R H Trading Ltd v Damansara Forest Products (PNG) Ltd [1999] PGNC 88; N1904 (11 October 1999)

Unreported National Court Decisions

N1904

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

WS 705 OF 1998
R.H.TRADING LIMITED - PLAINTIFF
DAMANSARA FOREST PRODUCTS (PNG) LIMITED – FIRST DEFENDANT
GREEN MOUNTAIN LOGGING LIMITED - SECOND DEFENDANT
SAVWAY LIMITED - THIRD DEFENDANT
LIM BENG NGO & CHENG BOOB LENG – FOURTH DEFENDANTS

Waigani

Woods J
21 September 1999
11 October 1999

CONVERSION - Damages – Detention of goods normally let out on hire or used in a profit making enterprise – owner entitled to reasonable hiring charges.

Counsel

W Neil for the Plaintiff

W Arua for the First and Third Defendants.

11 October 1999

WOODS J: This matter arose out of a claim over the removal of 4 Nissan Trucks by the First Defendant in about April 1996 and the conversion of those trucks to its own use. The vehicles were later recovered. The claim is for loss of income from the ability to utilise the trucks in the business of the plaintiff and for the recovery of costs incurred. The trucks are large trucks used for logging purposes.

The allegation is that the trucks were in April 1996 removed from the plaintiff’s possession at Lae in Morobe Province and were transported for the First Defendant’s use at its Krere Base camp in Aitape in Sundaun Province. The Plaintiff took certain recovery action and finally in May 1998 the police confiscated the trucks at Aitape and they were shipped back to Port Moresby.

Further Defendants were joined in the proceedings in October 1998.

In November 1998 Judgement was entered for the Plaintiff against the first defendant for damages to be assessed.

In May 1999 judgement was entered for the Plaintiff against the third defendant for damages to be assessed. The matter has come before me now on the assessment of the damages.

The evidence on the assessment is contained in the affidavits of a Mr Lee Teck Kong and a John Barrett.

I am satisfied on the evidence presented on the costs incurred in the recovery of the costs, and I find nothing unreasonable in the way these costs were incurred considering the nature of the vehicles and the circumstances of the recovery. I accept the total of K50,275.00 for these recovery costs.

The plaintiff is also claiming for loss of profits from the inability to utilise the trucks during the period of the conversion namely from May 1996 to May 1998. However to consider this claim I must consider the history of the matters. Two of the vehicles were purchased by the Plaintiff in 1993 and the other two in 1995. The vehicles were then transported to Wewak where the plaintiff utilised them on a logging site. In February the trucks were transferred from the Wewak operation to the plaintiff at Lae, see annexure ‘I’ of the affidavit of Lee Kung. There is no evidence of what actually happened to the trucks when they arrived in Lae however the plaintiff discovered, following an audit of their property in 1998, that the particular 4 trucks were missing. Through their investigations they found that the registration of the trucks had been transferred in Lae in 1996 to the first defendant and the trucks had been shipped to Aitape and used in the first defendant’s operations. The normal rule in assessing the damages for the conversion of a profit making machine or asset is that an owner is entitled to compensation for the period of the loss at the full market rate of hire that the owner might otherwise have received; see Strand Electric Co v Brisford [1952] 3 AER 796. However the position seems to be that the plaintiff did not know that they had lost the use of these trucks. Therefore if they did not know how do they claim that they have lost money from the inability to use the vehicles. Can it could be assumed that there was no direct work for those vehicles to do and that is why their ‘disappearance’ was not noticed. Their claim for the loss of profits is based on a hypothetical calculation of a utilisation of the trucks for the period of 25 months at a net return on the hire of such vehicles at the rate of K8,000 per month. However such a calculation is subject to many contingencies. It could also be suggested that if the plaintiff did not know it had lost the vehicles therefore it did not have the access to work for them and therefore did not lose anything. Of course they may have lost something in depreciation in the value of the trucks however no figures have been presented on the condition and market value of the trucks at the respective dates.

On the other hand the defendant has benefited from the illegal conversion of the truck to its own purposes so it could be liable to an accounting of the profits it has made during that period of the conversion. The law is that damages for conversion are damages at large, thus they do not depend on proof of what the plaintiff had actually planned to do with the profiting earning asset but rather with the fact the defendant has illegally deprived the plaintiff of its assets and should not be allowed to gain from that. The evidence is that the defendant did use the trucks in its business operations during the period of the conversion, so it must be liable for damages at large for the deprivation. As Lord Halsbury has stated in The Medina [1900] AC 117, “what right has a wrongdoer to consider what use you are going to make of your vessel.” And Lord Denning in the Strand Electric Case case suggested that a plaintiff might recover a reasonable hiring charge even though, because he would not have used the goods, he had suffered no loss.

The plaintiff has presented figures for a the market hiring charges for such trucks at K8.000 per month per vehicle after allowance for the running costs. The plaintiff is therefore claiming a loss of profit on that figure for the 25 months of the conversion and its claim for this comes to K800,000. The court is entitled to award a reasonable measure of damages however I will reduce that figure to allow for contingencies and the fact that the Plaintiff actually did not know it had lost the use of the trucks. The award must still be sufficiently high to compensate for the loss of two years life use of trucks which because of the nature of the work they do have a very short working life. I will award damages of K500,000 for the loss of profits.

I order judgement for the plaintiff against the first and third defendants in the sum of K550,275.00 together with interest at 8% from the date of the issue of the writ to date which calculates at K53,067.60.

The First and Third Defendants to pay the plaintiff’s costs.