|
|
Home
| Databases
| WorldLII
| Search
| Feedback
National Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
WS No. 579 OF 2017
BETWEEN
EL MANGOTH COMPANY LIMTED
Plaintiff
AND:
JACK SARVIMAN
First Defendant
TAE GUAMBELEK, CHIEF EXECUTIVE OFFICER, BULOLO DISTRICT DEVELOPMENT AUTHORITY
Second Defendant
AND:
BULOLO DISTRICT DEVELOPMENT AUTHORITY
Third Defendant
Lae: Numapo J
2020: 18th & 23rd September
CIVIL PRACTICE AND PROCEDURE – Assessment of damages (Order 10 Rule 17) – Special damages and Compensatory damages – Plaintiff bears the onus to prove loss – Losses must be pleaded with sufficient clarity - Claim on losses must be corroborated – Plaintiff has a duty to mitigate loss – Plaintiff only entitled to damages of which actual loss is proven.
Case Cited:
Waranunbo v Hyper Construction Ltd (2012) N4882
Jifok v Kambang Holdings Ltd t/a Lutheran Shipping (2008) N3475
Andrew Kewa v Johnny Lus & Securimax Security Ltd (2007) PGNC 3
Rodao Holdings Ltd v Sogeram Development Corporation (2006) N5485
William Mel v Coleman Pakalia and Others (2005) SC790
Papua New Guinea Banking Corporation v Jeff Tole (2002) SC694
Coecon Ltd v National Fisheries Authority (2002) N2182
Jonathan Paraia v The State 91995) N1343
PNG Ports Corporation Ltd v Islands Salvage and Towage Ltd (2009) N3780
Albert Baine v The State (1995)
Kopung Brothers Business Group v Sakawar Kasieng [1975] PNGLR 331
Peter Wanis v Fred Sheekiot & The State (1995) N1350
Counsel:
Mr. T Dawidi, for the Plaintiff
No Appearance of First, Second & Third Defendants
DECISION
23rd September, 2020
1. NUMAPO J: The Plaintiff commenced this action on assessment of damages pursuant to Order 10 Rule 17 of the National Court Rules (NCR) after a default judgment on liability was entered against the Defendants on the 11 April 2019. The Plaintiff claims the following:
(i) Replacement cost of the vehicle valued at K150,350.00;
(ii) Outstanding hire of the vehicle for a sum of K195, 200.00;
(iii) Economic Loss amounting to K876,800.00
(iv) Interests at 2% per annum on judgment sum;
(v) Post judgment interest; and
(vi) Costs.
2. The plaintiff is the owner of a Toyota Land cruiser Troop Carrier registration number LBN- 183 it bought for K155, 000.00 from Ela Motors, Lae. The vehicle was hired to the defendants for the sum of K800 per day under a ‘Hire Agreement’ between the plaintiff and the defendants dated the 1 January 2016. According to the terms of the Hire Agreement the defendants were to be responsible for any damage caused to the vehicle.
3. On the 26 January 2016 the defendants’ driver crashed the vehicle which was assessed to be uneconomical to repair. Technically, the defendants used the vehicle for only 25 days before it was damaged and written off. The defendants kept the plaintiff’s vehicle and undertook to repair it. Defendants also informed the plaintiff that they would make some payments for the loss of hire for a total of 105 days. The vehicle was not repaired nor was there any payment on hire made hence, the claim. Plaintiff claims that the defendants were in breach of the hire agreement. A default judgment on liability was entered against the defendants.
4. The issue(s) are:
(i) Whether or not the plaintiff suffered any losses and if so, has the plaintiff proven its losses?
(ii) Whether or not the plaintiff is entitled to special damages being the pre-accident of the vehicle and compensatory damages for the outstanding hire of the vehicle’?
(iii) ‘Whether or not the plaintiff is entitled to general damages for loss of business referred to as economic losses?
5. The general principles in assessment of damages is that the claimant is entitled to full compensation of his or her losses once liability is established. The precise quantum to be paid to the plaintiff by the defendant is to be assessed in the trial on assessment on damages. In tort, the purpose of damages is to put the claimant in the position that he/she would have been in had the tort not been committed. See: Waranunbo v Hyper Construction Ltd (2012) N4882; Jifok v Kambang Holdings Ltd t/a Lutheran Shipping (2008) N3475; and Rodao Holdings Ltd v Sogeram Development Corporation (2006) N5485.
6. A number of case laws have made it clear that once liability is established and on assessment of damages the court is satisfied that the Plaintiff has suffered the losses, it should award the damages. See: Andrew Kewa v Johnny Lus & Securimax Security Ltd (2007) PGNC 3.
7. The Supreme Court in William Mel v Coleman Pakalia and Others (2005) SC790 in endorsing the earlier decisions of Papua New Guinea Banking Corporation v Jeff Tole (2002) SC694 and a National Court decision in Coecon Ltd v National Fisheries Authority (2002) N2182, held that, the role of a trial judge in assessing damage is:
(a) To make a cursory inquiry so as to be satisfied that the facts and the cause of action are pleaded with sufficient clarity; and
(b) If the facts and cause of action are reasonably clear, liability should be regarded as proven, i.e. the default judgment resolves all questions of liability in respect of the matters pleaded in the statement of claim;
(c) Only if the facts of 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;
(d) The plaintiff has the burden of producing admissible and credible evidence of the alleged damages; and
(e) 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.
8. The onus is on the plaintiff to prove his loses upon the balance of probabilities. He must show through cogent and credible evidence the losses suffered. Mere speculation or conjecture is not good enough. A good number of case laws have established these principles of law which requires sufficient proof on losses, the burden of which is on the claimant. See for example: Jonathan Paraia v The State (1995) N1343; PNG Ports Corporation Ltd v Islands Salvage and Towage Ltd (2009) N3780.
9. Claim for losses must also be corroborated. No claim will succeed if the evidence on the loss is not corroborated. Corroboration is usually required on claims on losses. See: Albert Baine v The State (1995); Kopung Brothers Business Group v Sakawar Kasieng [1975] PNGLR 331. The same principles of proof and corroboration apply even when the Defendant fails to present any evidence disputing the claim. See: Peter Wanis v Fred Sheekiot & The State (1995) N1350.
10. It is trite law that a person who suffers personal injury through no fault of his or her own, has an obligation to take the necessary steps to avoid further losses and to minimize it. Whether it is an action arising from a tort or a breach of contract, the plaintiff has a duty to mitigate his loss and must take all necessary and reasonable actions, where possible, to lessen the impact of his loss and suffering.
11. The matter was made returnable on the 31 August 2020 for hearing on assessment of damages after a default judgment was entered against the defendants on 11 April 2019. Certain directions were issued by the court on the 18 August 2020 requiring the parties to file and serve their respective affidavits and give relevant notices under the Evidence Act by 26 August 2020. Whilst the plaintiff complied with the court orders and filed its affidavit and gave notice for the hearing on assessment of damages, the defendants had not filed any affidavits in response nor did they serve any notices of their intention to defend the claim or cross examine the claim. They were not represented in court either in person or by counsel on the day of the hearing on damages. A quick perusal of the court records also showed that the defendants have not made any appearances since the commencement of this proceeding. It seems to me that the defendants are not interested in defending this claim. The only evidence before the court on trial on assessment on damages is the uncontested evidence of the plaintiff.
12. The plaintiff relies on the affidavit of one, Yemon Bisa, the Director of the plaintiff company (‘Exhibit P1’) filed on 9 September 2020 and affidavit of Timothy Namiai (‘Exhibit P2’) the Accountant of the plaintiff company also filed on 9 September 2019.
13. The first two issues for the court to determine are; firstly; whether or not the plaintiff suffered any losses and if so, has the plaintiff proven its losses?, and secondly; whether or not the plaintiff is entitled to special damages being the pre-accident value of the vehicle and compensatory damages for the outstanding hire of the vehicle?
(i) Pre-Accident value of the Vehicle – K150,350.00
14. With respect to the pre-accident value of the vehicle, I am satisfied from the plaintiff’s uncontested evidence, supported and corroborated by the assessment reports provided by Ela Motors, Boroko Motors and Toba Motors, the three reputable car dealers in the country, that the damage caused to the vehicle is beyond economical repair and is a complete write-off. Based on the depreciation value, the vehicle was given a pre-accident value of K150, 350.00.
15. I am satisfied upon the balance of probabilities that the plaintiff has proven his losses and is therefore, entitled to damages. The loss has been quantified with a monetary value attached to it hence, is assessable. The assessment on damage with respect to the vehicle itself is clear and precise.
16. Having established that the plaintiff is entitled to damages, the second issue for me to determine is the quantum; whether or not the plaintiff is entitled to K150, 350.00 as the cost of the pre-accident value of its vehicle? I answer this in the affirmative. To mitigate his losses the plaintiff bought a new replacement vehicle valued at K150, 000.00. Plaintiff is entitled to damages.
(ii) Outstanding Hire – K195,000.00
17. There is nothing in the Hire Agreement (‘Exhibit B’) that states the specific period of hire; for example, whether or not the plaintiff’s vehicle was on hire for a period of 105 days or 243 days or for three years (2016 – 2018) upon which the separate claims were based on. The Agreement signed by both parties only showed 01 January 2016 as the date the hire commenced but it did not specify how long the vehicle is on hire for and the due date the vehicle is to be returned. A practice that is quite common with many hire car companies.
18. The plaintiff claim for loss of hire from 1 Januray 2016 to 31 August 2016, a total of eight (8) months equivalent to 243 days. The only reference made to the eight (8) months period hence, the claim, it seems, is the period for which the defendants kept the damaged vehicle in their custody with an undertaking to repair it. Defendants also undertook to pay for the down-time on the loss of hire whilst the vehicle is undergoing repairs. This is also the period whereby the plaintiff did not have a vehicle until it purchased a new replacement vehicle in September 2016.
19. Despite their assurances, defendants did not make good on their promise to repair the vehicle and to pay for the loss of hire for the period the vehicle was immobile prompting the plaintiff to buy a new vehicle to mitigate his losses. Plaintiff had a legitimate expectation based on the undertaking given by the defendants that they would repair the vehicle and compensate the plaintiff for the loss of hire but they failed to do so. Consequently, the plaintiff suffered losses and therefore, is entitled to damages.
20. As regards to quantum, I am satisfied that the plaintiff has quantified his loss in hire at K800.00 per day as per the hire agreement for a total of 243 days, the period for which the vehicle was immobile awaiting repairs. The loss is proven hence, the plaintiff is entitled to compensatory damages in the sum of K194, 400.00 for loss on income on hire.
(iii)Total Economic Loss – K876, 800.00
21. The third issue for the court to determine is; ‘Whether or not the plaintiff is entitled to damages for loss of business or loss of profit generally referred to as total economic losses?
22. The claim of K876, 800.00 described as ‘total economic losses’ or loss of business or lost profits is not clearly pleaded in the statement of claim with sufficient clarity as a quantifiable loss. Plaintiff has not proven this loss through evidence. Consequently, it is difficult for the loss to be assessed for damages. The onus is on the plaintiff to prove his losses through cogent and credible evidence. See: PNG Ports Corporation Ltd v Islands Salvage & Towage Ltd (supra).
23. The claim, I find, is based entirely on the Financial Report compiled by the plaintiff’s accountant (Exhibits “A & B”). Financial report such as this, is nothing more than an annual projection or estimates on income and expenditure within the financial year. The figures in the report, for what it’s worth, is only guesstimate and should not be construed as actual losses. I find no basis in the claim that the plaintiff would infact suffer the predicted loss of K292, 000.00 annually for three consecutive years (2016 – 2018), attributing the losses to one damaged vehicle. It is hard to contemplate that this would be the case in a real business world without the plaintiff taking any corrective actions to cut or minimize its losses at the earliest opportunity possible to avoid further losses. Plaintiff infact did exactly that by purchasing a new vehicle a few months later in September 2016 to replace the damaged vehicle in order to minimize its losses. For this reason, I cannot see how the plaintiff would continue to suffer the same losses in profit for three years in a row. That being the case, it is difficult to accept the plaintiff’s claim that he has made substantial economic losses since the demise of his vehicle and therefore, is entitled to damages.
24. Furthermore, the general rule on lost profits or loss of business is that it should not be speculative. The claim on lost profits must be reasonably linked to the breach of contract. Simply put, the lost profit damages must directly and proximately arise due to the defendant’s conduct. Plaintiff must prove that the lost profits he suffered is as a direct result of the disruption caused to its business operations. In the present case however, there is no such evidence to prove that. In any event, the hire agreement does not have any specific clause relating to loss of business apart from the loss of hire and the cost of the damage to the vehicle, the responsibility of which, rests on the defendants as stipulated in the hire agreement. It would have made a world of difference if a clause is inserted into the hire agreement stating for example that, in addition to the loss suffered on damages and loss of hire, the defendants is also liable for any other losses brought on to the business as a direct result of the loss of the vehicle.
25. According to evidence, the plaintiff runs a business that provides a variety of services to the public which includes cartage, freight services and vehicle hire services. Vehicle hire service is but one of them. To suggest that in the vehicle hire services alone with the use of just one vehicle is capable of generating an annual income of K292, 000.00 on a consistent level for three years is, in my opinion, a gross and ambitious over-estimates that does not reflect reality. It does not make any good business sense to continue to carry the same losses for a number of years without taking any steps to reducing it. This is not prudent management.
26. I reiterate again, that the principles of law governing losses is that the claimant is only entitled to the actual losses suffered once liability is established. A loss that would have put him or her back to his or her original position had the tort not been committed or the contract not been breached. In assessment of damages, the quantum is determined on the actual losses suffered. Nothing more nothing less. Plaintiff should not come to court to profit out of his losses. See: Waranunbo v Hyper Construction Ltd (supra) and Rodao Holdings Ltd v Sogeram Development Corporation (supra). In addition, the plaintiff must prove his losses through evidence. Mere speculations or assumptions on business losses or lost profits suffered or likely to be suffered is not good enough and cannot sustain the claim in law. See: Golden Valley Transport v Peter Pipili & Ors [2019] N8377 and PNG Ports Corporation Ltd v Islands Salvage and Towage Ltd (supra). The financial report provided by the accountant is a mere estimate and does not reflect the actual losses hence, plaintiff is not entitled to damages in the sum of K876, 800.00 for loss of business, lost profits or total economic losses.
27. I find no evidence that independently verified or corroborated the claim on the economic loss. Corroboration is required on claims on losses without which the claim will not succeed. See: Albert Baine v The State (supra) and Kopung Brothers Business Group v Sakawar Kasieng (supra). Defendants need to be present to dispute or challenge the claim. The requirement of corroboration and proof is also required even if the defendants fail to present any evidence disputing the claim. See: Peter Wanis v Fred Sheekiot & The State (supra).
28. Based on what I have said so far, I am not convinced that the plaintiff is entitled to damages in the sum of K876, 800.00 claimed as total economic losses. The claim, I find, is speculative, unsubstantiated and without basis hence, plaintiff is not entitled to it as an assessable damage.
29. All in all, I find that the only losses with discernable and quantifiable monetary amounts attached to them that have been sufficiently proven as losses suffered and therefore, assessable for which the plaintiff is entitled to damages are; the pre-accident value of the plaintiff’s vehicle at K150, 350.00 and the outstanding hire of K194, 400.00.
30. I make the following Orders:
(i) Plaintiff is entitled to special damages in the sum of K150, 350.00 being for the cost of the damaged vehicle on its assessed pre-accident value.
(ii) Plaintiff is entitled to compensatory damages in the sum of K194, 400.00 for the loss suffered in outstanding hire.
(iii) 2% interest per annum on the judgment sum (from the date of the filing of Writ of Summons until payment in full) and costs pursuant to the Judicial Proceedings (Interest on Debts & Damages) Act 2015.
(iv) Costs of to be taxed, if not agreed.
Orders Accordingly
Dawidi Lawyers: Lawyers for the Plaintiff
PacLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.paclii.org/pg/cases/PGNC/2020/314.html