N10861

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 950 OF 2018

BETWEEN:
TUBO TRUCKING LIMITED
Plaintiff

V

TONY KILA as the Managing Director of
Moran Ina Naga Limited
First Defendant

AND
MORAN INA NAGA LIMITED
Second Defendant

Waigani: Anis J
2024: 16th May, 14th & 24th June

TRIAL ON ASSESSMENT OF DAMAGES – Claim premised on dry lease contract – leasing of excavator - term of the lease for 1 year period – claim in debt recovery to enforce contract and to seek outstanding invoices that remain unpaid – claim for loss of business – claim for return of the excavator or its replacement value - consideration - ruling

PRACTICE AND PROCEDURE – Whether plaintiff can seek damages premised on what was not pleaded – default judgment was entered at separate hearing – liability was determined premised on the facts that had been pleaded – an entry of default judgment crystalizes the pleaded facts – one cannot therefore raise argument or make allegations that may infer, vary or assert new facts that are contrary to or outside the already crystalized facts which had been determined by the entry of default judgment 

Cases Cited:

William Mel v Coleman Pakalia and Others (2005) SC790
Papua New Guinea Banking Corporation v Jeff Tole (2002) SC694
National Court decision in Coecon Ltd v National Fisheries Authority (2002) N2182
Kalinoe v. Paul Paraka (2014) SC1366
National Capital District v. Central Provincial Government (2015) SC1429
Mark Ipuiya v.  George Waugulo (2022) N9416
Jennifer Gawi v. Anna Gawi and Or (2024) N10869
Porgera Gold Mines Ltd v. Kimaleya Ondalane and Ors (2023) N10274
William Lakain v. Senior Sergeant Andrew Wilfred and Ors (2023) N10270
Gadigi v Logae (2021) SC2102
Michael Newall Wilson v Clement Kuburam (2016) SC1489
Application by Anderson Agiru (2002) SC686
Lars Opi v. Telikom (PNG) Ltd (2020) N8290

Counsel:

D Rhem with counsel assisting A Yauieb, for the Plaintiff
M Kombri, for the Defendants

JUDGMENT

24th June 2024

1.	ANIS J:  This was a hearing on assessment of damages.  The claim by the plaintiff was to recover outstanding monies it claimed were due under a lease or dry-hire contract (the Lease), damages for loss of business, and for the return of its excavator that had been delivered to the defendants under this arrangement.

2.	Default judgment was entered in favour of the plaintiff on 8 November 2022.  The trial on assessment was heard on 16 May 2024.  Closing submissions were heard on 14 June 2024.  I reserved my ruling thereafter to a date to be advised.

3.	This is my ruling.

BACKGROUND

4.	As stated, the main dispute concerns outstanding monies the plaintiff claimed were owed to it under the Lease.  The plaintiff also claimed loss of business and for the return of its excavator.  The excavator is described as Komatsu PC 200-8 (Excavator).  It was delivered to the defendants brand new for the defendants to further lease to Oil Search (PNG) Ltd as per the terms and conditions stipulated in the Lease.  The dispute arose in 2015 where the plaintiff claimed, amongst others, breach of the terms and conditions of the Lease.  To this day, defendants continue to keep the Excavator even though the Lease had formally expired in 2014.  

5.	After waiting for about 3 years, the plaintiff filed this proceeding. At para. 26 of the Writ of Summons and Statement of Claim filed 14 August 2018 (the Writ or SoC), the plaintiff seeks the following relief:

(a)	Payment of the amount of K3,825,175.00;

(b)	Damages for loss of business;

(c)	Immediate return of the Excavator;

(d)	Interest pursuant to Judicial Proceedings (Interest on Debts and Damages) Act;

(e)	Costs of and incidental of these proceedings; and

(f)	Any other or further orders this Honourable Court deems fit.

ISSUES

6.	The main issues are, (i), whether the defendants owe the plaintiff the full sum of K3,825,175 as claimed, or whether a lesser sum or no amount at all should be awarded, (ii) whether the Court should make any award for loss of business, and if so, how much should be awarded, and (iii), Should the Excavator be returned to the plaintiff or should the defendants pay for its replacement value, and if the later is granted, what would be the reasonable replacement value?

OUTSTANDING MONIES

7.	The default judgment that was entered herein was entered premised on the pleadings in the SoC.  According to the pleadings, the Lease was signed on 1 January 2013.  A copy of the Lease is attached as Annexure C to Exhibit P1.  

8.	Term 6 of the Lease is relevant for this purpose.  It reads in part:

6.	ADMINISTATION OF THIS AGREEMENT

6.1	Both Parties have agreed to the following for the proper administration of this Agreement:

Validity of the Agreement

(a)	The Agreement will be valid for twelve (12) months upon the date of signing.

Review of the Agreement

(b)	The review of the Agreement will take place annually; however, nothing stops the Parties from reviewing the Agreement on mutual consent prior to the annual review period.
……

9.	I note the submissions of the parties in this regard.

10.	I make the following preliminary observations.  First, the plaintiff had not pleaded whether the agreement was ever extended beyond its first year.  Secondly, there was no pleading that the Lease was extended by the conduct of the parties as alleged by the plaintiff.  The agreement was signed on 1 January 2013.  It expired in January of 2014.  And when I consider clause 6.1(b), the term is express.  It states that unless the parties mutually agree or consent to an earlier review (of the Lease), the Lease ‘will ‘which means that it must or shall be reviewed annually.  In this case, it is not disputed that the Lease was never mutually extended at the end of its first term.  It is also not disputed that the parties did not meet earlier or ever to extend the Lease beyond 2014.  However, the plaintiff, in submissions and as stated above, is asserting that the Lease was varied or extended by the conduct of the parties.  The dilemma I have with this claim is that it runs contrary to the express terms of the Lease, namely, clause 6.1(b).  The other problem is that the claim was not pleaded in the SoC.  And I must remind myself that judgment on liability has already been entered premised on what had been pleaded.  

11.	Therefore, and in my view, it is not open for this separate Court hearing, which is sitting to consider damages, to accept any argument from the plaintiff that may try to circumvent the deficiencies in its pleading, or for the plaintiff to seek relief premised on what was not pleaded.  When default judgment was entered on 8 November 2022, it was entered premised on the pleaded facts in the SoC.  And the pleaded facts ‘crystalized’, so to speak, on 8 November 2022.  Thus, this Court, in conducting assessment, is limited to or bound to make findings on assessment premised only on the crystalized pleaded facts. 

12.	I note that I have jurisdiction to revisit pleadings under circumstances such as this; that is, to seek clarity or address ambiguities on what may or may not be sought as damages in this assessment hearing.  The Supreme Court in William Mel v Coleman Pakalia and Others (2005) SC790 in endorsing the earlier decisions of Papua New Guinea Banking Corporation v Jeff Tole (2002) SC694 and a National Court decision in Coecon Ltd v National Fisheries Authority (2002) N2182, held that, the role of a trial judge in assessing damage is:

(a)  To make a cursory inquiry so as to be satisfied that the facts and the cause of action are pleaded with sufficient clarity; and

(b)  If the facts and cause of action are reasonably clear, liability should be regarded as proven, i.e. the default judgment resolves all questions of liability in respect of the matters pleaded in the statement of claim;

(c)  Only if the facts of the cause of action pleaded do not make sense or would make an assessment of damages a futile exercise should the judge inquire further and revisit the issue of liability;

(d)  The plaintiff has the burden of producing admissible and credible evidence of the alleged damages; and

(e)  Any matter that has not been pleaded but is introduced at the trial is a matter on which the defendant can take an issue on liability.

13.	I have exercised my role in that regard.  My conclusive view is that the plaintiff is only entitled to damages premised on what had been pleaded in the SoC: See also cases:  Papua New Guinea Banking Corporation Ltd v. Jeff Tole (supra) SC694, Kalinoe v. Paul Paraka (2014) SC1366, and National Capital District v. Central Provincial Government (2015) SC1429.

14.	Let me now address this head of damage.  The purported outstanding hire fees claim made from 2013 to 2018, is K3,825,175.  I make the following observations regarding that:  First, the parties acknowledge that the outstanding hire fees charge for the period from 2013 to 2014, was received late and as part-payment only, in 2015.  The parties acknowledge that the outstanding sum under the Lease for the period was K446,505 (the Debt).  The parties also acknowledge that on 20 May 2015, the defendants made a part-payment of K200,000 to settle the Debt.  And the parties further acknowledge that a balance of K246,505 remained outstanding then and to-date.  However, the defendants claim that since the plaintiff did not expressly plead the sum of K246,505 as owing but instead pleaded K3,825,175 as the sum that was owing in its SoC, it should not be awarded with anything.

15.	Let me begin by dismissing the defendants’ argument regarding want of pleading of the outstanding sum of K246,505 in the SoC.  With respect, the argument is illogical.  It is true that the plaintiff had pleaded a higher figure then K246,505 in the SoC.  But this is an assessment hearing; my role is to consider what correct or appropriate sum I should award for this head of damage. 

16.	Because there is admission by the parties on what is outstanding, I am minded to and will award the balance of the Debt which remains due under the Lease, to be awarded to the plaintiff, that is, the sum of K246,505.  I am also satisfied that the plaintiff has provided sufficient evidence to establish the Debt on the balance of probabilities.  

17.	I decline to make any other award that is beyond the lifespan of the Lease.  I find nothing in the SoC that provides the foundation for the plaintiff to make claims for purported lease fees that may be owed by the defendants to the plaintiff, after 2014 or after the Lease had expired.

LOSS OF BUSINESS

18.	The plaintiff claims as its second relief Damages for loss of business.  

19.	I note the submissions of the parties in that regard.

20.	The 2 main disputes put forward by the defendants are (i), the relief was not sufficiently pleaded or particularized, and (ii), the plaintiff did not provide evidence to establish the losses allegedly suffered.  And the defendants submit that the Court should make zero award for this head of damage.

21.	I refer to the SoC.  Paras. 15, 16 and 22 are relevant.  The plaintiff pleads, amongst other things, that the defendants continue to keep the Excavator.  And the plaintiff calculates the hire fees premised on the period 2012 to 2018 and arrives at a sum of K3,825, 175 as pleaded at para. 22.  It claims that the sum represents the estimated loss of revenue suffered, and therefore claims that as its loss of business.  At the hearing, the plaintiff increased the year from 2018 to 2023, and submitted that the final sum for loss of business should be assessed at K7,730,580.  

22.	My first observation concerns the variation in the sums claimed.  I note that there is no basis for the plaintiff to calculate beyond 2018.  Paragraph 22 of the SoC pleaded the number of years to as far as 2018 only.  Thus, I find no premise for the plaintiff to estimate its losses beyond 2018.

23.	My second observation is this.  I made a finding above that the Lease was never renewed nor extended.  It ended on 1 January 2014.  The Lease does not state or define what the annual renew period is.  Does it commence within 6 months before the expiry date of the Lease?  Or is it within 6 months after the expiry date?  Such information may be relevant for assessment purposes.  But the main key factor for this purpose is the Excavator.  The Excavator was never returned.  And I note that the Excavator was the main asset or capital investment of the plaintiff.

24.	With these, I do find that the plaintiff should be awarded a sum of money for loss of business.  After the Lease expired, the Excavator should have been returned to the plaintiff.  There was no legal basis for the defendants to continue to hold onto it.  However, the Excavator has remained in their custody to this day.  The first issue for me now is to determine the period to compute time, and the next issue is the rate and calculation that I should make to come up with a sum to award for loss of business.  

25.	The first issue is 2-fold, and I begin with these questions.  When should I compute time?  Should I start from the date when the Lease expired?  Or should I commence from the date after the defendant had confirmed the invoice and had made the part-payment of K200,000 on 20 May 2015.  And the second part to it is, when do I stop computing time?

26.	These determinations are discretionary.

27.	In this case, I am minded to compute time commencing as at 1 January 2015 to 14 August 2018, the latter being the date of filing the Writ.  The rate of the dry hire in the Lease may be considered to assist me determine a reasonable rate to project loss of business, that is, as a result of being deprived of the Excavator.  I note that Clause 3.2 of the Lease states that the defendants shall pay to the plaintiff an hourly rate net at K255.

28.	For this purpose, to project loss of business, I am minded to allow a projected rate of K200 per hour.   I will estimate work per day at 8 hours per day for 6 days per week from 1 January 2015 to 14 August 2018.  I multiply 8 by K200 and get K1,600.  The estimated loss of business per day by the plaintiff may be projected at K1,600 per day, that is, loss of opportunity to lease the Excavator elsewhere to make revenue.  From 1 January 2015 to 1 January 2018 is 3 years.  I multiply K1,600 by 365 and get K584,000.  I then multiply K584,000 x 3 years and get K1,752,000.  From 2 January 2018 to 14 August 2018 is a total of 7 months and I will estimate the months to have 30 days.  Therefore, I multiply 30 days by 7 months and get 210 days.  From 2 August 2018 to 14 August 2018 is a total of 12 days.  I add 12 days with 210 days and get 222 days.  Then I multiply K222 days by K1,600 and get K 355,200.  To summarise, I add K1,752,000 with K355,200 and get K2,107,200.

29.	Loss of business by the plaintiff may be projected at K2,107,200.  

30.	If I allow 15% contingencies, the projected loss may be discounted to K1,791,120.  Or if I allow 20% contingencies, the projected loss will stand at K1,685,760.  I am minded to allow and apply the rate of 20%.  This means the projected loss of business may be assessed at K1,685,760.

31.	The next point of consideration is mitigation.  The plaintiff has a duty to mitigate its loss:  Mark Ipuiya v.  George Waugulo (2022) N9416.  However, the burden of proof rests with a defendant to make the assertion and provide evidence of what a plaintiff ought to have done to minimize its loss:  Lars Opi v. Telikom (PNG) Ltd (2020) N8290.  When I refer to the written submission, the defendants did not address that.  I therefore will not address it.  But as a remark, I note that the plaintiff had taken steps to mitigate its loss.  On 23 February 2022, it purchased a new excavator.  It adduced evidence in that regard, that is, at paras. 29 and 30 to Exhibit P1.  The plaintiff’s evidence was challenged by the defendants.  However, I find the plaintiff’s evidence credible, and I accept that as accurate.

32.	I am minded to make an award for loss of business, or to be precise, loss of revenue that would have otherwise been derived from the hire of the Excavator elsewhere, in the sum of K1,685,760 in favour of the plaintiff.

EXCAVATOR

33.	The plaintiff also seeks as its 3rd relief in its SoC, the return of its Excavator.

34.	The defendants do not dispute that.  They confirm that the Excavator is presently in their possession.  But their argument is this.  They say the Excavator has always been at their site after the Lease expired, but the plaintiff did nothing to retrieve it all this time.

35.	I note the submissions of the parties on this.

36.	The plaintiff also makes the alternative submission that given that the Excavator has been in the custody of the defendants for 12 years, the defendants should reimburse the cost of the new excavator that it purchased from UMW Niugini Ltd.  

37.	I reject the alternative submission for the reason that it was not pleaded as an alternative relief.  I will order the defendants to return the Excavator to the plaintiff.  Now, I note that the Excavator was delivered brand new to the defendants in 2012, which was about 12 years ago.  As such, the only other consequential order I will make, in exercising my powers under s.155(4) of the Constitution, to administer justice given the circumstances of the case, is to make an additional order that the defendants must return the Excavator in working or good condition within 30 days from the date of the Court Order.  

38.	This Court does have power to make such additional or consequential orders: Jennifer Gawi v. Anna Gawi and Or (2024) N10869, Porgera Gold Mines Ltd v. Kimaleya Ondalane and Ors (2023) N10274, William Lakain v. Senior Sergeant Andrew Wilfred and Ors (2023) N10270, Gadigi v Logae (2021) SC2102, Michael Newall Wilson v Clement Kuburam (2016) SC1489, and Application by Anderson Agiru (2002) SC686.

INTEREST

39.	The plaintiff also seeks interest under the Judicial Proceedings (Interest on Debts and Damages) Act 2015.  

40.	I am minded to award interest, and I will apply the standard 8% interest rate per annum.

41.	In regard to the award K246,505, I will compute time from the date it was due.  Evidence adduced shows that it was due as at 20 May 2015, that is, from the time the defendants informed the plaintiff of the Debt.  Eight percent of K246,505 is K19,720.40.  I divide that by 365 days and get K54.03 which is the interest rate per day.  From 20 May 2015 to the date before the date of judgment, 23 June 2024, is a total of 9 years and 31 days.  I multiply K19,720.40 by 9 years and get K177,483.60.  I multiply 31 days by K54.03 and K1,674.93.  I add the 2 together and get K179,158.53 which is the assessed interest to be added onto the sum of K246,505. 

42.	The final award on the outstanding debt inclusive of interest is K425,663.53.

43.	The next award was for loss of business or revenue of the plaintiff.  The award for that is K1,685,760.  For this loss, I will compute time from the date of filing the proceeding to the date, which is a day before the date of judgment, 23 June 2024.  Eight percent of K1,685,760 is K134,860.80 which is the annual interest.  I then divide that by 365 days and get K369.48 which is the interest rate per day.  From 14 August 2018 to 23 June 2024, is a total of 5 years, 10 months and 9 days.  I multiply K134,860.80 by 5 years and get K674,304.  I estimate 30 days for each month, and I multiply 30 days by 10 months, and I get 300 days, and then I multiply that with K369.48 and get K110,844.  I also multiply K369.48 by 9 days and get K3,325.32.  When I add them all up with K1,685,760, I get K2,474,233.32.

44.	The final award for loss of business or revenue that should otherwise have been derived for the hire of the Excavator, inclusive of interest, is K2,474,233.32.

SUMMARY

45.	I find that the plaintiff has proven its relief for me to grant as per the awards that have been made including interest.

46.	Interest at 8% per annum shall accrue if the total judgment debt is not settled in full within 30 days from the date of judgment, and it shall continue to accrue until the debt is fully settled.

COST

47.	An order for cost remains discretionary.  In this case, I will order cost to follow the event on a party/party basis to be taxed if not agreed.  Since the first defendant is sued in his capacity as the Managing Director of the second defendant, cost will be ordered against the second defendant.

ORDERS OF THE COURT

48.	I make the following orders:

1.	Judgment is entered in the sum of K425,663.53 for outstanding monies owed under the Lease Agreement.

2.	Judgment is also entered in the sum of K2,474,233.32 for loss of business or to be more precise, for loss of revenue that would have otherwise been derived from the plaintiff’s excavator.

3.	In total, a final judgment in the sum of K2,899,896.85 (Judgment Sum) is awarded to the plaintiff against the second defendant.

4.	Unless the Judgment Sum is paid in full within 30 days from the date of this order, interest will accrue at the rate of 8% per annum on the Judgment Sum until the Judgment Sum is fully settled.

5.	The defendants are ordered to return the plaintiff’s excavator described as Komatsu PC 200-8 in good and working condition within 30 days from the date of this decision.

6.	The second defendant shall pay the plaintiff’s cost of the proceeding, on a party/party basis which may be taxed if not agreed.

7.	Time for entry of these orders is abridged to the date and time of settlement by the Deputy Registrar of the National Court which shall take place forthwith.

The Court orders accordingly.

________________________________________________________________
M S Wagambie: Lawyers for the Plaintiff
Kombri & Associates: Lawyers for the Defendants