N11690
PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]

WS NO 1101 OF 2019 (CC1) (IECMS)

BETWEEN
CHAN CONSOLIDATED LIMITED
  Plaintiff

AND
BARBARA AGE AS THE SECRETARY FOR DEPARTMENT OF FOREIGN AFFAIRS AND TRADE 
First Defendant

AND
INDEPENDENT STATE OF PAPUA NEW GUINEA
Second Defendant

 WAIGANI: MAKAIL J
15 APRIL, 2 SEPTEMBER 2025; 3 FEBRUARY 2026   

ASSESSMENT OF DAMAGES – Assessment of damages following strike out of defendants’ defence for want of discovery of documents and entry of judgment – Breach of Lease Agreement – Award of damages – General and special damages – Outstanding rentals – Outgoings – Distress and anguish caused by unlawful alteration to office space – Costs of architects – Proof of  

Cases cited

Yooken Paklin v The State (2001) N2212
Albert Baine v The State (1995) N13335
Kopung Brothers Business Group v Sakawar Kasieng [1997] PNGLR 331
Peter Wanis v Fred Sikiot and The State (1995) N3150
Yange Langan v The State (1995) N1369
Kolaip Palapi & Ors v Sergeant Poko and Others (2001) N2274
Obed Lalip & Ors v Fred Sikiot &The State (1996) N1457
Rodao Holdings Ltd v Sogeram Development Corporation Ltd (2007) N5485
Willie Lahari v Roko Koloma & Ors (2021) N9254

Counsel

Ms S Gigmai & Ms F Agi, for plaintiff
Mr B Yuyuke, for defendants 

JUDGMENT

1.	MAKAIL  J: On 19th July 2023 the defendants’ defence was struck out for want of discovery of documents and judgment was entered against the defendants with damages to be assessed.  On 15th April 2025 the learned counsels for the parties appeared in Court for directions hearing, and in consultation with them, the Court directed that the trial on assessment of damages will be on paper with both counsels directed to file written submissions by 6th June 2025.  

2.	The action is for breach of a Commercial Lease Agreement (“Lease”).  In the statement of claim, the plaintiff seeks the following:

	(a)	An amount be assessed for breach of contract for:	

		(i)	Outstanding rental; and
		(ii)	Outgoings.

	(b)	The sum of K839,007.61 in lost outgoings revenue.

	(c)	General damages.

(d)	Interest pursuant to the Judicial Proceedings (Interest on Debts and Damages) Act 2015.

	(e)	Costs of and incidental to the proceedings.

3.	The plaintiff relies on the following:

(a)	Affidavit of Benedict Wai Nam Chan sworn and filed on 21st November 2023;

(b)	Affidavit of Benedict Wai Chan sworn 14th March 2024 and filed on 15th March 2024; and

(c)	Written submissions filed by learned counsel on 9th June 2025 pursuant to Court direction/order of 15th April 2025.

4.	The defendants did not file any responding affidavits and written submissions.

5.	I have read the affidavits of Mr Chan and written submissions of the learned counsel, and I find that:

•	Mr Chan is a director and sole shareholder of the plaintiff.  

•	the plaintiff is the registered proprietor of a commercial complex building known as the Waigani Corporate Building (“Building”), located and described as Section 37 Allotments 1, 2, 3, and 4 Graville contained in the State Lease Volume 10 Folio 2402 (“the Lease”).  A copy of the State lease is annexed as “BC3” to the affidavit of Mr Chan sworn and filed on 21st November 2023.

•	on 26th May 2012 the plaintiff entered into a Commercial Lease Agreement with the defendants pursuant to which the Department of Foreign Affairs & Trade was to occupy two levels of the plaintiff’s building for a term of 5 years commencing on 1st April 2012 and ending on 28th February 2017. A copy of the Lease is annexed as “BC5” to the affidavit of Mr Chan sworn and filed on 21st November 2023.

•	pursuant to Item 8 to the Schedule to the Lease Agreement, the rate of rental is K264,984.00 per month or K3,179,800 less GST per annum.

•	pursuant to Item 13, the Department of Finance (Office Allocation Section) is responsible for the rental payment.

•	in June 2012 the defendants through the first defendant moved into the two levels of the plaintiff’s building.

•	the defendants did not pay the Outgoings.  

•	the parties made attempts to settle the claim for Outgoings.

•	in its letter dated 1st November 2013 to the plaintiff’s agent, LJ Hooker Real Estate, the Office of the State Solicitor denied the obligation of the defendants to pay Outgoings.

•	According to the calculations prepared by DFK Hill Mayberry Chartered Accountants to the defendants for payment, a total sum of K1,891,769.73 (correct sum is K1,412,963.53) comprising of:

o	K186,793.46 for 2nd quarter of 2012.
o	K362,615.20 for 2nd half of 2012.
o	K289,598.95 for 1st half of 2013.
o	K227,679.57 for 2nd half of 2013.
o	K346,279.35 for 1st half of 2014.

•	on 1st May 2014, the plaintiff gave notice to the State (second defendant) under Section 5 of the Claims By and Against the State Act 1996 of its intention to make a claim against the State (second defendant).

•	in July 2015, the plaintiff and first defendant agreed to a payment plan for payment of K1,891,769.73 for Outgoings owing to 31st December 2014, with interest of 8% per annum, on any amounts due and unpaid.  The arrangement was for four instalments each of K472,942.43 to be paid on the following dates:

o	17th July 2015;
o	17th October 2015;
o	17th January 2016; and
o	17th April 2016.

•	as agreed, the first defendant paid the first instalment of K472,943.00.  After that, it failed to pay the remaining three instalments totalling K1,418,826.73.

•	during the period of occupancy, the first defendant made alterations to the office space at the two levels of the plaintiff’s building.

•	on 1st July 2015 the first defendant was locked out of the plaintiff’s building.  Subsequently, on 11th November 2015, it was granted permission by the plaintiff for its staff to enter and remove all their office items and equipment.  

•	after the first defendant vacated the building, the plaintiff, amongst others, engaged I.F Neheja & Associates Limited, a consulting firm who conducted Building Services Report at the costs of K8,360.00 and K3,190.00 respectively.  

•	significant and unlawful alterations were done to the office space by the first defendant including damage to the toilets, showers, walls and celling.  

Principles of Law on Assessment of Damages

6.	The general rule of evidence is that the plaintiff carries the burden of proving its losses on the balance of probabilities.  Adopting the principles of law on assessment of damages in Yooken Paklin v The State (2001) N2212, Albert Baine v The State (1995) N13335, Kopung Brothers Business Group v Sakawar Kasieng [1997] PNGLR 331, Peter Wanis v Fred Sikiot and The State (1995) N3150, Yange Langan v The State (1995) N1369 and Kolaip Palapi & Ors v Sergeant Poko and Others (2001) N2274, that entry of default judgment does not relieve a plaintiff from proving its claim, corroboration of a claim is usually required, and the corroboration must come from an independent source, and even in a case where the defendant fails to present evidence disputing the claim and, further even after default judgment is entered and furthermore, when trial is conducted  ex parte, and finally, vague claims unsupported by corroborating evidence must be rejected because they may be false, I assess each of the head of damages hereunder.

Outstanding rentals

7.	In the case of outstanding rentals, the learned counsel for the plaintiff did not make submissions in the written submissions for the plaintiff to be awarded a sum of damages as Outstanding rentals.  In fact, there is no evidence to prove this head of damages.  This is reinforced by the Court’s findings above that there are no findings that the defendants failed to pay rentals and the plaintiff is owed rentals.  

8.	In any case, the plaintiff has failed to correctly quantify what is outstanding as rentals in the written submissions of its counsel by reference to the relevant evidence.  For example, at page 2 of the letter from Irish & Saunders Pty Limited to the plaintiff dated 30th November 2023 marked as annexure “A” to the affidavit of Mr Chan sworn on 14th March 2024 and filed on 15th March 2024, their findings were:

	“Rent and outgoings due to 11 November 2015 	K2,011,596.17.

Interest due to 30 November 2023 			K,298,500.70.”

9.	Further, at page 3 of the same letter, it gives the break-up of the Outstanding rentals as follows:

	“Amounts due since 1 July 2015

	Rent 	1-Aug-15			297,956.41		3043	198,724.68	
Rent 	1-Sep-15			297,956.41		3012	196,700.21	
Rent 	1-Oct-15			297,956.41		2982	194,741.04	
Rent 	(11 days) 31-July-15107,754.102951		2951	 69,694.76”

10.	Except for these figures in the said letter, evidence of this nature is vague and unreliable.  What is also missing is that there is no independent evidence in the form of Rental Tax Invoices produced by the plaintiff as the primary source of evidence to first, establish if they were served on the defendants for payment and secondly, if so, that they remained due and unpaid.  Thirdly, as I have found above the first defendant was locked out of the plaintiff’s building on 1st July 2015.  It was granted permission by the plaintiff for its staff to enter and remove all their office items and equipment.  Consequently, the first defendant had by then vacated the plaintiff’s building.  The learned counsel for the plaintiff did not refer me to the relevant clause (if any) in the Lease Agreement which provided that the plaintiff is entitled to receive rental after termination of the Lease Agreement on 1st July 2015 or up to the date of 11th November 2015 when the first defendant vacated the building.  

11.	For the foregoing reasons, the plaintiff has failed to establish on the balance of probabilities that it is entitled to the relief sought for Outstanding rentals.  Accordingly, the relief sought for a sum to be awarded as Outstanding rentals is refused.

Outgoings 

12.	According to Mr Chan, the defendants are responsible for the Outgoings.  He relies on an email from Mr Guido David of the Department of Personnel Management to Blanche Vitata dated 13th April 2012 and copied to Mr Rio Fiocco, Mr Laurie Needham and him which stated in part that“….to the Commercial Lease amendments for the Westpac building (Dept of Foreign Affairs & Trade) sent to us by Mr Rio Fiocco as the Lawyers representing” the plaintiff as the landlord and for comments “1. Claus (sic) 1.1 Outgoings is Tenant’s responsibility and Dept of Foreign Affairs are the ones to pay.  Govt Off Accommodation office is responsible for the Rental alone.” 

13.	In short, Mr Chan says that according to the above email, the first defendant undertook to pay for the Outgoing expenses of 40.08%.  Shortly after that, Mr Chan informed Mr Needham that the payment of Outgoings is not negotiable.  He will not sign the Lease Agreement without the Outgoings on condition that the first defendant gave to him a written undertaking to pay the 40.08% Outgoings as defined in the Lease Agreement.  Otherwise, there will be no leasing.  

14.	On 30th May 2012 Mr Chan received a letter from the Acting Secretary of the first defendant one Mr Alexis Maino confirming the undertaking for the first defendant to pay the 40.08% Outgoings for the two levels of the building.

15.	As noted above, the plaintiff carries the burden to prove its losses, in this case, the Outgoings.  Just because the plaintiff has obtained a judgment does not mean that he is entitled as of right to receive damages.  He must prove his damages suffered by credible evidence.  In respect of proof, the evidence and pleadings must be clear, not confusing, contradictory and inherently suspicious.  As the National Court observed in Obed Lalip & Ors v Fred Sikiot & The State (1996) N1457:

“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.”

16.	Based on the above principles, I find that the plaintiff’s claim for Outgoings is confusing and contradictory because the evidence does not add up.  While Mr Chan says that the parties agreed that it is the responsibility of the first defendant to pay the Outgoings, clause 1.6 of the Lease Agreement is expressed to the contrary and does not lend support to Mr Chan’s assertion.  Clause 1.6 states:

	“OUTGOINGS

The State is not liable to pay any Operational costs which would be classified as Outgoings and deemed to be of benefit to the operations of the demised premises and the Land, or as otherwise specified in this Lease.

“Outgoings” means the total of all expenses and costs paid or payable by the Leasor (or for which payment the Lessor is or becomes liable) in respect of the land and all the improvements erected on the land arising by direct assessment or by virtue of any covenant in any head lease or otherwise (and where appliable calculated at the rate payable by the Leasor by reason of the ownership of all its property) including but not limited to expresses and costs in respect of:……….”

17.	Also, at clause 1.6(i)-(xviii), there are 18 items which the Lessor, in this case, the plaintiff is responsible to pay, the first one being “All rates, taxes, charges, assessment, outgoings and impositions relating to the provisions and operation of all water and sewage service to and from the Land.”

18.	Quite clearly, clause 1.6 does not state that the second defendant is responsible for paying any Operational costs which would be classified as Outgoings.  The plaintiff’s claim to be awarded damages for Outgoings is contrary to Clause 1.6.

19.	Secondly, it may be that Mr Chan made it clear to the plaintiff’s agent Mr Needham of LJ Hooker Real Estate to have the first defendant agree to paying the Outgoings before the Lease Agreement is signed, but there is no evidence that Mr Needham conveyed this information to the first defendant prior to the parties signing the Lease Agreement on 26th May 2012.  

20.	Thirdly, it may be that Mr Maino gave an undertaking to the plaintiff that the defendants will pay the Outgoings in his letter dated 29th May 2012, but it is after the event because the parties signed the Lease Agreement on 26th May 2012, three days prior to Mr Maino’s letter and contrary to clause 1.6.  Fourthly, it may be that the parties agreed on a payment plan for payment of the Outgoings and the first defendant made one lot of payment before it failed to complete the payment plan.  

21.	Be that as it may, the reasons offered by the plaintiff must fail because it is trite law of contract that the parties are bound by the terms of the contract, and the Court will uphold the terms of the contract.  Consequently, the parties are bound by clause 1.6 to settle the differences between them in relation to who is responsible for the Outgoings. Reading clause 1.6 does not lend support to the plaintiff’s assertion that the defendants are responsible for the Outgoings.  

22.	In addition, no evidence and submissions were put to the Court that clause 1.6 was varied to place the responsibility on the first defendant to pay the Outgoings.  Accordingly, the parties are bound by clause 1.6 and the plaintiff has failed to discharge the onus of proof on the balance of probabilities to be awarded damages for Outgoings.  The relief sought for an award of damages for Outgoings is refused.

Unlawful alteration  

23.	At paragraph 34 of its written submissions the learned counsel for the plaintiff submits that through-out the occupancy, the first defendant, as per the Lease Agreement, agreed to take care of the office space, to get the plaintiff’s prior consent for any alteration made to the office space, and to ensure that their actions do not prejudice the plaintiff’s insurance regarding the building.  The duty of care is spelt out at clause 3.3 (Care of premises) and clause 4 (Insurance) of the Lease Agreement.  

24.	At paragraph 35 of the written submissions, it was submitted that the first defendant failed to and is in breach of these terms in the Lease Agreement.  This has caused the plaintiff, especially Mr Chan, distress and anguish in correcting the breach and engaging various architects and other equivalent and relevant companies to correct the breach.

25.	First, I note here that the plaintiff does not make a claim for damages for costs of repairs or restoration of the damage done to the office space by the first defendant but for distress and anguish caused by the first defendant’s breach of the Lease Agreement for the unlawful alteration.  Secondly, I note the submissions that the plaintiff be awarded a sum of K50,000.00, this sum, the learned counsel submits, is consistent with past awards in the cases of Rodao Holdings Ltd v Sogeram Development Corporation Ltd (2007) N5485 and Willie Lahari v Roko Koloma & Ors (2021) N9254.  

26.	Given this and based on the above findings, I am satisfied that the first defendant has caused the plaintiff to suffer distress and anguish, and the sum proposed is fair and reasonable.  I award K50,000.00. 

Special damages   

27.	At paragraph 44 of its written submissions, the learned counsel for the plaintiff submits that the plaintiff, amongst others, engaged I.F Neheja & Associates Limited, a consulting firm who conducted Building Services Report after the first defendant vacated the building at the costs of K8,360.00 and K3,190.00 respectively.  The plaintiff produced copies of invoices for the costs of K8,360.00 and K3,190.00 which are annexed as annexures “D” and “E” to the affidavit of Mr Chan sworn on 14th March 2024 and filed on 15th March 2024.

28.	As special damages require strict proof, I uphold the submissions of the learned counsel for the plaintiff that based on the unlawful alteration of the office space by the first defendant, the work undertaken by I. F Neheja & Associates Limited to correct the breach and damage, and invoices rendered for payment, the plaintiff has proven on the balance of probabilities that it is entitled to be awarded costs of architect in the sum of K8,360.00 and K3,190.00 respectively.  The total sum awarded is K11,550.00 as special damages.  

Conclusion

29.	The plaintiff has been unsuccessful in proving damages for Outstanding rentals and Outgoings but successful in general damages for distress and anguish caused by unlawful alteration of the office space and special damages for costs of architects.  For the total judgment sum, adding general damages of K50,000.00 and special damages of K11,550.00 gives K61,550.00.

Interest 

30.	Interest is awarded at the rate of 2% per annum on the total judgment sum of K61,550.00 from the date of issue of writ of summon of 10th September 2019 to date of final settlement pursuant to the Judicial Proceedings (Interest on Debts and Damages) Act 2015.

Order

31.	The final order I make is as follows:

1.	The relief sought for a sum to be awarded as Outstanding rentals is refused.

2.	The relief sought for a sum to be awarded as Outgoings is refused.

3.	Judgment is entered in favour of the plaintiff in the sum of K50,000.0 as general damages for distress and anguish.

4.	Judgment is entered in favour of the plaintiff in the sum of K11,550.00 as special damages. 

5.	Interest is awarded at the rate of 2% per annum on the total judgment sum of K61,550.00 from the date of issue of writ of summon of 10th September 2019 to date of final settlement pursuant to the Judicial Proceedings (Interest on Debts and Damages) Act 2015.
	
	6.	Costs of the proceedings to the plaintiff, to be taxed, if not agreed.

	7.	Time shall be abridged.
________________________________________________________________
Lawyers for plaintiff: Fiocco & Nutley Lawyers
Lawyer for defendants: Solicitor General