N9834

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 1426 OF 2014

BETWEEN:
FRANCE GERRY
First Plaintiff

AND:
FRANCE GEE NUM CONTRACTORS
Second Plaintiff

AND:
HON. LABI AMAIU, MP, in his capacity as Member for Port Moresby North-East and as Chairman of Joint District Priority & Budget Planning Committee
First Defendant

AND:
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Second Defendant

Waigani:  Makail, J
2022:  12th & 15th August

LIABILITY – Breach of contract – Contract of services – Construction of concrete footpath or sideway – Non-payment for services rendered – Proof of – Privity of contract – Liability of State – State not privy to contract – Liability not established against State – Action dismissed against State – Default by contracting party – Liability established.

ASSESSMENT OF DAMAGES – Damages for breach of contract – Value of contract – Damages for value of contract awarded – Claim for loss of business refused – Nominal damages awarded for frustration and hardship – Special damages for travel expenses, legal costs and miscellaneous costs refused – Lack of pleadings – Lack of proof.

Cases Cited:

Nil

Counsel:

Mr. R. Awalua, for the Plaintiffs
No appearance, for the Defendants

JUDGMENT ON LIABILITY AND ASSESSMENT OF DAMAGES

15th August, 2022

1.	MAKAIL, J:  This is an ex parte trial on liability and assessment of damages because despite the plaintiffs serving the defendants a notice of trial and written submissions on 29th July 2022, they failed to turn up.

1.	Introduction

2.	The cause of action is based on breach of contract.   The plaintiffs alleged that they entered into a contract of services with the predecessor of the first defendant on 10th January 2012 to construct a concrete footpath or sidewalk from Pondorosa to PNG Power Station at 5 Mile at their own costs.

3.	In consideration for the services, the defendants will pay a sum of K80,000.00 when the contract is completed.  The plaintiffs further alleged that they performed the contract, but the defendants failed to pay the agreed sum.

2.	Liability 

4.	The first defendant filed a defence on 24th June 2015 neither admitting nor denying breach of contract.  It is not clear if the second defendant filed its defence.  Nonetheless, as they did not turn up for trial to reinforce the first defendant’s defence, it will be disregarded.

5.	Mr France Gerry and Mr Steven Mondo’s assertions in their respective affidavits in relation to the plaintiffs entering into a contract of services with the first defendant on 10th January 2012 to construct a concrete footpath or sidewalk from Pondorosa to PNG Power Station at 5 Mile at the plaintiffs’ own costs is accepted as unchallenged. 

6.	It is also accepted as unchallenged that in consideration for the services, the defendants will pay a sum of K80,000.00 when the contract is completed.  It is further accepted as unchallenged that the plaintiffs performed the contract, but the defendants failed to pay the agreed sum.

7.	However, as the contract does not state that the second defendant is one of the contracting parties, it is not privy to the contract and will not be liable for its breach.  It will be the first defendant because it was the party who entered into the contract.  Judgment on liability is entered against the first defendant.  No liability has been established against the second defendant and the action against it is dismissed.

3.	Quantum

8.	In the prayer for relief in the statement of claim, the plaintiff sought:

(a)	Liquidated damages in the sum of K80,000.00.
(b)	General damages.
(c)	Exemplary damages against the first defendant.
(d)	Interest at 8% per annum.
(e)	Legal costs.

4.	Liquidated damages

9.	The sum of K80,000.00represents the value of the contract and sum agreed between the plaintiffs and first defendant as consideration for the services rendered by the plaintiffs.

10.	It is accepted that Mr Gerry submitted an invoice in the sum of K80,000.00 dated 26th February 2012 to the office of the first defendant for settlement but he or his predecessor has not settled it to date.  Given the non-payment, this sum is awarded.

11.	The plaintiffs sought Value Added Tax (VAT) in the sum of K8,000.00 to be added to this sum but there is no evidence to show that the plaintiffs are registered VAT service providers.  It is refused.

5.	Loss of business 

12.	The plaintiffs sought damages for loss of business in the sum of K8,000.00.  This sum represents 10% of the contract value.  It will be refused for three reasons.  First, the plaintiffs did not plead it in the statement of claim.  For this reason, the defendants (not present at trial in any case) and the Court were not put on notice that the plaintiffs will be seeking damages for loss of business.

13.	Secondly, Mr Gerry and Mr Mondo gave no evidence in relation to loss of business.  Thirdly and finally, relying on 10% of the contract value is not an accurate formular to assess loss of profit.  No award will be made.  It is refused.

6.	General damages for frustration and hardship 

14.	A sum of K15,000.00 is sought to compensate the plaintiffs for frustration and hardship.  An award of this type of damages is discretionary and awarded subject to proof.  Evidence of being unable to pay their expenses, for example children’s school fees, falling ill or mentally distressed supported by medical or psychiatric report may yield a higher award.  Mr Gerry and Mr Mondo failed to outline this aspect in their respective affidavits.

15.	However, they mentioned the delay in bringing this matter to trial and conclusion due to the defendants’ lack of cooperation and procrastination.  This assertion is accepted and the time going in and out of Court will be considered as a factor operating in their favour and a nominal award will be made.  K5,000.00 is considered reasonable.  This sum is awarded.

7.	Special damages

16.	The plaintiffs sought special damages for travel expenses, legal costs, and miscellaneous costs.  It is alleged that travel expenses were incurred for travelling between 4 Mile and Gordons, Waigani Court House, and Lawyers offices while legal costs were for payment of lawyers’ fees and miscellaneous costs represented costs of photocopying, typing, printing, and binding of court documents.  As total sum of K21,000.00 is sought.

17.	The first consideration is special damages must be strictly pleaded and proved.  Secondly, it must fall within the head of special damages.  Otherwise, it will not be sustained.  In this case, none of the special damages were pleaded in the statement of claim and the defendants (not present at trial in any case) and the Court were not put on notice that the plaintiffs will be seeking special damages.

18.	Secondly, there is no evidence of receipts of payments to verify that the plaintiffs spent that much of money for travel expenses, legal costs, and miscellaneous costs.  Thirdly, legal costs and miscellaneous costs are recoverable in the event that costs of the proceeding is awarded in favour of the plaintiffs.  The plaintiffs will be entitled to file a bill of costs where costs of photocopying, typing, printing, and binding of court documents may be recovered under “Disbursement” after submission to and taxation by the taxing officer under Order 22 of the National Court Rules.  The sum allowed by the taxing officer is the sum due for settlement by the first defendant.

19.	For these reasons, there will be no sum awarded for special damages.  It is refused.

8.	Exemplary damages

20.	The plaintiffs did not press for exemplary damages at trial and in their submissions.  It is disregarded.

9.	Interest 

21.	As liability has not been established against the second defendant, there will be an award of interest at rate of 8% per annum on the total judgment sum of K85,000.00 (K80,000.00 + K5,000.00) from the date of filing of writ to the date of judgment on liability and assessment of damages pursuant to Section 4 of the Judicial Proceedings (Interest on Debts and Damages) Act, 2015.

10.	Legal Costs 

22.	As the successful party, the plaintiff shall their costs of the proceeding, to be paid by the first defendant if it is not agreed.

11.	Order

23.	There shall be a judgment for the plaintiffs in the following terms:

1.	Judgment on liability is entered against the first defendant.

2.	Liability against the second defendant has not been established and the action against the second defendant is dismissed.

3.	Judgment is entered against the first defendant in the sum of K80,000.00 as damages for breach of contract.

4.	Judgment is entered against the first defendant in the sum of K5,000.00 as general damages for frustration and hardship.

5.	Interest is awarded at rate of 8% per annum on the total judgment sum of K85,000.00 (K80,000.00+ K5,000.00) from the date of filing of writ to the date of judgment on liability and assessment of damages pursuant to Section 4 of the Judicial Proceedings (Interest on Debts and Damages) Act, 2015.

6.	The first defendant shall pay the costs of the proceeding, to be taxed, if not agreed.
________________________________________________________________
Awalua & Associates Lawyers:  Lawyers for the Plaintiffs
Solicitor General:  Lawyers for the Defendants