Fisher Windows Ltd v ANG Development Ltd and Morobe Constructions Pty Ltd [1974] PGSC 9; [1974] PNGLR 258 (26 March 1974)

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[1974] PNGLR 258 - Fisher Windows Ltd. v A.N.G. Development Ltd. and Morobe Constructions Pty. Ltd.

PRACTICE AND PROCEDURE - Trial - Whether issue of liability to be tried separately - Rules of the Supreme Court O. 39 r. 12[cccxxix]¹.

The plaintiff in an action for damages for breach of contract applied for the issue of liability to be determined first, leaving the quantum of damages to be tried at a later date. The plaintiff alleged that the issue of liability would be a relatively short matter involving a small number of witnesses, whereas the question of damages would involve a considerable amount of evidence including witnesses from other countries.

N1>(1) Separate trials of different issues ought only to be granted on special grounds, bearing in mind that it is, as a rule, not desirable that there should be the possibility of several issues being decided by different judges, and the question of increased costs.

N1>(2) A party who seeks separate trials of different issues must go further than showing that the expense or delay occasioned by the preparation for trial and the hearing of questions of damages would be avoided by ordering a separate trial as to liability.

In an action for damages for breach of contract, the plaintiff sought pursuant to O. 39 r. 12 of the Rules of the Supreme Court an order that the issue as to liability for damages for breach of the contract and one head of damage should be tried first, leaving the issue as to quantum of damages to be tried at a later date.

FROST ACJ: This is an action brought by a company registered in the Dominion of New Zealand against two companies incorporated in Papua New Guinea. The action is brought upon a contract between the plaintiff and the two defendants, or, alternatively, the first defendant, whereby the plaintiff alleges it was agreed that the plaintiff would construct and supply to the defendants certain anodised aluminium windows, louvre units, etc., according to certain drawings and specifications for the sum of $488,512.50 inclusive of cost, insurance and freight. The plaintiff further alleges that it was at all material times ready, willing and able to perform the agreement and commence the work of construction according to the said agreement, but that the defendants have refused to permit the plaintiff to perform the said agreement and have prevented the plaintiff from performing it and have wrongfully repudiated the said agreement. It is to be noted that there is no express allegation in the statement of claim that the plaintiff had elected to treat the defendants’ repudiation of the agreement as discharging the plaintiff from further performance, or the date of such election. The plaintiff will, no doubt, contend that such an allegation is to be implied. The plaintiff finally alleges that by way of damage it has lost the profit it would have made in performing the agreement. The particulars in the statement of claim relate to two heads of damage, the first being the difference between the contract price accepted less costs, viz. $79,661.19, and an item of $986.85 for loss of scraping of material. The other head of damage relates to the sum of $29,827.00 for loss of export incentive tax deduction under s. 129b of the Land and Income Tax Act 1954 as amended. The total damage claimed is $110,475.04.

Each defendant has delivered a defence in which each of the plaintiff’s allegations are all denied, particularly that the agreement was made and that the plaintiff was at all times ready, willing and able to perform the agreement, and in each of which it is alleged that the agreement was void for uncertainty and unenforceable by action pursuant to the Goods Ordinance 1951, s. 9. Each defence also contains a denial that the plaintiff has suffered the loss and damage set forth in the statement of claim.

On 13th February, 1974, immediately after the close of pleadings, the plaintiff took out a summons under O. 39 r. 12 asking that the matter be set down for trial to determine in the first instance whether or not the defendants or either of them are liable to the plaintiff for damages for breach of contract and, if so, whether or not the plaintiff is entitled to receive as part or all of any damages suffered by it an amount representing its loss of an export incentive deduction under the New Zealand legislation referred to in the statement of claim; and if the plaintiff should succeed upon the trial upon liability in the first instance that the matter be set down for such further trial to determine the quantum of such damages.

It will thus be seen that the relief sought by the plaintiff is that the issue as to liability for damages for breach of contract and also one head of damage should be tried first, leaving the quantum of damages to be tried at a later date.

“Subject to the provisions of the preceding Rules of this Order, the Court or a Judge may, in any cause or matter, at any time or from time to time, order that different questions or issues of fact arising therein shall be tried by different modes of trial, or that one or more question or questions or issue or issues of fact shall be tried before any other or others, ...”

The provision is in substantially similar terms as the English provision contained in O. 36 r. 1 (2) which, under different renumbering of the rules, has been in force in England since the Judicature Act.

Counsel for the plaintiff referred to a number of authorities, the most important of which are referred to in the case of Polskie Towarzystwo, etc., “Elektrim” v. Electric Furnace Co. Ltd. [cccxxx]², and there is no need for me, on this occasion, to review these authorities. It was there said, “... no general rule ought to be laid down to define the circumstances in which orders of this sort ought to be made and, secondly, that, without attempting to lay down any general rule, the kind of case in which an order of that sort can usefully be made is a case in which the matter directed to be tried first will, when decided one way or the other, really be likely to dispose of the case”. Per Jenkins L.J. at p. 566. It has also been said that, “Separate trials of separate issues are nearly as expensive as separate actions, and ought certainly not to be encouraged, and they should only be granted on special grounds”. Per Jessel M.R. in Piercy v. Young [cccxxxi]³. Again in Bottomley v. Hurst and Blackett, Limited, and Houston[cccxxxii]⁴ Scrutton L.J., in dealing with an application under the relevant English rule, said that:

“There was power in the Court, if it thought convenient to do so, to order one issue to be disposed of and the rest of the issues to be postponed until that one issue had been decided, but experience had taught the Court that that power was only to be resorted to in very special cases when it was asked for by the plaintiff.

When one issue was picked out it was not always one which could be disposed of quickly. Cases in which such an order had been made were cases in which a point of law had been raised as a preliminary issue, but when to that was to be added a question of fact, an additional difficulty was created. In his opinion, it was, as a rule, not a desirable method to adopt.”

The question of increased costs was a consideration adverted to by Jessel M.R. in Emma Silver Mining Company v. Grant[cccxxxiii]⁵ as one of the matters to be considered before the court made this kind of order. There is a useful passage also in Atkin’s Court Forms, vol. 23 at p. 130, as follows:

“The separate trial of separate issues is a departure from the general policy of the law that all the disputes in the same proceedings should be tried together. It must be remembered that separate trials of separate issues are often as expensive as separate actions and should only be granted on special grounds.

On the other hand, the objects of these rules are to avoid the trial of unnecessary questions or issues, to avoid any undue expense or delay being occasioned by the preparation for trial of questions or issues which may not ultimately arise for decision or determination, and to speed the process and lessen the cost of litigation by the determination or decision of a crucial question or issue. Whenever any of these objects can be achieved, the court may in its discretion order the separate trial of a separate question or issue. The court’s task is to strike a proper balance between the interest of the parties that the litigation should be determined finally and entirely and their interest that the solution of one question or issue may help to end the litigation more quickly, conveniently and cheaply.”

There are two cases reported in which applications have been made for trial of the issue of liability separately, and before trial of the issue as to damages. In Smith v. Hargrove[cccxxxiv]⁶ it was held that it was a proper exercise of discretion to make such an order. The circumstances of that case were that a special jury was to try the issue of negligence of the defendants in the management of a vessel, the action being for alleged breach of a charter party, but the particulars of damage were of such a detailed nature that that issue would probably be tried by a tribunal other than a jury. Pollock B. said, “Any one who has had experience of trials in cases of this kind finds that the parties are desirous of doing what is reasonable for themselves, and do not keep a special jury listening to the details of a matter of this kind, ...” (p. 185).

In Polskie Towarzystwo, etc., “Elektrim” v. Electric Furnace Co. Ltd.[cccxxxv]⁷ Devlin J. (as he then was) had directed that the issue as to liability in an action for damages for breach of contract should be determined first and that all questions as to the quantum of damages, if the defendants were found to be liable, should be referred subsequently to the official referee. However, an appeal against that order was allowed, the Court of Appeal taking the view that having regard to the pleadings the line of demarcation between questions of quantum and questions of liability was not, and possibly could not be, sufficiently defined to make the division practicable. The Court held that there were a number of issues raised upon the issue of liability which would be relevant also on the issue of damages, and that these issues would be more suitably and conveniently tried by the judge at the trial than be made the subject of a reference to an official referee, to whom Devlin J. (as he then was) had left the issue of damages. This also would affect the dissatisfied party’s right of appeal, there being no appeal from the official referee except on questions of law.

Coming to the case before me, there is at least one issue on liability which could affect the quantum of damages, and that is the date upon which the plaintiff elected to treat itself as discharged from further performance by reason of the defendants’ alleged repudiation of the contract, assuming that that is the plaintiff’s case. But this single issue does not make the defendants’ case in resisting this order as strong as that of the successful defendant in Polskie Towarzystwo, etc., “Elektrim” v. Electric Furnace Co. Ltd. [cccxxxvi]⁸. Apart from this each of these two cases is distinguishable.

I turn now to the circumstances upon which the plaintiff relies, which are set out in the affidavit of Mr. G. F. Honey, the Secretary of the plaintiff company. He deposes that only three witnesses would be called by the plaintiff to establish liability, and upon the head of damage concerning the loss of the export incentive taxation deduction. The affidavit then proceeds:

“By contrast, proof of the quantum of damages (apart from the loss of the export incentive taxation deduction) will involve at least thirty-seven witnesses and hundreds of exhibits. Being a loss of profit claim, the plaintiff will prove each and every component in the costing of the entire contract. These components have already been assembled in book form (which has been supplied to the defendants) comprising 155 foolscap pages of calculations, quotations and verification of particulars. Witnesses from New Zealand, Queensland, California and China will be giving evidence for the plaintiff. I am advised by the company’s Solicitors that the plaintiff’s case alone would occupy at least one month and probably more.”

At the hearing counsel for the plaintiff stated that the witnesses would give evidence as to the many quotations for the supply of material and labour costs. He referred also to the possibility that it might be necessary to take evidence on commission in the countries referred to in Mr. Honey’s affidavit.

Now it is clear that the plaintiff who seeks this kind of order must go further than merely showing that the expense or delay occasioned by the preparation for trial and the hearing of questions of damages would be avoided by ordering a separate trial as to liability, otherwise such an order would be made almost as of course in civil actions for damages.

Certainly it is, as a rule, not desirable that there should be the possibility of several issues being decided by different judges.

It is important also to consider the present state of preparation for trial. At this stage, although the plaintiff has supplied a great deal of information which the defendants have had no time to examine, there has been no request for further and better particulars as to the damages claimed, nor has discovery been sought or interrogatories delivered.

The terms of Mr. Honey’s affidavit are general indeed, and the doubts about this application which I felt during the argument, arising from the plaintiff’s failure to descend to any particularity as to the matters to be deposed to by the thirty-seven witnesses, have not left me. I do not find the plaintiff’s material convincing. The usual course of events in this type of case has not changed since the days of Baron Pollock, and it is still more usual than not that commercial men will be found to agree, without the necessity of calling evidence thereon, upon many items concerning damages, such as the costs of materials and labour costs. When the defendants are in the position of having full particulars of all items in the plaintiff’s claim and the benefit of discovery, it is very likely, as was said by the defendants’ counsel, that they will be in a position to make admissions which would obviate the expense of calling certain witnesses. There is also the question, of particular importance in this jurisdiction, of increased legal costs involved in two hearings, including the expense of witnesses and counsel’s journeys to and from New Zealand and Australia and the difficulty of ensuring the attendance of the same counsel, having regard to the kind of delays which occur in this type of litigation.

On the whole I have decided that the material submitted before this court is not sufficient to establish special circumstances which are required for the exercise of discretion in favour of a plaintiff who seeks this kind of order.

Accordingly, I have decided to refuse the application. The plaintiff may, of course, make another application upon changed circumstances after the procedural steps I have referred to have been taken.

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[cccxxx][1956] 1 W.L.R. 562.

[cccxxxi][1880] UKLawRpCh 32; (1880) 15 Ch.D. 475 at p. 479.

[cccxxxii](1928) 44 T.L.R. 451.

[cccxxxiii](1879) 11 Ch.D. 918.

[cccxxxiv](1885) 16 Q.B.D. 183.

[cccxxxv][1956] 1 W.L.R. 562.

[cccxxxvi][1956] 1. W.L.R. 562.

[cccxxxvii][1968] VicRp 13; [1968] V.R. 112.

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Supreme Court of Papua New Guinea

Fisher Windows Ltd v ANG Development Ltd and Morobe Constructions Pty Ltd [1974] PGSC 9; [1974] PNGLR 258 (26 March 1974)

Papua New Guinea Law Reports - 1974