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Mokono v Water PNG Ltd [2023] PGNC 182; N10354 (15 May 2023)

N10354

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS. NO. 432 OF 2022 (IECMS)

BETWEEN
HENRY JOSEPH MOKONO
Plaintiff

AND
WATER PNG LIMITED
Defendant

Waigani: Kandakasi, DCJ
2023: 17^th April, 15^th May

RES JUDICATA – Relevant principles – there components – cause pleaded and ought to have been pleaded – Cause and matters ought to be pleaded estoppel – same cause of action - Plaintiff claiming loss and damages not included in prior proceedings after almost 1 year after conclusion of earlier proceedings - Cause is res judicata – matter dismissed.

CONTRACT – Balance of contract payment – effect of – penalty- therefore null and void and cannot be enforced - payment made for balance of contract made despite the law against it – Plaintiff re-employed – Plaintiff failed to demonstrate in his pleadings how that is inadequate and needs to be paid more as claimed or at all – No clear nexus between delayed payment and alleged losses and damages claimed – Remote claims – matter dismissed.

Facts

The plaintiff was employed under a written contract dated 6^th March 2017 as the managing director of a State-owned enterprise (SOE) which was due to expire on 4^th March 2021. The SOE merged with another resulting in two different chief executive officers. The Plaintiff was therefore terminated. A settlement agreement in the sum of K2,708, 600.88 being the balance of his contract was reached. Following delays in a payment of the settlement monies the Plaintiff went to court seeking declaratory orders confirming the contract of employment, its termination and settlement and the settlement monies to be paid to him. Those orders were granted, and the payments sought were made. He was subsequently re-employed to a chief executive position by another SOE. Thereafter, the plaintiff filed fresh proceedings claiming damages in terms of various loan defaults, loss of investments and withdrawal from his superannuation funds. These he claimed was due to the delay in payment of the settlement monies. In its defence, inter alia, the defendant claimed the defence of res judicata, lack of proper pleadings and remoteness of damages and moved for a dismissal of the proceedings. The plaintiff claimed his claim is not res judicate and argued against a dismissal of the proceedings.

Held:

1. The common law doctrine of res judicata, with all its components, namely cause estoppel and issue estoppel applies in Papua New Guinea to a cause of action the subject of a prior litigation to all facts and issues pleaded as well as those that should have been pleaded and hence included in the prior proceedings.

Cited and applied: Telikom v. ICCC (2008) SC906; Titi Christian v. Rabbie Namaliu (1996) SC1583 and Telikom v. ICCC (2007) N3144.

Adopted and applied: Port of Melbourne Authority v. Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589.

2. The defence of res judicata applied as the matters claimed in the current proceedings were matters that were closely connected to the same subject matter of contract of employment, its termination, settlement, and delay in payment of the settlement monies and as such they should have been included in the earlier proceedings.
3. The proceedings were therefore dismissed based on res judicata and for lack of proper foundation in the pleadings for a cause of action separate from the earlier proceeding.
   

Cases Cited:
Papua New Guinean Cases

Telikom v. ICCC (2008) SC906
Titi Christian v Rabbie Namaliu (1996) SC1583
Telikom v. ICCC (2007) N3144
Central Bank of Papua New Guinea v. Gabriel Tugiau (2009) SC1013
Post Puma Ltd v. Yama Security Services Ltd, (unnumbered judgment delivered on 26/07/01) in SCA No. 80 of 2000
Teio Raka Ila v. Wilson Kamit & Bank of Papua New Guinea (2002) N2291
Papua New Guinea Banking Corporation v. Jeff Tole (2002) SC694

Overseas Cases

Port of Melbourne Authority v. Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589.
Blair v. Curran [1939] HCA 23; (1939) 62 CLR 464.
Henderson v. Henderon (1843) 3 Hare 115 (67 ER, 319).
Yat Tung [1975] UKPC 6; (1975) AC 581.
Greenhalgh v. Mallard (1947) 2 All ER 255.
Brisbane City Council (1979) AC 425

Counsel:

Mr. L. Tangua, for the Plaintiff
Ms. A. Samol, for the Defendant

15^th May, 2023

1. KANDAKASI DCJ: INTRODUCTION: Due to problems associated with the Plaintiff, (Mr. Mokono) not receiving his contract termination pay out in the sum of K2, 708,600.88 he went to Court under OS 561 of 2018 to compel a payment of his entitlements. In November 2021, he succeeded in his claim with an order for a payment of the amounts he claimed. A year later in November 2022, Mr. Mokono issued this proceeding claiming loss and damages caused allegedly by the defendant, Water PNG Limited’s (WPL) failure to have his entitlements paid promptly.
   
2. In its defence, WPL is claiming the common law doctrine of res judicata, (the matter is decided) and is asking for a dismissal of the claim. On the other hand, Mr. Mokono claims he is entitled to bring this claim for reasons not clearly pleaded in his Statement of Claim.
   
3. The issue for me to determine therefore is simply, whether the doctrine of res judicata applies and the matter should therefore be dismissed?
   

Background and relevant facts

4. On 6 March 2017, Mr. Mokono was employed under a contract of employment as managing director of the then NCDC Water & Sewerage Limited, trading as Eda Ranu. It was for a term of four years, expiring on 4^th March 2021.
   
5. The National Executive Council (NEC) decided to merge the then Eda Ranu with Water PNG Limited. That meant one of the two managing directors had to be terminated or made redundant. A decision was made to terminate Mr. Mokono on 13 June 2018 and have him paid out in full the balance of his contract entitlements. His total balance of contract entitlements added to K2, 708, 600.88, which Water PNG agreed to pay. A cheque in full settlement was drawn up and paid over to Mr. Mokono, who had it deposited in his bank account. Subsequently, the new board of Water PNG cancelled the cheque and Mr. Mokono did not receive the settlement funds.
   
6. Despite numerous follow ups and demands, Mr. Mokono was not paid his settlement monies. He therefore filed court proceedings under reference OS 561 of 2018 [First Proceeding] claiming breach of contract and sought several declaratory orders and an order compelling a payment of the settlement monies by way of reliefs. After a trial in November 2021, Makail J determined the proceeding in favour of Mr. Mokono which included an order for a payment of the settlement monies. Water PNG fully satisfied the judgment. Then almost a year after the decision in the First Proceeding and after having received the payments, Mr. Mokono filed this proceeding on 07 November 2022 [Second Proceeding].
   
7. Additionally, there is no dispute between the parties that Mr. Mokono has since been re-appointed to another higher executive level position. This time he was appointed as the managing director of the National Housing Corporation (NHC). There is however no evidence or clarity in the terms and conditions of his new employment.
   
8. In his pleadings in his Second Proceeding, Mr. Mokono pleaded the facts that were the basis for his claim, Makail J’s decision in the First Proceeding and hence the outcome of the First Proceeding. He pleads nothing at all as to why he was not able to include the various heads of damages he is now seeking in his Second Proceeding.
   
9. In its defence WPL amongst others pleads the common law based defence of res judicata, based on the First Proceeding and its outcome.
   
10. Based on the orders and directions of the Court, the parties have settled upon a statement of the relevant facts and issues for resolution. First of the issues to be resolved is whether this proceeding is res judicata. By a notice of motion filed by WPL, this proceeding is sought to be dismissed based on its defence of res judicata. In submissions for Mr. Mokono, learned counsel submitted the issue needs to be tried and not determined by notice of motion.
    

Consideration

11. The doctrine of res judicata, its acceptance and application in PNG is trite law. A good statement of the relevant principles is variously stated. I will allow myself to be guided by the decision of the Supreme Court in Telikom v. ICCC (2008) SC906. There Injia CJ (as he then was) confirmed the adoption of the doctrine in the following terms at [11]:

“The common law doctrine of res judicata is recognized and adopted as part of the underlying law by Constitution, Sch. 2.8. Issue estoppel is an extension of res judicata. At common law, res judicata is a substantive plea and a complete defence to an action and it must be specifically pleaded and tried.”

12. A succinct summary of the basic principles on res judicata is found in The Doctrine of Res Judicata by Spencer Bower and Turner as adopted and applied by the decision of Amet CJ in the seven-men Supreme Court decision in Titi Christian v. Rabbie Namaliu (1996) SC1583. The relevant passage reads:
    

“A final decision pronounced by a judicial tribunal having competent jurisdiction over the cause of matter and over the parties therein, disposes of once for all the matters decided so that they cannot afterwards be raised for re-litigation between the same parties or their privies. The effect of such a decision is two-fold.

13. In other words, an earlier judicial decision in the first place, estops or precludes any party to the relevant decision from disputing against any other party to the same proceeding, in any latter decision, the correctness or otherwise of the earlier decision in law and or in fact. The same issue cannot be raised again between the same parties. The matter stands decided. This principle extends to all matters of law and fact which the judgment, decree or order necessarily established as the legal foundation or justification of the conclusion reached by the court. In the second place, by virtue of the decision, the right or cause of action set up in the suit is extinguished, merging in the judgment which is pronounced. The result is that no further claim may be made upon the same cause of action in any subsequent proceedings between the same parties or their privies.
    
14. In his decision in the Telikom v. ICCC (supra), Injia CJ (as he then was) stated these to mean in summary as follows at [16]:
    

“In summary, in order for the defence of res judicata to succeed, a party relying on the doctrine must show:

1. The parties in both matters are the same;
   
2. The issues in both matters are the same;
   
3. The previous judgment or decision extinguished the foundations of the claim or the right to set up an action. The result is therefore final and conclusive, and it binds every other Court; and
   
4. A Court of competent jurisdiction made the first decision.”
   
15. The appeal to the Supreme Court in Telikom v. ICCC was out of my decision in the National Court reported as Telikom v. ICCC (2007) N3144. At [33] to [38] I discussed and stated the principles on res judicata. Applying those principles, I decided to dismiss Telikom’s proceedings because I found the defence of res judicata applied. The relevant facts in the case clearly provided the basis for the application of the defence.
    
16. Relevantly, the facts in that case were these. On 31 October 2006, ICCC commenced Court proceedings first in OS No. 811 of 2006 seeking declaratory relief. On 3 November 2006, Telikom responded by filing proceedings in WS No. 1599 of 2006. On 4 December 2006, the hearing of the proceedings in WS 1599 of 2006 and OS 811 of 2006 were consolidated by order of the Court. On 22 December 2006, Telikom filed judicial review proceedings in the National Court in OS No. 927 of 2006 (JR). Whilst those Court proceedings were pending determination, on 26 April 2006, Telikom applied to the Appeals Panel under s 182A of the Telecommunications Act seeking certain reliefs. The Appeals Panel on 24 May 2007 handed down his decision, dismissing Telikom’s application and confirmed ICCC’s decision. Consequently, Digicel moved a motion in WS 1599 of 2006 seeking dismissal of the proceedings on various procedural grounds namely, Telikom abused Court process in commencing multiple proceedings over the same matter, Telikom failed to employ appropriate mode of commencement of proceedings and res judicata. On 5 August 2007, I granted the orders sought and dismissed the proceedings. Telikom appealed from that decision.
    
17. At the hearing before me and again in the Supreme Court, Telikom argued that there were two different causes of action which I rejected. The Supreme Court by the majority of Kirriwom J (as he then was) and Cannings J, considered the subject in the following way and endorsed my decision on that point:

“Should the primary Judge have found that the judicial review proceedings OS 927/2006 involved a different subject matter to WS 1599/2006? (Ground (b))

92. No. We consider that his Honour was correct in regarding the key issues in each of the proceedings as the same. They were: whether the regulatory contract prohibited the ICCC from issuing a public mobile licence to Digicel before 17 October 2007 and whether Telikom had agreed to variation of the regulatory contract.

93. OS 927/2006 was an application for leave to seek judicial review of the ICCC’s decision to issue the licence to Digicel. It was concerned with the tender process conducted by the ICCC whereas WS 1599/2006 could be regarded, as contended by Mr Webb for Telikom, as an action for breach of contract (ie breach by the ICCC of the regulatory contract between it and Telikom). Whatever label is put on WS 1599/2006, however, we consider that the key issues, the subject matter and the grievances being agitated by Telikom, were the same as in OS 927/2006. The remedies being sought were also the same.

94. In WS 1599/2006, Telikom wanted an injunction to restrain the ICCC from issuing a public mobile licence to Digicel before 17 October 2007. In OS 927/2006, they wanted an order prohibiting the ICCC from issuing any new public mobile licences. They were seeking declarations and other remedies in both proceedings. Though there were differences in the wording and the form of the remedies sought, the substance of the relief being sought was the same. The primary Judge correctly concluded by examining the true nature of each proceeding that OS 927/2006 was a duplication of WS 1599/2006 and that Telikom was engaging in an unjustified multiplicity of proceedings.”

(Underlining added)

18. From these discussions it should be clear that, where a cause of action is litigated and final decision is arrived at, the parties are bound by the decision and are therefore precluded from relitigating or reagitating the same cause. That is when a matter is said to have reached cause estoppel. The same applies to any issue that has been considered and determined in the earlier proceeding aside from the cause of action itself. This when a matter is said to have reach issue estoppel. There is a third component. That component has not been expressly raised and determined in PNG yet. This has to do with cases in which certain matters ought to have been included in the earlier proceedings but were not and a party seeks to litigate those points as does Mr. Mokono in the present case. This is part of the cause estoppel as it has to do with the cause or matter that was previously heard and determined by a court of competent jurisdiction.
    
19. I directed parties to assist the Court with any judicial pronouncement from within our jurisdiction or other jurisdictions like ours. Only the learned counsel for WPL, Ms Samol produced the decision of the apex Court in Australia, its High Court’s decision in Port of Melbourne Authority v. Anshun Pty Ltd [1981] HCA 45; (1981) 147 CLR 589. The learned Chief Justice, Gibbs CJ., Mason and Aickin JJ in their joint judgment, considered earlier judgments on distinction between cause estoppel and issue estoppel. This included the decision in Blair v. Curran [1939] HCA 23; (1939) 62 CLR 464, per Dixon J at p 597 in these terms:
    

“in the first [cause estoppel] the very right or cause of action claimed or put in suit has in the former proceedings passed into judgment, so that it is merged and has no longer an independent existence, while in the second [issue estoppel], for the purpose of some other claim or cause of action, a state of fact or law is alleged or denied the existence of which is a matter necessarily decided by the prior judgment, decree or order.”

20. Another of the decisions their honours considered was the decision of Sir James Wigram V.C. in Henderson v. Henderon (1843) 3 Hare at p.115 (67 ER, at 319) where the Vice Chancellor said at p.598:
    

“...where a given matter becomes the subject of litigation in, and of adjudication by, a Court of competent jurisdiction, the Court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of a matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted part of their case. The plea of res judicata applies, except in special cases, not only to points upon which the Court was actually required by the parties to form an opinion and pronounce a judgment, but to every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time.”

(Underlining added)

21. Their honours also considered the decision of Lord Kilbrandon in Yat Tung [1975] UKPC 6; (1975) AC 581 who spoke of it becoming “an abuse of process to raise in subsequent proceedings matters which could and therefore should have been litigated in earlier proceedings.”
    
22. Finally, their honours also considered the decision of Somervell L.J. in Greenhalgh v. Mallard (1947) 2 All ER 255 at 257 (as approved by Lord Wilberforce in Brisbane City Council (1979) AC, at p. 425) who said:
    

“res judicata for this purpose is not confined to the issues which the court is actually asked to decide, but . . . it covers issues or facts which are so clearly part of the subject-matter of the litigation and so clearly could have been raised that it would be an abuse of the process of the court to allow a new proceeding to be started in respect of them.”

(Underlining added)

23. The learned jurists then said in the case before them at [42]:
    

“Taking into consideration the relevant factors we conclude that the Full Court was right in holding that there was an estoppel. The matter now sought to be raised by the Authority was a defence to Anshun’s claim in the first action. It was so closely connected with the subject matter of that action that it was to be expected that it would be relied upon as a defence to that claim and as a basis for recovery by the Authority from Anshun. The third-party procedures were introduced to enable this to be done. If successful, the indemnity case would have obviated an inquiry into contribution. If reserved for assertion in a later action, it would increase costs and give rise to a conflicting judgment.”

(Underlining added)

24. In the same Port of Melbourne Authority v. Anshun (supra) case, another member of the Court, Murphy J. added:
    

“I prefer not to attempt to formulate an exhaustive theory of res judicata or issue estoppel in order to determine this case by application of such theory. These notions of res judicata and issue estoppel are founded on the necessity, if there is to be an orderly administration of justice, of avoiding re-agitation of issues, and of preventing the raising of issues which could have been and should have been decided in earlier litigation.

.. In this instance, the issue now sought to be raised was plainly open to be agitated in the previous litigation. The judgment in that case is inconsistent with the judgment now sought by the plaintiff. To preserve the orderly administration of justice the earlier judgment should be treated as conclusive on the question of indemnity. There is no discretion to allow the raising of that issue against the unwilling defendant; the attempt to do so is properly characterized as an abuse of process.”

(Underlining added)

25. As can be gathered from the foregoing discussion of the law, the notion of res judicata extends to issues or facts which are clearly part of the subject-matter of a litigation but also to matters that were not pleaded or raised in earlier proceedings. This is part of the cause estoppel principle. The courts and the law require the parties to all litigation to bring forward their entire case either as plaintiffs or defendants to a litigation. Hence, the parties will not be permitted to open the same subject of litigation which should have been brought forward as part of the subject in contest in the earlier proceeding, but was not brought forward due to their negligence, inadvertence, accident, or a deliberate choice not to make them part of the earlier proceeding. For when the court comes to a decision in a case, the decision or pronouncement of judgment covers all matters or every point which properly belonged to the subject of litigation, and which the parties, exercising reasonable diligence, might have brought forward at the time. This is necessary to ensure finality in litigation and to also ensure the parties are not caused to face multiple proceedings over the same cause with increased costs.
    

Application of the law to the facts

26. In the present case, Mr. Mokono himself disclosed his First Proceeding in his statement of claim at [10] and its outcome at [11]. In the earlier part of his pleadings at [1] to [9] he repleads the facts that were the subject of the First Proceeding. He then pleads at [13]:
    

“As a consequence of the defendant’s action in causing the plaintiff’s final entitlements payment to be stopped and withheld for a long period, plaintiff and his family have suffered enormous losses and damages.”

27. Then by way of particulars under [13] Mr. Mokono goes on to plead various loans that he had obtained as summarised below:
    

(1) December 14, 2014 - investment property loan in the sum of $393,000.00 after allowing for his equity contribution of $104,000.00, over K1 million equivalent in PNG Kina.

(2) December 2013 K1,000,000.00 loan for first home purchase.

(3) May 2017 first personal loan for K206,000.00 for purchase of new vehicles.

(4) May 2017 second personal loan for K178,000.00 for purchase of a vehicle.

(5) May 2017 third personal loan for K135,000.00 for purchase of a vehicle.

28. Thereafter, Mr Mokono claims of loss or damage to his superannuation benefits from NASFUND. He claims he was forced to withdraw from those funds earlier to service some of the loans. In respect of these loans, Mr. Mokono claims his termination and being put off the payroll caused him to fall into arrears. That in turn he claims, caused him into a force sale of the investment property in January 2019.
    
29. In its defence, WPL in addition to claiming res judicata also pleads remoteness of damages by pleading, the various loans were matters personal to Mr. Mokono. They were neither part of the contract of employment, nor was WPL a party to any of the loan arrangements or were in the reasonable contemplation of WPL.
    

Res judicata – cause estoppel

30. To determine whether the principles of res judicata by way of cause estoppel applies here, I need to be satisfied as to the following:
    

(1) The parties in both the First and Second Proceedings are the same.

(2) The subject matter and or the facts and issues in both proceedings are the same.

(3) The previous judgment or decision extinguished the foundations of the claim or the right to set up an action. The result is therefore final and conclusive, and it binds the party and the Courts.

(4) A Court of competent jurisdiction made the first decision.

31. Given the pleadings or a lack thereof, I find firstly that, there is no issue between the parties that the parties are the same in the First Proceeding and the Second Proceeding. Secondly, the cause of action is the same. Let me explain that. The basis or cause of action for the First Proceeding and the Second Proceeding is the fact of the employment contract between the parties which was terminated, a settlement being reached to payout Mr. Mokono the balance of his contract entitlements and delays caused by cancellation of the settlement cheque and generally a failure to promptly pay the settlement monies. The two proceedings differ however, only on the reliefs sought by Mr. Mokono. In the First Proceeding, Mr. Mokono’s focus was to get an order compelling WPL to pay the settlement monies without further delay. In his Second Proceeding, the objective is to get damages in excess of K4 million paid to him, which alleged losses and damages were present as at the time of Mr. Mokono commencing the first proceeding, its trial and final judgment.
    
32. In paragraph 13 of his pleading, Mr. Mokono clearly shows his present claim is closely connected to his First Proceeding. Correctly, there is no pleading in the Second Proceeding by Mr. Mokono which clearly shows or explains how the matters he is now claiming are not closely connected to the subject matter of the First Proceeding, namely, his contract of employment, its breach, settlement monies and delayed payments which were concluded by Makail J.’s decision in November 2021. Further, not that it would matter, I note, Mr. Mokono does not plead as to why the claims he is making under the Second Proceeding could not be included and made part of the First Proceeding prior to final judgment.
    
33. Obviously, Mr. Mokono decided to piecemeal his case and proceed under the two separate proceedings for reasons only known to him. The Second Proceeding is perhaps an afterthought after failing to manage his various loan accounts well after the payment of the settlement monies as ordered by Makail J and Mr. Mokono got re-employed as managing director of the NHC. I have in several cases, held that such piecemealing of proceedings amounts to an abuse of process and the offending proceedings could be dismissed. One such decision was my decision in the National Court in Telikom v. ICCC which the Supreme Court in its decision by the majority in the same case endorsed in the following terms at [96]:
    

“We agree with the primary Judge that a multiplicity of proceedings should be avoided as it means a multiplicity of costs to the parties, and it uses up the courts’ precious time. In support of that proposition his Honour correctly referred to the decisions of Kapi DCJ (as he then was), in NCDIC v Bogibada Holdings Pty Ltd [1987] PNGLR 135 and Ok Tedi Mining Ltd v Niugini Insurance Corporation and Others (No 2) [1988-89] PNGLR 425. Mr Webb correctly pointed out that they were not actually abuse of process cases. Nevertheless, they vividly illustrate the principle that a multiplicity of proceedings should be avoided. In safeguarding against abuse of its processes the National Court should discourage plaintiffs from bringing their grievances to the court in a piecemeal way.”

34. Where a party decides to pursue his or her claim in a piecemeal way and issues several proceedings, a determination of one of them attracts an application of the doctrine of res judicata as against the others as well as an abuse of the court’s process. The two Telikom v. ICCC decisions, first in the National Court and the second by the Supreme Court are authorities on point.
    
35. Finally, the decision of Makail J in the First Proceeding was a final decision that was binding on all parties and any Court, subject to any appeal and decision on it. The decision was by a Court of competent jurisdiction. Since neither party appealed against the decision, the decision became final and binding. I note in the pleadings and the submissions of counsel for Mr. Mokono that this point of finality is claimed against the WPL. The same equally applies against him. That decision is final on the subject matter, the facts pleaded, issues presented the matters as well as the matters that should have been pleaded and included but were omitted for reasons only known to Mr. Mokono and his counsel.
    

Nature of Mr. Mokono’s case – Balance of contract payout

36. Before coming to a decision on the question of whether the doctrine of res judicata applies in this case, I have given some thought as to the nature of Mr. Mokono’s claim. First, I note that, Mr. Mokono was fortunate enough to get WPL to agree to pay the full balance of his contract of employment entitlements adding to a substantial amount of K2,708,600.88. It is settled law that, even an expressed provision in a written contract that provides for such payout is a penalty and is therefore illegal and is unenforceable. This is because as the Supreme Court explained in the Central Bank of Papua New Guinea v. Gabriel Tugiau (2009) SC1013:
    

“...the main reason for awarding damages is to compensate a plaintiff for his actual loss, which is usually expressed technically in terms of restitutio in intergrum. But that is subject to a plaintiff's obligation to mitigate his loss and provided also that the kinds of damages he is asking for are not too remote.”

37. The Supreme Court in Post Puma Ltd v. Yama Security Services Ltd, (unnumbered judgment delivered on 26/07/01) in SCA No. 80 of 2000, referred to in the Gabriel Tugiau case at [31] first expressly pronounced the law against balance of contract payouts. The Court reasoned at [4] to [5] in these terms:
    

“Damages in contract are awarded to compensate a party for loss or injury not to penalise. Damages are awarded to put the injured party in the same position, as it would have been had the contract not been breached, and it is the duty of the Court to satisfy itself that a sum to be held over a party to enforce a contract. A Plaintiff claiming under a contractual provision for liquidated damages must show that the agreement represents a genuine pre estimate by the parties of the actual loss that will be occasioned if the contract terms are met. But if the provisions can be seen to be essentially a threat over a party to secure performance of the contract, the provision will be a penalty and unenforceable.

Courts have long held that because the purpose of a penalty is to ensure compliance rather than to truly compensate, agreements for sums found to be penalty will not be enforced, and the party claiming damages will be properly and adequately compensated by an award of actual assessed loss. Further, if there be provision in an agreement for a sum or sums payable on breach wholly out of proportion to the breach. (sic) The Courts will hold such provision a penalty, as unconscionable, and unenforceable. ‘A Plaintiff cannot recover the sum stated in a contract if he has not in fact suffered such loss.’ (Law of Contracts Cheshire & Fifoot 2nd Edn 767).”

38. The Supreme Court in that case went on to say that a court dealing with a contract having such a provision has the duty to:
    

“... inquire into the matter and determine whether the provision in the contract represents a genuine pre-estimate of the damages that will occur in the event of breach, as opposed to whether the sum designated is in reality a penalty to be imposed if the contract is not carried through.”

39. I followed this line of cases in my own decision in several of my decisions, such as the one in Teio Raka Ila v. Wilson Kamit & Bank of Papua New Guinea (2002) N2291. There, I held that a provision providing for a payout of the balance of the plaintiff's contract was null and void and therefore unenforceable.
    
40. As the Supreme Court noted in the Gabriel Tugiau case, in some earlier cases, balance of contract payments was allowed because the issue was not taken. The Courts have also allowed for the balance of the contract where such loss has been limited to a shorter period of the unexpired period. The judgment of the Supreme Court in Papua New Guinea Banking Corporation v. Jeff Tole (2002) SC694 is a case on point. There, the Supreme Court upheld an appeal against an award of damages for the balance of a contract of employment that was terminated prior to the agreed date of termination. The relevant provision of the contract made provision for a pay out of the balance of the contract or 12 months whichever of the two were lesser. There PNGBC, terminated Mr. Tole 1 year 8 months before the agreed period of termination. The National Court awarded damages for the full balance of the contract. This, Supreme Court found that was erroneous and allowed for damages for 12 months as agreed to by the parties.
    
41. Then as the Supreme Court in the Gabriel Tugiau said at [35]:
    

“All of these proceeded on the basis that the only true measure of damages is the amount of wages actually lost or denied. This is usually by reference to the relevant period of notice as agreed to by the parties or imposed by law. They also take into account the fact that a plaintiff is under an obligation to mitigate his loss which includes securing alternative employment.”

42. Turning to the present case, the issue of the legality of the settlement of the balance of the contract was not an issue between the parties and the Court in the First Proceeding. Also, the issue of the need for Mr. Mokono as the plaintiff to mitigate his loss was not an issue between the parties and hence the Court. Thus, it appears clear to me that, Mr. Mokono got away with the settlement sum of K2,708,600.88, sued for it and secured judgment in that amount. It would thus appear all dues under the contract up to its agreed period was fully paid out. Clearly considering what happened against the law, it would appear Mr. Mokono was paid more than what was reasonably due to him as a matter of law. Given that, the question necessarily arises, what more was connected to the contract was not adequately covered for by the settlement and subsequently the judgement of Makail J? To my mind none whatsoever. This is why in my view, Mr. Mokono chose to sue only for the settlement monies under his First Proceeding.
    

Lack of pleadings

43. Secondly, following on from the comments and questions just posed, there is a complete lack of pleadings connecting the alleged loss and damages under the Second Proceeding to the contract termination, its settlement, settlement cheque cancellation, and generally, payments delayed, and the judgment Mr. Mokono eventually secured. A lot more questions than answers are obvious. Questions include, how was WPL made a party to the various loan agreements? Was WPL’s consent and approval for each of the loans sought and did WPL so consented or approved? Was WPL required to guarantee all or any of the loans and it provided any such guarantees? Did WPL undertake not to terminate Mr. Mokono prior to the agreed date of termination of their contract in view of Mr. Mokono’s various loans? Did Mr. Mokono inform WPL of the various loans he had secured and if so when and how? How else was the loan agreements, their arrears and defaults reasonably contemplated by the parties in case of any early termination and or delayed payment of any settlement monies?
    

Failure to mitigate

44. Thirdly there is also a complete lack of pleading as to what steps Mr. Mokono took in mitigation of his alleged losses and damages after having secured substantial loans. What was the statement of accounts for each of the loan accounts as at the date of his termination? Did he faithfully serve the various loan accounts prior to his termination and delayed payment of his settlement monies? How did the delay impact against his mitigation efforts? How much of the settlement monies when he eventually got paid, did he pay to clear or reduce the total owing in each of his loan accounts. After allowing for any such payments what was the total balance due and owing for each of the loan accounts?
    

Other claims

45. Fourthly, the lack of pleadings with more questions than answers also apply to Mr. Mokono’s other claims for, loss of income of over K1.3 million, general damages for pain and suffering, exemplary and aggravated damages. The questions include for example, given his claim at [15] at pp. 14 – 15 for over K500,000.00, what was his prior investing habit like? How much did he invest and what was the return on any such investment? Additionally, in respect of these, they only appear in the prayer for reliefs without any foundation whatsoever in the main body of the pleadings. This is clearly offending the law on point as represented by decisions of the Supreme Court as in Gabriel Tugiau’s case at [56] – [57]:

“In this case, the plaintiff did not plead with any particularity his claim of having suffered stress, anxiety and loss of reputation in the Bank and amongst his peers. He only pleaded in the prayer for relief “damages for psychological effects, stress, embarrassment, shame, defamation of his good reputation and character.” That was no pleading at all. The law is clear that, foundation must be laid in the pleadings to properly ground any prayer for relief. Without any such pleadings there can be no award.

The Supreme Court emphasized the importance of proper pleading and made the point we have just made clear in the Jeff Tole case. In that case, there was a lack of proper and sufficient pleading even though some things where pleaded and there was an indication in the statement of claim that, further and better particulars will be provided prior to or at the trial. The Court was of the view that, such a pleading was no pleading at all. The Court made it clear also that, the rules and hence the case law that has built around them, requires proper pleading before there can be any award of damages.”

Re-employment on similar position

46. Finally, I note, Mr. Mokono was subsequently reappointed as the managing director of the NHC. Details of the terms and conditions of his current employment is not before the Court. If such details were pleaded or disclosed, it would be most important to see if the new contract of employment allows for the full payout of the balance of his prior employment by WPL, another State-Owned Enterprise. Again, there are more questions than answers. One of the key questions is, when Mr. Mokono eventually got re-employed as managing director of NHC, how was that inadequate and how did that not help his cause?
    

Decision and orders

47. Given the uncontested facts I find this matter is res judicata. Consequently, the proceeding needs to be dismissed. The other factors of lack of proper foundation in the pleadings to find WPL liable for the various alleged losses and damages especially when Mr. Mokono was paid out his full balance of contract entitlements, an application of the concept of remoteness of damages and lack of proper pleadings to form the relevant and necessary basis to assess Mr. Mokono’s damages if liability is established against WPL also gives me additional basis and comfort to order a dismissal of the proceeding. Costs shall follow the event to be ascertained by taxation unless agreed.

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Tangua Lawyers: Lawyers for the Plaintiff
In House Counsel: Lawyers for the Defendant