N8485

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 1739 OF 2015

BETWEEN:
EVITO INVESTMENTS LIMITED trading as EVITO INVESTMENTS LIMITED
Plaintiff

AND:
MISCHEQ WOWONGO
First Defendant

AND:
MENYAMYA DISTRICT AUTHORITY
Second Defendant

Lae: Dowa AJ
2020:  17th August & 25th August

DAMAGES – assessment of damages following entry of default judgment – plaintiff a hire care company seeking damages for outstanding payments due for car hire services rendered to local level government administration – judgment entered in favour of the Plaintiff – costs awarded on the party to party basis

Cases Cited:

Coecon Ltd (Receiver Manager) v The National Fisheries Authority of PNG (2002) N2182)
PNGBC v Jeff Tole (2002) SC 694
Albert v Aine (2019) N7772
PNG Power v Augerea (2103) SC2145

Counsel:

G. Topa, for the Plaintiff
L. Vava, for the Defendant

DECISION
25th August, 2020 

1.	DOWA AJ:	 This is my decision on a trial of the assessment of damages.  Default judgment was entered on 28th July 2020.

FACTS

2.	The Plaintiff is a company, trading under a registered business name known as Evito Hire cars.  Between 2013 and 2014, the Plaintiff leased a number of its motor vehicles for hire to the Menyamya District, used by their three Ward Managers of their three (3) local level Governments, namely Kome, Namina Koriba and Wape Districts.
         
3.	The hire rate for the vehicles were fixed at K880.00 inclusive of GST per day.

4.	The total outstanding invoices as at 21 June 2014 was K166,935.40.  This comprise of the following invoices:

a)	Tax invoice No. 0092              K36,800.00
b)	Tax invoice No. 11062014      K 32,890.00	
c)	Tax invoice No. 10062014      K 71,696.00
d)	Tax invoice No, 21072014      K 23,296.00
e)	 Tax invoice No.22072104      K   2,253.40

Total                                         K166,935.40

5.	The Plaintiff is seeking judgment for the full sum of K166,935.40 with interest and cost.

Issues

6.	The issues for determination are as follows:

a)	What is the effect of the default judgment?
b)	How much is the Plaintiff entitled to in damages?
The Effect of Default Judgment

7.	The law on the effect of default judgment is settled in this jurisdiction.  A trial Judge must satisfy himself with the principles summarised in the cases; Coecon Ltd (Receiver Manager) v The National Fisheries Authority of PNG (2002) N2182, PNGBC v Jeff Tole (2002) SC 694, and Albert v Aine (2019) N7772.  In Albert v Aine, Kandakasi DCJ at paragraphs 7 & 8 of his Judgment said:
 “7. 	Fourthly, the law on the effect of the entry of default judgment is clear. In Coecon Limited (Receiver/Manager Appointed) v. The National Fisheries Authority of Papua New Guinea (2002) N2182, I summarised the principles that govern an assessment of damages after the entry of default judgement in the following terms:
“A survey of the authorities on assessment of damages after entry of judgement on liability mainly in default of a defendant’s defence, clearly show the following:
1.	The judgement 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 judgement 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.”
8. 	The Supreme Court in PNGBC v. Jeff Tole (2002) SC694 adopted and applied this summation of the principles. Later, the decision of the Supreme Court in William Mel v. Coleman Pakalia (2005) SC790, did the same. Additionally, however, the Court in that case went further by noting several decisions of the National Court in which the principles were adopted and applied. It then added the following:
“Turning back to the issue raised above as to the role of the trial judge after entry of default judgment, we consider the following to be the correct approach:
the trial judge should make a cursory inquiry so as to be satisfied that the facts and the cause of action are pleaded with sufficient clarity;

if it is reasonably clear what the facts and cause of action are, liability should be regarded as proven;
only if the facts or 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.”
8.	In the present case, I have thoroughly examined the pleadings and the cause of action. I have also considered the process and steps taken in the entry of default judgment. I am satisfied that the default judgment is in order and to that extent liability is proven.

Burden of proof

Whilst the issue of liability is settled, the Plaintiff is still required to prove its damages with credible evidence.

Evidence

9.	The Plaintiff relies on the affidavit of David Morris sworn 31 July 2020 and filed 3rd August 2020.  The affidavit was tendered without objection and is exhibited “P1”. Mr Morris, the Managing Director of the Plaintiff company, deposes, his company leased several vehicles to Menyamya District for hire at the rate of K880 per day, between 2012 and June 2014.  Some invoices were settled, whilst others remain outstanding which is the basis for the current proceedings. Mr. Morris annexed to his affidavit all the five invoices, which confirm the amounts claimed in the statement of claim.

Submissions of Counsel

10.	Ms. Topa, counsel for the Plaintiff submitted that the Plaintiff has proven its claim and therefore be awarded the full sum of K 166,935.40 with cost and interest.

11.	Mr Vava, counsel for the defendants submitted, the Plaintiff is not entitled to charge GST, as the Plaintiff was not a registered taxpayer when the invoices were issued.  Mr Vava also submitted no award should be made for claims in respect of cost for repairs for damage to motor vehicles during the hire period as they were not properly pleaded.

Findings and reasons for Decision

12.	I have studied the pleadings, considered the evidence and the submissions of counsel. In respect of the tax component of the claim, I do not totally agree with Mr Vava’s submission.  Firstly, the evidence shows, the Plaintiff was registered with the Internal Revenue Commission as a Tax Payer on 16th January 2015, with TIN No. 500178577. Prior to that the Plaintiff had GST No.15042. The Plaintiff was entitled to charge GST or VAT known then. I note, the Plaintiff did not provide any evidence of tax compliance. The evidence of tax compliance would normally come from Internal Revenue Commission by the production of a statement on tax status. This would indicate whether a person is up to date with his tax obligations. The mere production of GST and TIN registration documents does not in itself prove tax compliance. This is particularly important where invoices include GST components. In the present case I would, nevertheless, make no deductions on the taxed invoices as the defendants have not filed any defence to legally raise the issue. Secondly, these invoices were issued for services actually rendered and consumed, so to speak, by the defendants as opposed to future economic loss.

13.	The total sum claimed for Hire Cars is K155,832. The Plaintiff provided the relevant invoices and I accept them. There shall be an award of K155,832.00.

Damage to Repairs

14.	The Plaintiff is claiming K6,103.40 for damage to the vehicles.  There is no pleading as to how this claim is made out.  Secondly, the Plaintiff did not provide evidence for the repairs.  In the absence of pleadings and evidence.  I am not prepared to make an award for this claim.

Security Deposit

15.	There is a claim for security deposit which totals K5,000.  The Plaintiff has not explained in his evidence what is the basis for this claim.  There is a notation in the invoice that says, the deposit shall be refunded, upon return of the vehicle.  This means, the amount may have been paid to the Plaintiff by the Defendants as a security deposit guaranteeing the safe return of the vehicle.  In the absence of an explanation by the Plaintiff, I will disallow this figure of K5,000 being for the security deposit.

Damages Awarded

16.	In conclusion, I would assess and calculate the Plaintiffs claim as follows:

Amount claimed in the writ			K166,935.40
Less Deduction					K 6,103.40	for repairs 
K 5,000.00	Security deposit			K11,103.40
	
						K155,832.00

   There shall be an award of K155,832.00

INTEREST

17.	The Plaintiff claims interest to be calculated at 8% pursuant to Judicial proceedings (Interest on Debts & Damages) Act 2015.  I am inclined to award interest at 2%.  The Defendants are officers of a State Agency.  In accordance with the decision of the Supreme court in PNG Power v Augerea (2013) SC1245, the Menyamya District Administration is a Governmental body, set up by a Government for an important public purpose.  In the circumstances, I award interest at 2%. 

18.	I add 2% interest on K155,832.00 per annum since filing of writ (7/12/2015) to date of judgment (25/08/20). Interest amounts to K14,731.50. The total judgment is K170,563.50. 

COSTS

19.	The Plaintiff sought a separate award for cost in the sum of K100,000.00.  I am not inclined to make an award.  The cost incurred in prosecuting this matter is a matter for parties to agree and if not, to be taxed after judgment.  Cost shall be awarded to the Plaintiff on a party/party basis, to be taxed, if not agreed.

20.	There shall be a judgment for the Plaintiff against the Defendants in the sum of K170,563.50 inclusive of interest, with cost.

Formal Orders

21.	     It is ordered that:

a)	Judgment be entered for the Plaintiff in the sum of K170,563.50.
b)	Post judgment interest shall accrue at the rate of 2% until settlement.
c)	The Defendant shall pay the Plaintiff’s cost to be taxed, if not agreed.
d)	Time be abridged
________________________________________________________________
Myles Legal Services:	Lawyers for the Plaintiff
Luke Vava Lawyers:	 Lawyers for the Defendants