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Balakau v Amet [2013] PGNC 107; N5313 (7 August 2013)

N5313

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 1256 of 2009

BETWEEN

JEFFERY BALAKAU
Plaintiff

AND

SIR ARNOLD AMET as the ATTORNEY GENERAL & PRINCIPAL LEGAL ADVISOR
First Defendant

AND

GABRIEL YER as the SECRETARY DEPARTMENT OF FINANCE
Second Defendant

AND

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Third Defendant

Waigani: Kandakasi, J.
2013: 23rd May
7th August

JUDGMENTS & ORDERS – Default judgment – State in default of filing and serving defence in a part liquidated claim – Section 12 (3) of the Claims By and Against the State Act, precluding judgment for amount claim except only for a debt claim – Definition of "debit" as used in legislation considered – Amount agreed to be paid and set out in a deed of release is a debit within the meaning of the s. 12 (3) – Judgment for amount claimed and set out in deed of release entered.

WORDS & PHRASES – "Debt" – A sum of money that one person is bound to pay another – "Debt" normally has one or other of two meanings: it can mean an obligation to pay money or it can mean a sum of money owed – Money agreed to be paid and set out in a deed of release is a debt.

WORDS & PHRASES – "Liquidated claim"- A liquidated demand is in the nature of a debt, for a specific sum of money due and payable under or by virtue of a contract which is already ascertained or capable of being ascertained as a mere matter of arithmetic without the need for investigation and assessment – Amount agreement to be by one person to the other and set out in a deed of release is a liquidated claim.

Cases Cited:

Christina Kumba v. Dr Joseph Pagalio (2010) N4089

Stephen John Rose v. The State (2007) N3241
Anthony Nicholas Dempsey v. Project Pacific Pty Ltd [1985] PNGLR 93
Wamp Nga Holdings Ltd v. KK & Sons Ltd (2011) N4219
The State v. Zachary Gelu & Monoburn Earthmoving Limited (2003) SC 715
Polem Enterprises Ltd v. Attorney General of Papua New Guinea Mr. Francis Damen (2008) SC911
North Solomons Provincial Government v. Pacific Architecture Pty Ltd [1992] PNGLR 145

Counsel:

A. Furigi, for the Applicant/Plaintiff.
J. Kerenge, for the Respondent/Defendants.

7th August 2013

1. KANDAKASI J: Jeffery Balakau is seeking to enforce a deed of release for an amount specified in the deed plus interest at 8% on the principle amount and damages for chasing up payment. Following a successful application by Mr. Balakau, I decided to enter default judgment for the plaintiff after a failed application by the defendants to file and serve their defence out of time. However, the defendants pointed out that, I can only sign judgment for the plaintiff with damages to be assessed by reason of s. 12 of the Claims by and against the State Act (CBASA). I reserved on that issue to consider the provisions in question.

2. I have now had the opportunity to consider the provisions of s.12 which reads in the following terms:

"12. Judgements against the State.

(1) ...

(2) ...

(3) Where in a claim against the State the State is in default within the meaning of the National Court Rules, then notwithstanding that a plaintiff's claim for relief is for a liquidated demand, judgement shall not be entered against the State for the sum claimed unless the claim relates to a debt only, and in all other cases judgement shall be entered for damages to be assessed and, where appropriate, for costs."

(Underlining mine)

3. The wording in subsection (3) is very clear. Where there is a case for the signing of a default judgment against the State on a liquidated claim, the Court is precluded from signing judgment for the amount claimed. But this provision does allow for the Court to sign judgment for the amounts claimed if it is a debt claim . Given that position, I do not with respect agree with my brother Justice Gavara-Nanu in Stephen John Rose v. The State[1]. There, His Honour said of the provision:

"...The section provides that, where a claim against the State is for a liquidated demand, unless the claim relates to a debt only, no judgment can be entered against the State for the liquidated amount claimed. Thus, where a claim against the State is for a liquidated amount as well as for general damages, as is the case here, the Court is only empowered to enter judgment for damages to be assessed, in the event of a default by the State...."

4. The correct view is as I noted above, a view also expressed by my brother, Justice Sawong's view in Christina Kumba v. Dr Joseph Pagalio[2]. There, His Honour said:

"To my mind, it is clear that this provision makes it plainly clear that even if the State is in default in a claim for liquidated amount, no default judgment shall be entered for that liquidated claim. The only exception is if the liquidated claim is for a debt.."

5. As is noted in the foregoing, the provisions of s. 12(3) allows for one exceptional case in which the Court can sign judgment in the amount claimed in a liquidated claim. The exception applies in a case where the claim relates to a debt only. The question then is what constitutes a "debt". L.B. Curzon, A Dictionary of Law defines the term in these terms:

"A sum that one person is bound to pay another. 'Debt normally has one or other of two meanings: it can mean an obligation to pay money or it can mean a sum of money owed.'...

6. Other ordinary English dictionaries define the term broadly to include services and a feeling of being indebtedness to someone. According to the ordinary English language the term "debt" has two contextual categories. The first is in terms of "money owing" and means money owing, arrears, liability, debit, balance, balance due and or credit. The second is in terms of an obligation where someone is obliged or has the duty, responsibility and or dues owed to another.

7. The first context renders no complication because it clearly deals with money owed. Such a situation would come about out of say for example where goods and services are supplied or rendered at a particular agreed price or cost and are not paid for or that someone lends certain sums of money on conditions of their repayment with or without interest. The second context which is a debt other than a sum of money owed would present complications. This context talks about a duty or obligation being owed. The complication would be in terms of identifying what kinds of duties or obligations would fall under this category. In the context of the question under consideration in this judgment, we are fortunately provided with an answer by s. 12 (3) of the CBASA. The debt must relate to a liquidated claim. The question then is what is a "liquidated claim"?

8. There are numerous authorities in our jurisdiction which helpfully define what is a liquidated claim. The 1982 Annual Practice, par 6/2/4a, provides the following definition of liquidated demand, which has been used for many years:

"A liquidated demand is in the nature of a debt, i.e. a specific sum of money due and payable under or by virtue of a contract. Each amount must either be already ascertained or capable of being ascertained as a mere matter of arithmetic. If the ascertainment of a sum of money, even though it be specified or named as a definite figure, requires investigation beyond mere calculation, then the sum is not a 'debt or liquidated demand' but constitutes 'damages'."

9. The Supreme Court in Anthony Nicholas Dempsey v. Project Pacific Pty Ltd[3] adopted and effectively applied the above definition. In so doing, the Court was of the view that, value of shares in the company were not considered liquidated because they could not easily be ascertained but by further consideration and assessment.

10. The above definition has been adopted and applied with approval in many subsequent cases. One of the latest is the decision of her Honour Sagu AJ (as she then was) in Wamp Nga Holdings Ltd v. KK & Sons Ltd[4]. Her Honour had regard to a simple yet more helpful definition in the Oxford Dictionary of Law, 6th edition published in 2006 which defines the term "liquidated claim" as follows:

"A demand for a fixed sum, eg. A debt of $50. Such a demand is distinguished from a claim for unliquidated damages, which is the subject of a discretionary assessment by the court."

11. Now taking into account all of the foregoing discussions, it is clear that where there is a liquidated claim against State and the State is clearly in default, the Court can sign judgment for the amount claimed only if the claim is in respect of a debt claim. Such a claim must involve the payment of a certain sum of money which is due and owing and is easily ascertainable without the need for any assessment.

12. In the present case, the plaintiff is seeking to recover a sum of K649, 213.63 pursuant to a Deed of Release, which settled his earlier claim for damages as a former Member of Parliament and as Governor of Enga Province. Additionally, the plaintiff claims K155, 811 being for interest at 8% on the principle amount and a further K77, 950.55 in fees for chasing up payment under the deed. A copy the Deed of Release is in evidence before the Court by way of an annexure to an affidavit sworn and filed by Mr. Balakau on 23rd June 2011.

13. Obviously, the amount of K649, 213.63 is in the Deed of Release. That figure was arrived at after settlement negotiations and discussions between Mr. Balakau and the State of a claim Mr. Balakau had earlier brought against the State. Once the parties agreed to the amount, that became a debt due and owing to Mr. Balakau from the date the agreement was reached until payment in full.

14. Having failed in their application to file and serve their defence out of time, the defendants did not and could not argue for any particular defence that renders Mr. Balakau's claim unsustainable. I am however, aware of the line of authorities following the Supreme Court decision in The State v. Zachary Gelu & Manorburn Earthmoving Limited[5]and Polem Enterprises Ltd v. Attorney General of Papua New Guinea Mr. Francis Damem[6]. These cases stand for the proposition that, any agreement with the State settling a claim that does not have the approval of the Attorney General is void and cannot be enforced. This, in my view, requires specific prove by appropriate evidence of the agreement not having the approval of the Attorney General. Here, although the State wanted to argue that position per its failed application for leave to file and serve its defence out of time, it did not produce evidence disclosing that defence and the other defence it wanted to raise against Mr. Balakau's claim in accordance with and following case law on point such as that of North Solomons Provincial Government v. Pacific Architecture Pty Ltd[7].

15. In the circumstances, I find that the amount of K649, 213.63 set out in the Deed of Release and as pleaded is clear and is a definite amount the parties agreed to, which is clearly and easily ascertainable. It does not require any inquiry and assessment of evidence to arrive at the amount. This amount became a debt due and payable by the State. There is no serious and meritorious contest on the claim or a clearly established impediment to this Court signing judgment for that amount. Accordingly, I have no hesitation in holding the view that the claim for K649,213.63 is a liquidated debt claim and judgment ought to be entered for that amount.

16. This leaves us to consider the balance of Mr. Balakau's claim. The claim for interest at 8% prior to the issue of the writ has no foundation in law or even the agreement. The law only recognizes interest running at 8% pursuant to the Judicial Proceedings (Interest on Debts and Damages) Act chp.52, from the date of the issue of the writ to the date of judgment and if the judgment remains outstanding after 21 days from the date of the judgment, until full payment. If Mr. Balakau decides to claim interest strictly in accordance with the law on interests, the interest claim could simply be added to the principle amount claimed, which would require no evidence and further assessment. On the current pleadings, this aspect of the claim could be considered unliquidated. The same would go for the claim for damages for chasing up payment.

17. In the end, I order that the order for default judgment be varied to read "Default judgment in the liquidated sum of K649, 213.63 as a debt is entered for the plaintiff with damages to be assessed for the balance of the claim". In respect of that part of the claim, I direct that this matter be listed for directions hearing on 22nd August 2013. The parties shall come fully prepared to assist the Court to expeditiously have the matter progressed to trial on the balance of Mr. Balakau's claim. Costs are ordered in favour of the Plaintiff to be agreed if not taxed.

_________________________________________________________
Furigi Lawyers: Lawyers for the Plaintiff/Applicant.
Solicitor General: Lawyers for the Defendant/Respondents.

^[1] (2007) N3241

[2] (2010) N4089

^[3][1985] PNGLR 93

^[4] (2011) N4219
^[5] (2003) SC 715
^[6] (2008) SC911
^[7] [1992] PNGLR 145