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BNDL Enterprises Ltd v Sonny [2023] PGNC 308; N10434 (4 August 2023)

N10434

PAPUA NEW GUINEA
[IN NATIONAL COURT OF JUSTICE]

WS NO. 775 OF 2021

BETWEEN:
BNDL ENTERPRISES LTD
-Plaintiff-

AND
MATTHEW SONNY in his capacity as COUNCIL PRESIDENT, LERON, WATUT LOCAL LEVEL GOVERNMENT
- First Defendant-

AND
MOROBE PROVINCIAL GOVERNMENT
-Second Defendant-

Lae: Dowa J
2023: 20^th July & 04^th August

ASSESSMENT OF DAMAGES-breach of motor vehicle lease agreement – motor vehicle collision during hire –onus on plaintiff to prove damages with credible evidence-principles on assessment of damages-need to prove economic loss with evidence of compliance of tax and regulatory requirements- damages awarded.

Cases Cited:
Kay Pure v Tonnesi Ewebi (2021) N9013
Yooken Paklin v The State (2001) N2212
Peter Wanis v Fred Sikiot and The State (1995) N1350
Enaia Lanyat v State (1996) N1481
Obed Lalip v Fred Sekiot and The State (1996) N1457
Jonathan Mangope Paraia v The State (1995) N1343
Samot v Yame (2020) N8266
Tirima v Angau Memorial Hospital Board (2005) N2779
Graham Mappa v PNG Electricity Commission [1995] PNGLR 170
Komaip Trading v George Waugluo & The State [1995] PNGLR 165
Kekeral Farming v Queeensland Insurance (1995) PNGLR 405
Marshall Kennedy -v-Coca Cola Amatil (2011) N4946

Counsel:
K Kiendip, for the Plaintiff
No Appearance for Defendants

JUDGMENT

4^th August 2023

1. DOWA J. This is a judgment on assessment of damages. Default judgment was entered for the Plaintiff on 17^th February 2023.

Facts

2. The Plaintiff is a local company operating in Lae, Morobe Province. It is the registered owner of Motor vehicle, Toyota L/C 10 STR, Reg No. BES 927. The Plaintiff entered a Motor vehicle Lease Agreement with the Morobe Provincial Government on 8^th April 2021. Under the lease agreement, the defendants agreed to hire the Plaintiff’s vehicle for 30 days at the daily rate of K1,000.00 and further agreed to keep the vehicle in good condition, with due care and attention. During the hire and while in the custody of the first Defendant, the vehicle got involved in a major road accident. As a result, the vehicle was damaged beyond economic repairs.

3. The Plaintiff, therefore, instituted these proceedings seeking damages for the loss of the vehicle as well as economic loss.

The Proceedings

4. The Writ of Summons was filed on 9^th November 2021. The Second Defendant was served copies of the writ on 15^th November 2021. The First Defendant was served on 10^th December 2021. The State was served copy of the writ on 16^th November 2021. The State filed its Notice of Intention to Defend and a Defence on 6^th September 2022. The first and second Defendants did not file any Notice of Intention to Defend nor a Defence. On 17^th February 2023, default Judgment was entered for the Plaintiff. On 25^th May 2023, leave was granted to the Plaintiff to discontinue the proceedings against the State.

5. The matter was listed for trial on assessment of damages on 13^th July 2023. Although the First and Second Defendants were served Notice of Trial, the lawyer for the First and Second Defendants failed to turn up. The matter proceeded to trial on 13^th July 2023, exparte. The matter was then adjourned to 20^th July 2023 for submissions.

6. On 20^th July 2023, Mr. Keindip, counsel for the Plaintiff, sought to introduce additional evidence. The Court granted leave to the Plaintiff to reopen, as the evidence to be included was relevant. He then then tendered the affidavit of Borana Gaia sworn and filed 19^th July 2023. Counsel then handed up written submissions, and the matter was then reserved for decision which I now deliver.

Issues

7. The issues for consideration are:

1. Whether the second defendant is vicariously liable for the actions of the First Defendant.

b) Whether the Plaintiff is entitled to any damages, and if so, how much?

Evidence

8. The Plaintiff relies on the following the affidavits:

1. Affidavit of Borana Ugaia sworn 7^th & filed 10^th October 2022; Exhibit P1
2. Affidavit of Borana Ugaia sworn 27^th April and filed 5^th May 2023 – Exhibit 2

100. Affidavit of Borana Ugaia sworn & filed 19^th July 2023 and Exhibit P3
     

9. This is the summary of Mr. Ugaia’s evidence: Mr. Ugaia is the Managing Director of the Plaintiff company. On 8^th April 2021, BNDL entered a Motor Vehicle Lease Agreement with the Morobe Provincial Government, to hire its vehicle, a Toyota 10-seater Reg. No. BES 927 for a period of 30 days at the rate of K1,000.00 per day. It was specifically agreed that Morobe Provincial Government would be responsible for the payment of the hire and for any damage done to the vehicle during the hire. The Defendants took delivery of the motor vehicle on the same day.

10. The Plaintiff was informed, the 10-seater was hired for the official use by the First Defendant, the President of Leron/Wantoat LLG. During the currency of the hire, the vehicle got involved in a road accident on 23^rd April 2021, at Leron along the Highlands Highway in the Morobe Province. As a result of the accident, the Plaintiff’s vehicle sustained extensive damage, and was assessed as a write off, beyond economic repairs.

11. The accident was reported to the police who investigated and noted that one Yak Zinimbo, a relative of the first Defendant who drove the vehicle was negligent, causing the accident.

12. Mr. Ugaia deposes further that the vehicle is primarily used for the Plaintiff’s hire business and the accident crippled their business. They have demanded the first and second Defendants to pay for the vehicle and for the loss of income but have not received any favorable response. He says, he has sent several invoices, and by February 2023, their loss stands at K727,000. Apart from the economic loss, the pre accident value of the vehicle is K55,000.00 as assessed by Ela Motors.

13. Mr. Ugaia deposes, the Plaintiff suffered substantial business loss for the financial period for 2021 and 2022, K25,470 and K41,037 respectively compared to previous years.

Submissions of Counsel

14. Mr. Keindip, counsel for the Plaintiff, submits that the Plaintiff suffered loss because of the loss of its motor vehicle and is entitled to damages for the replacement value, general and special damages and for economic loss. The Defendants did not appear to respond to the Plaintiff’s submissions.

Whether the Plaintiff is entitled to any damages, and if so, how much.

Burden of Proof
15. Whilst the issue of liability is settled, the Plaintiff is still required to prove damages with credible evidence. Ref: Yooken Paklin v The State (2001) N2212, Peter Wanis v Fred Sikiot and The State (N1350), Enaia Lanyat v State (1996) N1481; Obed Lalip v Fred Sekiot and The State – N147; Jonathan Mangope Paraia v The State (1995) N1343, and Samot v Yame (2020) N8266.

16. In Samot v Yame (Supra), His Honour, David J referring to legal principles to be applied in assessing damages said this at paragraph 46 of his judgment:

“ The Supreme Court in William Mel v Coleman Pakalia (2005) SC790 and the National Court decision of Cannings, J in Steven Naki v AGC (Pacific) Ltd (2006) N5015 summarise or identify a number of legal principles that are applicable in assessing damages where liability is established either following a trial or after the entry of default judgment and these are:

• The plaintiff has the onus of proving his loss on the balance of probabilities. It is not sufficient to make assertions in a statement of claim and then expect the court to award what is claimed. The burden of proving a fact is upon the party alleging it, not the party who denies it. If an allegation forms an essential part of a person’s case, that person has the onus of proving the allegation. (Yooken Paklin v The State (2001) N2212, National Court, Jalina J.)
  
• Corroboration of a claim is usually required and the corroboration must come from an independent source. (Albert Baine v The State (1995) N1335, National Court, Woods J; Kopung Brothers Business Group v Sakawar Kasieng [1997] PNGLR 331, National Court, Lenalia J.)
  
• The principles of proof and corroboration apply even when the defendant fails to present any evidence disputing the claim. (Peter Wanis v Fred Sikiot and The State (1995) N1350, National Court, Woods J.)
  
• The same principles apply after default judgment is entered and the trial is on assessment of damages – even when the trial is conducted ex parte. A person who obtains a default judgment is not entitled as of right to receive any damages. Injury or damage suffered must still be proved by credible evidence. (Yange Lagan and Others v The State (1995) N1369, National Court, Injia J.)
  
• If the evidence and pleadings are confusing, contradictory and inherently suspicious, the plaintiff will not discharge the onus of proving his losses on the balance of probabilities. It is conceivable that such a plaintiff will be awarded nothing. (Obed Lalip and Others v Fred Sikiot and The State (1996) N1457, National Court, Injia J.)
  
• Where default judgment is granted, for damages to be assessed on a given set of facts as pleaded in a statement of claim, the evidence must support the facts pleaded. No evidence will be allowed in support of facts that are not pleaded. (MVIT v Tabanto [1995] PNGLR 214, Supreme Court, Kapi DCJ, Hinchliffe J, Sevua J; Waima v MVIT [1992] PNGLR 254, National Court, Woods J; MVIT v Pupune [1993] PNGLR 370, Supreme Court, Kapi DCJ, Jalina J, Doherty J; Tabie Mathias Koim and 28 Others v The State and Others [1998] PNGLR 247, National Court, Injia J.)
  
• The fact that damages cannot be assessed with certainty does not relieve the wrongdoer of the necessity of paying damages. Where precise evidence is available the court expects to have it. However, where it is not, the Court must do the best it can. (Jonathan Mangope Paraia v The State (1995) N1343, National Court, Injia J.)
  
• The court must be alert to vague claims, unsupported by corroborating evidence, as they might be false claims. The court must only uphold genuine claims. (Kolaip Palapi and Others v Sergeant Poko and Others (2001) N2274, National Court, Jalina J.)
  
• The person who has been wronged has a duty to mitigate their losses; though it is the defendant who has the onus of proving failure to mitigate (Dia Kopio v Employment Authority of Enga and Others (1999) N1865, National Court, Hinchliffe J; Coecon v National Fisheries Authority (2002) N2182, National Court, Kandakasi J.)”
  

17. I will adopt and apply these principles in the present case when considering each head of damages sought by the Plaintiff.

Consideration: Damages

18. How much in terms of damages is the Plaintiff entitled to? The Plaintiff claims the following in the statement of claim:

1. a) Replacement Value for the Motor Vehicle
2. b) Loss of income both past and future at K 1,000.00 per day

100. c) Special damages

4. d) General damages

e) Punitive damages

f) Interest and costs

19. To appreciate and properly assess the Plaintiff’s claim it is important to set out the terms of the Motor Vehicle Lease Agreement dated 8^th April 2021. The Agreement is reproduced:

“MOTOR VEHICLE LEASE AGREEMENT

The parties involved in above transaction namely, BNDL ENTERPRISE LTD, the Lessor and Division Tutumang of Morobe Provincial Government, P O BOX 1834, Lae, Morobe Provincial Government, agreed to the lease the ten-seater Blue Reg BES 927 the rate of K1000.00 per day rate.

That the Lesse, Tutumang of Morobe Provincial Government will take commence lease on dated 08/04/2021 and return on dated 10/05/201 period of 30 days.

That the Lessee, Tutumang of Morobe Provincial Government will be responsible for any damages that may occur during the period of hire, the cost will be due to damages done to the vehicle.

Delay in returning the vehicle on scheduled date of return will also incur additional cost to the Lessee at the rate as agreed upon.

The Agreement is now endorsed and approved by the representatives of both parties involved in this transaction.

(Signed) (Signed)

Borana Ugaia Kau Kasup

BNDL ENTERPRISES LTD Deputy Tutumang Clierk”

20. It is interesting to observe that the agreement was signed by one Kau Kasup, Deputy Tutumang Clerk, on behalf of the Morobe Provincial Government. It raises the question of whether Mr. Kasup had financial authority to bind the Morobe Provincial Government in this transaction in accordance with the administrative guidelines or financial instructions under the Public Finances (Management) Act. Since the Defendants have not raised the issue, the Court will proceed with assessment.

Loss of Motor vehicle.

21. The first claim is for the loss of the motor vehicle. It is a Toyota LC 10-Seater Wagon. It is registered Reg. BES 927. It was purchased in October 2015 and was about five and half years when involved in the accident. Ela Motors assessed the Pre-Accident Value for the vehicle to be K 55,000.00. Although there is no evidence of mechanical repair assessment being presented, I accept the evidence of the Plaintiff that the vehicle is damaged beyond economic repairs. I note from the description of the accident recorded by the accident investigation officer in the Road Accident Report that the Plaintiff’s vehicle was extensively damaged. The Plaintiff is therefore entitled to make a claim under the terms of the agreement. Counsel for the Plaintiff submits that the Plaintiff be awarded K 210,513.37 for a replacement vehicle as quoted by Ela Motors. The Plaintiff’s request for an award of damages to the value of a new vehicle is unreasonable. Firstly, the Plaintiff did not plead for this relief in the statement of claim. Secondly, the Plaintiff’s vehicle was more than five years old and has depreciated in value over the years. The Plaintiff purchased the vehicle in October 2015 at the purchase price of K 135,860.21. Allowing for depreciation at 20 % per year over five years would have reduced the value of the vehicle below K 45,000.00. In the circumstances, I accept the pre accident value provided by Ela Motors, the Toyota dealer, as credible and will award the sum of K 55,000.00 for the loss of the vehicle.

General Damages

22. The Plaintiff makes a claim for general damages. This head of damages is a claim made for general pain and suffering. In my view, it is not appropriate to make an award under this head of damages and so I refuse the claim.

Special Damages

23. The Plaintiff claims special damages. Although he made a general claim under this head of damages in the statement of claim, he has not pleaded a specific amount. Further, no evidence was presented in support of the claim. There shall be no award under this head of damages.

Economic Loss

24. The Plaintiff claims economic loss from date of accident to December 2025 at the rate of K 1,000. 00 per day and for the loss of profits. I will deal with them together as they are related. There is a string of cases in this jurisdiction that have stressed that a claim for loss of income must be supported by proper tax and accounting details. Refer: Peter Wanis -v-The State (1995) N1250, Graham Mappa v PNG Electricity Commission (1995) PNGLR 170, Komaip Trading v George Waugluo & The State, and Kekeral Farming v Queeensland Insurance (1995) PNGLR 405. Marshall Kennedy -V -Coca Cola Amatil (2011) N4946.

25. The Plaintiff gave evidence that its principal income earning business activity is motor vehicle hire. The subject vehicle is one of such vehicles used for the business. The Plaintiff has produced evidence that it is a registered taxpayer, with Taxpayer Identification Number (TIN) No. 500049789. There is evidence that the Plaintiff has been paying its GST and Group Tax for the relevant period. Although there is no evidence from IRC on the status of its tax obligations, I accept that the Plaintiff is compliant with the minimum tax requirements. The Plaintiff has also produced its financial statements for the years 2018 to 2022 to show that it made a loss for the financial years 2021 and 2022. Finally, the Plaintiff produced its bank statements for the years 2021 to 2022 to show the income it makes from the hire business. I am satisfied from the evidence provided that the Plaintiff is entitled to a reasonable sum for economic loss.

26. The Plaintiff is claiming loss of income at the rate of K 1,000.00 per day from May 2021 to 31^st December 2025 which amounts to K 727,000.00. That is an income of more than K 160,000.00 per year. Is this a reasonable ask? I perused the financial statements and note the Plaintiff’s business and profitability level were on the decline even before the accident. For ease of reference, I set out the trading results for the last 5 years:

1. 2017 trading year K 41,794.00 profit
2. 2018 trading year K 20,400.00 profit
3. 2019 trading year K 21,168.00 profit
4. 2020 trading year K 2,557.00 profit.
5. 2021 trading year K 25,470.00 loss
6. 2022 trading year K 41,037.00 loss
   

27. Whist there is a sharp decline in the profits after the accident, there is a clear trend that the Plaintiff’s business was not doing well even before the accident. It was earning its income mainly from its hire contracts from the Morobe Provincial Government. Is it reasonable then to obligate the Defendants to pay for the loss for the four and half years at the rate of K 1,000.00per day. In my considered view, it is not reasonable. The Court has already determined that an award can be made for the loss of the vehicle at its pre accident value. The Court can only make a reasonable award for the loss of income, given the age of the vehicle and the chances of the vehicle not being hired on consistent basis or that the vehicle is being off the road for mechanical or other reasons. In my view the reasonable period is six months, and I will allow for six months only, which is about 183 days. As for the rate, K 1,000.00 per day is not unreasonable and I am inclined to allow same. The award for economic loss shall be K 183,000.00

Punitive Damages

28. The Plaintiff seeks punitive damages. The Plaintiff did not plead particulars of the claim and has not provided evidence in support. No award shall be made under this head.

Total judgment sum.

29. The total judgment sum is K 238,000.00 which comprise of:

1. Pre accident value of vehicle- K 55,000.00
2. Economic loss- K 183,000.00

K 238,000.00

Interest

30. The Plaintiff is claiming interest. I will allow interest at the rate of 8% on the amount assessed pursuant to section 1 (2) of the Judicial Proceedings (Interest on Debts and Damages) Act. Interest shall commence from date of writ of summons, (09/11/2021) to date of judgment (4/08/ 2023) for a period of 637 days. Interest is calculated as follows:

K 238,000 x 8/100 = K 19,040.00

K 19,040 /365 days = K 52.16 per day

K 52.16 x 637 days = K 33,225.92

32. The total award inclusive of interest is K 271,225.92

Costs

33. The Plaintiff has succeeded in its claim and is therefore entitled to the costs of the proceedings as a matter of course.

Joint Liability

34. The loss suffered by the Plaintiff was the result of neglect of duty of care as well as a breach of contract on the part of the First Defendant which gave rise to the cause of action. He was the President of a Local Level Government Council, and the vehicle was hired for him by the second defendant to use in the normal course of his official duties. The second Defendant is vicariously liable, if not directly, for the loss. I will therefore order that both Defendants be jointly and severally liable to settle the judgment debt.

Orders

35. The Court orders that:

1. Judgment be entered for the Plaintiff in the sum of K271,225.92 inclusive of interest.
2. The first and second defendants are jointly and severally liable to settle the judgment debt.
3. Post Judgment interest shall accrue at the rate of 8% until settlement.
4. The Defendants shall pay the cost of the proceedings to be taxed, if not agreed.
5. Time be abridged.

_______________________________________________________________
Gamoga & Co. Lawyers: Lawyers for the Plaintiff
Emma Philemon (In-House Lawyer): Lawyer for the Defendants