Home | Databases | WorldLII | Search | Feedback National Court of Papua New Guinea

Edasave Corporation Ltd v National Capital District Commission [2023] PGNC 77; N10202 (6 April 2023)

N10202

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 732 OF 2014 (CC1)

BETWEEN:
EDASAVE CORPORATION LIMITED
Plaintiff

AND:
NATIONAL CAPITAL DISTRICT COMMISSION
First Defendant

AND:
TOAMI KULUNGA in his capacity as the Commissioner of Police,
ROYAL PAPUA NEW GUINEA CONSTABULARY
Second Defendant

AND:
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Third Defendant

Waigani: Tamade; AJ
2022: 22^nd September
2023: 6^th April

DAMAGES – trial on assessment of damages – damages to be paid on actual losses reasonably foreseeable as ordered by the Supreme Court – lease agreement – notice to terminate not adhered to – force majeure – demolition of property – losses suffered – principles of assessing damages applied

EVIDENCE – plaintiff failed to vacate property upon receiving notice of termination – plaintiff from Chinese origin and did not understand English while being examined – valuers report lacks substance and credibility – presumption that Plaintiff set up its own loss – plaintiff’s evidence is hearsay, speculative and uncorroborated – plaintiff failed to provide sufficient evidence on actual losses reasonably foreseeable as ruled by the Supreme Court

Cases Cited

Apa and Ors v The State [1995] PNGLR 43
George v Motor Vehicles Insurance (PNG) Trust [1993] PNGLR 477
Huaimbukie v Baugen [2004] PGNC 191; N2589
Lalip for himself and on behalf of Kulap and Minalo v Sikiot [1996] PGNC 7; N1457
Mel v Pakalia [2005] PGSC 36; SC790
Motor Vehicles Insurance (PNG) Trust v Pupune [1993] PNGLR 370
Pias v Kodi [2004] PGNC 84; N2690
Wapi v Ialy [2014] PGSC 32; SC1370

Counsel:
Mr Herman Leahy, for the Plaintiff
Mr Mokawau Mukwesipu, for the First Defendant
Mr Troy Mileng and Ms Priscilla T Ohuma, for the Second and Third Defendants

6^th April, 2023

1. TAMADE, AJ: The closing submissions on a trial on assessment of damages was heard on 22 September 2022 and this is a decision on the matter.
   
2. On 6 July 2018, the National Court found that there was no reasonable cause of action against the Defendants after a trial and dismissed these proceedings against the Defendants.
   
3. The Plaintiff then appealed to the Supreme Court and on 17 December 2019, the Supreme Court made the following orders in SCA 125 of 2018 with emphasis underlined:
   
   1. The Appeal is upheld.
   2. The matter is remitted to the National Court before a different judge for an assessment of damages to be paid by the Respondents to the Appellant for any actual losses of the Appellant which were reasonably foreseeable.
   3. The Respondents shall pay the costs of the Appellant of and incidental to the Appeal.
      
4. This Court is therefore tasked to find any actual loss or damage occasioned to the Plaintiff which is reasonably foreseeable as in the words of the Supreme Court.
   

Facts of the case

5. The First Defendant, NCDC owned a property described as Portion 2031, Granville which included a Sea Kiosk and a Sea Park Area at now what is the Paga Hill Ring-road past Ela Beach. The Plaintiff was the tenant of that property leasing it from NCDC pursuant to a lease agreement that commenced on 1 January 2011 and was for the duration of 5 years.
   
6. In a letter dated 13 November 2013, NCDC gave notice to the Plaintiff terminating the lease and informing the Plaintiff that as the Government was constructing a road in preparation for the South Pacific Games and the APEC meeting, the land was required to make way for the road. NCDC relied on clause 23 of the lease agreement which is in the following term:
   

Force Majeure

23.1 Neither party shall be liable to the other, or be in default under the terms of this Agreement, for failure to observe or perform any provision of this Agreement for any reason or cause which could not have with reasonable diligence be controlled or prevented by the other party in question, including strikes, lock-outs, labour disputes, criminal activity, acts of God, acts of government or the emergencies, fire, flood, storm, riots, power shortages or power failure, war, sabotage.

23.2 The party relying on the provisions of sub-clause 23.1 shall give to the other, notice of its inability to observe or perform, and the reasons, therefore.

7. It is the Plaintiff’s claim that on 11 March 2014 during the term of the subject lease, the First Defendant entered on the property and demolished the structures on the property thereby contravening the said lease agreement. The Plaintiff therefore claims damages, exemplary damage, interest and costs of the proceedings.
   
8. Following on from the Supreme Court decision on appeal, the Plaintiff has the burden to prove its actual losses which are reasonably foreseeable in this case as I am of the view that the wide net of damages in general as pleaded is now narrowed to what is “actual and reasonably foreseeable”.
   

General Principles of damages

9. The Supreme Court case of Mel v Pakalia^[1] sets out the principles in assessing damages as follows:
   

“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 [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.)”

10. The Plaintiff has pleaded in its Statement of Claim filed on 2 July 2014 Damages and Exemplary Damages. At paragraph 19 of the Statement of Claim, the Plaintiff pleads for loss of profits and destruction of improvements. A claimant is bound by its pleadings. In Motor Vehicles Insurance (PNG) Trust v Pupune[2], a claimant cannot hark back on the pleadings if evidence was led and he did not object to it, the pleadings therefore are an integral part of the claim where evidence is led based on the pleadings.[3] The First Defendant has substantially objected to the Plaintiff’s claim that are not pleaded.

Actual loss reasonably foreseeable

11. In the Affidavit of Raymond Wang marked as Exhibit P2, he is the only shareholder of the Plaintiff company and he is a director of the Plaintiff company with one other Yunqin Lin. Mr Wang is from the Fujian Province in China and he is also known as Changen Wang. Mr Wang had signed a lease agreement with NCDC for the operation of a Kai Bar at the subject premises.
    
12. Mr Wang states in his affidavit at paragraph 47 that on 13 November 2013, he received a letter dated 13 November 2013 from NCDC informing him of the roadworks that were to happen through the subject property that his company was leasing from NCDC and informing him that the subject lease over the property is terminated and that NCDC is giving his company four weeks from the date of the notice to vacate the subject premises.
    
13. After Mr Wang received this notice from NCDC, he proceeded to have meetings with NCDC and presented a valuation report of the improvements on the subject property that he states NCDC should pay for. He states in his affidavit that in accordance with his meetings with NCDC, he was shown several locations in the city precinct as possible venues for his business to move to. He states in evidence that he did not hear back from NCDC until 11 March 2014 at around 10am when NCDC and the police arrived onto the subject property and began to demolish the buildings and surrounding areas.
    
14. Mr Wang was in Court for cross examination on his affidavit evidence and I find from his general responses to the questions asked in cross examination that clearly, Mr Wang is not fluent in the English language nor can he clearly understand the English language. He however understands the tok pisin language better as I find that in some of his responses, he starts of by speaking English but completes his sentences with tok pisin.
    
15. I find that some of Mr Wangs complaints stem from his dilemma in understanding the English language. He had received a letter on 13 November 2013 to vacate the subject premises in four weeks. Four months went by and he did nothing to move his possessions or any supplies that were stored in containers on his premises and or rearrange his affairs as he was notified. He could have removed company records, store goods and anything movable, prior to the demolition. He cannot be said to be taken by surprise when the demolition happened on 11 March 2014.
    
16. At paragraph 37 of his Affidavit as Exhibit P2, he states that he not only lost the improvements done on the property, he also lost all other records when the building was demolished. Mr Wang also states in his other affidavits that he lost supplies, frozen chicken and meat etc that were stored on containers on the premises and other goods which were looted when the demolition took place.
    
17. What is intriguing is that in the Affidavit of Belden Memi tendered as Exhibit P4, Mr Memi states that he is a certified property valuer and auctioneer. He was requested by the Plaintiff, Mr Raymond Wang and on 13 November 2013, he attended at the subject premises and conducted a physical inspection of the Kiosk site and surrounding areas and prepared a valuation report of the business loss that could potentially be suffered by the Plaintiff’s business. This is the same day the demolition of the subject property took place. The valuation report by Mr Memi assesses the loss of business income to be at K1, 968 000.00 and the loss of goodwill attached to the local site as K10, 362, 000.00; to the total amount of K12, 330, 000.00. Mr Memi states in his valuation report that there is no separate valuation on land and improvements and equipment’s as they are all classified as a single production unit which produces the maintainable profit as a business.
    
18. I find that Mr Memi does not have the required qualification to assess the loss of business and goodwill of the premises. He is qualified as a property valuer however he makes no assessment on the value of the improvement on the subject land. I find that his valuation report lacks substance and credibility and is entirely speculative. It is irresponsible and negligent of a valuer to exaggerate a loss based on a superfluous foundation. I find the valuation report as fanciful and bogus to say the least.
    
19. It would appear that the Plaintiff refused to vacate the premises in time as notified by NCDC and thereby did nothing only at the day of the demolition, it brought in a valuer to observe the demolition and write a report on loss of business. The Plaintiff had effectively contributed to its own losses by not heeding the warning and not vacating the premises in time.
    
20. There is evidence by a cashier employed by the Plaintiff and security guards on the premises who all say that the demolition caught them by surprise. I find that the Plaintiff, Mr Wang had sufficient and ample notice of the demolition. He cannot make a big song and dance when he chose not to rearrange his affairs, remove his possessions, important company records, imported supplies kept in freezer containers etc. There is only one conclusion I find that can be drawn from Mr Wang’s conduct which raises a reasonable presumption, Mr Wang set up his own losses to claim from NCDC by not vacating the premises in time. Mr Wang may not understand clearly the English language and the contents of the letter he received from NCDC, but he had time to seek assistance to understand the letter from NCDC. In fact, his attempt to meet with NCDC to relocate to another location is conclusive that he understood that he has to move his business to allow for the road works to begin. I uphold NCDC’s submissions that the Plaintiff did nothing to mitigate its losses.
    
21. I also find that the Plaintiff has not proven any actual loss of business profits from the demolition and actual loss of improvements from the demolition. The Plaintiff’s evidence is largely hearsay and speculative, uncorroborated by any Profit and Loss Statement, there is no bank Statements, there is no verification from its accountants and or there is no convincing evidence that this is a formal business that was making profits prior to the demolition. To say that all its financial records were kept on the premises and destroyed is far from good and prudent business practice and cannot be believed by the Court as the Plaintiff did nothing to keep in a safe custody it’s records. I also find that other records can be retrieved from its bank and its accountants etc, but the Plaintiff failed to produce those.
    
22. I am of the view that the Plaintiff has not made out a case for any damage at all in its claim as the evidence is insufficient and clearly lacking. The Claim for future economic loss is not an actual loss as ordered by the Supreme Court and that is refused. The claim for Special Damage has not been pleaded in the Statement of Claim and has been vehemently opposed by NCDC and therefore that is also refused.
    
23. In regard to Exemplary Damage which is pleaded in the Statement of Claim, the Court in Apa and Ors v The State^[4] defined exemplary damage as:
    

The leading common law case on exemplary damages is Rookes v Barnard [1964] UKHL 1; [1964] AC 1129, a decision of the House of Lords which was discussed in a subsequent decision of the House in Broome v Cassell & Co [1972] UKHL 3; [1972] AC 1027. In Rookes it was observed that the primary object of an award of damages is to compensate the plaintiff for the harm done to him. A possible secondary objective is to punish the defendant which is an object which can be achieved by awarding exemplary damages. The House of Lords decisions counselled moderation in the award of exemplary damages and observed that the award of exemplary damages may be influenced by the size of the award of compensatory damages.

24. Exemplary damage is penal in nature in addition to the wrongdoer paying damages. I find that an award of exemplary damage is unwarranted in this case as I have found that the Plaintiff had sufficient notice of the eviction and did nothing thereby contributing to its own losses. The claim for exemplary damage is refused.
    
25. The Plaintiff therefore has not made out a claim for actual loss reasonably foreseeable. This could have been a claim for the improvement on the property subject to the terms of the lease agreement, that to my mind is an actual loss reasonably foreseeable however this has not been made out on the evidence and on the required civil standard of proof. In the words of the Court in Lalip for himself and on behalf of Kulap and Minalo v Sikiot^[5]:
    

“Just because the Plaintiff has obtained (default) judgement does not mean that he is entitled as of right to receive damages. He must prove the damages suffered by credible evidence.”

26. The Plaintiff appears to run a business reserved for Papua New Guineans and does not produce any records that it is a foreign enterprise. It’s failure to keep proper records and prove its losses is entirely to its own peril.
    
27. Following the Supreme Court decision in Wapi v Ialy^[6], the Supreme Court said this with particular emphasis underlined:
    

“Given the above, we are of the view that where a judgment, be it default or otherwise, has been entered, and a primary judge determines, after concluding a hearing to assess damages, that the plaintiff has not sufficiently proved his loss or that no cause of action is disclosed in the statement of claim or that the pleadings are defective or that the claim is frivolous or vexatious or is an abuse of process, he is entitled to refuse to make an award of damages. This is in accord with him being able to consider the question of liability for the damages claimed. To dismiss the entire proceeding however, in the absence of any application to set aside, as in this case, the effect of which is to review the decision to enter judgment and to set such judgment aside, is in our respectful view, to fall into error.”

28. As the Plaintiff has not proven its losses, actual losses reasonably foreseeable as ruled by the Supreme Court, the Plaintiff’s claim for damages is refused.
    
29. The Court therefore makes the following orders:
    
    1. The Plaintiff’s claim for damages is refused.
    2. The Plaintiff shall meet the Defendants costs of these proceedings to be taxed if not agreed.
       

Orders accordingly.
________________________________________________________________
Pacific Legal Group Lawyers: Lawyers for the Plaintiff
Mukwesipu Lawyers: Lawyers for the First Defendant
Office of the Solicitor General: Lawyers for the Second and Third Defendants

^[1] [2005] PGSC 36; SC790 (1 July 2005)

[2] [1993] PGSC 12; [1993] PNGLR 370 (14 December 1993)PNG Law Reports 1993
[3] See George v Motor Vehicles Insurance (PNG) Trust [1993] PGNC 62; [1993] PNGLR 477 (16 November 1993), Huaimbukie v Baugen [2004] PGNC 191; N2589 (16 July 2004), Pias v Kodi [2004] PGNC 84; N2690 (18 October 2004)
[4] [1995] PNGLR 43
[5] [1996] PGNC 7; N1457 (17 May 1996)
[6] [2014] PGSC 32; SC1370 (4 July 2014)