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Koa v Kula Oil Palm Ltd (trading as Higaturu Oil Palms) [2021] PGNC 551; N9377 (4 August 2021)

N9377

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]



W.S. NO. 1433 OF 2006

LANCELOT KOA
Plaintiff


-V-

KULA OIL PALM LIMITED t/a HIGATURU OIL PALMS
First Defendant


USG PRODUCTS (PNG) LIMITED
Second Defendant


Waigani: Kariko, J
2021: 19th May & 4th August


DAMAGES – assessment of – breach of cartage contract – loss of truck – loss of income – loss of property mortgaged to fund purchase of truck – general damages for stress and anxiety - special damages for refund of out-of-pocket expenses


Cases Cited:


Enga Enterprises Pty Ltd v Danny Porakali (1995) N1359
Kinsim Buisness Group Inc. v Joseph Hompwafi [1997] PNGLR 111
Mappa v PNG Electricity Commission (1995) PNGLR 170
Paraia v The State (1995) N1343
PNGBC v Jeff Tole (2002) SC694
William Mel v Coleman Pakalia and Others (2005) SC790


Legislation:


Judicial Proceedings (Interest on Debts and Damages) Act, Chapter 52


Counsel:


Mr G Konjib, for the Plaintiff
Ms E Noki, for the first Defendant


JUDGMENT


4th August, 2021


  1. KARIKO, J: A trial on assessment of damages followed my finding of liability on 25th October 2019 against the first defendant (Higaturu) for breach of contract.
  2. Simply described, the contract was for Higaturu to use the plaintiff’s new Nissan UD truck to carry oil palm fruit for a fee payable to the plaintiff. Upon purchase of the truck, the parties entered into an agreement (unsigned) for 2 years commencing 2nd January 1998 for the use of the truck to carry the fruit. That agreement was replaced by a new contract for a term of three years commencing 1st February 2000. About a month into the contract, the engine seized, and the truck was unable to be repaired and used again. Under the contract. Higaturu was obliged to service and maintain the truck in good working condition and good state of repair. I found Higaturu breached those obligations and deemed it liable for breach of contract.
  3. In the Statement of Claim, the plaintiff seeks as relief the following damages plus interest and costs:

EVIDENCE


  1. In support of his claim for damages the plaintiffs produced his own affidavit filed on 16th November 2020, while Higaturu did not present any evidence in response.
  2. The plaintiff deposes that many of the documentary evidence that would have supported his claim for damages were destroyed in the extensive flooding caused in the Oro Province by Cyclone Guba. The plaintiff says the Cyclone occurred in 2001 but I am aware the correct year is 2007, which was some six years after he filed this court action.
  3. The plaintiff states that he purchased the vehicle from Boroko Motors for K151,903.00 through a lease/purchase arrangement financed by Nambawan Finance. The loan amount was K113,000.00, and he was required to settle K140,507.02 (inclusive of interest) for the loan. He completed the required payment.
  4. He also says that in relation to purchasing the truck, he paid:
  5. After he entered into the 1998 agreement with Higaturu, he operated and managed the truck in carrying oil palm for Higaturu and earned between K12,000.00 and K15,000.00 a month. This occurred from February to June 1998, before the operation and management of the truck changed to Higaturu when the plaintiff had still not paid his equity share to Boroko Motors.
  6. He had paid K15,612.02 on 3rd March 1998, and explained that he paid the remaining K18,000.00 by a Papua New Guines Banking Corporation (PNGBC) bank cheque. A copy of the cheque was produced and shows its date as 21st May 1999.
  7. The plaintiff states that after Higaturu took possession of the truck and operated it, he only received income of K300 – K700 a month which was paid directly to a bank account. Although this amount was much lower than the revenue he had received when the truck was in his care, he did not ask Higaturu for details of this income, particularly how this was calculated.
  8. As noted earlier, the truck broke down after just one month into the 3 years term.
  9. The plaintiff explained that the K18,000.00 bank cheque mentioned earlier was facilitated by an overdraft of K40,000.00 allowed by the bank. The annual effective rate of interest for the facility was charged on the outstanding balance of the overdraft. As security, the plaintiff’s property at Allotment 16 Section 4 Popondetta was mortgaged to the PNGBC. The mortgage was registered on 18th December 1998.
  10. According to the plaintiff, after the truck seized functioning and he was unable to earn further income from use of the truck, he was unable to meet his obligations to repay PNGBC in respect of the overdraft. This resulted in the bank exercising its rights as mortgagor to sell the plaintiff’s property for K93,000.00 and recover the money owed to it by the plaintiff.

CONSIDERATION

  1. I now consider what damages should be paid by Higaturu.
  2. The respective submissions of the parties have been considered.
  3. I bear in mind the principles in assessment of damages endorsed by the Supreme Court in the case of William Mel v Coleman Pakalia and Others (2005) SC790, which include the following:
  4. I address the different heads of damages claimed.

Loss of Vehicle


  1. It is generally agreed that the plaintiff is entitled to damages for the loss of his truck calculated as follows - purchase price of the truck less (depreciation x age of the truck).
  2. It is also agreed that the truck was aged 3 years when the engine seized and it stopped running.
  3. Both parties have confirmed with the Internal Revenue Commission that the applicable depreciation rate for vehicles is 20% using the Straight-Line Method.
  4. The only dispute in respect of this claimed relief is the purchase price of the truck. The plaintiff states that he expended K179, 974.02, but the evidence shows the purchase price was quoted at K151, 903.00. I accept the latter figure. The plaintiff has wrongly included associated costs in the purchase of the truck.
  5. Under this heading therefore, I award K151, 903.00 less (K151, 903.00 x 20% x 3 years) = K151, 903.00 less K91, 141.80 = K60, 761.20.

Loss of income


  1. In his submissions, the plaintiff claims loss of income in respect of three periods:
  2. The plaintiff contends that for these periods he should have received the type of income he experienced in the earlier months when he was managing the truck, which was an average of K12,500 per month. Take away the average K350.00 he was actually paid by Higaturu, he claims the difference of K12,150.00 per month as owing to him for the first period. For the other periods, he claims K12,500 per month.
  3. The amounts he claims are:
  4. The first period relates to the period the truck was managed by Higaturu pursuant to the first agreement, while the second period refers to the term of three years under the second agreement. In respect of the third period, the plaintiff assumes that the contract would have been renewed for a further 3 years.
  5. The difficulty with these claims is that there are no business records to confirm details of the various figures relied upon by the plaintiff, namely:
  6. The owner of a small business operated by an ordinary Papua New Guinean is required to keep records of their business including appropriate tax returns and produce them in evidence to support a claim for loss of income or profit from the business; see Mappa v PNG Electricity Commission (1995) PNGLR 170.
  7. The unfortunate situation in this case is that any records the plaintiff possessed were destroyed by the floods caused by Cyclone Guba in 2007, while the records maintained by Higaturu were destroyed by fire in 2002.
  8. However, I bear in mind that where damages cannot be assessed with certainty, the wrongdoer is not relieved of the necessity of paying damages and the Court must do the best it can; Paraia v The State (1995) N1343.
  9. What is undisputed is that during the first period, the loan by Nambawan Finance was settled. It has not been an issue in this case that the plaintiff was not the owner of the truck at the time it permanently broke down. The required monthly payment was K5,854.49 over 24 months which coincided with the term of the first contract. Apart from this monthly payment, Higaturu was entitled to deduct costs for wages for the driver and crew, and any service costs. Whatever remained as balance of the revenue earned by the truck was paid to the plaintiff. That he says, was an average K350.00 per month. The plaintiff did not question Higaturu as to how the revenue was treated, and I think it safe to conclude that the plaintiff was aware of the details, and he was content with it.
  10. In the circumstances, I do not award any damages for loss of income for the period July 1998 to January 2000. In any case, I reject the claim for the first period because it is not pleaded; Unless that is done, no evidence of matters not pleaded can be allowed or relief granted: PNGBC v Jeff Tole (2002) SC694.
  11. As to the period under the second contract, it is noted that the truck seized forever in the first month. Had the income continued to be the same for the next three years, the K5,854.49 that was previously paid to Nambawan Finance would have been payable to the plaintiff together with the K350.00, each month. For the 3 years (2000 -2003), the expected income based on previous years’ earnings due to the plaintiff would have been (K5,854.49 + K350.00) x 36 months = K6,204.49 x 36 = K223,361.64.
  12. However, there is no evidence that the plaintiff would have continued to receive the same sort of income. It is possible, prices could have dropped for oil palm. The plaintiff has referred to statements from two other truck owners regarding oil pam fruit cartage rates in the ensuing years, but I disregard this evidence as hearsay. The income that would have been received by the plaintiff would obviously have been subject to tax. There is also the chance that the truck could have stopped operating for reasons, not the fault of Higaturu. Another possibility is that the contract could have terminated early for breach of contract not caused by Higaturu. Given these factors, I discount the amount of K223,361.64 as future income by 50%. I therefore award K111,685.82 for loss of future income for the three years 2000 - 2002.
  13. In relation to the claim for loss of future income for the years 2003 – 2005, I award no damages. There is no guarantee or certainty that the contract would have been renewed past 2003. The claim is too remote.

Loss of property


  1. The plaintiff alleges that Higaturu should compensate him for the sale of his property at Allotment 16 Section 4 Popondetta, through a mortgage sale by PNGBC. He justifies the claim by saying that if he had been properly paid the revenue due to him, he would not have defaulted in his obligations to the bank, and he would not have lost his house.
  2. In my view, this claim is too remote to hold Higaturu liable. The defendant was not a party to the mortgage arrangement and was not aware nor could it have anticipated that the mortgage of the property was necessary to facilitate the purchase of the truck; See Enga Enterprises Pty Ltd v Danny Porakali (1995) N1359 and Kinsim Buisness Group Inc. v Joseph Hompwafi [1997] PNGLR 111.

General damages


  1. General damages are intangible, non-monetary losses that do not have an exact monetary value and include mental anguish and distress.
  2. The plaintiff seeks general damages for frustration, stress and anxiety. While there is no medical evidence in support of this claim, I have no doubt the plaintiff would been adversely affected emotionally and mentally over the last 15 years in pursuing compensation for the loss resulting from the breakdown of his truck. I will award a nominal sum of K3,000.00 under this heading.

Special damages


  1. The plaintiff has also claimed out-of-pocket expenses he incurred in relation to this case. He claims for airfares and accommodation expenses, and his legal fees.
  2. I refuse to award any special damages as this claim is not corroborated by evidence but more importantly, they are matters relevant to the question of legal costs.

Summary


  1. In summary, damages are awarded as follows:

Total - K175,447.02


INTEREST


  1. Taking into account the delay in getting this case finalized and the reasons for that, I exercise my discretion pursuant to the Judicial Proceedings (Interest on Debts and Damages) Act, Ch. 52, and award 8% interest on the judgment sum to be applied from the date of judgment on liability, 25th October 2019.

COSTS


  1. Cost shall follow the event.

ORDER


  1. The Court orders:

Konjib & Associates: Lawyer for the Plaintiff
Bradshaw Lawyers: Lawyer for the First Defendant


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