AND:
KAINANTU LOCAL LEVEL GOVERNMENT COUNCIL
Second Defendant

Lae: Dowa AJ
2020:  04th September & 12th November

CONTRACT – breach of contract by defendants by failing to make payments for services rendered to the defendants by the plaintiff – assessment of damages after entry of default judgment- the law on the effect of default judgment – discussion of - no evidence that Plaintiff is an incorporated entity as a company – plaintiff had no capacity to sue – default judgment set aside -  plaintiff given 21 days to serve amended writ of summons on the defendants

Cases Cited:

Ace Guard Dog Security Services Ltd v Lailai (2004) SC757
Albert v Aine (2019) N7772.
Coecon Ltd (Receiver Manager) v The National Fisheries Authority of PNG (2002) N2182,
 PNGBC v Jeff Tole (2002) SC 694

Counsel:

T. Makale, for the Plaintiff
M. Karu, for the Defendant
RULING

12th November, 2020

1.	DOWA AJ:	   This is a ruling on assessment of damages.  Default Judgment was entered on 7th June 2019. 

2.	The Plaintiff pleads it is an incorporated company and carries on business as a builder.

3.	It alleges it was engaged by the First Defendant to build a Village Court House and Ward Council office at Kamano No.2, Kainantu District, Eastern Highlands Province. 

4.	The building contract was made orally in part and partly in writing.  The contracted sum was for K60,000.00.  It was agreed that the Defendants would provide materials and the Plaintiffs were to provide labour for the construction.

5.	The Plaintiff drafted a building contract for the parties to execute but it was not signed by the parties.

6.	Between May and July 2016, the two buildings were constructed and an invoice for K60,000.00 was tendered for payment.

7.	Dispute repeated requests, the Defendants failed to settle.  The Plaintiff alleges, it incurred a further K13,000.00 in chasing up the payment of the invoice.

8.	The Plaintiff instituted these proceedings to recover the debt. On 7th June 2019 default Judgment was entered for the Plaintiff in damages to be assessed.

	Issues for Consideration

9.	The issues for consideration are:

a)	What is the effect of default judgment, and
b)	What damages if any is to be awarded.

10.	The law on the effect of default judgment is settled in this jurisdiction.  A trial Judge must satisfy himself with the principles summarised in the cases; Coecon Ltd (Receiver Manager) v The National Fisheries Authority of PNG (2002) N2182, PNGBC v Jeff Tole (2002) SC 694, and Albert v Aine (2019) N7772.  In Albert v Aine, Kandakasi DCJ at paragraphs 7 & 8 of his Judgment said:
 “7. 	Fourthly, the law on the effect of the entry of default judgment is clear. In Coecon Limited (Receiver/Manager Appointed) v. The National Fisheries Authority of Papua New Guinea (2002) N2182, I summarised the principles that govern an assessment of damages after the entry of default judgment in the following terms:
“A survey of the authorities on assessment of damages after entry of judgement on liability mainly in default of a defendant’s defence, clearly show the following:
1.	The judgement resolves all questions of liability in respect of the matters pleaded in the statement of claim.
2.	Any matter that has not been pleaded but 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 judgement 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.”
8. 	The Supreme Court in PNGBC v. Jeff Tole (2002) SC694 adopted and applied this summation of the principles. Later, the decision of the Supreme Court in William Mel v. Coleman Pakalia (2005) SC790, did the same. Additionally, however, the Court in that case went further by noting several decisions of the National Court in which the principles were adopted and applied. It then added the following:
“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.” 
11.	I adopt and apply the above principles to ensure that default judgment is in order.

12.	I noted from the evidence filed by the directors of the Plaintiff that Haveru Building and Maintenance is only a business name. The evidence shows one Nassame Nonofa as the owner of the business name HBM Haveru Building and Maintenance.  

13.	On the other hand, there is no evidence that the Plaintiff is an incorporated entity as a company. In my view, the Plaintiff did not have legal capacity when it instituted the proceedings.

14.	The law on legal capacity is settled in this jurisdiction. The case on point is Ace Guard Dog Security Services Ltd v Lailai (2004) SC757. The Supreme Court said at page 7 of the judgment and I quote:
“For these reasons, the Appellant is not an incorporated company and therefore without any legal personality. The law in this regard is clear. Counsel for the Respondent submits that consequence of the non-existence of the Appellant is fatal to the appeal. He relied on passage from Halsbury, 4th Edition, Vol 37, para 241:
"A corporation, whether incorporated by charter, statute or registration, or a company, whether incorporated by special statute or registered under the Companies Act, must sue or be sued in its corporate title or registered name,, as the case may be. A corporation which has ceased to have any juristic existence cannot sue or be sued"
Counsel for the Respondents further rely upon the proposition that under its inherent jurisdiction a superior court of record has power to order the stay of proceedings in circumstances where the proceedings are instituted or continued without lawful authority by the plaintiff and in particular where the action was brought in the name of a non-existent company (Larzard Bros & Co v Midland Bank Limited [1933] AC 289)
We find that the Appellant is not incorporated as a company and therefore has no legal standing. It is therefore incompetent to institute the appeal.”
15.	I consider the default judgment entered on 7th June 2019 was based on the premise that the Plaintiff had legal capacity to sue. This is not the case. Defence counsel submitted that I dismiss the proceedings for this reason. I am of the view that it would be improper to proceed with the assessment based on a default judgment obtained by a party who lacked legal capacity to sue.

16.	I am inclined to revisit liability. I will therefore set aside the default judgment entered on 7th June 2019.

17.	What orders should I make.  I noted the Plaintiff’s claim is genuine.  The Default Judgment is set aside only because of technical and competency reasons.  On the other hand, the First Defendant conceded that the agreement was for K30,000.00 and the contract was given to Nasame Nonofa, the owner of HBM Haveru Building and Maintenance. If I dismiss the proceedings on this technical and competency ground it will prejudice the Plaintiff who has actually done the work at the request of the Defendants.  I am aware the Plaintiff did the case himself without the help of a lawyer. Secondly, the Defendant failed to raise this matter earlier. The Defendants have also defaulted in filing their Defence in time.

18.	In the circumstances, I will make appropriate orders to do justice in the circumstances.

19.	The orders of the court are:
	 
1.	Default Judgment entered 7th June 2019 is set aside.
2.	Leave is given to the Plaintiff to amend the Writ of Summons by adding Sassame Nonofa trading as HBM Haveru Building and Maintenance.
3.	The Plaintiff shall file and serve an amended writ of Summons on the Defendants at care of its lawyers within 21 days.
4.	The Defendants shall file their Defence within 14 days after receipt of the amended Writ of Summons.
5.	Cost shall be in the cause.
6.	Time be abridged.

________________________________________________________________
In Person for the Plaintiff
Daniels & Associate Lawyers:	Lawyer for the Defendants