N11086

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 196 OF 2023

BETWEEN
YAME YAME LIMITED
-  Plaintiff -

AND
DOROTHY PRUL, MANAGING DIRECTOR OF THE SECOND DEFENDANT
- First Defendant–

HONUNGA PLANT HIRE
- Second Defendant–

Kimbe:  Collier J
2024:  08th November

DAMAGES – assessment of damages – plaintiff sought amount of unpaid invoice, interest from when cause of action arose, special damages and fixed sum costs – damages awarded in respect of unpaid invoice amount – special damages not pleaded – whether pre-judgment interest should be awarded – whether fixed costs should be awarded

Facts

The defendants engaged the landscaping services and machinery of the plaintiff however failed to pay the plaintiff’s invoice of K80,000.00 in 2018. The plaintiff issued a writ of summons in 2023. The plaintiff claimed the unpaid amount, as well as interest from when cause of action arose and post-judgment, special damages, and costs fixed in a lump sum amount.

Held: 

The plaintiff is entitled to damages in respect of its unpaid invoice, and interest at 8% from the issue of the writ of summons until payment. Special damages must be pleaded – as they were not pleaded it was not open to the Court to order them. Pre-judgment interest would not be awarded where the plaintiff had failed to explain the delay of 5 years in the issue of its writ of summons. A fixed costs lump sum order would not be made where the amount of costs sought by the plaintiff was not supported by evidence or proper submissions.

Cases Cited:
Papua New Guinean Cases

Andrew Moka v Motor Vehicle Insurance Limited [2004] SC729
John R. Giheno Holdings Ltd v City Pharmacy Ltd [2022] PGNC 312; N9837
Ken Let v Motor Vehicle Insurance Limited [2005] N816
Kepson v Lati [2023] N10473
Kusa v Motor Vehicles Insurance (PNG) Trust [2003] N2328
Marsh v Hay [1981] PNGLR 392
Mel v Pakalia [2005] SC790
Nayos v Gawi [2014] N5667 
Papua New Guinea Banking Corporation (PNGBC) v Tole [2002] SC694

Overseas Cases

Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119
Leary v Leary [1987] 1 All ER 261

Legislation:

Judicial Proceedings (Interest on Debts and Damages) Act 2015 s 4(1)

Counsel:

Mr P. Mokae, for the Plaintiff
Mr F. Kua, for the Defendants

8th November 2024

1	COLLIER J: Before the Court is an application for Assessment of Damages pursuant to orders made by Anis J on 21 November 2023 following delivery of default judgment against the defendants in this proceeding. Specifically, the orders made by his Honour were in the following terms:

THE COURT ORDERS THAT: - 
1. 	Default Judgement is entered against the Defendants for failing to file their Defence within the time required under the National Court Rules. 
2. 	The matter shall be listed in the next call over for parties to set a date for trial on assessment of damages. 
3. 	The Defendants shall pay the Plaintiffs cost of this application on a party/party basis to be taxed if not agreed. 
4. 	Time is abridged. 

Background

2	In late July 2018, the defendants engaged the landscaping services and machinery of the plaintiff. 

3	There was no prior agreement in relation to rates or otherwise due to the urgency of the work. The defendant initially paid K10,000.00 as part payment of the work. 

4	The works took two weeks. It was agreed that an invoice would be provided for the works upon completion of the works. 

5	On 27 July 2018 the plaintiff provided the defendant with an invoice for works completed in the amount of K80,000.00. 

6	Several attempts were made by the plaintiff to recover the amount from the defendants but the invoiced amount was never paid. 

7	A Writ of Summons and Statement of Claim were filed by the plaintiff on 7 June 2023, seeking: 

(i). 	K80,000.00 for services rendered. 
(ii). 	8% Interest on the K80,000 for the last five years
(iii). 	Damages for pain, inconvenience and hardship inflicted on the Plaintiff as a result of non-settlement of the Plaintiff’s account. 
(v). 	Costs of this proceeding
(vi). 	Interest pursuant to the Judicial Proceedings (Interest of Debts and Damages) Act 1962, Chapter 52
(vii). 	Such further and other relieves as this Honorable Court deems fit 
(errors in original) 
8	It is in respect of this originating process that default judgment was ordered.
Submissions 

9	The plaintiff provided both written and oral submissions in respect of damages he sought. Those submissions, in summary, were as follows: 

•	The liability of the defendant to pay the unsettled invoice of K80,000.00 was already established by the orders of Anis J. This amount was payable ‘as of cause’. 
•	The claim for 8% interest on the K80,000.00, being K38,400.00 was unchallenged by the defendants. 
•	Pursuant to Nayos v Gawi (2014) N5667 and Mel v Pakalia (2005) SC790, once default judgment is entered against a defendant, the factual elements of the cause of action, and their legal consequences, are taken as proven. 
•	Inflation and the high cost of living should be considered in assessing and awarding damages: Ken Let v Motor Vehicle Insurance Limited (2005) N816; Andrew Moka v Motor Vehicle Insurance Limited (2004) SC729. 
•	General damages must be increased from what was awarded 5 to 10 years ago. 
•	The plaintiff incurred costs in terms of bills, phone credits, bus fares, and incidentals in the prosecution of the case. An appropriate range for the damages is K4,000.00 to K10,000.00. A reasonable award in the circumstances would be K8,000.00. 
•	Interest should be payable for the total of the damages (including interest on the K80,000,00) and calculated from the date that the cause of action arose at a rate of 8% per annum. 
•	Costs should be fixed in the amount of K50,000.00.
•	The plaintiff expected that, upon delivering the invoice, they would be repaid the K80,000.00 forthwith. 

10	The plaintiff also made submissions in relation to damages for pain, inconvenience and hardship. However, at the hearing, Mr Mokae for the plaintiff informed the Court that he would not press that head of damages. 

11	The defendant made both written and oral submissions. Those submissions, in summary, were as follows: 

•	Interest is not part of the award for damages and is to be assessed separately. 
•	Claims for pain, inconvenience and hardship inflicted on the plaintiff only apply to personal injury claims and cannot apply where the plaintiff is a company. 
•	K8,000.00 in special damages for bus fares and incidentals is excessive and should not be granted. This is particularly so in circumstances where the plaintiff is a company and owns a vehicle. 
•	A claim for K50,000.00 in costs is unfair to the defendant. The costs should be taxed. 

12	The defendant further submitted that the amount of K80,000.00 was not specifically ordered in the default judgment and as such should be proved on documentary evidence. This line of submission was not pressed at the hearing and the defendant conceded that the amount of K80,000.00, being the debt sought in the Writ of Summons, was payable pursuant to the orders dated 21 November 2023. 
Consideration

K80,000.00 for services rendered

13	It is not necessary to go into detail concerning the defendants’ liability to pay K80,000.00 claimed for services rendered, as the defendant conceded at the hearing that those monies were payable pursuant to the orders of Anis J dated 21 November 2023. 

14	It is appropriate in the circumstances to order that K80,000.00 be paid by the defendant for services rendered. 
K8,000.00 in special damages 

15	The plaintiff in the writ of summons and statement of claim does not specifically plead special damages, or indeed any head of damages under which the amount of K8,000.00 claimed by the plaintiff can be seen to fall.

16	As the Supreme Court explained in Papua New Guinea Banking Corporation (PNGBC) v Tole [2002] SC694:

It is clear law that, where a plaintiff’s claim is special in nature, such as a claim for loss of salaries or wages, they must be specifically pleaded with particulars. Unless that is done, no evidence of matters not pleaded can be allowed and relief granted. That is apparent from the judgements in the James Pupune and John Etape cases. These cases adopted and applied principles enunciated in those terms in authorities such as Ilkiw v. Samuel [1963] 2 All ER 879, per Diplock L J at pp. 980-891 and Pilato v. Metropolitan Water Sewerage and Drainage Board (1959) 76 WN (NSW) 364, per McClemens J at 365. This follows in turn from the fact that, our system of justice is not one of surprises but one of fair play. Reasonable opportunity must be given to each other by the parties to an action to ascertain fully the nature of the other’s case so that, if need be, a defendant can make a payment into Court.
(emphasis added)

17	It was on the basis of absence of pleading, for example, that Mugugia AJ refused to order special damages in John R. Giheno Holdings Ltd v City Pharmacy Ltd [2022] PGNC 312; N9837. I further note the observation of Gavara-Nanu J in Kusa v Motor Vehicles Insurance (PNG) Trust [2003] N2328 that:

These are special damages which must be specifically claimed and proved strictly. This principle was stated by Lord Macnaugton in Stroms Bruks Aktie Bolag –v- John and Peter Hutchinson [1905] UKLawRpAC 52; [1905] A.C 515 at page 525.
" Special damages ..... are such that as the law will not infer from the nature of the act. They do not follow in the ordinary course. They are exceptional in their character, and therefore, they must be claimed specifically and proved strictly ...." (my underlining).
18	In the absence of specific pleading of a claim for special damages in the plaintiff’s statement of claim, it is not open to this Court to make such an award.
Interest 

19	Section 4(1) of the Judicial Proceedings (Interest on Debts and Damages) Act 2015 provides:

4. PRE-JUDGMENT INTEREST ON DEBTS AND DAMAGES.
(1) Subject to Section 5, in proceedings in a court for the recovery of a debt or damages, the court may order a rate as it thinks proper to be applied to the sum for which judgment is given interest, on the whole or part of the debt or damages for the whole or part of the period between the date on which the cause of action arose and the date of the judgment.
20	The plaintiff has sought an award of pre-judgment interest, as well as interest following the issue of the writ of summons. 

21	Recently in Kepson v Lati [2023] N10473 a successful plaintiff sought interest at the rate of 8% per annum from the date the cause of action arose to the date of judgment. Justice Makail observed:
47. … However, while the cause of action arose in or about August 2015, the writ of summons was issued on 17th January 2017 and there is no explanation by the plaintiff for the delay of about two years in issuing the writ of summons. In all fairness, interest shall run from date of issue of writ of summons on 27th January 2017 until date of judgment on assessment of damages and thereafter, until final settlement….
22	The general approach in respect of interest payable on an award of damages is that a defendant will be ordered to pay interest at the rate of 8% on the total judgment sum from the date of filing of the writ of summons until final payment. 

23	In my view, the plaintiff has provided no explanation of merit as to why it did not issue the writ of summons until the expiration of 5 years after it issued its unpaid invoice to the defendant. The plaintiff submitted that the delay was occasioned because the plaintiff continued to ask the defendants for payment and the defendants failed to pay. With respect, this excuse is poor. It was for the plaintiff to take action to enforce its rights against the defendants. Its delay in doing so should not be indulged by the Court by an award of interest.

24	I am not prepared to order interest on the damages awarded, prior to the issue of the writ of summons.
Costs

25	Costs generally speaking follow the event. An award of costs is, of course, at the discretion of the Court. 

26	It is not in dispute in the present case that the defendants should pay the costs of the plaintiff of and incidental to the proceedings.

27	However, the plaintiff has sought the Court to make a lump sum costs order in the amount of K50,000.00, rather than costs going to taxation. The defendants oppose a lump sum costs order.

28	The plaintiff offered no evidence to support the order of a lump sum costs order in the amount of K50,000.00. In particular, there was no evidence of its lawyer deposing as to the costs incurred by the plaintiff in the proceedings. 

29	As a general proposition, bills of costs were required to be provided by lawyers in taxable form: Marsh v Hay [1981] PNGLR 392. In more recent times lump sum costs orders have become more usual. However, as Von Doussa J observed in the decision of Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119 at 165-166:

I agree however with the submission of Mr Rice that before exercising the power to fix a gross fee, the Court should be confident that the approach taken to estimate costs is logical, fair and reasonable. On the one hand the Court must be astute to prevent prejudice to the respondents by overestimating the costs, and on the other hand must be astute not to cause an injustice to the successful party by an arbitrary “fail safe” discount on the cost estimates submitted to the Court: Leary v Leary at 76; 265. Although with the benefit of hindsight it is regrettable that an application was not made by the applicants for gross sum orders before so much paperwork had been prepared, there would nevertheless have been a need to prepare substantial paperwork in the nature of schedules of disbursements, explanations of the work done, and so forth to support the amounts claimed.
(emphasis added)
30	Earlier in Leary v Leary [1987] 1 All ER 261 the English Court of Appeal noted at 265 in respect of a rule permitting a gross sum so specified in lieu of taxed costs:

The unlimited discretion given by Ord 62, r 9 must be exercised in a judicial manner. How the powers are to be used varies widely from case to case and each case must be considered on its own merits. It is easy to envisage cases where a judge could be said to have acted unjudicially: eg by clutching a figure out of the air without having any indication as to the estimated costs; receiving such an estimate without the details being made available to the other side; or refusing a request to hear submissions on such a schedule if the party against whom the order is to be made makes, on reasonable grounds, an application to be heard. There will be many cases in which the judge may well feel that he or she would be assisted by submissions from counsel on whether (a) a gross figure should be assessed under Ord 62, r 9 at all, and (b) if so, at what figure. There is, however, no statutory obligation on the judge to receive such submissions provided that he observes the rules of natural justice…
(emphasis added)
31	As I noted at the hearing today to Mr Mokae for the plaintiff, it is not appropriate to pluck amounts out of the air in making costs orders. In this context, I further note that the amount of fixed costs sought by the plaintiff was almost two-thirds of the amount claimed, in circumstances where the plaintiff obtained a default judgment and was not required to go to a full trial liability. I have serious concerns that an order that the defendants pay K50,000.00 in lump sum costs could cause prejudice to the defendants by overestimating the costs. 

32	In the absence of evidence supporting a lump sum or fixed costs order in the amount sought by the plaintiff, I am not prepared to make a costs order in the terms sought. Rather, it is appropriate that a costs order be made in the usual manner, namely that costs be taxed if not otherwise agreed.

33.      The Court orders that:

1.	Judgment be entered against the defendants in the amount of K80,000.00.
2.	The defendants pay interest at the rate of 8% on the total judgment sum of K80,000.00 from the date of filing of the writ of summons until final settlement pursuant to sections 4 and 6 of the Judicial Proceedings (Interest on Debts and Damages) Act 2015.
3.	The defendants pay the costs of the plaintiff on a party-party basis, to be taxed if not agreed.

Mokae & Associates Lawyers: Lawyers for Plaintiff
Felix Kua Lawyers: Lawyers for Defendants