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Awesa v Southern Highlands Provincial Government [2013] PGNC 39; N5107 (11 March 2013)

N5107

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 584 OF 2010

BETWEEN

ALEX AWESA
Plaintiff

AND:

SOUTHERN HIGHLANDS PROVINCIAL GOVERNMENT
Defendant

Waigani: Kandakasi, J.
2012: 13th August
2013: 11th March

EVIDENCE – Open letter from defendant to plaintiff offering full settlement before any damages started to run – Evidence contradicting plaintiff's claim - No reason provided to ignore evidence – Evidence taken into account – Judgment accordingly.

DAMAGES – Assessment of after entry of default judgment – Principles governing – Failed contract of sale of land – Default judgment - Effect of – Plaintiff still required to prove damages allegedly suffered – Evidence of settlement offered at higher and contractual amount – No evidence or submission explaining why that evidence should be ignored or not taken into account – Settlement offer made before any damages ran – Finding – Plaintiff suffered no damages but he did that was his own doing – No judgment in damages for plaintiff.

Cases Cited:

Coecon Limited (Receiver/Manager Appointed) v. National Fisheries Authority (2002) N2182.
PNGBC v. Jeff Tole (2002) SC694.
William Mel v. Coleman Pakalia & The State (2005) SC790.
Francis Kulunga v Michael Wandil (2010) N3910.

Counsel

J Nandape, for the Plaintiff
No Appearance, for the Defendant

11th March, 2013

1. KANDAKASI J: Alex Awesa is asking for judgment in the sum of K85, 000.00 being for unpaid deposits, K26,000.00 for foregone rental income and K6,000.00 for out of pocket expenses out of a failed contract for sale of a land with the Southern Highlands Provincial Government in the Southern Highlands Province. The Provincial Government failed to actively defend this claim. That resulted in judgment in default with damages to be assessed entered against it. The matter then progressed to trial without the Provincial Governments participation.

Relevant Issue

2. The main issue to resolve is this. Is Alex entitled to each of the items he is claiming against the Provincial Government? This question can be answered by reference to the principles governing the assessment of damages, what is pleaded and the evidence before the Court.

Relevant Principles

3. Turning firstly, to the relevant principles I note that, in Coecon Limited (Receiver/Manager Appointed) v. National Fisheries Authority,[1] I summarized the relevant principles governing assessment of damages as follows:

"A survey of the authorities on assessment of damages after entry of judgment on liability mainly in default of a Defendant's defence, clearly show the following;

1. The judgment resolves all questions of liability in respect of the matters pleaded in the statement of claim.

2. 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.

3. In the case of a claim for damages for breach of contract as in this case, such a judgment confirms there being a breach as alleged and leaves only the question of what damages necessarily flow from the breach.

4. The Plaintiff in such a case has the burden to produce admissible and credible evidence of his alleged damages and if the Court is satisfied on the balance of probabilities that the damages have been incurred, awards can be made for the proven damages.

5. A Plaintiff in such a case is only entitled to lead evidence and recover such damages as may be pleaded and asked for in his statement of claim."

4. This summation of the principles have been cited with approval, referred to, adopted and applied in a number of National and Supreme Court decisions. This include the decisions in PNGBC v. Jeff Tole[2] and William Mel v. Coleman Pakalia & The State.[3] In the second case, the Supreme Court elaborated on the first principal and said, once default judgment is entered, the default judgment means the plaintiff has proven the matters pleaded together with their consequence. In this context, it must be remembered that, where a default judgment is entered with damages to be assessed, a plaintiff in whose favour the judgment has been entered, has the burden to adduce credible and admissible evidence at the trial establishing the damages claimed in his statement of claim.[4]

Present Case

5. Since this claim concerns a breach of contract and default judgment in respect of that, the third principle under the above summation of the principles applies here. That means, the default judgement establishes Alex's claim as pleaded in his statement of claim and in particular that the Provincial Government breached the contract and that Alex has suffered damages. But exactly what damages did he suffer and what is the reasonable amount in compensation is what is left for me to determine.

6. To give proper context to the claim and assessment of damages, I find in accordance with the pleadings and evidence before me that, Alex is the registered owner of a State Lease located in the township of Mendi Southern Highlands Province, described as Allotments 2 and 3 initially and subsequently consolidated into one allotment, which is Allotment 4, Section 23. On 29th December 2008, he entered into a written contract of sale with the Provincial Government for the sale of his land for K850,000.00. That followed negotiations which commenced on 1st December 2008.

6. A copy of the contract is in evidence as annexure "B" to Alex's affidavit sworn on 02nd September 2013 ("Alex's affidavit"). The then Provincial Administrator signed the contract on behalf of the Provincial Government under the Provincial Government's official seal. This was under an approval given by the Provincial Government's executive council in its meeting No. 12/08, Decision No. 44/08. A copy of that decision is annexure "C" to Alex's affidavit.

7. The contract of sale did make provision for deposit requirements without any specific agreement on the amount or rate of deposit required. However, it is pleaded that the parties understood that the normal rate of 10% of the purchase price of K850,000.00, which comes to K85,000.00, would be the deposit. The contract also made provision for payment of stamp duties and interest at 15% for non payment of any payments due under the contract. Alex claims he was always ready and willing to complete the contract but the Provincial Government was not. He also says without any specific prove, of having made repeated requests for the Provincial Government to complete the contract. That attracted no response by reason of which, he decided to terminate the contract.

8. The only evidence of any follow-ups and any request for completion, is in the Affidavit of Ms Judy Nandape of counsel for Alex, sworn on 6th September 2010, which is in evidence for Alex before the Court. According to that affidavit, the lawyers were instructed on 01st July 2009. Upon being instructed, Nandape Lawyers wrote to the Provincial Government's lawyers on 02nd July 2009, a copy of which is annexure "A" to Ms Nandape's affidavit. Relevantly, the third and fourth paragraphs of that letter read:

"As per clause 4 of the Contract, at the time of signing of the contract, SHPG [the Provincial Government] was to have paid the 10% deposit amounting to K85, 000.00 including a cheque for stamp duties and ministerial approval and also provide to the Vendor a transfer instrument. SHPG has not complied with the provisions of this clause, thereby breaching the terms of the contract for sale. To date SPHPG continues to be in breach of the contract.

We therefore give your client seven (7) days as of the date of writing this letter to specifically perform its obligation under the contract for sale."

9. By letter dated also 2nd July 2009, Jerry Kiwai Lawyers responded and informed that, they were instructed to confirm that, the contract was executed on 29th December 2008 but did not have any instructions as to the performance of the contract. They therefore asked Nandape Lawyers to write directly to the Provincial Government. That Nandape Lawyers did the next day, 3rd July 2009 by repeating what was put to Jerry Kiwai Lawyers. The Provincial Government did not directly respond to that letter. That caused Alex to give notice through his lawyers of his intention to make a claim against the State and the Provincial Government, by two respective letters dated 27th July 2009. More than 6 months later by letter date 1st February 2010, which is nexure "A" to affidavit of Judy Nandape sworn on 06th August 2012, which is also in evidence for Alex in Court, Nandape Lawyers wrote to the Provincial Government formally terminating the contract.

10. Further, Alex pleads and produces evidence that, before he terminated the contract, he entered into a lease agreement at a monthly rental of K3, 000.00 or K100.00 a day with Clough Curtain Joint Venture as of 26th September 2009. He claims that, the failed contract of sale with the Provincial Government caused him to lose an opportunity to lease his property for 268 days at K100 a day giving a total of K26, 800.00. He has not however, produced any evidence of the kinds of opportunities he had foregone. The same goes for his additional claim for K6,000.00 for what he claims is for legal fees, phone calls and fuel expenses.

11. If the above were all there was before the Court, I would have no hesitation in finding for Alex in the sum of K85, 000.00 being for deposit required and he is entitled to forfeit and keep under the contract. I would however, have difficulty finding for him in respect of his claim of loss of rental opportunity. That is so because, there is no evidence of the kinds of opportunities he had in either renting or otherwise a commercial use of his property. The same would go for his claim for legal, phone and fuel expense because there is no receipt or any other evidence of him having incurred those alleged expenses.

12. There is unfortunately a more serious problem that affects the whole of Alex's claim. The problem is this, also annexed to Ms Nandape's affidavit of 06th August 20012, is a letter dated 16th February 2010, from Jerry Kiwai Lawyers, which refers to a letter dated 2nd February 2010, form Nandape Lawyers, a copy of which is not in evidence. A copy of the Letter from Jerry Kiwai Lawyers is annexure "G" which states in relevant parts:

"We are instructed that your client refused to accept a sum of K850, 000.00 being the contractual amount agreed between the Southern Highlands Provincial Government ... as per the Contract of Sale. The amount was offered by our client around December 2008.

Our client was at all material times willing to pay the contractual amount as per the contract but your client refused. Therefore there is no breach on the part of our client as alleged in your letter.

Accordingly, our client is not liable for any damages purportedly suffered by your client."

13. That letter was not marked "without prejudice." That means, the letter was open for admission into evidence by either of the parties in the event the matter went to Court. Hence, the letter was intended to be used by either of the parties if the matters in issue between them did not resolve out of Court.

14. A reading of the above letter reveals clearly a number of things. First, the Provincial Government offered settlement in the sum of K850,000.00. Secondly, the amount offered was the full agreed contract price or consideration for the contract of sale and was beyond the amounts claimed in this proceeding. Thirdly, the settlement offer was made sometime in December 2008. Finally Alex rejected the offer.

14. If what was stated in that letter was not true, it was incumbent on Alex and his lawyer to take issue with it immediately or soon upon its receipt. There is no evidence of that being done. The lack of any details as to dates, times and names of persons with whom, Alex followed up on the settlement of the contract, lends support to what is stated in the letter dated 16th February 2010, from the Provincial Government's Lawyers. Additionally, there is no submission on how this letter should be treated. It is part of Alex's case. It is part of his evidence, which the Court must consider. Having adduced it, it was incumbent on Alex and his lawyer to demonstrate why or how that letter should or can be ignored. That, they failed to do.

15. Having regard to all of the above and more so the letter dated 16th February 2010, from the Provincial Government's Lawyers, I find that if indeed, Alex suffered the damages he claims he suffered, that was his own doing. The Provincial Government offered settlement in the same month and year of the signing of the contract of sale at a level of damages that was much higher than what he is claiming. That offer was made before any damages could be said to have run. Alex however rejected that settlement proposal. Hence, I find that Alex did not suffer any damages but if he did suffer any damages as he claims, that was his own doing in respect of which the Provincial Government cannot be responsible. Accordingly, I decline to make any award in damages for Alex, the plaintiff. Consequently I order a dismissal of the claim for damages and order judgment for the defendant Provincial Government. Costs shall follow the event.

___________________________________________________________
Nandape Lawyers: Lawyers for the Plaintiff
No Appearance for the Defendants

^[1] (2002) N2182
^[2] (2002) SC694.
^[3] (2005) SC790.
^[4] Francis Kulunga v Michael Wandil (2010) N3910.