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Nambawan Super Ltd v Paraka (trading as Paul Paraka Lawyers) [2022] PGNC 59; N9507 (24 March 2022)

N9507

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 1662 OF 2016 (COMM)

BETWEEN:
NAMBAWAN SUPER LIMITED
Plaintiff

V

PAUL PARAKA trading as PAUL PARAKA LAWYERS
Defendant

Waigani: Anis J
2022: 14^th & 24^th March

TRIAL ON ASSESSMENT OF DAMAGES – Claim based on breach of contracts – judgment entered by default with damages to be assessed – assessments uncontested – trial conducted in the absence of the defendant who had opted not to appear after defendant did not succeed with application to vacate hearing date – assessments – consideration – assessment of damages re unpaid rents/invoices – assessment of consequential or special damages – assessment of interest – findings and conclusions

Cases Cited:

Nambawan Supa Limited v. Paul Paraka trading as Paul Paraka Lawyers (2020) N8375
Sam Tasion and 1 Or v. National Broadcasting Corporation (2021) SC2164

Counsel:

D. Wood with counsel assisting T Injia, for the Plaintiff
P. Paraka, in Person (partial appearance)

JUDGMENT

24^th March, 2022

1. ANIS J: This was a trial on assessment of damages. It commenced at 9:30am on 14 March 2022. Both parties were present on that morning. By then, the defendant had filed, on short notice, an application to vacate the trial date. The application was contested and addressed as preliminary matter. I refused the application to vacate the trial date, and in so doing, ordered the trial to commence at 1:30pm on that day. My full reasonings are in the transcript of proceedings and I would refer to that. The plaintiff appeared at 1:30pm, and the trial proceeded. The defendant, on the other hand, failed to appear in Court that afternoon to defend the matter.

2. The plaintiff tendered its evidence which consisted of affidavits without any contest or objections. The plaintiff closed, and given the non-appearance of the defendant, the trial on assessment of damages concluded where I then allowed counsel to present the plaintiff’s closing submissions. I reserved my ruling thereafter to a date to be advised.

3. Parties have been notified of today’s ruling so I will proceed.

BACKGROUND

4. The plaintiff seeks damages for breach of contracts. It seeks to recover outstanding rentals and other charges that had been invoiced to the defendant under these contracts. Its claim was made based on two contracts. The first was a commercial lease agreement (the lease), and the second, a deed of settlement and indemnity (the deed). The lease was signed earlier on 10 September 2013 whilst the deed was signed on 23 March 2016. As it turned out, the defendant breached these 2 agreements. For this purpose, I will refer to them (i.e., the lease and the deed) as the 2 agreements.

5. The full background of the claim is set out in my earlier decision re Nambawan Super Limited v. Paul Paraka trading as Paul Paraka Lawyers (2020) N8375, and I would refer to that. For the present purpose, however, I would add that on 22 June 2020, default judgment was entered against the defendant. Term 2 of the Order reads, Default judgment is entered in favour of the plaintiff with damages to be assessed.

6. Default judgment was entered premised on the plaintiff’s claim that the defendant had defaulted in paying his rents to the building or premises from 1 February 2016 to 1 October 2016 which was the date when the lease was determined. Default judgment was also entered premised on the plaintiff’s claim that the defendant continued to occupy the building on 1 November 2016 (after the lease was terminated) till the time he vacated the building on 1 May 2017. Default judgment was also entered premised on the plaintiff’s claim under consequential or special damages, which was that it had purportedly incurred costs to remove the defendant and his properties (such as office files and equipment) from the rented premises as well as in securing the premises, which included things such as providing security, changing locks to the buildings and providing logistic support to remove the defendant’s properties to another location. Default judgment was also entered premised on the plaintiff’s claim for interest and costs.

EVIDENCE

7. Despite non-appearance by the defendant, the trial proceeded in the normal fashion whereby the plaintiff opened its case, tendered its evidence, and closed its case, that is, before proceeding to present its closing submissions. The plaintiff, I observe, has the obligation to establish its various losses or damages that it seeks, that is, consistent to or in compliance with practice and procedures. Recently, the Supreme Court in Sam Tasion and 1 Or v. National Broadcasting Corporation (2021) SC2164 stated, and I quote:

19. In our view, a civil trial must be conducted in observance of its formal process. The process requires an opening address by each counsel, proceeded with adducing of evidence whether it be orally or by affidavits, that is, subject to the rights of the parties to cross-examine witnesses in observance of the requirements under the Evidence Act Chapter No. 48, then the closing arguments or submissions. The transcript of proceeding in the present matter shows that the process was not observed by the Court below. To us, this error is fatal thus affects the final decision of the trial Judge making it susceptible to be overturned upon an appeal. The proper term for this is mistrial.

8. So, in total, the plaintiff tendered a total of 6 affidavits which were given exhibit numbers. They are, (i), Affidavit of Merv Moniz filed on 22 December 2016 (Exhibit P1), (ii), Affidavit of Andrew Esler filed on 5 April 2019 (Exhibit P2), (iii), Affidavit of Andrew Esler filed on 25 February 2019, (Exhibit P3), (iv), Affidavit of George Koi filed on 2 September 2021 (Exhibit P4), (v), Affidavit of Bradley Gee filed on 2 September 2021 (Exhibit P5), and (vi), Affidavit of Terry Injia filed on 2 September 2021 (Exhibit P6).

ISSUES

9. The main issues, in my view, are as follows, (i), whether each of all of the relief sought was sufficiently pleaded, (ii), whether each of the relief sought is proven with supportive evidence on the balance of probabilities, (iii), and whether the calculations or assessment made are reasonable or whether they should be substituted with another amount(s), and (iv), Court’s considerations and assessments on the rate of interest and its calculations. I will of course deal with the issue of cost towards the end of my decision, that is, whether cost should be awarded on an indemnity basis.

COMMON GROUND

10. There are no common grounds on assessment of damages for the matter in general given the failure by the defendant to appear to make know his position to the Court. The unusual situation herein is that the defendant has decided not to appear and substantiate his defence as to why he opposes the relief or damages that are being sought by the plaintiff.

11. So, this will be case where I would consider firstly whether by law the plaintiff is entitled to seek the type of relief that it is seeking, and secondly, whether it has established them and therefore whether I should grant the relief.

12. This Court, as stated, has already ruled on liability in favour of the plaintiff. What this means is that the plaintiff has established that these 2 agreements, (i), were valid, (ii), were breached, and (iii), that the plaintiff may seek damages for their breaches or for services and costs that had been rendered accordingly. For this purpose, and subject to me confirming that the plaintiff has pleaded the relief sought and is entitled to them, my role would be to:

(i) to confirm the outstanding rents that were due and continue to remain outstanding to the plaintiff, that is, for the specified period of the lease from 1 February 2016 to 1 October 2016;

(ii) confirm or establish that the rental arrangement under the lease had continued from 1 November 2016 to 1 May 2017 due to the fact that the defendant had failed to vacate the premises immediately but had stayed on with his properties, during this period;

(iii) establish whether the plaintiff had incurred costs to, amongst others, secure the premises when the defendant failed to vacate the premises as claimed;

(iv) establish if the plaintiff is entitled to seek interest on the invoices that had been issued and whether the rate of 15% per annum is allowable;

(v) consider and reach a final sum as damages for the plaintiff.

RELIEF

13. The main relief sought in the Writ of Summons and Statement of Claim (SoC), which is also covered in the submissions, may be summarized as follows:

1. The plaintiff claims its unpaid rental invoices issued to the defendant between 1 February 2016 to 1 October 2016 which included car park fees and electricity charges. In total, the plaintiff seeks K2,626,425.50 as outstanding rental payments for the said period. The plaintiff also seeks unpaid invoices for the period after the lease term, that is, from 1 November 2016 to 1 May 2017. In total, it seeks K843,663.24 as outstanding rental payments for the said period. The total amount claimed for the 2 periods, is K3,470,088.74.
   
2. The plaintiff also claims reimbursements for invoices that had been issued by Wridgways PNG, CLS Logistics and Black Swan to the plaintiff’s property manager JLL which had been fully paid by the plaintiff. The total payment made for this consequential or special damage is K158,797.97.
   
3. The plaintiff also claims interest at the rate of 15% per annum as per clause 4.5(k) of the lease, on each unpaid rental invoice that had been issued between 1 February 2016 to 15 March 2022, the latter date being the estimated date of delivery of judgment on assessment. The total interest sum claimed, that is, based on the said projected estimate, is K2,976,908.02.
   

UNPAID RENTS

14. I refer to the pleadings in the statement of claim. The plaintiff has pleaded the outstanding invoices which represent the outstanding rents for the months of February 2016 to October of 2016. Explanatory evidence including the invoices for this period, plus invoices for electricity and car park charges, are adduced commencing at para 5 to Exhibit P5 (affidavit of Bradley Gee filed on 2 September 2021) and also commencing at para 87 to Exhibit 4 (affidavit of George Koi filed on 2 September 2021).

15. The total sum claimed for is K3,470,088.74 under this head of damages. This claim is undefended. The defendant has failed to appear and as such, I have no submissions or evidence from him in response to this relief as claimed.

16. I find the relief to be sufficiently pleaded in the SoC (paras 22 and 23). Not only that, I also find detailed pleadings or particulars of the alleged unpaid rents and charges which the plaintiff claims remain outstanding and owing under the 2 agreements. I also find evidence that supports or justifies the issued invoices and charges which the plaintiff seeks for the full length of the period, that is, from 1 February 2016 to 1 May 2017. The plaintiff’s total claim of K3,470,088.74 under this head of damage is therefore valid and has been established to my satisfaction on the balance of probabilities, and I will make an order for the said amount.

CONSEQUENTIAL OR SPECIAL DAMAGE

17. Under this head of damage, I note that it is pleaded in the SoC (paras 7 and 8). The total amount the plaintiff claims under this damage is K158,797.97.

18. The cost relates to events that had unfolded after the outcome of proceeding OS No. 115 of 2014. In that proceeding, defendant had attempted to obtain restraining orders against the plaintiff from evicting him from the plaintiff’s premises including the Mogoru Moto Building. After conclusion of the said matter, the plaintiff filed the present proceeding and in so doing, applied for, and obtained consent orders before Hartshorn J on 30 December 2016. Orders were then put in place for the smooth transition of the defendant’s properties out of the plaintiff’s premises. The plaintiff pleads that it incurred costs including providing special security measures to the building to secure it during the transition period. It pleads that it has also incurred costs for packing, transporting, and storing the defendant’s properties. The cost includes, the plaintiff pleads, purchasing 15 x 20-foot containers from CS Logistics. The plaintiff pleads that it had engaged service provider Wridgways PNG who had conducted the packing, transportation, and storage of the defendant’s properties.

19. The plaintiff relies, in particular, to its evidence adduced in Exhibit P4 (affidavit of Mr Koi). The plaintiff evidence again is uncontested. I have considered this relief and the plaintiff’s evidence in that regard. I firstly find the relief sufficiently pleaded in the SoC. Secondly, I am satisfied that there is evidence and background facts that supports this cost which had been incurred by the plaintiff. I do not consider the cost or relief too remote. In fact, it was incurred in circumstances that directly relate to the end or conclusions of the 2 agreements. And these were actual costs incurred by the plaintiff with the full knowledge of the defendant. There was no agreement or understanding in place that the defendant would not meet the plaintiff’s cost or costs, that is, for assisting with removing the defendant’s properties out of its premises.

20 I am satisfied on the balance of probabilities and will award this damage or cost of K158,797.97 to the plaintiff.

INTEREST

21. The interest component is pleaded and sought by the plaintiff in relation to its claim under the first damages, that is, for the outstanding or unpaid rents and related costs. The plaintiff also seek interest to apply in the post judgment period.

22. The plaintiff’s calculation of interest is 15% per annum. The said percentage was derived from the lease. The plaintiff, in submission, refers to clause 4.5(k) of the lease. I note that this is also pleaded in the SoC [para 6(e)]. Clause 4.5 (k) states:

Without prejudice to the rights, powers and remedies of the Lessor otherwise under this Lease the Lessee will pay to the Lessor interest at the rate of fifteen percent (15%) on Rent or other moneys due but unpaid by the Lessee to the Lessor pursuant to this Lease such interest to be computed from the due date for the payment of the moneys in respect of which the interest is chargeable until payment of such moneys in full.

23. The lease was a private agreement between the parties. The parties were bound by the terms and conditions set therein including the above clause for interest. For clarity, I must say that the Judicial Proceedings (Interest on Debts and Damages) Act of 2015 has no application herein although it may be used as a guide. I make this finding for 2 reasons. Firstly, the preamble of the Act states in part, Being an Act...to make provision for interest on certain judgments. The phrase, certain judgments, may be read in the context as stated by s. 2 of the Act, which states, This Act applies to all Court Orders made against the State on or after 1 January 2014. The defendant herein is not the State. But that aside, the dealings between the parties herein were commercial in nature with private contractual terms where parties were bounded by, terms that also covered interest.

24. And let me also say this. This case must be distinguished from other cases where it may be said that the Court’s power to award interest is discretionary. The Court’s exercise of discretion on interest applies in cases where there are no express provisions for interest in a transaction and where parties are seeking it, and if allowed, the rate or percentage that would apply or be termed as reasonable under the circumstances. It also applies in a situation where for example a clause of a contract or an agreement may state that interest shall apply, whether it be by a commercial rate or otherwise, but does not give or state a definite or fixed percentage rate at which interest is to apply. The Court may then be asked to make a determination on what rate or rates to use. Also, the Court may exercise its discretion and award an appropriate interest rate for example if a term of an agreement or contract is uncertain or ambiguous (i.e, on interest and whether it should apply or not). The most common rate used by Courts in this jurisdiction is 8% percent per annum. The said rate is derived from Order 12 Rule 6(1) &(2) of the National Court Rules and the now repealed Act, that is, the Judicial Proceedings (Interest on Debts and Damages) Act 1962.

25. In the present case, however, application of interest and at what rate, are expressly stated in the lease as agreed to by the parties. In my view, there is no room for exercise of discretion in this type of situation except to sanction the interest rate that the parties agreed on. Therefore, and given that liability and the validity of the lease have been established, I am bound or oblige herein to apply the interest rate of 15% per annum pursuant to clause 4.5(k) of the lease.

26. In so doing, I note that the plaintiff has sufficiently covered and addressed interest upon the invoices that had been issued at the rate of 15% per annum in its submissions and evidence. Its submission is of course based on its adduced evidence of Mr Koi and Mr Gee, that is, exhibits P4 and P5 at paras 147 and 64 respectively. The table that used in the submission is similar to those adduced in evidence by the plaintiff. However, I note that the plaintiff’s calculation of interests for the pre-judgment period is estimated up to or as at 15 March 2022.

27. The total interest the plaintiff has assessed and claims at 15%, that is, from the period of their due dates to the estimated date of judgment as at 15 March 2022, is K2,976,908.02. The period of calculations of interests, I observe, is based on the terms of the lease for the pre-judgment period. I find the calculation accurate as per the terms of the lease.

28. In this case, I will permit interest as calculated for the pre-judgment period. Given that we have passed 15 March 2022, I will make additional adjustments to cater for the additional 8 days up to 23 March 2022. I am also inclined to award post judgment interest at 8% per annum which has been sought by the plaintiff herein. The said rate is standard and, in my view, reasonable under the circumstances. I will order interest to accrue on the judgment sum if payment is not received within 30 days from the date of service of the orders that I will make.

29. But before that, I set out the adjusted interest table herein,

SUMMARY

30. In summary, I award damages for breach of the 2 agreements in the sum of K3,470,088.74. I also award interest at 15% per annum as calculated herein on the outstanding invoices, in the sum of K2,988,686.98. I also award consequential or special damages in the sum of K158,797.97.

31. In total, the judgment sum I award is K6, 617,573.69. I also order that post judgment interest to apply at 8% per annum on the judgment sum, which shall be K1,450.43 per day, and the said interest shall accrue after 30 days of service of this Court Order or judgment on the defendant.

COST

32. An award of cost remains discretionary to me to exercise, including what cost scale I should apply. In the present case, the plaintiff seeks cost on an indemnity basis. I note its submissions in that regard. The defendant did not appear so there is no submission from him on the matter.

33. I uphold the plaintiff’s submissions. I concur that the defendant has cause substantial delays to this proceeding generally. I also take these other factors into account. Firstly, I note that the 2 agreements were settled and agreed to by both parties in 2016, that is, after numerous unsuccessful attempts to resolve the outstanding rental issues. As it turned out, the defendant was not serious at all as did he keep to his promise and commence payment of his rents from day one, which was to pay his rent for the month of February of 2016. Secondly, I note that the pleadings did not disclose a valid defence on the part of the defendant, and I had addressed that in my earlier decision. The third main factor I note and take into account is this. The defendant has deliberately refused to attend Court to defend the matter. He had many months to prepare for the trial including opportunities to engage a lawyer or law firm to act for him. I recall that it was upon his request that the matter was set down for 3 days trial. Instead, he did nothing and waited till the very last minute where filed an application to vacate the hearing date. He had made similar numerous applications in the past which had wasted a lot of the Court’s time. And when his application to vacate the hearing date was refused, he simply did not turn up in Court in the afternoon on 14 March 2022 to defend the matter. If he had issues, he, as an officer of the Court, should have had the courtesy to instruct a lawyer to appear on his behalf. He did none of that knowing fully well that the hearing would resume at 1:30pm that afternoon, and the trial had to proceed in his absence. I find the defendant’s actions at the trial and throughout the course of this proceeding in general, disingenuous as well as bordering on contempt of Court. I also note that the defendant, by his actions, has shown no regard for the troubles and financial losses that he had and has continued to cause to the plaintiff’s business. In my view, he therefore ought to be punished for these with an order for cost against him on an indemnity basis. I see that the situation and circumstances of the case warrants me to exercise my discretion in this manner.

ORDERS OF THE COURT

34. I make the following orders:

1. I award damages for breach of contracts in the sum of K3,470,088.74 in favour of the plaintiff against the defendant.
   
2. I also award pre-judgment interest to the damages, in the sum of K2,988,686.98.
   
3. I further award consequential or special damages, in the sum of K158,797.97 in favour of the plaintiff against the defendant.
   
4. In total, I award a Judgment Sum of K6, 617,573.69 (i.e., K3,470,088.74, K2,988,686.98 and K158,797.97) in favour of the plaintiff against the defendant.
   
5. The defendant shall pay the full Judgment Sum within 30 days upon service or receipt of a sealed copy of this Order or judgment, and failure to do so (i.e., failure to pay the Judgment Sum in full within 30 days) will attract interest to accrue on the Judgment Sum at the rate of 8% per annum or at the rate of K1,450.43 per day until the date and time when the Judgment Sum is settled in full.
   
6. The defendant shall pay the plaintiff’s cost of the proceeding on an indemnity basis which may be taxed if not agreed.
   
7. Time for entry of these orders is abridged to the date and time of settlement by the Registrar of the National Court which shall take place forthwith.
   

The Court orders accordingly

________________________________________________________________
Ashurst PNG: Lawyers for the Plaintiff
Paul Paraka: In person