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Alfred v Kautu [2025] PGNC 398; N11531 (17 October 2025)

N11531

PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]

WS No. 188 OF 2020 (CDS)

BETWEEN:
JUNIOR ALFRED
First Plaintiff

NEW BRITAIN STATIONARY
Second Plaintiff

V

MILIKA KAUTU-COUNCILLOR WARD 3
First Defendant

BEN FEDILIS – KIMBE TOWN MAYOR
Second Defendant

JOHN ROBIN – Executive Officer, Office of the Kimbe Town Mayor
Third Defendant

MARTIN LINGE
Fourth Defendant

KIMBE URBAN LOCAL LEVEL GOVERNMENT
Fifth Defendant

THE WEST NEW BRITAIN PROVINCIAL ADMINISTRATION
Sixth Defendant

KIMBE: ANDELMAN J
10, 17 OCTOBER 2025

DAMAGES – Assessment – after entry of default judgement – breach of contract – contract for supply of stationary

INTEREST – Assessment – whether rate agreed in the contract – whether amount of interest payable is to be inferred

The plaintiffs entered into two contracts with the defendants. The first contract was for the supply of stationary to the value of K12, 000.00. The second contract was a loan of K5,000.00 plus K2,000.00 interest to assist with the payment of salaries for staff employed by the fifth defendant.

The defendants failed to pay for the stationary and to repay the K7,000.00 within the agreed time. The plaintiffs alleged that because of the late payment of K19, 000.00 its business collapsed and claimed damages for loss of business as well as interest on the late payment of the contracts.

The defendants failed to file defences and default judgment on liability was entered against them.

The plaintiffs sought two categories of relief; (a) claim K868,000.00 for loss of business (office rent and salaries) for the period of March 2015 to June 2025; and (b) default interest on the loan of K5,000.00, claimed to be at K2,000.00 per fortnight from May 2015 to June 2015 in the sum of K488,000.00.

Held:

(1) The Court awarded zero for loss of business.
(2) Interest calculated at the rate of 8% per annum

1. On K12,000.00 from the date the amount became due, 15 June 2015 until it was paid on 14 December 2015
2. On K7,000.00 from the date the amount became due, 16 April 2015 until it was paid to 14 December 2015

(3) Interest calculated at the rate of 8% per annum on the payments in Order 2 from the date of service of the amended writ to the date of judgment; Judicial Proceedings (Interest on Debts and Damages) Act 2015
(4) The defendants pay 20% of the plaintiffs’ costs of the proceedings on a party-party basis which shall be taxed if not agreed.

Cases cited
Coecon Ltd (Receiver/Manager Appointed) v National Fisheries Authority (2002) N2182
Infratech Management Consultants Limited v State [2019] SCA NO 106 of 2018
Kiap (trading as El Roi Hire Cars) v Wari [2024] PGNC 233; N10902
Madang Cocoa Growers Export Co Ltd v. National Development Bank Ltd (2012) N4682
RD Tuna Canner Limited v Sengi & Ors [2022] SC2232
University of Papua New Guinea v Duwaino [2011] SC1119
William Mel v Coleman Pakalia & Ors (2005) SC790

Counsel
Mr N Loloma, for the plaintiffs
Mr P Paraka, for the defendants

1. ANDELMAN J: This is a decision on assessment of damages for loss of business and interest on the late payments of debts due. On the 6th of May 2025 this court entered default judgement in respect of the matters pleaded in the plaintiffs’ amended writ of summons and statement of claim filed on 2nd of November 2017. Judgment was entered against the defendants.
   
2. The plaintiffs made two claims:
   1. Interest on debt resulting from breach of contract. The contract was in the form of a statutory declaration entered into by the second plaintiff and the second defendant, Mr. Fidelis, caretaker Kimbe Town Mayor on 2 April 2015 for a loan of K5,000.00 to be paid together with K2,000.00 within two weeks as interest (the Statutory Declaration).
   2. Loss of business damages caused by the defendants’ failure to pay K7,000.00 on 16 April 2015 and for K12,000.00 of stationery due to be paid on 15 June 2015. The debts were paid on 14 December 2015. In the second plaintiff’s affidavit sworn on 30 May 2025 (Exhibit 1 annexure D) the second plaintiff stated that the business closed in March 2015 and claimed losses for rent and salaries accumulated until August 2017.
      

Pleadings

3. The plaintiffs pleaded the following matters in the Amended Writ of Summons:
   1. After eight months of non-payment the plaintiffs’ business incurred considerable loss in its operation, including their clients withdrawing their services.
   2. By December 2015 the non-payment of outstanding arrears of K19,000.00 had caused considerable loss to the plaintiffs’ stationary company resulting in its closure.
   100. The plaintiffs’ business loss and accumulate (sic) interest of K5,000.00 loan was calculated on 29 months since (sic) 2nd of April 2015 to September 2017...
   4. The plaintiffs claimed:
      1. K133,000.00 for interest earned on the principal funds of K5,000.00 borrowed
      2. K420,000.00 for loss of business
      3. Interest and costs
         

The Evidence

4. The plaintiffs relied on three affidavits sworn by the first plaintiff. Exhibit 1 affidavit sworn on 30 May 2025, affidavit sworn on 3 March 2022 (Exhibit 2) and affidavit sworn on 18 July 2025 (Exhibit 3).
   
5. The background is that the business commenced on the 30th of October 2019. The business was conducted out of the second plaintiff’s home, and the business was supplying stationary. The plaintiffs relied on a Certificate of Registration of Business Name which named the first plaintiff and two other individuals as owners. There was no evidence that the second plaintiff was a registered company at the time the contracts were entered into or subsequently.
   
6. In evidence are:
   1. account statements for the period ending in December 2015 which shows that some business was carried out during this time by the second plaintiff;
   2. bank account from the 4th of April 2014 to the 5th of November 2015 which also shows that the second plaintiff was conducting some business during this time;
   100. second notice of rent dated 2 April 2015 which states that the lease may be terminated; and
   4. a letter from a client closing its account with the second plaintiff dated the 6th of March 2015.
7. The Statutory Declaration states that:

Kimbe Urban LLG on this day borrowed money from New Britain Stationaries totaling K5,000.00 and will repay it with interest of K2, 000.00. Repayment shall be done within two weeks of the date of this declaration.

8. There is no dispute between the parties that the defendants borrowed cash of K5,000.00 and agreed to repay with K2,000.00 interest by way of signing the Statutory Declaration and that the defendants obtained stationary items to the value of K12,000.00 and that the defendants failed to pay these amounts in full until 14th of December 2015.
   

Submissions

9. The plaintiffs submitted that despite a lack of any documentary evidence of when or why the business collapsed the Court should do its best to award some amounts for loss of business in the interests of justice in reliance on William Mel v Coleman Pakalia & Ors (2005) SC790. In that case, the Supreme Court stated that:
   

... 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. (citations removed)

10. As to the interest on the unpaid amount of K7,000.00 in the Statutory Declaration, the plaintiffs submitted that the Court should infer that default interest was agreed to be at K4,000.00 per month and claim the amount until June 2025. This was a claim for ‘contractual interest’ as distinct from ‘statutory interest’ claimed under s 4 of the Judicial Proceedings (Interest on Debts and Damages) Act 2015.
    
11. The Defendants submitted that the plaintiffs had failed to plead whether they were claiming loss of business profits or loss of business opportunities or both in reliance on Kiap (trading as El Roi Hire Cars) v Wari [2024] PGNC 233; N10902. Further that there is no evidence that the second plaintiff is a legal entity and that there is no evidence before the court that there was a loss to the business or that the loss of business was caused by the defendants.
    

Consideration

12. As to the breach of the Statutory Declaration, the plaintiffs claim interest in the amount of K4,000.00 per month. Their submission is that because there is agreement between the parties that there will be a payment of K2,000.00 for 2 weeks, the court should infer that the contract was that any breach of the contract would attract interest at K2,000.00 for every 2 weeks.
    
13. There is no evidence from the first plaintiff as to the circumstances in which the Statutory Declaration was entered into other than that the request was made for the payment of staff salaries. There is no suggestion that there were any oral terms that there was some agreement as to what would occur if the Statutory Declaration was breached.
    
14. In RD Tuna Canner Limited v Sengi & Ors [2022] SC2232 the Supreme Court stated that:
    

Where a civil claim relies on circumstantial evidence, the party bearing the burden of proof must establish that the more probable inference supports the case alleged. An inference can be drawn provided it is reasonable and definite based on the circumstances appearing in the evidence. The court cannot draw an inference where the circumstances give rise to conflicting inferences of equal degrees of probability, where the choice between them is a mere matter of conjecture. But if circumstances are proved in which it is reasonable to find a balance of probabilities in favour of the conclusion sought then it is not to be regarded as mere conjecture or surmise even though it may fall short of certainty (citations removed).

15. I do not consider that there is any evidence that could ground an inference that the parties agreed to pay K2,000.00 for every 2 weeks where there was a breach of the contract. The statutory declaration is silent as to any breach.
    
16. As stated in Infratech Management Consultants Limited v State [2019] SCA NO 106 of 2018 at [11] where there is a claim for contractual interest, it must be supported by reference to the terms of the contract.
    
17. As to the loss of business claim, the plaintiffs have the onus of proving their loss on the balance of probabilities and it's not sufficient to make assertions in submissions.
    
18. The documentary evidence relied on by the plaintiffs does not demonstrate that the business collapsed in March 2015 because of the defendants’ breach of contract.
19. First, the debt of K12,000.00 did not become due until 13 June 2015, secondly the documentary evidence demonstrated that the second plaintiff was trading after March 2015, thirdly the documentary evidence demonstrated that the second plaintiff lost a client in early March 2015 and had trouble paying rent in April 2015, this was prior to the date the amounts of K19,000.00 were to be repaid.
    
20. There is also an unsurmountable problem with the second plaintiff claiming wages and rent as business loss, as there is no evidence of the amount of rent paid or wages payable. It is also entirely unclear how the payment of rent and wages can be a business loss. They are business expenses.
    
21. There is a dearth of evidence as to the circumstances in which the business operated prior to the contracts with the defendants and why the second plaintiff lost its clients and suffered losses. There is no evidence linking the loss of business to the breach of the oral or written contract.
    
22. This is not a case where damages cannot be assessed with certainty. This is a case where there is no evidence of damage caused by the conduct of the defendants. The claim is very vague.
    
23. As both parties submitted and I accept, the general principle is that the purpose of an award of damages is to put the innocent party in the same position as far as money can do as if the guilty party had not committed a wrongful act, that is the innocent party only gets the amount of their actual losses that were reasonably foreseeable at the time the contract was formed; University of Papua New Guinea v Duwaino [2011] SC1119 at [14]; Madang Cocoa Growers Export Co Ltd v. National Development Bank Ltd (2012) N4682.
    
24. What is considered to have been reasonably foreseeable at the time the statutory declaration was entered into depends on two things, first the sort of knowledge that any reasonable person would be expected to have and secondly knowledge of special circumstances outside the ordinary course of things; Coecon Ltd (Receiver/Manager Appointed) v National Fisheries Authority (2002) N2182.
    
25. There is no evidence that the defendants had any knowledge that their failure to pay the plaintiffs would result in the plaintiffs’ business terminating. No such knowledge can be inferred. There is no documentary evidence that the defendants’ conduct caused the loss of business. The plaintiffs’ claim is not reasonably foreseeable.
    
26. No damages can be awarded for the claim of business loss.
27. As there is no evidence that the second plaintiff is a legal entity, I will make orders for the first plaintiff.
    

Interest

28. As the oral contract for the stationary was entered into on 13 March 2015 with an agreement that the amount be paid within three months, K12, 000.00 was to be repaid by 13 June 2015. The first plaintiff is entitled to interest on the unpaid amount until full payment was made on 14 December 2015. Interest is to be calculated at the rate of 8% per annum on K12, 000.00 from 13 June 2015 to 14 December 2015.
    
29. The Statutory Declaration was entered into on 2 April 2015 with the agreement that the sum of K7,000.00 be paid within two weeks, 16 April 2015. The first plaintiff is entitled to interest on the unpaid amount until full payment was made on 14 December 2015. Interest calculated at the rate of 8% per annum on K7,000.00 from 16 April 2015 to 14 December 2015.
    
30. The defendants conceded that interest was payable and could be at 8% at the court’s discretion but submitted that no interest was to be awarded following the payment of the debt in December 2015.
    
31. I consider that in this case, further interest is warranted as it serves the purpose of compensating the plaintiff for the loss of the use of the money that should have been paid to them. It also prevents the party who withheld the money from unjustly enriching itself. Interest is to be calculated at the rate of 8% per annum on the payments in paragraphs [28]-[29] above from the date of service of the amended writ of summons to the date of judgment; Judicial Proceedings (Interest on Debts and Damages) Act 2015. The amended writ of summons was served on the defendants on 3^rd of March 2022.
    

Costs

32. The plaintiffs have been unsuccessful in the claim for loss of business and that contractual interest for the breach of the Statutory Declaration be calculated at K2,000.00 per every 2 weeks. However, they are entitled to interest for the period until the amounts are paid in full. I consider that in these circumstances the defendants should pay 20% of the plaintiffs’ legal costs.

Orders

1. The defendants shall pay the first plaintiff’s interest on K12,000.00 from 13 June 2015 to 14 December 2015 at 8% per annum.
2. The defendants shall pay the first plaintiff interest on K7,000.00 from 16 April 2015 to 14 December 2015 at 8% per annum.
3. The defendants shall pay the first plaintiff pre-judgment interest on the payment of money in Order 1 and Order 2 at 8% per annum from the date of service of the amended writ of summons to the date of judgement.
4. The fifth defendant shall pay 20% of the first plaintiff’s legal costs as agreed or assessed.

________________________________________________________________
Lawyer for the plaintiffs: Public Solicitor
Lawyer for the respondents: Legal Services Division of West New Britain Provincial Government