Rabaul Shipping Ltd v Aisi [2006] PGNC 155; N3173 (6 October 2006)

N3173

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 239 OF 2003

BETWEEN

RABAUL SHIPPING LIMITED
Plaintiff

AND

PETER AISI FIRST ASSISTANT SECRETARY,
SAFETY OFFICER MARITIME DIVISION
DEPARTMENT OF WORKS
First Defendant

AND

JEROME AINUS ASSISTANT ENGINEER
SURVEY MARITIME DIVISION
DEPARTMENT OF WORKS
Second Defendant

AND

CYRIL MUDALIGE
PRINCIPAL SHIPS SURVEYOR
MARITIME DIVISION
DEPARTMENT OF WORKS
Third Defendant

AND

INDEPENDENT STATE
OF PAPUA NEW GUINEA
Fourth Defendant

Kokopo: Lay J
2006: 6 October

DAMAGES-assessment-role of judge-effect of judgment for liability-challenge to Plaintiff’s claim-Defendants obligation to employ Rules of Court for discover-failure to prove loss claimed.

Facts

The Plaintiff obtained default judgment upon a statement of claim which pleaded that by the Defendants negligent delay in surveying its vessel; the Plaintiff had been prevented from commercially employing its vessel for a period of 57 days ("the stoppage"). The Plaintiff claimed loss of net income for the stoppage. On the hearing for assessment of damages the Plaintiff’s Financial Controller gave evidence that from the Plaintiff’s records he had compiled the gross profit for the 4 months trading before, and the 4 months trading after, the stoppage. The average daily gross profit multiplied by the 57 days was K218,325.56. The Defendants submitted that (a) the Plaintiff had not provided evidence of the facts pleaded in the statement of claim (b) the Defendants evidence showed they had not been negligent, (c) the Plaintiff did not corroborate it’s evidence by production of primary accounting documents such as cheques, receipts and orders (d) the Plaintiff’s witness’s evidence was merely accountants assertions and assumptions (e) the calculations did not provide for contingencies (f) the Merchant shipping Act s55(1) was a complete indemnity against damages claims.

Held

1. On an assessment of damages after entry of default judgment there is no need to provide evidence of the facts pleaded in the statement of claim which are proven by entry of the judgment.

William Mel v Coleman Pakalia, Commissioner of Police, the State SC790 referred to.

2. No weight could be given to the Defendants evidence which sought to contest the finding of negligence established by the judgment.

3. Where the Plaintiff gives evidence which is not inherently improbable, neither the circumstances surrounding the claim nor the Plaintiffs evidence give rise to a suspicion in the mind of the judge that the quantum of the claim is inflated, not bona fide or not in keeping with the expectations of a reasonable person, there is no obligation on a Plaintiff operating a substantial business in a main town to provide primary source accounting documents to prove its claim. If the Defendants want to see those documents they can do so in discovery.

Fisherman Island [1979] PNGLR 202 referred to, and applied; Albert Bairu v The State (1995) N1335; Kopung Brothers Business Group v Sakawar Kasieng (1997) N1631; Peter Wanis v Fred Sikiot & Anor (1995) N1350; Yange Lagan & ors v The State (1995) N1369; MVIT v Tabanto [1995] PNGLR 214; MVIT v Pupune [1993] PNGLR 370, Tabre Mathias Korm & 28 ors v The State and ors [1998] PNGLR 247 and John Tuink Salamon & ors v The State and Others (1994) NI272; Benny Balopa v The State & ors NI374 referred to and distinguished on their facts.

4. The Plaintiff’s witness’s evidence is evidence of the actual financial performance of the Vessel over an 8 month period, it is not mere assertions or assumptions.

5. Calculations and accounts of actual financial performance over an 8 month period include adverse contingencies occurring in that period. Therefore an extrapolation of the daily average will also contain that contingency factor.

6. The Defendants had led no evidence that the Plaintiff should have mitigated its loss, therefore the usual measure of damages applies.

The Solholt [1983] 1 Lloyds Rep 605 and McGregor on Damages 15th Ed para 289 referred to.

7. The Plaintiff claimed loss of "net income", but proved loss of "gross profit". There was no evidence by which the court could establish the net income figure. The Plaintiff had therefore failed to prove its claim. The Plaintiff could only have the relief pleaded.

London Passenger Transport Board v Moscrop [1942] 1 All ER 97, Blay v Pollard and Morris [1930] 1 KB 628, Ume More & Ors v University of Papua New Guinea [1985] PNGLR 401 referred to. Chaplin V. Hicks [1911] UKLawRpKQB 104; [1911] 2 KB 786, in Biggin & Co Ltd. v Permanite Limited [1951] KB 422, Wilhelm Lubbering versus Bougainville Copper Ltd. [1997] PNGLR 183; Yange Lagan v The State (1995)N1369 distinguished.

8. If the Plaintiff had succeeded Interest claimed pursuant to the Judicial Proceedings (Interest on Debts and Damages) Act would be given at 8 percent from issue of the writ as no other rate or earlier commencement date was pleaded.

Peter Goodenough v The Independent State of PNG (2001) N2157 referred to.

6 October 2006

1. LAY J: This was the hearing of an action for assessment of damages. The writ of summons was filed on 6 March 2003. Judgement on liability and for assessment of damages was entered on 6 February 2004. The various other applications which have come before the Court are not relevant for present purposes.
The Statement of Claim pleaded as follows:

STATEMENT OF CLAIM

1. The Plaintiff is a company incorporated under the laws of Papua New Guinea and has its registered place of business at Section 62 Allotment 8 George Brown Street, Rabaul, East New Britain.
   
2. The First Second and Third Defendants were at all material times employees of the Fourth Defendant and were therefore acting in their individual capacities as servants and or agents of the Fourth Defendant.
   
3. The Fourth Defendant, the Independent State of Papua New Guinea, is responsible for the acts and or omissions of the First, Second and Third Defendants as its servants or agents by virtue of Section 1 of the Wrongs (Miscellaneous Provisions) Act Ch 297.
   
4. In or about June 2002 the Plaintiff as required under the Merchant shipping Act Ch 242 Section 69(2) paid the requested fee and requested the services of a surveyor to carry out the survey of its motor vessel "Condor"" in the prescribed form.
   
5. The First Defendant being the Safety Officer under Section 69(3) of the Merchant shipping Act Ch 242 owed a duty to the Plaintiff, upon receiving the request of the Plaintiff in the prescribed form, to promptly appoint a surveyor to attend to the said vessel. However he failed to appoint a surveyor as requested.
   
6. The Third Defendant being the Principle Ships Surveyor was fully aware of Plaintiff’s request however he failed to appoint a surveyor to carry out the required survey and or carry out the survey himself, without advising the Plaintiff of any reason for the delay.
   
7. As a result of the First, Second and Third Defendant’s single and or collective negligence the Plaintiff has suffered loss of income from June 2002 to October 2002 and damages arising out of the failure to appoint a surveyor for the motor vessel "Condor" particulars of which are as follows:
   

PARTICULARS

(a) Loss of net income from the months of June-October 2002"

AND THE PLAINTIFF CLAIMS:

1. An order that the Fourth Defendant is vicariously liable for the Plaintiffs loss of net income as a result of the acts and or omissions of the First, Second and or Third Defendant
   
2. An order that the First Second and Third Defendants are each and severally liable for the Plaintiff’s loss of net income as a result of their individual and or collective negligence
   
3. Interest pursuant to the Judicial Proceedings (Interest on Debts and Damages) Act Ch 52.
   

Pursuant to National Court Rules O.9 r.15(b) Judgment was entered in the following terms:

1. The collective amended defence filed on 10 October 2003 by First, Second, Third and Fourth Defendants is struck out.
   
2. Default judgment is entered in favour of the Plaintiff.
   

2. Counsel for all parties have treated the hearing as an assessment of damages ordered by the Court. I do not propose to make any issue out of the wording of the judgment but treat it on the same basis as counsel.

3. The Plaintiff relied upon the affidavits of Chaska Ramamurthy sworn on 10 February 2005 and 21 April 2005 and the Defendants upon the affidavits of Jerome Acinus and Cyril Modaline both sworn on 21 January 2005 and filed on 27 January 2005 and the affidavits of Titus Kabuki and Wooli Embodied sworn and filed on 27 January 2005.

4. Mr Ramamurthy said that he has been the Financial Controller of the Plaintiff for some nine (9) years and from the Plaintiff’s records available to him he calculated the gross returns for the Condor for the four (4) full operational months prior to dry docking of the vessel and for the full 4 months after the resumption of trading and after doing the same for direct expenses arrived at a figure representing the daily average gross profit for the operation of the Condor of K3,830.28 per day. In separate proceedings on 26 July 2002 the National Court ordered that the Department of Works and Transport (Maritime Division) issue a Safety Certificate for the Motor vessel Condor to carry cargo on a voyage from Rabaul, to Ballad, Kimba and return. The required certificates were not issued and the vessel could not commence her operations again until after 20 September 2002. That period was 57 days between 26 July 2002 and 20 September 2002 reflecting a loss of gross profit amounting to K218,325.96.

5. The Defendants filed a large body of evidence setting out all of the facts and circumstances relating to the surveying of the Condor dating back to 2000. This evidence was that there were issues of the vessel operating without proper certification in 2001 and that the vessel was in need of extensive repairs which were being attended to in the period April to June 2002 on this 30 year old vessel; that those repairs required by surveyors reports prepared in April and May 2002 were not complete at 23 June 2002, the vessel was again inspected in August 2002 and on 20 September 2002 when serious safety concerns were noted. The necessary repairs were made by and a certificate issued on 24 September 2002.

6. In summary the Defendants affidavits sought to show that the Defendants had not been negligent and to the contrary they had been diligent and responsible in carrying out their duties as surveyors of ships which put to sea and carry many lives and that during the relevant period the vessel was laid up with work required by safety inspections not completed.

7. The Defendants submitted that I ought not to accept the evidence put forward for the Plaintiff on calculation of damages because the Plaintiff had not produced actual invoices and vouchers and the evidence is not corroborated and they rely on Yoke Pakalia & Anor v The State N2212, Albert Baines v The state N1335, Kopung Brothers Business Group v Sakawar Kasieng [1997] PNGLR, Peter Wanis v Fred Sikiot and The State N1350, Yange Lagan and others v The State N1369, John Tuink Salamon and Others v The State and Others N1272, Benny Bellara v The State & Ors N1374. Further it is submitted that some of Mr Ramamurthy’s evidence is partly hearsay and that his working papers for his calculations of gross income and direct expenses are not in evidence; and the deponent’s calculations make no provision for contingencies. It is also submitted that the Plaintiff led no evidence of the facts pleaded in paragraphs 1,2,4,5 & 6 of the Statement of Claim and Merchant Shipping Act s.55 provide complete protection from liability.

8. Subsequent to the hearing one matter caught my attention on which I sought further assistance from counsel. That was the fact that the prayer for relief in the statement of Claim refers to a claim for "loss of net income" whereas the affidavit evidence refers to calculations of the "gross profit". The Plaintiff submitted that in terms of a company's income "net income" equates to total sales/gross revenue minus operating expenses, the result therefore being "gross profit", before the deduction of depreciation, company tax and investor dividends. Accordingly the Plaintiff submitted that "gross profit" is the same as "net income". No authorities were cited.

9. The defendant submitted that the use of the terms "net income" and" gross profit" makes the pleadings confusing, contradictory and inherently suspicious. They submit the Plaintiff has not discharged the onus of proving its losses on the balance of probabilities.
   

The Law

10 In the case of William Mel V Coleman Pakalia, Commissioner of Police, The Independent State of Papua New Guinea SC790 ( Los J, Jalina J, Cannings J) the Court said:

" The principles that apply to a trial on assessment of damages following entry of default judgment were summarised by Kandakasi J in Coecon Ltd (Receiver/Manager Appointed) v National Fisheries Authority (2002), National Court, N2182.

His Honour stated:

‘A survey of the authorities on assessment of damages after entry of judgment on liability mainly in default of a defendant’s defence, clearly show the following:

1. The judgment resolves all questions of liability in respect of the matters pleaded in the statement of claim.

2. Any matter that has not been pleaded but is introduced at the trial is a matter on which the defendant can take an issue on liability.

3. In the case of a claim for damages for breach of contract as in this case, such a judgment confirms there being a breach as alleged and leaves only the question of what damages necessarily flow from the breach.

4. The Plaintiff in such a case has the burden to produce admissible and credible evidence of his alleged damages and if the Court is satisfied on the balance of probabilities that the damages have been incurred, awards can be made for the proven damages.

5. A Plaintiff in such a case is only entitled to lead evidence and recover such damages as may be pleaded and asked for in his statement of claim.’

The Supreme Court adopted and applied those principles in Papua New Guinea Banking Corporation v Jeff Tole (2002) SC694, Amet CJ, Sheehan J, Kandakasi J.

Kandakasi J applied those principles recently in the National Court in Desmond Huaimbukie v James Baugen (2004) N2589. We believe his Honour succinctly and correctly stated the law. We elaborate on the first principle by saying that once default judgment is entered, the facts as pleaded and their legal consequences in terms of establishing the cause of action as pleaded must be regarded as proven. (See Keith Reid v Murray Hallam and Allcad Pty Ltd (199h5) N1337, National Court, Kapi DCJ and Andale More and Manis Andale v Henry Tokam and The State (1997) N1645, National Court, Injia J.)

...

Turning back to the issue raised above as to the role of the trial judge after entry of default judgment, we consider the following to be the correct approach:

the trial judge should make a cursory inquiry so as to be satisfied that the facts and the cause of action are pleaded with sufficient clarity;

if it is reasonably clear what the facts and cause of action are, liability should be regarded as proven;

only if the facts or the cause of action pleaded do not make sense or would make an assessment of damages a futile exercise should the judge inquire further and revisit the issue of liability."

This Case

11. So in this case, looking at the statement of claim it seems to me that the facts are pleaded with sufficient clarity and that it is clear that the cause of action is one in tort for negligence. The State is liable in tort for the acts of its servants employed in carrying out a statutory duty pursuant to the Wrongs (miscellaneous Provisions) Act s1 as specifically pleaded.

12. The default judgment has therefore established all of the matters of fact for liability that have been pleaded in the Statement of Claim. In summary the Defendants owed a duty of care to the Plaintiff, they were negligent and as a result the Plaintiff lost income between June and October 2002.

13. Because the liability issues have been determined I cannot give any weight to the evidence which the Defendants adduced tending to show that there were good reasons, other than the non issue of the ordered certificate, for the vessel to have been laid up and not earning. All of those matters which go to liability were conclusively dealt with by the judgment. For all purposes it has been established that the Defendants were negligent and that as a result of that negligence the Plaintiff has lost income during the pleaded period.

14. My role now is to be satisfied that the Plaintiff has, on the balance of probabilities, proven the amount of damages which it claims.

15. I reject the Defendants submission that evidence should have been led by the Plaintiff in respect of paragraphs 1, 2, 4, 5 and 6 of the Statement of Claim. The facts pleaded in those paragraphs are conclusively proven by the judgment for liability.

16. The Respondents referred to a number of cases in support of the contentions that the Plaintiff has not proven its damages. The first Papua New Guinea case was Albert Baine v the State (1995) N 1335. That was a case of villagers claiming damage for houses destroyed in a police raid. The court had before it photographs of the scene. There were claims for K 400 and K 500 for Bush materials houses and a claim for K 8000 for a semi permanent materials house. The court noted that the photographs of the site for the semi permanent materials house did not show the sort of debris one would expect from the destruction by fire of a house incorporating "permanent materials".

17. The Court said that it must demand corroboration and could not accept merely the Plaintiffs evidence. That was obviously so because the court was faced with evidence which, if not directly contradicting the evidence of the Plaintiff, at least did not support it from a quarter where one might expect support.

18. The Respondents also referred to Kopung Brothers Business Group v Sakawar Kasieng (1997) (Lenalia J.). In that case there was a claim for loss of a large amount of cash allegedly lost in a fire caused by policemen. There was no corroborative evidence of the existence of this cash, and the claim was not allowed. Again there was a claim from a police raid of a village and there were issues of credibility.

19. Reference was also made to Peter Wanis v Fred Sikiot and the State (1995) N 1350. In that case there was a claim for the loss in a fire of a dump truck and some other vehicles. The Plaintiff claimed that he had set himself up in Porgera as a mechanical workshop and trade store. He produced one document which showed that a dump truck had been registered in his name, but no evidence of value. There was no corroborating evidence at all in respect of the other vehicles for which loss was claimed. There was no valuation evidence for any of the vehicles. Nevertheless his Honour allowed sums both for the dump truck and the other vehicle which he found were unregistered and therefore probably un road worthy.

20. Next there was a claim for buildings for which there was also no valuation report. Going on the photographs before him his Honour allowed a figure.

21. There was also a claim for loss of stock and loss associated with the gold buying mine business the Plaintiff claimed he was carrying on. There was no documentary evidence at all to show that the Plaintiff was carrying on a trade store business, no license, and no evidence of carrying on a gold buying business. The claim was not allowed.

22. The next case on which the Respondents relied was Yange Lagan & Ors v the State (1995)N1369 (Injia J.). That was another claim for damages arising out of a police raid. That was a representative action where three Plaintiffs represented 59 Plaintiffs. The evidence given by two witnesses purported to be the evidence on behalf of 56 claimants. His Honour said the evidence was hearsay and "in my view the minimum requirement in any action is for the Plaintiff himself to give admissible evidence in support of the claim." I entirely agree with that observation, particularly in the context of the case with which his Honour was dealing. Of course, in the case which I am considering, the Plaintiff is a company and can only give evidence by its officers or employees.

23. The next point submitted by the Defendants was that where judgment is granted for damages to be assessed, the evidence must support the facts pleaded and no evidence will be allowed in support of facts that are not pleaded. MVIT v Tabanto [1995] PNGLR 214, MVIT v Pupune [1993] PNGLR 370, Table Mathias Kim & 28 Ors v The State & Ors [1998] PNGLR 247 were cited. I agree entirely with the principle cited. However I do not see how it assists the Defendants. The Plaintiff has pleaded all of the facts required for its claim. Those facts have been found by reason of the default judgment.

24. MVIT v Tabanto is simply authority for the proposition that contributory negligence cannot be claimed by the Defendant unless there is evidence of negligence on the part of the Plaintiff. In the particular circumstances of that case it was found that riding in the back of an open backed vehicle was not negligence per se. There had to be some aspects of the riding which increased the risk of injury to establish negligence. In that case there was no such evidence. As I have already said several times in this case before me all the facts necessary to give rise to the cause of action have been found by a judgment for the Plaintiff. There is no claim by the Defendants for contributory negligence.

25. The next case relied upon is Repas Waim v MVIT [1992] PNGLR 254. In that case several authorities were cited for the proposition that special damages cannot be recovered unless specially pleaded. Woods J. extends that principle in the case of personal injury claims, to all forms of damage referred to in Order 8 rule 33. The principle is not of general application, it is confined to personal injury cases. I do not find the case applicable to the circumstances of this case.

26. The next case is MVIT v Pupune [1993] PNGLR 370. This is another personal-injury decision by the Supreme court. It is authority for the proposition that if Defence counsel does not object to economic evidence at the trial which goes outside of the pleading, it cannot be objected to on appeal. It is also authority for the proposition that in assessing personal injury damages the judge should take into account mitigating factors and the obligation of the Plaintiff to mitigate his loss. I do not find those principles helpful in deciding this case, except in a general way with reference to mitigation.

27. Lastly in support of the submission that no evidence will be allowed to support facts not pleaded, the Defendants rely upon Tabie Mathias Koim and 28 Ors v The State and Others [1998] PNGLR 247, a decision of the Injia J. as he then was. That was a police raid case and a representative action. Twenty-one (21) of the claimants did not give evidence and the trial judge did not accept the evidence given by the seven witnesses in respect of the claims of the 21 claimants. Damages were awarded to the seven witnesses who were also claimants. No award was made for cash said to be lost when there was no positive assertion of a claim for that amount, but where there was evidence, but no corroboration, that it had either been burned or stolen. A claim for damages under the head of breach of Constitutional rights was refused when the loss of property constituting the claim was already compensated for under general and exemplary damages. I do not find anything in that case helpful to the deciding of this case.

28. The next case cited is a decision of Woods J. in John Tuink Salamon and Ors v the State and Others (1994) N 1272 where his Honour said:

"Whilst the Court may be lenient with strict evidentiary matters with village claims, once you are claiming for what is a major economic activity enterprise, the Court is entitled to insist on proper evidence in the nature of ledgers and account books and even taxation returns to comply with the modern laws. The Plaintiff says that all the records were lost in the destruction of the store. However in modern activities there are copies and other records such as copies of documents with suppliers of substantial quantities of goods such as his large amounts of cigarettes. There is an affidavit by an accountant Arial Adraincem to support the Plaintiff's claim but he did not appear to be the Plaintiff's regular account who looked after the Plaintiffs business records but rather gave a series of trading assumptions based on what the Plaintiff told him and there was no reference to actual business records from anywhere. The Court cannot find judgment based on mere assertions or assumptions. Whilst I will accept the fact that there is enough evidence to suggest a reasonably well operating trade store and therefore some moderate loss in the short-term. Then of course there is an obligation in modern enterprises to mitigate and insure and rebuild on insurance. The other party cannot be penalised for a person's failure to follow normal business practice and insure. I will allow a figure of loss of profits of K 1000 per month for a reasonable time namely 3 months."

29. That case was a claim for damages arising from a police raid at a village near Wapenamanda. The Plaintiff claimed a substantial sum for loss of trade store buildings and stock amongst which was a claim for over K 12, 000 for cigarettes and a substantial claim for loss of profits. The issue was whether the judge could be satisfied that those claims had been proven in respect of a trade store in a remote village with only the assertions of the Plaintiff and some hypothetical figures calculated by an accountant based on further assertions of the Plaintiff, when the claims were outside the expectation of the Court.

30. I distinguish that case from the present case on two bases:

1. We are not dealing with a trade store in a remote village, we are dealing with a substantial business operating a number of vessels, in a main town, the existence of which is well known to the Defendants by reason of its licensing and survey activities in relation to those vessels. In particular, the existence of the vessel in question is known to the Defendants;

2. The evidence adduced for the Plaintiff is not an accountant's hypothetical based on some assumptions, but calculation based on what the witness says are actual operating figures.

31. I also note in passing that I do not agree with his Honour’s comments about insurance, the obligation to insure and the assumptions that the Defendant would be entitled to the benefit obtained from insurance. My understanding of the law is that a contract of insurance is a private matter between the insured and the insurer. A person liable in damages cannot obtain relief by the benefit due from an insurer to a Plaintiff insured. This is because of the doctrine of privity of contract and the fact that in the ordinary case the person liable in damages is a stranger to the consideration passing to support the Contract of Insurance. There may be an exception where the Contract was made for the benefit of a third person, a point not yet decided in this jurisdiction. See Trident General Insurance Co. Ltd v McNiece Bros Pty. Ltd [1988] HCA 44; (1988) 165 CLR 107 (High Court of Australia) for a full discussion of the law relating to Insurance Contracts made for the benefit of third parties and the history of the common law on privity of Contract.

32. The observations quoted above in John Tuink Salamon and Ors v the State and Others (1994) N 1272 has been referred to in part in several cases including Yange Lagan v the State (1995)N1369, another police raid case with 59 claimants did not give evidence and the court reopened the case to allow those claimants to give evidence rather than deprive them of their claim without hearing. His Honour found that the primary evidence was general or vague in the case of the Plaintiff who did not provide documentary evidence. In the absence of documentary evidence his Honour was not satisfied that the quantum of the loss in the amount claimed had been established. He did however allow a nominal sum on the basis that even where damages cannot be assessed accurately it does not relieve a defendant from paying damages and it is the duty of the court to arrive at a probable figure.

33. I did not read the cases relied upon by the Defendant as laying down a rule that for every claim for damages the Plaintiff must produce corroborative documentation. I do not think that the cases relied upon for the Defendants take the principles of evidence in proof of damages any further than this, that if the general circumstances surrounding the making of the claim and the Plaintiffs evidence give rise, in the mind of the judge, to a suspicion that the claim is inflated or not bona fide or otherwise not in keeping with the expectations a reasonable person would have in respect of that type of claim, in those circumstances, the court is entitled to require some independent evidence, or some supporting documentation, which makes the claim or the quantum of the claim more probable than not.

34. Mr. Ramamoorthy gave evidence in respect of certain matters relating to the period and reasons for lay up of the vessel of which he was aware. The Defendants take the point that this evidence is hearsay. It is hearsay if it is to be treated as evidence of the facts recited. I only treat that evidence as matters which operated on the deponent’s mind to cause him to make his accounts in respect of 57 days and not the full period claimed in the Statement of Claim. For that purpose it is primary evidence.

35. In respect of the Defendants submission that I should not accept the evidence put forward by the Plaintiff as proving its claim because supporting vouchers and signed financial accounts have not been produced, I find that submission somewhat naïve. The Plaintiff is not a trade store in a remote area from which a large claim of loss might be viewed upon with some suspicion as was the case in John Tuink Salamon v The Independent State of Papua New Guinea[1994]265 (Woods J). There His Honour was speaking of the court’s power to require a certain level of evidence to persuade it that the quantum of the claim was established. That is a different matter from the Defendant submitting the level of evidence is insufficient because of the absence of primary source accounting documents. The Defendant has had in its power the right to inspect the Plaintiff’s documents. The Defendants were professionally assisted in this case. The Defendants had all of the Rules relating to discovery, inspection and interrogatories available to them. The Defendants had it in their power to examine every relevant voucher, account, ledger, bank statement or other document, which they considered bore on the issues to be determined, prior to trial. Judgment for liability did not preclude the use of the Rules to inspect documents related to the quantum of damages.

36. A Defendant who does not take advantage of the Rules for discovery and inspection in a case such as this is demonstrating that he is simply not serious about challenging the evidence for the Plaintiff. The trial is not the place to start pouring over primary accounting documents produced in evidence by the Plaintiff. This is plainly an unworkable approach to any commercial case involving large numbers of transactions. The Defendants should have examined every document which might be relied upon at trial before the case was set down for trial. It is only after such an examination with appropriate professional accounting assistance that the Defendants would have a proper basis for cross examination of the Plaintiff’s witnesses and to call their own rebutting evidence.

37. It is in pre trial discovery that the Plaintiff can be called upon to produce the vouchers and receipts; cheque butts bank statements, journal entries etc. from which the Defendants might find some miscalculation in the calculations put forward by the Plaintiff.

38. It is not as if the Defendants were unaware of the availability of the process of discovery. Default judgment was entered pursuant to O.9 r.15 upon their failure to give discovery.

39. If the Defendants had sought discovery and the documents on which the Plaintiff relied to compile the summaries of income and expenses had not been discovered, that would be an entirely different matter.

40. The Defendants gave no evidence challenging the quantum calculation, either as to the dates between which the loss was calculated, which was a significantly shorter period than was claimed in the prayer for relief, or as to the amount per day claimed; nor was the Plaintiff’s witness damaged in cross examination on either issue. I am not here saying that there is any onus on the Defendants to prove the Plaintiff case. What I am saying is their attack on the sufficiency of the Plaintiff’s evidence rings hollow when the Defendants have taken no steps to obtain from the Plaintiff documentary information with which to challenge the substance of the Plaintiff’s evidence.

41. Some helpful comments on the weighing and assessment of evidence were made in the case of the Fishermen’s Island [1979] PNGLR 202 where Wilson J. said:

"in any case in which there is conflicting oral evidence the judicial officer should state in his reasons for decision why he rejects the evidence [or part of the evidence] of one and why he accepts that of the other. Where there is evidence, whether oral or otherwise tending to prove one side of an issue and there is no evidence on the other side to contradict it, then the judicial officer is bound to accept it unless the evidence is in itself so incredible and unreasonable that no reasonable man could accept it. If for any reason which recommends it self to the mind of the judicial officer dealing with a matter, he thinks it not fit to accept the evidence of the only witness who is the only witness before the court or Judicial Tribunal and he is founding his decision on his disbelief of that witness, he is bound to disclose it."

42. The Plaintiff’s witness is an accountant with a good many years experience as Financial Controller of the Plaintiff. I do not find his evidence either incredible or unreasonable. He impressed me in the witness box as a competent person. I find no reason to reject the evidence which he has given.

43. I distinguish the cases relied upon by the Defendants on the basis that this is not a case in which the Plaintiffs evidence is inherently improbable, nor does the evidence give rise to any suspicion that the claim is inflated, not bona fide or otherwise not within the expectations of a reasonable person for this type of claim in the circumstance of this case.

44. The Defendants have submitted that the evidence for the Plaintiff is some how hypothetical; that the calculations in the annexure to Mr . Ramamoorthy’s affidavits are ‘mere assertions or assumptions’. I find that the evidence given for the Plaintiff is evidence of the actual financial performance of the vessel from figures which the witness compiled from the records in his possession. Those figures cover 8 months of trading, the results of which are then extrapolated for the 57 days loss of gross profit for which evidence has been given.

45. The submission by the Defendants that the Plaintiff’s figures do not allow for contingencies cannot stand in the absence of evidence from the Defendant. The actual results for 8 months provided by the Plaintiff will contain the loss of revenue which occurred as a result of any contingency arising during those 8 months. The particulars annexed to the affidavits show some non revenue days. Hence the daily gross profit figure will reflect the same actual contingency expenses and so will the extrapolation for the 57 days claimed.

46. The Defendants submission that, the Plaintiff’s calculations do not make allowance for wages, employees and other running costs, is based on Mr "Ramamoorthy’s affidavit sworn 14 April 2005. The submission has no substance. Direct expenses have been taken up and allowed for in the supplementary affidavit sworn 20 April 2005. I return to this issue later in the judgment. The Defendants had available to them a request for further and better particulars if they wanted to know the nature of the income, or expenses deducted by the Plaintiff.

47. The submission by the Defendants that the Merchant shipping Act s55(2) provides that

"the Safety Officer, or a delegate of the Safety Officer, is not liable for any act or omission done or made by him bona fide and without negligence under, or for a purpose of this Act" cannot succeed when negligence has been conclusively established by the judgment.

48. The Plaintiff has given the minimum amount of evidence to prove its loss of gross profit. It could have done a lot more. Accounts could have been prepared particularizing the various heads of income and expenses. The account could have been accompanied by a certificate that the account had been prepared in accordance with the relevant accounting standard. However, the evidence is not "mere assertions or assumptions": cf John Tuink Salamon and Ors v The State (supra). Nor is the evidence a claim for a figure without any evidence to support it:cf Benny Balepa v The State & Ors N1374.

49. On the question of the "duty to mitigate" Sir John Donaldson M. R. delivering the judgment of the court in The Solholt [1983] 1 Lloyd's Rep.605 (C.A.) said:

"A Plaintiff is under no duty to mitigate his loss, despite the habitual use by the lawyers of the phrase 'duty to mitigate'. He is completely free to act as he judges to be in his best interests. On the other hand, a defendant is not liable for all loss suffered by the Plaintiff in consequence of his so acting. A defendant is only liable for such part of the Plaintiff's loss as is properly caused by the defendant's breach of duty."

50. The onus is on the Defendants to show that the Plaintiff could reasonably have taken certain mitigating steps. If they fail to do so, and I find in this case that they have, then the normal measure of damages will apply: See McGregor on Damages 15th edition par. 289.

51. On the balance of probabilities the Plaintiff has proven a loss of gross profit in the sum of K218,325.96.

52. Now returning to the question of what the meanings and distinction are, if any, between "gross profit" and "net income", I note firstly that the Concise Oxford Dictionary ninth edition does not provide definitions of those terms. It does provide that "net (especially of money) means remaining after all necessary deductions or free from deductions." It also provides that "gross up" means to increase (a net amount) to its value before deductions."

53. Other dictionaries consulted "on-line" show the following definitions:
"Gross profit "

Random House Unabridged Dictionary-"gross receipts less the cost of goods or production but before the deduction of such other costs as rent or salaries."

Wall street Words: And A to Z. Guide to investment Terms for Today's Investor by David L. Scott-"total revenue of the business minus the cost of goods it sold. Gross profit does not include income from incidental sources and also excludes selling and administrative expenses."

Wordnet 2.0 by Princeton University-"the net sales minus the cost of goods and services sold."

"Net income"

Random House Unabridged Dictionary-"income after all expenses and taxes have been deducted. Net income, the most frequently viewed figure in a firm's financial statements, is used in calculating various profitability and stock performance measurements including prize-earnings ratio, return on equity, earnings per share, and many others. Also called after-tax profit, bottom line, net, net profit, profit."

Wall Street Words: A. to Z. Guide to Investment Terms for Today's Investor by David L. Scott - "the balance of gross income remaining after all allowable deductions and exemptions are taken."

Merriam-Webster Dictionary of Law -"the excess of revenues over outlays in a given period of time (including depreciation and other non-cash expenses); synonyms: Net, net profits, profits, earnings."

54. While it might be argued that each of those definitions is slightly different, the definitions for "net income" and the definitions for "gross profit" each have the same thrust, and that is that "gross profit" is gross return on sales less the cost of stock or production, but before the deducting the indirect costs of making the sales and other costs of running the business. "Net income" is the amount left after deducting everything deductible. The two terms are not synonymous. They are quite different.

55. The position therefore is that the Plaintiff has proven its loss of gross profit, but in its statement of claim it has claimed loss of net income. As gross profit is obviously a larger amount than net income. The discrepancy raises a serious difficulty. It may be that the figure that has been proven is something less than the gross profit. The evidence is that the figure is the gross receipts less the direct expenses, particulars of which have not been provided. However, what has been proven is definitely not net income. There is no evidence before me to assist in determining what the mathematical relationship is between the gross profit and the net income. Depending on whether the business has high or low overhead costs, net income could be anywhere between a figure very close to gross profit, to zero or even a negative figure.

56. A party cannot obtain relief which has not been sought or requested in the pleading-see London Passenger Transport Board v Moscrop [1942] 1 All ER 97 per Lord Russel of Killowen at p105; and cases must be decided on the issues on the record and the record must be amended if it is desired to raise other issues-see Blay v Pollard and Morris [1930] 1 KB 628 at 634 per Scrutton LJ. Both cases were cited by Pratt J in the Supreme Court in Ume More & Ors v University of Papua New Guinea [1985] PNGLR 401 at 405.

57. In a number of cases in this jurisdiction the difficulties in assessment of damages has not prevented the judge from making an assessment. Reference has been made to the words of Vaughn Williams LJ. in the case of Chaplin V. Hicks [1911] UKLawRpKQB 104; [1911] 2 KB 786 at 792:

"The fact that damages cannot be assessed with certainty does not relieve the wrongdoer of the necessity of paying damages"

The following observations of Devin J. in Biggin & Co Ltd. v Permanite Limited [1951] KB 422 at 438. have also been quoted:

"Where precise evidence is obtainable, the court naturally expects to have it, where it is not the Court must do the best it can."

58. See for example Wilhelm Lubbering v Bougainville Copper Ltd. [1997] PNGLR 183; Yange Lagan v The State (1995) N1369 for cases where those statements have been applied.

59. In my view in the English cases referred to, what the judges intended to convey, was that if the facts of the case will not admit of precise evidence or evidence which can provide a certainty for assessment of damages, then the court must do the best it can. The principle is most often applied in cases of non pecuniary loss. I do not think the English court intended to say that where the Plaintiff has failed to adduce evidence which should be available, the court can invent a figure to make up for the oversight on the part of the Plaintiff in proving its case.

60. In the current state of the evidence I can find no basis on which I can arrive at a figure for the claimed net income. The decision I am driven to reach is that the Plaintiff has failed to prove its claim.

61. If I am wrong on the last point, and the Plaintiff is entitled to recover, the Plaintiff claims interest pursuant to the Judicial Proceedings (Interest on Debts and Damages) Act ch52. No rate has been claimed and no evidence was led on an appropriate rate. That provision grants a discretion to the Court to award interest at a rate it considers appropriate between the date on which the cause of action arose until judgment. Order 4 rule 10 (2) and 0.12 r.l7(2) provide for a rate of 8 percent on liquidated debts. In the absence of a pleaded rate and evidence to support it I would apply 8 percent: See Peter Goodenough v The Independent State of PNG (2001) N2157. Given the prevailing low rates of interest this is equivalent to a lender’s rate on secured funds. In the absence of a specific prayer for interest to be applied before the date of the issue of the writ I would apply interest from that date.

62. The result of the case is that the Plaintiff has failed to prove the claim it has made, there must be judgment for the Defendants. Costs follow the event.

ORDERS.

1. Judgments for the Defendants
2. Plaintiff to pay the Defendants costs of the assessment for damages.

_________________________________________

Warner Shand: Lawyers for the Plaintiff
Paul Paraka Lawyers: Lawyers for the Defendants