Waranumbo v Hyper Construction Ltd [2012] PGNC 178; N4882 (9 November 2012)

N4882

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO 870 OF 2009

BANDUWARA WARANUMBO
Plaintiff

V

HYPER CONSTRUCTION LIMITED
Defendant

Madang: Cannings J
2012: 21 September, 19 October, 9 November

DAMAGES – negligence – assessment of damages after entry of default judgment – motor vehicle accident – damages claimed for vehicle repairs, business losses and pain and suffering.

A vehicle owned by the first defendant and driven by its employee collided with a truck, a profit earning asset, owned by the plaintiff, causing damage to the truck. The plaintiff commenced a negligence action and succeeded in establishing liability against the defendant by default judgment. At a trial on assessment of damages the plaintiff claimed three heads of damage: cost of new truck K89,720.00, loss of income K1,206,880.00 and pain and suffering K20,000.00, a total claim of K1,316,600.00. The defendant argued that nothing should be awarded as the plaintiff failed to produce evidence that he suffered any loss: there was insufficient evidence that he owned the truck and if he did own it, there is no evidence of its replacement value or business records.

Held:

(1) The presumption arises on entry of default judgment that the judgment resolves all questions of liability on the matters pleaded in the statement of claim. The judge assessing damages should make only a cursory inquiry to be satisfied that the facts and causes of action are pleaded with sufficient clarity.

(2) Here the facts and cause of action are clear: there was a motor vehicle accident caused by the negligence of the defendant's driver, which caused damage to the plaintiff's vehicle, giving rise to a cause of action in negligence. There was no good reason to inquire further into the correctness of the judgment on liability.

(3) The plaintiff was entitled not to the cost of a brand new vehicle but to the replacement value of the vehicle, which was assessed at K40,000.00.

(4) If a defendant causes damage to a plaintiff's profit-earning asset, the plaintiff is entitled to damages to compensate him for profits lost during the period that is reasonable to repair the asset. The claim for business losses suffered due to lack of evidence. A notional profit of K3,000.00 per month was allowed and the reasonable time for repair or replacement was three months, thus K9,000.00 was awarded.

(5) The claim for pain and suffering was nebulous and without merit. Nothing was awarded.

(6) The plaintiff was awarded damages of K40,000.00 + K9,000.00 = K49,000.00, plus interest of K18,620.00, being a total judgment sum of K67,620.00.

Cases cited

The following cases are cited in the judgment:

Abel Kopen v The State [1988-89] PNGLR 655
Albert Baine v The State (1995) N1335
Andrew Kewa v Johnny Lus [2007] PNGC 3
Daniel Jifok v Kambang Holdings Ltd (2008) N3475
Daniel Occungar v Luke Kiliso (2010) N4102
Desmond Guasilu v Enga Provincial Government (2012) N4774
Jonathan Mangope Paraia v The State (1995) N1343
Kolaip Palapi and Others v Sergeant Poko and Others (2001) N2274
Kopung Brothers Business Group v Sakawar Kasieng [1997] PNGLR 331
Livingston v Raywards Coal Co [1880] 5 App Cases 25
Misac Pokonoming v Jeffery Simiri WS 1596/2005, 26.10.07
Peter Wanis v Fred Sikiot and The State (1995) N1350
Sam Manasseh v The State (2011) N4469
Samuel Roth v Samuel Waironak (2011) N4452
William Mel v Coleman Pakalia (2005) SC990
Yooken Paklin v The State (2001) N2212

TRIAL

This was a trial on assessment of damages after entry of default judgment.

Counsel

B W Meten, for the plaintiff
S Kesno, for the defendant

9 November, 2012

1. CANNINGS J: On Thursday 7 February 2008 there was a collision between:

• a Daihatsu Delta truck, claimed to be owned by the plaintiff, Banduwara Waranumbo, and driven by his employee, John Urambari; and
  
• a Toyota Landcruiser claimed to be owned by the defendant, Hyper Construction Ltd, and driven with its authority by its employee, Sam Manasseh.
  

2. The collision occurred on the Sepik Highway near Wewak, East Sepik Province. No one was seriously injured but the Daihatsu, which was a Public Motor Vehicle (PMV), suffered serious damage and was rendered unroadworthy. Mr Manasseh was charged with a traffic offence and convicted by the Wewak District Court and an appeal against his conviction was dismissed by the National Court (Sam Manasseh v The State (2011) N4469). The plaintiff commenced a negligence action against the defendant. He succeeded on 20 May 2011 in obtaining default judgment and a trial has been held on assessment of damages. The plaintiff claims three categories of damages: cost of new truck K89,720.00, loss of income K1,206,880.00 and pain and suffering K20,000.00, a total claim of K1,316,600.00.

3. The defendant argues that nothing should be awarded as the plaintiff failed to produce evidence that he suffered any loss: there was insufficient evidence that he owned the truck and if he did own it, there is no evidence of its replacement value or business records.

THE ARGUMENT THAT NOTHING SHOULD BE AWARDED

4. It must be emphasised that this is a trial on assessment of damages following entry of default judgment. Though a judge assessing damages following entry of default judgment may revisit the question of liability, the discretion to do so must be exercised sparingly. The presumption arises on entry of default judgment that the judgment resolves all questions of liability on matters pleaded in the statement of claim. The judge assessing damages should make only a cursory inquiry to be satisfied that the facts and the cause of action are pleaded with sufficient clarity. If so, liability should be regarded as proven. Only if the facts or 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 (William Mel v Coleman Pakalia (2005) SC990).

5. I have made a cursory inquiry and am satisfied that the facts and cause of action alleged against the defendant are pleaded with sufficient clarity. There was a motor vehicle accident caused by the negligence of the defendant's driver, which caused damage to another vehicle, which was the property of the plaintiff. The defendant lost the opportunity to bring evidence to counter the plaintiff's claim that he was the owner by failing to file a defence, and by failing to have the default judgment set aside. There is a clear cause of action in negligence. There is no good reason to inquire further into the correctness of the judgment on liability. I will now assess each of the three categories of damages being claimed by the plaintiff.

1 LOSS OF TRUCK

6. The plaintiff has adduced evidence that as a result of the defendant's driver's negligence his truck is a write-off. Ela Motors Wewak has provided a repair quote of K77,475.51 and a quote for a new replacement truck of K89,720.00, which is the amount of damages being claimed.

7. There is a serious flaw in the plaintiff's case here. It is not clear what the pre-accident value of the truck was. There is very little evidence to go on. The plaintiff wrongly assumes that he is entitled to the cost of a brand new truck. This approach would offend against a fundamental principle of the law of damages: the purpose of an award of damages is to put the innocent party in the same position, as far as possible, as he would have been in if the wrongdoer had not committed the wrongful act (Livingston v Raywards Coal Co [1880] 5 App Cases 25, Samuel Roth v Samuel Waironak (2011) N4452). To put the plaintiff in the same position he was in before his truck was negligently damaged, it is necessary for him to be awarded damages calculated by reference to the value of the truck at the time of the accident. There is evidence that the plaintiff purchased the truck for K45,000.00 one month before the accident. I consider a reasonable amount to award is K40,000.00.

2 LOSS OF INCOME

8. If a defendant causes damage to a plaintiff's profit-earning asset, the plaintiff is entitled to damages to compensate him for profits lost during the period that is reasonable to repair the asset (Abel Kopen v The State [1988-89] PNGLR 655).

9. The plaintiff claims that he could not afford to get his truck repaired and that it was unroadworthy. He claims that based on the one month period that he had the truck doing a return PMV run between Wewak and Angoram it would have generated annual revenue of K301,720.00. He has multiplied that figure by four years to arrive at the amount claimed, K1,316,600.00. His counsel, Mr Meten, acknowledges that at first glance there may be a problem in supporting that claim in view of the absence of evidence such as a set of accounts, audited or unaudited, or income tax returns to verify the figures. However, he asks the court to take into account that the plaintiff had only been running his PMV business for a month and that explains the absence of business records. Further he invited me to follow the approach to assessment of loss of income taken by Manuhu J in Andrew Kewa v Johnny Lus [2007] PNGC 3, where his Honour stated:

On loss of income, the plaintiff's vehicle was duly registered and insured as a PMV. From the figures provided by the plaintiff his average loss of income per month is K4,320.67. In the absence of any other evidence, the Court must accept the plaintiff's calculations. He should know what he earned. The period from the date of the accident to the final hearing of the case is 59 months and 12 days. The plaintiff's total loss of income stands at K254,919.50. Once again, in the absence of contrary evidence, no basis exists for the Court to entertain any doubt and to find otherwise.

10. I do not think his Honour was saying that the court is obliged to award the amount of business losses a PMV operator claims irrespective of the quality of the evidence. I can only presume that the quality of the evidence in that case was much higher than it is in this case. I cannot conceive that his Honour was intending to depart from the basic principles of assessment of damages, such as:

• The plaintiff has the onus of proving his losses on the balance of probabilities. It is not sufficient to make assertions in a statement of claim and then expect the court to award what is claimed. The burden of proving a fact is upon the party alleging it, not the party who denies it (Yooken Paklin v The State (2001) N2212).
  
• Corroboration of a claim is usually required and the corroboration must come from an independent source (Albert Baine v The State (1995) N1335; Kopung Brothers Business Group v Sakawar Kasieng [1997] PNGLR 331).
  
• The principles of proof and corroboration apply even when the defendant fails to present any evidence disputing the claim (Peter Wanis v Fred Sikiot and The State (1995) N1350).
  
• The court must be alert to vague claims, unsupported by corroborating evidence, as they might be false claims. The court must only uphold genuine claims (Kolaip Palapi and Others v Sergeant Poko and Others (2001) N2274).
  
• 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 (Jonathan Mangope Paraia v The State (1995) N1343, Misac Pokonoming v Jeffery Simiri WS 1596/2005, 26.10.07).
  

11. Here there is a dearth of evidence to support the assertion that in the month that the plaintiff's truck was being used as a PMV it generated revenue of K25,143.33 (which appears to be the monthly figure used for calculation of the annual loss claimed). There is a case for saying, as Mr Kesno asserts for the defendant, that the plaintiff should be awarded nothing for business losses. I have seriously considered taking that approach but ultimately decided against it. The best and fairest approach is to assess lost profits at the nominal figure that I have applied in similar cases such as Desmond Guasilu v Enga Provincial Government (2012) N4774: K3,000.00 per month.

12. As for a reasonable period to effect repairs or organise a replacement vehicle I allow the standard period adopted in cases such as Daniel Jifok v Kambang Holdings Ltd (2008) N3475 and Daniel Occungar v Luke Kiliso (2010) N4102: three months.

13. It would be wrong to allow the period claimed by the plaintiff of four years. Any prudent businessperson who uses a vehicle in the course of their business will have comprehensive motor vehicle insurance to cover the risk of their vehicle being off the road due to an accident. The plaintiff should have had his truck insured. He should not be rewarded by the court for his lack of diligence by being allowed an extended period.

The amount of business losses is K3,000.00 per month x 3 months = K9,000.00.

3 PAIN AND SUFFERING

14. This is a nebulous claim, unsupported by particulars or any credible evidence. Nothing is awarded.

SUMMARY OF DAMAGES ASSESSED

15. The assessment is:

(1) loss of truck: K40,000.00;

(2) business losses: K9,000.00;

(3) pain and suffering: 0.

being a total amount of K49,000.00.

INTEREST

16. Interest will be awarded at the rate of 8 per cent per annum on the total amount of damages under Section 1(1) of the Judicial Proceedings (Interest on Debts and Damages) Act Chapter No 52. Interest is calculated from the date on which the cause of action accrued, 7 February 2008, to the date of this judgment, a period of 4.75 years, by applying the following formula:

• D x I x N = A
  

Where:

• D is the amount of damages assessed;
• I is the rate of interest per annum;
• N is the appropriate period in numbers of years;
• A is the amount of interest.
  

Thus K49,000.00 x 0.08 x 4.75 = K18,620.00.

COSTS

17. The general rule is that costs follow the event, ie the successful party has its costs paid for by the losing party on a party-to-party basis. In this case there is no clear winner. The plaintiff has on the one hand succeeded in obtaining an award of damages but on the other hand has succeeded in convincing the court that only 3.72% (K49,000.00 out of K1,316,600.00) of his claim had merit; 96.28% of the claim was without merit. The defendant has succeeded in showing that the vast bulk of the claim had no evidentiary basis and was misconceived. In these circumstances it is appropriate that the parties bear their own costs.

ORDER

18. The court orders that:

(1) the defendant shall pay to the plaintiff damages of K49,000.00 plus interest of K18,620.00, being a total judgment sum of K67,620.00;

(2) the parties will bear their own costs;

(3) time for entry of the judgment is abridged to the date of settlement by the Registrar, which shall take place forthwith.

Judgment accordingly.
_________________________________________

Meten Lawyers: Lawyers for the Plaintiff
Warner Shand Lawyers: Lawyers for the Defendant