N11268

PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]

WS NO 21 OF 2024 (CCI) (IECMS)

BETWEEN
GRAND COLUMBIA LIMITED
Plaintiff

INDEPENDENT STATE OF PAPUA NEW GUINEA
Defendant

WAIGANI: MAKAIL J
8, 25 APRIL,  5 MAY 2025

ASSESSMENT OF DAMAGES – Assessment of damages following entry of default judgment – Award of damages – Unpaid rentals – Contractual interest – Statutory interest – Two types of interests – Purpose of awarding of interest – Proof of 

Cases cited
Albert Baine v The State (1995) N13335
Infratech Management Consultants Limited v The State (2019) SC1862
Kopung Brothers Business Group v Sakawar Kasieng [1997] PNGLR 331
Kolaip Palapi & Ors v Sergeant Poko and Others (2001) N2274
Peter Wanis v Fred Sikiot and The State (1995) N3150
Soakofa Trading v Bank of South Pacific Limited (2021) SC2068
Yange Langan v The State (1995) N1369
Yooken Paklin v The State (2001) N2212

Counsel
 Mr Lubia Evore for plaintiff
No appearance, for defendant
 
JUDGMENT

1.	MAKAIL, J: This is an ex parte trial on the paper for assessment of damages for breach of a lease agreement following entry of default judgment for failure by the defendant to file a notice of intention to defend and defence on 24th July 2024.

2.	The plaintiff relies on an affidavit of Edmond Stack sworn on 13th September 2024 and filed on 27th September 2024 and its written submissions filed by learned counsel on 25th April 2025.

3.	I have read the affidavit of Mr Stack and written submissions of the learned counsel, and I find that:

•	on or about 1st January 2010 the plaintiff entered into a Commercial Lease with the defendant pursuant to which the Department of Education was to occupy one of the plaintiff’s buildings, namely Fincorp Haus for a term of 5 years (the Lease).

•	at the expiry of the lease in 2015, the Department of Education continued to occupy Fincorp Haus on a month-to-month basis pursuant to clause 1.4 of the lease.  

•	pursuant to item 13 of the schedule to the lease, the Department of Finance (Office Allocation Section) (DoF) was responsible for all rental payments.  From 2017 onwards, the DoF and Government Office Allocation Committee (GOAC) failed to pay the rent, and the shortfall kept accruing each year.  Finally, the rental payments became increasingly irregular and the shortfall for each year’s rental increased as time passed.

•	rent was due each quarter in each year.  For each quarter, the plaintiff rendered an invoice and for each invoice rendered, the defendant would either pay the sum due or a sum less than the sum due in the invoice.

•	the plaintiff made numerous requests to the defendant to settle the outstanding rent, but it failed.  Eventually, the requests turned into a demand and threat to commence legal proceedings but still the defendant failed to settle the outstanding sum.  

•	by March 2023 when the Department of Education finally vacated Fincorp Haus the outstanding rental arrears owed by the defendant was K42,300,860.05.

•	on 16th August 2023 the plaintiff’s lawyers give notice of intention to make a claim against the defendant and on 16th February 2024, commenced proceedings to recover the outstanding rentals from the defendant.

4.	Adopting the principles of law on assessment of damages in Yooken Paklin v The State (2001) N2212, Albert Baine v The State (1995) N13335, Kopung Brothers Business Group v Sakawar Kasieng [1997] PNGLR 331, Peter Wanis v Fred Sikiot and The State (1995) N3150, Yange Langan v The State (1995) N1369 and Kolaip Palapi & Ors v Sergeant Poko and Others (2001) N2274, that entry of default judgment does not relieve a plaintiff from proving its claim, corroboration of a claim is usually required, and the corroboration must come from an independent source, and even in a case where the defendant fails to present evidence disputing the claim and, further even after default judgment is entered and furthermore, when trial is conducted  ex parte, and finally, vague claims unsupported by corroborating evidence must be rejected because they may be false, based on the above findings I am satisfied that the plaintiff has corroborated its claim for unpaid rentals by producing the unpaid invoices and a Statement of Account showing a sum of K42,300, 860.05 as due and owing.  

5.	Secondly, I am satisfied that this is not a vague and a false claim but one of a genuine service provider to the defendant where the plaintiff provided its Fincorp Haus to house the offices of the Department of Education over the years and the defendant terribly failed to honour its part of the bargain.  Finally, I accept the learned counsel’s submission that the action is not statute-barred under Section 16 of the Frauds and Limitation Act, 1988 because the breach is continuous, and a fresh cause of action arises each time a breach occurs: Soakofa Trading v Bank of South Pacific Limited (2021) SC2068.  

6.	For the foregoing reasons, I award a sum of K42,300,860.05 as outstanding rentals to the plaintiff.

7.	The next claim is contractual interest.  The plaintiff seeks a sum of K13,396,653.13 pursuant to clause 5.2(c)(i) and (iii)(e) of the contract based on a rate of 8% per annum.  It says the claim for contractual interest is separate from statutory interest under the Judicial Proceedings (Interest on Debts and Damages) Act, 2015.  As a matter of law, I accept the learned counsel’s submission that contractual interest is separate from statutory interest: Infratech Management Consultants Limited v The State (2019) SC1862.

8.	However, if the primary purpose of awarding interest is to compensate a party for being kept out of money or lost opportunity to use the money during the period of delay, I consider that the plaintiff will be awarded one or the other of the interests, but not both.  Also, I distinguish the Infratech case (supra) from the present case because the question of duplicity of awards of interest, contractual or statutory was not one of the grounds of appeal and issue decided by the Supreme Court.  For these reasons, I will only award contractual interest.

9.	In terms of proof, first it is necessary to plead it in the statement of claim and secondly, led evidence to prove it: Infratech case (supra).  In the present case, I accept the learned counsel’s submission that the plaintiff’s claim for contractual interest is sufficiently pleaded at paragraph 5(a) and its claim for contractual interest at paragraph 4 of the statement of claim.  The formulae and rate is 8% per annum from when the payment fell due until the payment is paid in full.  The plaintiff has provided evidence of its calculation of the contractual interest up to date of judgment on lability, that is 24th July 2024, which is annexed to Mr Stack’s affidavit as annexure “ES25”.

10.	I also accept the learned counsel’s submissions that the calculations show the outstanding rentals for each year from 2017 until 2023, the interest calculation at 8% per annum on the outstanding rentals, including explanatory notes on the method of calculation.  The calculation shows that the contractual interest owing to the plaintiff as at 24th July 2024 is K13,396,653.13.  I award K13,396,653.13 contractual interest up to 24th July 2024.  Furthermore, I award interest from 25th July 2024 until final settlement to be calculated by the plaintiff.

11.	As to statutory interest, for the reason given at [8] supra, it is refused.

12.	The final order I make is as follows:

1.	Judgment is entered in favour of the plaintiff in the sum of K42,300,860.05 as outstanding rentals.

2.	Judgment is entered in favour of the plaintiff in the sum of K13,396,653.13 as contractual interest up to 24th July 2024 and until final settlement to be calculated by the plaintiff. 

3.	Order sought for statutory interest under the Judicial Proceedings (Interest on Debts and Damages) Act, 2015 is refused.	

	4.	Costs of the proceedings to the plaintiff, to be taxed, if not agreed.

	5.	Time shall be abridged.
________________________________________________________________
Lawyers for plaintiff: Ashurst PNG