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Mabuhay Ltd v Kilicaslan [2021] PGNC 532; N9371 (9 August 2021)

N9371

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 585 OF 2017

MABUHAY LIMITED
Plaintiff

V

ISMAIL KILICASLAN
First Defendant

PNG PARADISE LIMITED trading as PNG PARADISE HIGH SCHOOL
Second Defendant

Waigani: Kariko, J
2021: 19^th May & 9^th August

DAMAGES – early termination of lease agreement – payment due on balance of agreement – rental expenses – general damages for stress and anxiety

Cases Cited:

Dia Kopo v Employment Authority of Enga Provincial Government and Enga Provincial and Local Level Government (1999) N1865
Meridian Motors Ltd v Boroko Motors Ltd (2018) N7699
PNGBC v Jeff Tole (2002) SC694
William Mel v Coleman Pakalia and Others (2005) SC790

Counsel:

Ms G Kogora, for the Plaintiff
Ms A Yauieb, for the Defendants

JUDGMENT

9^th August, 2021

1. KARIKO, J: A trial on assessment of damages followed my decision on 9^th February 2021 that found the defendants liable for breach of contract.
   
2. The brief facts of the case are that the second defendant (Paradise High School) entered into a lease agreement with the plaintiff for the lease of one of the plaintiff’s residential units at Boroko for a term of 12 months, to be tenanted by the first defendant, who was an employee of the High School. The unit was vacated two months into the lease, thereby terminating the agreement.
   
3. As relief, the plaintiff seeks damages plus interest and costs.
   

PLAINTIFF’S EVIDENCE

4. Evidence in support of the plaintiff’s claims comprised two affidavits by the plaintiff’s accountant, Edward Kembu, which were tendered without objection:
   
   • Affidavit sworn and filed 21^st December 2017 – Exhibit P1
   • Affidavit sworn and filed 25^th February 2021 – Exhibit P2
     
5. Summarized, the plaintiff’s evidence refers to the facts and circumstances regarding the lease. Mr Kembu stresses that the plaintiff complied with the defendants’ requests for some extra furniture and chattels for the unit before the lease agreement was concluded. The lease was for a term of one year commencing 24^th January 2017. The monthly rental was K5,720.00. On 31^st January 2017, the Principal of the High School gave notice that the leased unit would be vacated by end of February 2017.
   
6. The financial statements and reports of the plaintiff’s business for the years 2016-2018 prepared by Mr Kembu are also produced to show the expected income for the plaintiff in 2017. Mr Kembu claims that there were expenses associated with having the units available for leasing. The costs allocated in respect of the unit leased to the defendants was K49,852.19 for the year. He says that the early termination of the lease resulted in the plaintiff wearing those costs, termed rental expenses.
   
7. The deponent also adds that both he and the owner of the plaintiff company, Johnathon Cano, suffered anxiety, distress and hardship following the defendants’ repudiation of the lease agreement. Not only did the plaintiff lose income but they were put to the trouble of preparing the unit to meet the defendants’ requirements, only for the lease to be terminated early.
   

DEFENDANTS’ EVIDENCE

8. The defendants also tendered affidavit evidence without objection:
   
   • Affidavit of Liyas Yarcin sworn and filed 18^th January 2018 – Exhibit D1
   • Affidavit of Abdurrahman Ayin sworn and filed 18^th January 2018 – Exhibit D2
   • Affidavit of Ismail Kilicaslan sworn and filed 18^th January 2018 – Exhibit D3
   • Affidavit of Safak Delismail sworn and filed 19^th April 2021 - Exhibit D4
     
9. Stated in brief, the first three affidavits support the defendants’ version of the facts and circumstances leading up to the lease agreement and its subsequent termination. The affidavit of Safak Delismail disputes the plaintiff’s claim for rental expenses and argues that the claim is unfounded.
   
10. The defendants confirm that pursuant to the lease agreement, the lease was for a term of one year commencing 24^th January 2017. The monthly rental was K5,720.00. Upon signing the agreement on 31^st December 2016, Paradise High School made payment of K12,694.22 for the following:
    
    • Pro-rata rental for the 8 days of January 2017 K1,341.94
    • Rental for the month of February 2017 K5,200.00
    • GST on the above rentals for January and February K654.20
    • Refundable security bond K5,200.00
    • Stamp duty on the lease agreement K298.00
      
11. On 31^st January 2017, the Principal of the High School gave notice that the leased unit would be vacated by end of February 2017, and that duly occurred.
    

RELIEF

12. The plaintiff claims the following relief in [8] of its Statement of Claim:
    
    • Damages of K51, 480.00 for the balance of the lease term.
    • Interest at 8%.
    • Costs.
    • Any other orders the Court deems fit.
      
13. In submissions however, the plaintiff sought:
    
    • Damages of K62,920.00 for the balance of the lease term (inclusive of GST).
    • Rental expenses of K49, 852.19.
    • K200,000.00 for stress and hardship.
    • Interest at 8%.
    • Costs.
      

CONSIDERATION

14. I bear in mind the relevant principles in relation to assessment of damages endorsed by the Supreme Court in the case of William Mel v Coleman Pakalia and Others (2005) SC790 and summarized by Cannings, J in Steven Naki v AGC (Pacific) Ltd (2006) N5015:
    
    • The plaintiff has the onus of proving his loss on the balance of probabilities.
    • Corroboration of a claim from an independent source is usually required.
    • The principles of proof and corroboration apply even when the defendant fails to present any evidence disputing the claim.
    • Where liability has been established i, injury or damages suffered must be proved by credible evidence.
    • If the evidence and pleadings are confusing, contradictory and inherently suspicious, the plaintiff will not discharge the onus of proving his losses on the balance of probabilities, and a plaintiff may be awarded nothing.
    • Where default judgment is granted, the evidence must support the facts pleaded. No evidence will be allowed in support of facts that are not pleaded.
    • The fact that damages cannot be assessed with certainty does not relieve the wrongdoer of the necessity of paying damages. Where precise evidence is available the court expects to have it. However, where it is not, the Court must do the best it can.
    • The person who has been wronged has a duty to mitigate the losses; though it is the defendant who has the onus of proving failure to mitigate.
      

Rental for balance of term

15. The parties agree that the plaintiff is entitled to the rental that would have been paid for the balance of the lease term, from 1^st March 2017 to 23^rd January 2018.
    
16. As the monthly rental was K5,720.00, the due rental is for 10 months to end of December 2017 plus the 23 days of January 2018. That calculates to 10 x K5,200.00 + (23/31 x K5,200.00) = K52,000.00 + K3,858.06 = K55,858.06. It is noted that a refundable security bond of K5,200.00 was paid upfront. That amount must be deducted, and that leaves the amount of K50,658.06 payable to the plaintiff. GST applied to this amount is K5,065.81.
    
17. However, I must consider whether the plaintiff has discharged its obligation to mitigate its loss. It is settled law that a defendant who claims a lack of any mitigation of damages has the burden to establish that; Dia Kopo v Employment Authority of Enga Provincial Government and Enga Provincial and Local Level Government (1999) N1865. In relation to property leases, the defendant must prove on the balance of probabilities that the plaintiff did not take reasonable steps to lease the premises at a reasonable rent for a reasonable term; Meridian Motors Ltd v Boroko Motors Ltd (2018) N7699.
    
18. The defendants have not produced any evidence to support their submission that the plaintiff failed to mitigate its losses.
    

Rental expenses

19. The basis of this claim is difficult to understand despite counsel’s effort to explain. In any case, I refuse the claim for the simple reason that it is not pleaded. No evidence of matters not pleaded can be allowed or relief granted; PNGBC v Jeff Tole (2002) SC694.
    

General damages

20. The plaintiff seeks monetary compensation for anxiety, distress and humiliation suffered by the owner and the accountant of the plaintiff company. It is submitted that this resulted due to the early termination of the lease and after the trouble they were put through to prepare the leased unit to accommodate the defendants’ needs. Neither of these persons is the plaintiff, which is a separate legal entity in the form of an incorporated company. The claim must therefore be refused. Furthermore, it is a relief that that is also not pleaded; PNGBC v Jeff Tole (supra).
    

Summary

21. In summary, damages are awarded as follows:
    
    • Loss of rental (+ GST) - K55,723.87
    • Rental expenses - Nil
    • General damages - Nil

Total - K55,723.87

22. The damages awarded shall be paid by the second defendant who was the actual lessee while the first defendant was merely the tenant.
    

INTEREST

23. I exercise my discretion pursuant to the Judicial Proceedings (Interest on Debts and Damages) Act, Ch. 52, and award 8% interest on the judgment sum to be applied from the date of the filing of this proceeding.
    

COSTS

24. Cost shall follow the event.
    

ORDER

25. The Court orders:
    
    • (1) Damages totalling K55,723.87 is payable by the second defendant to the plaintiff.
    • (2) Interest of 8% per annum on the judgment sum is payable by the second defendant to the plaintiff, to be applied from the date of the filing of this proceeding, 14^th June 2017.
    • (3) The second defendant shall pay the plaintiff’s costs of and incidental to this proceeding on a party-party basis, to be taxed if not agreed.
    • (4) Time for entry of this order is abridged to the date of settlement by the Registrar which shall take place forthwith.
      

Namani & Associates: Lawyer for the Plaintiff
M S Wagambie Lawyers: Lawyer for the Defendants