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Supreme Court of Papua New Guinea |
SC658
PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]
SCA No. 5 OF 1997
P.N.G. AVIATION SERVICES PTY LIMITED
-Appellant-
AND:
MICHAEL THOMAS SOMARE
-First Respondent-
AND:
INDEPENDENT STATE OF PAPUA NEW GUINEA
-Second Respondent-
WAIGANI: SALIKA, SAKORA, SEVUA, JJ
November, 1999
December, 2000
DEFAMATION – Damages – Damages to Company – Damages to Company reputation – Damages to Company trade reputation or goodwill – Aggravated damages – General Damages.
Mr. J. Shepherd, for the Appellant
Mr. J. Kwimb, for the Respondents
DECISION
SALIKA, J: The appellant appeals from a part of the decision of the National Court dealing with the assessment of damages in favour of the appellant given in WS 290 of 1987 on 20 December 1996 at Waigani.
The appellant at the time of filing of the notice of appeal had also filed an application for leave to appeal. The grounds for application for leave were that the appeal raised matters of importance and justice between the parties and as such that he relied on his grounds of appeal.
The grounds of his appeal are as follows:
"(1) The award of damages in favour of the appellant was unreasonable and manifestly inadequate.
(2) In assessing the appellant’s damages the learned trial judge failed to give any sufficient consideration to the loss of at least K313,316 suffered by the appellant in the year 1985.
(3) The learned trial judge erred in failing to give any or any sufficient consideration to the evidence of the appellant’s loss of income in the year in which the defamatory matter was published or in subsequent years.
(4) Having found that the appellant was "a viable operation" and being "satisfied that it had every chance of developing into a strong profitable business had this (defamatory) attack not occurred" the learned trial judge erred in failing to determine and award damages for the appellant’s financial loss.
(5) The learned trial judge erred in failing to award, or to give any consideration to awarding, aggravated damages in favour of the appellant.
(6) His Honour erred in failing to award, and in failing to consider awarding, interest on damages at a commercial rate.
(7) The appellant reserves the right to add to these grounds of appeal when a transcript of the evidence is available."
The appellant seeks the following orders:-
"(1) That the award of the National Court in favour of the appellant be set aside and in lieu thereof judgment be entered against the respondents in favour of the appellant for damages as assessed by the Supreme Court and for interest thereon at such rate as to the Court seems just.
(2) Alternatively, that the award of the National Court be set aside and that the proceedings be returned to the National Court for re-assessment of the appellant’s damages and interest thereon.
(3) The respondents pay the costs of the appeal.
(4) Such further or other order as the Court considers just."
APPLICATION FOR LEAVE TO APPEAL
The application for leave was filed contemporaneously with the notice of appeal. This was in conformity with the practice of the Supreme Court Rules as approved by the Supreme Court in KUNANGEL v. THE STATE (1985) PNGLR 144. This practice of simultaneous filing of a notice of appeal was subsequently disapproved by the Supreme Court in HENZY YAKAM & OTHERS v. THE STATE & OTHERS, SC 533 dated 27 November 1997. In the YAKAM case the Court held that where a Notice of appeal sets out the grounds which require leave, a separate Application for leave must be determined first in time. The Court went on to say that a Notice of Appeal and Application for leave to appeal are different both in form and content in that the grounds seeking leave to appeal are different to the grounds in the Notice of Appeal.
The appellant submits that the procedures relating to applications for leave to appeal required as a result of the decision in the YAKAM case should not apply to him because he filed his Notice of Appeal and his Application for leave to appeal under the practice approved in the KUNANGEL case. I am also of the same view that the ruling in the YAKAM case should not affect this case. In the light of that view, I am satisfied that leave be granted for the reasons stated in his application for leave to appeal, that is there are serious issues of law to be determined in this case.
THE APPEAL
The appellant contends that the award of general damages to the company was unreasonably low and that it was manifestly inadequate given the finding by the learned trial judge concerning the enormity and the wide impact the defamation had on the company.
The background facts as set out in the trial are:-
"On 16 August 1985 the Prime Minister of Papua New Guinea the Hon. Mr. Michael Somare addressed Parliament in answer to questions that had been put to the Government by the Leader of the Opposition Mr. Paias Wingti.
The Government was challenged in its dealings relating to the sale [and] purchase of Government aircraft. The Opposition through its Leader accused the Government of accepting bribes in return for business favours. At that time the issues raised by those questions were a matter of considerable public interest.
Mr. Somare in his reply to the House denied any impropriety in Government’s or his own business dealings and launched a severe and scathing attach on the Opposition Leader. In the course of this speech he made equally severe and damaging assertions about the plaintiff company PNG Aviation Services and its directors Messrs Valentine, Mendoza and Lussick.
Following that speech in the House the Prime Minister caused a report of it [to be] published under the State crest in advertisements printed over three days in each of 4 newspapers circulating in PNG at the time. It reads as follows:
Statement by Prime Minister Michael Somare in reply to a statement by Opposition Leader Wingti, August 16, 1995
Yesterday, the Opposition Leader made a statement about Government negotiations leading to the sale of Kumul 1 and the purchase of Arawa aircraft for the Defence Force.
Sir, in that statement he made a number of vicious, dishonest and slanderous allegations about my conduct in this House. He accused me of deliberately lying to this House and of associating with criminals.
Sir, I believe the member for Hagen has in his enthusiasm for the Opposition role overstepped the mark dramatically.
Sir, Mr Wingti is relatively inexperienced and perhaps he doesn’t fully understand legal documents, so I would like to give him the chance to retract his statements (if he doesn’t offer to retract).
Mr. Speaker, since the Honourable member does not choose to retract his statement full responsibility for it must fall on his head. And, Sir, it is a dreadful responsibility. The member for Hagen will for many years regret his rashness and ill-considered words on this subject.
...
Sir, I will demonstrate to every member of this House how the member for Hagen has lied and I will use his own documents and words to do it!!!
Mr. Speaker the dishonesty exhibited by the Opposition Leader is on a level rarely seen in this house previously. It is dishonesty which must being upon the Opposition Leader’s head the condemnation of all decent thinking citizens.
Sir, I will deal with his scurrilous allegations in the order they were delivered.
First, Sir, I was accused of lying to this House in a statement I made on June the seventh.
Sir, I do not lie!!!
I stand by every word of that statement. I have nothing to hide! And I have nothing to apologise for.
Sir, the Opposition Leader has been manipulated by a disreputable foreign owned company.
Sir, PNG Aviation Service have tried repeatedly to mislead and cheat this Government and when they failed to do that they have tried to embarrass us by leaking documents to the gullible members of the Opposition.
Sir, yesterday Mr. Wingti tabled a number of documents and claimed and here I quote "These documents are total proof that PNG Aviation Services Pty Ltd was appointed the Sole Agent for the sale of Kumul 1".
End of quote.
Sir, the member for Hagen continued to say that these documents proved I was lying.
Sir, that statement not only proved that Mr. Wingti is not very wise. It showed that he is rash and irresponsible. These documents demonstrate only that PNG Aviation Services entered into a preliminary agreement – an escrow agreement with the Government of Papua New Guinea.
Sir, for the Opposition Leader’s information an escrow agreement is merely a conditional agreement. It is not a firm contract – it is an agreement conditional upon certain actions.
Sir, in this case PNG Aviation Services did not fulfil the conditions of the escrow and it lapsed.
...
Sir, PNG Aviation services had an escrow – and an escrow only – on the sale of the Kumul.
It was a limited escrow for three weeks from August the third, 1983.
The company failed to live up to the conditions of the escrow and because of this failure was not appointed as an official agent for the sale of Kumul 1.
...
Sir, my officials found that, not only did PNG Aviation Services fail to meet the conditions of the escrow, they tried to undermine then and sneak by without fulfilling their legal obligations.
Sir, PNG Aviation Services and its principals are completely untrustworthy and dishonest.
Their own documents prove this.
Sir, that company deliberately and with criminal intent sought to defraud the Papua New Guinea Government during the negotiations leading up to the sale of Kumul 1.
Sir, to substantiate these allegations I table two documents.
The first consists of information provided to a Minister, Sir Barry Holloway by Mr. Valentine of PNG Aviation.
The second is the report of the official government inspection of the aircraft which was prompted by Mr. Valentine’s communication.
(Table documents)
Mr. Speaker, it is typical of Mr. Valentine’s behaviour that he did not operate through the correct channels he attempted to politically manipulate ministers just as he is manipulating the member for Hagen now.
Sir, document one makes a number of spurious allegations about the condition of Kumul 1. Mr. Valentine claims the interior of the plane was in terrible condition, it had been left out on the tarmac and so on.
Sir, all these claims were later prove to be absolute lies!!!
The intent of this document we believe was to make us distrust the company we were dealing with and transfer our business to PNG Aviation Services.
In other words having failed to win the business legitimately PNG Aviation Services were trying through slander and innuendo to undercut their rivals.
Sir, these were serious accusations so my department head, Mr. Yauieb, immediately ordered an Office of Civil Aviation official, Mr E.C.Johnston, superintendent of Airworthiness, to fly to Copenhagen to inspect the aircraft.
His report is Document 2.
Sir, this document shows that there was nothing whatsoever wrong with the aircraft.
It also shows that the information supplied to my Government by Mr Valentine was completely misleading and false. Valentine lied to my Ministers.
Sir, these lies caused this Government to spend a great deal of money as we had to ensue that the allegations were false.
Sir, PNG Aviation Services’ role in this incident can only be described as negligent or criminal.
...
Sir, subsequent to the incident I described my departmental head decided on his own initiative and through no influence of mine that Mr Valentine and PNG Aviation Services were not trustworthy and recommended terminating dealings with them.
Sir, the NEC and the member for Hagen was at that meeting accepted these recommendations and terminated all dealings with PNG Aviation Services.
Sir, the reason for this termination was the company’s complete failure to live up to the conditions of the escrow agreement.
We now believe PNG Aviation Services did not have the capacity to meet the conditions and did not a t any stage intend to meet them.
...
We now know what Mr. Mendoza and Mr. Valentine of PNG Aviation Services are like. There is no question about them. The question is why does the Opposition Leader associate with these individuals? Why does he believe the absolute nonsense that the feed to him.
...
The only investigation that could be launched is into PNG Aviation Services and how they have manipulated the Opposition into this ludicrous position.
Is the member for Hagen a mouthpiece or a business representative of Valentine, Mendoza or Lussick? Why as the Opposition Leader not ensured his Deputy Leader for actions which may result in criminal charges for fraud? Mr. Speaker, the Opposition is in disarray and I smell corruption at the highest levels.
Instead of being the clean force that Mr. Wingti claimed it was going to be it has become mired in scandal and wild accusations. It has allied itself with questionable businessmen, allowed its Deputy Leader to get away with criminal behaviour with not a murmur and completely failed to provide any serious policy alternatives.
...
The learned trial judge made the following observations after analysing the evidence:
"I am satisfied the Plaintiffs have shown that the 1st Defendant did not have any honest belief in the defamatory matter. In terms of Section 11 [of the Defamation Act] he believed it untrue.
The Defence had submitted that the Plaintiffs had failed to establish an absence of good faith on the part of the Defendants [and that] in fact the First Defendant had throughout the proceedings disavowed any malice or ill will towards any of the Plaintiffs; that he didn’t intend to harm or discredit the Plaintiffs. The intention is in fact irrelevant. It is the ordinary meaning of words that count. The ordinary meaning and fact of assertions of cheating and criminal actions without basis belies the 1st Defendant’s claim that he bore no [malice or ill-] will. The 1st Defendant acknowledged he was angry with the Plaintiffs and intended to harm them as Mr. Wingti had with their assistance harmed him. It was said in Royal Aguarium v Parkinson [1892] UKLawRpKQB 46; [1892] 1 QB 431 that where a person through anger makes aspersions of other people reckless whether they are true or false, publication will not be excused.
I am satisfied too that in acknowledging that one of the main reasons for [the 1st Defendant’s] ordering the Plaintiff Valentine deported was because of his filing proceedings for defamation against him, is further evidence of lack of good faith on the part of the 1st Defendant..
In the result the Plaintiffs case has been overwhelming. As for the second Defendant, it must be held vicariously responsible for the actions of its Chief Minister. Judgment is entered for each of the Plaintiffs against each of the Defendants."
The learned trial judge in assessing and awarding damages said:-
"The defamatory allegations in this case are in my view among the most serious and damaging that can be made. A company’s reputation is dependent on its being recognised as honest and fair in its dealings. Allegations that it is disreputable, dishonest and cheats in business is to attack a business at its heart.
To assert that its principals, naming them individually, are also dishonest fraudulent criminal and cheats who consciously set about to cheat the PNG Government is to make the most serious and damaging of charges.
The charges were unwarranted not only because they were not true but also because they were known not to be true. The facts supposedly giving rise to the charges were known not to be true. And documentation offered supposedly as proof of the charges clearly and obviously did not do so.
When the man in the street unjustly defames his neighbour the injury is a serious matter having its own consequences, It will result in an appropriate an award in damages. However when the State through its Prime Minister asserts untruthfully that a company is dishonest and names it principals as criminal in statements published bearing the State emblem, on 3 consecutive days throughout the nation, the impact of such charges on the reputation of company and individual can only be regarded as devastating. Such assertions are in effect a pronouncement of the State; a conviction without the; process of law for which the State is guarantor.
I am satisfied that was the case here. The evidence shows that the Company was stopped in its tracks and eventually went out of business. The two working principals Messrs Mendoza and Valentine were left without position or income, their business failed, their reputations wrecked. Mr. Lussick as an advisory director of the Company was perhaps not affected so much as to his income but his reputation was, like the others, seriously injured.
The Pelair Enquiry [instituted] by the 1st Defendant did in fact help to vindicate the Plaintiffs though that vindication did not generate any change of heart in the Defendants by way of apology or recompense. In the normal course of an action for defamatory prior to verdict matter may not warrant adverse comment. But where, as here prior even to proceedings being commenced there has been a public enquiry where the findings, which the Defendants freely accept, cleared the Plaintiffs of any wrong doing then, then in such case the failure to retract or apologise must be seen as serious lack of good faith.
Evidence was given as to the effect of the publication on the Company and the financial losses that it was said to have sustained. Evidence was given also by each of the Plaintiffs directors as to the impact of the publication on them, financially, and the resultant isolation socially and in the business community.
For PNGAS, Counsel submitted that an award should compensate the company for its loss of goodwill, the financial losses sustained and for the company’s eventual closure. Defence Counsel pointed out that the company was in fact unprofitable. It had sustained losses in the previous two years and was carrying heavy debt.
I do not propose to traverse the evidence regarding the company finances. Suffice to say that I accept the Defence contention that the company was, at the time of the publication certainly not making much more than wages for its staff. It was financially not strong. But notwithstanding the extensive obligation it was carrying, insolvency was far from inevitable. It was nonetheless a viable operation being run in its development stages with the vigour and determination of its shareholders with the guidance of Mr. Lussick, an experienced businessman of long standing. I am satisfied that it had every chance of developing into a strong profitable business had this attack not occurred." [emphasis added]
Having made those findings it was submitted by the appellant that the learned trial judge failed to give any reasons to not "traverse" the evidence given at trial regarding the financial losses the appellant suffered as a result of the defamatory publications. The trial judge awarded general damages of K100,000 with interest at 8% from the commencement of each set of proceedings to the date of verdict to each of the appellants directors, Mr. Mendoza, Mr. Valentine and Mr. Lussick. The appellant was awarded general damages of K50,000.00 plus interest at 8% from date of commencement to date of verdict. The appellant submits that the amount awarded to it for general damages is unreasonably low and manifestly inadequate.
The trial judge also declined to award aggravated damages on the basis that:-
"... all the matters raised in support of such a claim are essentially the same as arise in the ordinary course of the Compensation award now made."
The appellant further submits that the trial judge did not consider awarding interest on general damages at a commercial rate and argues that he should have.
The appellant submits that the trial was conducted between the 8th September 1993 and 23rd September 1993. On the 23rd September Counsel’s submissions were delivered. Judgment on the matter was delivered on the 20 December 1996. Judgment was given more than three (3) years after the case had been adjourned for a reserved decision. No audio cassette transcript of the oral evidence given at the trial was made and kept by the Court. (The current Transcription Unit was set up after 1993). The only official record of the oral evidence given at the trial was the trial judges own handwritten notes which were in an abbreviated form. It was submitted that the notes in the trial judges record book did not reflect a comprehensive record of the oral evidence given at the trial. The appellant respectfully submitted that though the trial judge was able to analyse from his own abbreviated hand written notes of the evidence given at the time, the delay in the writing up of the judgement, that is over 3 years, it inevitably meant that much of the comprehensive and very detailed evidence given by the appellant in connection with its financial position on its projected financial losses as a result of the defamatory publication was no longer fresh in the mind of the trial judge. As such it was submitted that the appellants financial evidence was no longer amenable to any in depth analysis by the trial judge.
The respondents on the other hand submit that unless the appellant can show that the trial judge erred in law and or that the amount awarded was so small, this Court should not disturb the assessment by the trial judge.
The respondents argued that the learned trial judge had considered the relevant factors before assessing damages especially after referring to Gatley paragraph 1451 which says:-
"In assessing a proper award, decided cases show the Courts should include in its consideration, the plaintiff, the injury to his reputation, the plaintiffs own conduct, the nature of the defamatory allegations made and extent of publication, the absence of retraction or apology by the defendant and in fact the whole of the conduct of the defendant the time the libel was published down to verdict."
The respondents further argue that companies are perpetual in existence while human beings are not and as such companies can recover over time whereas human beings cannot, thus they argue that individual directors were appropriately paid more than the company.
The respondents further submit that the amount of K313,316 that the appellant is claiming is a forecasted figure and not an actual figure and that it was the reason the learned trial judge did not accept that figure. They then go on to ask what the learned trial judge’s error is in exercising his discretion in determining the amount of damages. They submitted that the trial judge was aware of the evidence on the financial position of the company when he said:-
"I do not propose to traverse the evidence regarding the Company finances. Suffice to say that I accept the defence contention that the company was, at the time of publication certainly not making more than wages for its staff. It was financially not strong. But not withstanding the extensive obligation it was carrying, insolvency was far from inevitable. It was none the less a viable operation being run in its development. Stages with the vigour and determination of its shareholders with the guidance of Mr. Lussick an experienced businessman of long standing. I am satisfied that it had every chance of developing into a strong profitable business had this attack not occurred."
It was submitted that what the learned trial judge said was that while the company was not doing very well at that time it had every chance of picking up and developing into a profitable business had the attack not occurred, therefore K50,000.00 was sufficient to compensate the company for loss of expected profit, as well as damages for defamation. It was further submitted that had the attack not been so damaging the amount would have been lesser.
THE LAW ON DAMAGES
GAITLEY ON LIBEL & SLANDER 8th Edition Sweet & Maxwell at paragraph 960 cites what was said in LEWIS v. DAILY TELEGRAPH (1964) AC at p.262 and PROPRIETORS OF SELBY BRIDGE v. SUNDAY TELEGRAPH The Times, February 17, 1996 Paragraph 960 reads:
"A company cannot be injured in its feelings, it can only be injured in its pocket. Its reputation can be injured by a libel but that injury must sound in money. The injury need not necessarily be confirmed to loss of income. Its goodwill may be injured. But a corporation does not need to prove special damages or financial loss to recover damages for defamation of its business reputation in a way calculated to injure its reputation in the way of its trade or business."
The appellant cited the case of THE METROPOLITAN SALOON OMNIBUS COMPANY v. HAWKINS [1859] EngR 252; (1859) 157 ER 769 where it was stated that a trading company has a trading reputation and it is entitled to sue and to be awarded damages in respect of an imputation of mismanagement and the improper and dishonest conduct of its affairs.
In the instant case the question of damage to reputation and financial losses have my view been properly determined. The learned trial judge said:-
"The defamatory allegations in this case are in my view among the most serious and damaging that can be made. A company’s reputation is dependant on its being recognised as honest and fair in its dealings. Allegations that it is disreputable, dishonest and cheats in business is to attack a business at its heart.
......
However when the State through its Prime Minister asserts untruthfully that a company is dishonest and names its principals as criminal in statements published bearing the State emblem on 3 consecutive days throughout the nation the impact of such charges on the reputation of every company and individual can only be regarded as devastating ......
I am satisfied that is the case here. The evidence shows that the company was stopped in its tracks and eventually went out of business."
The trial judge was of the view that this case was among the most serious and damaging defamation cases. He found that the company was stopped in its tracks and eventually went out of business. To stress the point the learned trial judge said:-
"When the man in the street unjustly defames his neighbour the injury is a serious matter having its own consequences. It will result in an appropriate award in damages. However when the State through its Prime Minister asserts untruthfully that a company is dishonest and names its principals as criminals in statements published bearing the State emblem, on 3 consecutive days throughout the nation, the impact of such charges on the reputation of company and individual can only be regarded as devastating. Such assertions are in effect a pronouncement of the State; a conviction without the process of law for which the State is guarantor."
In spite of those findings his honour the learned trial judge awarded the company a mere K50,000.00 in damages. He said that while there was a claim for aggravated damages "all the matters raised in support of such a claim are essentially the same as arise in the ordinary course of the compensation award now made" and thus no award was granted for aggravated damages. In the light of his own findings I am of the view that the learned trial judge may have misdirected himself on the issue of aggravated damages. Aggravated damages differ from other types of damages and exemplary damages. They are not designed to punish a defendant or to act as a deterrent. They are compensatory in nature. There are the normal or ordinary compensatory damages but there are those which are aggravated: see ROOKS v. BARNARD [1964] UKHL 1; (1964) AC 1129. Lord Devlin in that case said an injury done to the plaintiff may be exacerbated by the conduct of the defendant, thereby attracting higher compensatory damages. Where the conduct of the defendant has been "high handed, malicious, insulting or oppressive" the award may be at the highest of the range "that could fairly be regarded as compensation." In this case it is my view that the circumstances of the publication of the statement in the newspapers as found by the trial judge established that the publication was high handed, insulting and oppressive and as such called for a high compensation award.
Furthermore aggravated damages are awarded where the defendants conduct has lacked bona fides or is somehow improper or unjustifiable: See WATERHOUSE v. BROADCASTING STATION 2GB Pty Ltd (1985) CCH AUSTRALIAN TORTS Reports Case No. 728 pp. 69, 220. In the instant case the learned trial judge found that:-
"The 1st Defendant was challenged on "wilful blindness" only to repeat his reliance on the statement prepared for him. I am satisfied the plaintiffs have shown that [the] 1st Defendant did not have an honest belief in the defamatory matter. In terms of S.11 [the Defamation Act] he believed it untrue.
The Defence submitted that the plaintiffs had failed to establish an absence of good faith on the part of the Defendants; [that] in fact the First Defendant had throughout the proceedings disavowed any malice or ill will towards any of the plaintiffs: that he didn’t intend to harm or discredit the plaintiffs. The intention is in fact irrelevant. It is the ordinary meaning of the words that count. The ordinary meaning and fact of assertion of cheating and criminal actions without basis belies the 1st Defendants claim that he bore no ill will. The first defendant acknowledged that he was angry with the plaintiffs and intended to harm them as Mr. Wingti had with their assistance harmed him. It was said in ROYAL AQUARIUM v. PARKINSON [1892] UKLawRpKQB 46; (1892) 1 QB 431 that where a person through anger makes aspersions of another [person] reckless whether they are true or false, publication will not be excused."
These findings by the learned trial judge clearly show that the First defendant made the statements without bona fide or good faith. The statements were therefore improper and unjustifiable. Moreover the publications in the newspapers were made under the official crest of the Government. This would have given more prominence to the publication. In the case of WATERHOUSE v. BROADCASTING STATION 2GB Pty. Ltd (1985) AUST. TORTS REPORTS 80-728 the Court held that:-
"1. Aggravated compensatory damages are awarded where either the circumstances of both the publication or the defendants conduct then or subsequently make the injury to the plaintiff worse.
In the instant case the First Defendant did not have any proper basis for making the statements. They were lacking in bona fides. I am of the opinion that an appropriate award for aggravated damages should have been made by the learned trial judge. I am now being asked to award the appropriate damages. I believe this is a case where the defamatory words used were "high handed", "oppressive", "insulting", "lacked bona fides", "improper" and "lacked justification" and as such the occasion arose for aggravated damages to be warded.
I have said that the learned trial judge awarded K50,000.00 in total damages to the appellants. The appellants are aggrieved by that award.
I agree that the award should be increased because of the extent of the damage caused it by the defamatory publication by the First Defendant. The Common Law position as stated by Gately on LIBEL and SLANDER paragraph 1521 at page 624 is:
"Awards by a Judge alone may more easily be upset than those made by juries, but as damages in defamation are essentially a matter of "impression and of common sense", the Court of Appeal will not readily interfere, unless the Judge has misapprehended the facts or has taken into account irrelevant factors or applied a wrong principle of Law. It will otherwise reject his figure only in "very special" or "very exceptional" cases where he had made a wholly erroneous estimate of the damage suffered".
See DAVIS v POWELL DUFFRY N(1942) AC at p.616
UNITED PRINTERS v BERNARD (1969) 11 W.I.R. 269
ASSOCIATED NEWSPAPERS v DINGLE (1964) AC at p.393, 404, 405, 408, 418.
Gately at paragraph 1523 further says:-
"But where there has been some mistake in point of Law or on the elements of damage to the plaintiff on the part of the trial judge, or mistake in the calculation of figures by the jury, a new trial will be granted. A new trial will also be granted where the amount assessed is so small that twelve sensible jurors could not reasonably have given the verdict, or the summing up must have confused the jury, or the amount leads the Court to the conclusion that the jury must have omitted to take into consideration some elements of damages which they were bound to consider".
Applying those principles in the instant case I am firmly of the view that the learned trial Judge made an erroneous estimate of the damages suffered by the plaintiffs. The learned trial judge found that the defamation was high handed, insulting and oppressive and that the defamation virtually snuffed out the life of the company. I am therefore of the view that the award is so small and grossly inadequate that it should be increased because of the extent of the damage caused to the appellant by the defamatory publication by the First Defendant. Evidence adduced by the appellant showed the Company’s loss in profits and loss of trading reputation or goodwill.
DAMAGES:
In the National Court the parties had tried to make the Court to draw comparisons with personal injury cases in order for the Court to come to a figure. The Court found those personal injury cases to be unhelpful. In awarding the K50,000.00 to the appellant the learned trial judge said:-
"In my assessment this damaging attack on the plaintiff is one where the award in compensation should not only be appropriate to the injury sustained but signify and affirm the vindication of the plaintiffs reputation.
Accordingly bearing in mind that Messrs Mendosa and Valentine are also the shareholders in PNGAS. I award the damages to that company of K50,000.00. Mr Mendosa and Mr. Valentine and Mr. Lussick, I consider should be equally compensated and award to each the sum of K100,000.00"
The evidence from Mr. Hosking the accountant for the appellant company is that the appellant lost a pre-tax net profit of K313,316-00 for the year 1985 as a direct result of the defamatory publications. Mr. Hosking said that the overall percunary loss to the appellant was not just the income loss from 1985 to 1995 which was estimated at K1,135,081.00 but also the loss represented by the injury to the company’s trade reputation or good will. Mr. Hosking further said that the appellants financial assessment showed that the company lost gross sales income of K7 million from 1985 to 1995 and lost K1,135,081 in profits. He said that had it not been for the defamation the company would have accumulated the reserves of the K1,135,081.00 and the operation would have been thriving and would have been profitable and the company trading reputation and good will would have grown. It was submitted that the appellant would have had far more value than just the value of its net taxable profits and that it would have had good will, intellectual property, physical property, agencies and professional and experienced employees. I am in agreement with those submissions in the absence of evidence to the contrary.
The appellant had claimed over K1 million representing the loss of its trading reputation and good will.
No relevant PNG case law was cited to the Court. I am faced with figures supplied by the appellant only. While I am mindful of the fact that the figures supplied by the appellants are estimates, and that the Court should not be overly persuaded or swayed to award the maximum, I am not convinced that I should totally reject the appellants figures. A lot of time has lapsed and the type of industry the appellant was engaged in has convinced me that the Court ought to grant a substantial amount. Moreover the respondents were not able to assist the Court in that regard. I find helpful the case of COMALCO LTD v AUSTRALIAN BROADCASTING CORPORATION (1985) AUST TORT REPORTS p. 69, 349 in calculating the appropriate damages.
Taking into account the similar consideration as done by BLACKBURN CJ in the COMALCO case, I award damages in the following way:-
(a) Injury to the appellants reputation : K100,000.00
(b) Aggravated damages : K100,000.00
(c) Direct monetary loss caused to it and damages for injury and trade reputation or goodwill : K1,500,000.00
(d) Costs.
(e) Interest at 8% from date of commencement of proceedings to date of the verdict.
I refuse to award interest at the commercial rate because the point was never argued at the trial.
SAKORA, J : I have had the opportunity and benefit of reading the drafts of my brothers Salika, J. and Sevua, J. respectively and I have nothing to add. I agree with their conclusions and the reasons for these.
SEVUA, J : I agree that this appeal should be upheld for the reasons which have been stated by my brother Justice Salika, however, I take a slightly different approach to the award of damages he has proposed and I will add something of my own in that respect.
The findings of facts by the trial Judge have not been contested by the respondents. His Honour, Salika, J. has extensively quoted the relevant findings of the trial Judge and I do not propose to canvass them, suffice it to say that I only intend to reiterate and re-emphasise that the trial Judge had found that "the defamatory allegations in this case are............among the most serious and damaging that can be made." In respect of the appellant company, the trial Judge said, "allegations that it is disreputable, dishonest and cheats in business is to attack a business at its heart." The trial Judge went on to find that he was satisfied the evidence showed the appellant was "stopped in its tracks and eventually went out of business."
Having made those findings, the trial Judge went on to assess the appellant’s damages at K50,000.00. This I consider grossly inadequate. I am of the view that in assessing damages, he had acted on the wrong principle.
I consider therefore that the trial Judge’s assessment is vitiated by three errors or misconceptions. Firstly, the inadequacy of general damages to the appellant company; secondly, the failure to make an award for aggravated damages; and finally, the failure to made an award for pecuniary loss.
I refer to the well known passage from the speech of Lord Wright in Davies v. Powell Duffryn Associated Collieries Ltd [1942] AC 601 at 617 where, in dealing with an appeal from an award of damages in a trial by a single judge, it was said:
"In effect, the Court, before it interferes with an award of damages, should be satisfied that the judge has acted on a wrong principle of law, or has misapprehended the facts, or has for these or other reasons made a wholly erroneous estimate of the damages suffered."
In both Davies and Nance v. British Columbia Electric Railway Co. Ltd. [1951] AC 601; [1951] 2 TLR 137; [1951] 2 All ER 448; the following principles can be summarized. An appellate Court can reject a trial judge’s award of damages only in ‘very special’ or ‘very exceptional’ cases, that is, cases that the trial judge arrived at this award either by applying a wrong principle of law or through a misapprehension of the facts or for some other reason he has made a wholly erroneous estimate of the damage suffered, so that, where he has underestimated the damage, it is ‘unreasonably small’ or wholly inadequate. The damages are, to quote Lord Wright in Davies, at 616, "essentially matters of impression and of common sense." Salika, J. alluded to these principles by citing the learned author, Gately on Libel and Slander.
It is my view that, the trial Judge, in finding that the defamation was devastating to the appellant, acted on a wrong principle of law in awarding only K50,000.00 in general damages. In view of his own finding that the appellant was "stopped in its tracks and eventually went out of business," as a result of defamatory publication, he should have awarded a higher figure in general damages. Furthermore, in view of the finding that the appellant had made losses in profit and also suffered loss of trading reputation or good will, the award of K50,000.00 would seem unreasonably small or wholly inadequate. I consider that an award of K100,000.00 is a reasonable amount in general damages.
The second error or misconception, which I wish to advert to briefly, is the failure by the trial Judge to make an award for aggravated damages. He acknowledged that the appellant had claimed aggravated damages, however said, "all the matters raised in support of such a claim are essentially the same as arise in the ordinary course of the compensation award now made." He therefore did not make any award for aggravated damages. I consider this failure as an error on his part.
In describing the statements by the first respondent as devastating, the trial Judge said this:
"When the man in the street unjustly defames his neighbour, the injury is a serious matter having its own consequences. It will result in an appropriate award in damages. However, when the State through its Prime Minister asserts untruthfully that a company is dishonest and names its principals as criminals in statements published bearing the State emblem, on three consequential days throughout the nation, the impact of such charges on the reputation of company and individual can only be regarded as devastating. Such assertions are in effect a pronouncement of the State: a conviction without the process of law for which the State is guarantor."
Having made that finding the trial Judge refused to award a figure for aggravated damages, and I am of the view that he fell into error there. I consider that he misdirected himself on the law in respect of aggravated damages when he said, "all the matters raised in support of such a claim are essentially the same as arise in the ordinary course of the compensation award now made." Aggravated damage is distinct from general damages, just as it is from special damages and exemplary damages. It is my view that aggravated damages should have been awarded to the appellant on the basis of the evidence that the appellant’s reputation had been injured, the effect of which was "devastating" as the learned trial Judge had found.
There is a perception that reputation is considered of much greater value than life or limb. To that extent, I consider that the injury to reputation of a person or legal entity, to the extent that it is increased by the outrageous nature of the defendant’s manner or motives in publishing a defamatory statement, ought to be reflected in aggravated damages, not general damages; after all, the objective of aggravated damages is to compensate a plaintiff where the conduct of the defendant or the surrounding circumstances increase the injury to the plaintiff. In this case, the trial Judge’s findings of facts clearly demonstrated the injury to the reputation of the appellant, which I consider should have been compensated by an award of aggravated damages.
Chief Justice Blackburn in the Supreme Court of the Australian Capital Territory in Comalco Limited v. Australian Broadcasting Corporation (1985) Australian Torts Report 80 – 744; 69, 349 referred to a number of cases which discussed aggravated damages. I wish to refer to one or two of them as I consider them useful and persuasive in so far as an award for aggravated damages is concerned.
His Honour, (Blackburn, CJ.,) expressed an opinion that "the conduct of the defendant both before and after the trial could adversely affect the plaintiff’s reputation by increasing or fortifying the extent or potency of the defamation." To that extent, His Honour said, aggravated damages may be awarded to a corporation.
The first case the learned Chief Justice cited was David Syme & Co Ltd v. Mather [1977] VicRp 58; [1977] VR 516 where the Full Court of Supreme Court of Victoria (Starke, Lush & Kaye, JJ) set aside a jury’s verdict for damages in a defamatory case on the basis that there had been a misdirection in respect of aggravated damages. That case is said to be authoritative on the question of the nature of aggravated damages. The reasons for judgment of all three Judges manifested the fact that both the hurt to the plaintiff’s feelings and the increased damage to his reputation can be the basis for an award of aggravated damages.
Whilst Lush, J. seemed to have concentrated on the element of "subjective hurt" or injury to the plaintiff’s feelings, it is obvious that what Starke, J said at the bottom of page 517 to the top of page 518 is that additional injury to the plaintiff’s reputation is relevant apart from the injury to his feeling. After referring to Uren v. John Fairfax and Sons Ltd (1965) 66 SR (NSW) 231; Cassell & Co. Ltd v. Broome [1972] UKHL 3; [1972] AC 1027; and Rooks v. Barnard [1964] UKHL 1; [1964] AC 1129; Lush, J. said at 526:
"From these authorities, one is entitled to conclude that aggravated compensatory damages may be awarded in defamation if the defendant’s conduct aggravates the subjective hurt to the plaintiff. They cannot be awarded merely for reasons of indignation felt by the fury, but only if the evidence points to the conclusion that the blow to the plaintiff’s pride, however it may be called, has been or must have been worsened by what was done."
The principle that additional injury to the plaintiff’s reputation may justify an award for aggravated damages was recognised by Kaye, J in the same case. At 534, His Honour said:
"The authorities relating to aggravation of damage have been reviewed by Lush, J. in his judgment. From then it is clear that compensatory damages for libel are intended to cover both the injury done by the defamatory publication to the plaintiff’s reputation and his feelings of hurt resulting from it, as well as conduct of the defendant subsequent to the publication which might have increased his grievance or further detracted from the esteem in which others held him. Although the concept of aggravation of damages in defamation is now firmly entrenched in legal terminology, awards of damages might be kept within permissible limits if a jury were instructed to fix damages for the harm done to the plaintiff’s reputation.............."
For reasons I have alluded to, I am of the view that this is one case, which warrants an award for aggravated damages on the basis of the trial Judge’s findings. From the trial Judges’ findings of facts, I consider that the appellant’s reputation had been severely injured that it is entitled to aggravated damages.
While no precedent on quantum for an award of aggravated damages has been cited, Mr Shepherd, counsel for the appellant, nevertheless submitted that there should be an award of K100,000.00 for aggravated damages. I do not consider that figure as an excessive award. In the light of the findings by the trial Judge, I am of the view that, that sum is reasonable. I would therefore accept counsel’s submissions and award the sum of K100,000.00 in aggravated damages to the appellant.
The third error which I wish to address briefly is the pecuniary loss suffered by the appellant.
The trial Judge chose not to traverse the evidence regarding the appellant’s finances. It appears evident that he did not seriously consider the pecuniary loss suffered by the appellant as a result of the defamatory publication. He gave no reason as to why he did not want to traverse the evidence relating to the appellant’s financial losses.
It is my view that in awarding only the amount of K50,000.00 in general damages, the trial Judge erred in law in not considering the appellant’s pecuniary loss. I consider that a company is entitled to damages for the monetary loss caused to it by defamatory publications. Unlike damages for injury to reputation, which is at large, damages for pecuniary loss is not at large and must be proven. In the present case, there is evidence of financial losses suffered by the appellant as a direct result of the defamatory publication.
For instance, there is evidence that in 1985 alone, the appellant’s nett loss of profit amounted to K313,316.00 which included the write-off of Central Air Service debt of K217,787.00, which write-off was directly caused by the publication of the defamation. In my view, the appellant was entitled to those losses and there was adequate evidence to prove such losses.
Again, there is evidence that from the period 1985 to 1995, the appellant’s net profit losses came to K1,135,081.00. There was further evidence which established the appellant’s gross sales income losses at K7,484,789.00. I consider that the appellant was entitled to the pecuniary loss of K1,135,081.00, as that was its nett profit losses. There was evidence to prove that loss and the trial Judge should have accepted that amount as a pecuniary loss suffered by the appellant.
Counsel for the appellant has submitted that the overall pecuniary loss to the appellant was not just the income which it lost from 1985 to 1995 (K1,135,081.00) but also the loss represented by the injury to the company’s trade reputation or goodwill. Accordingly, he submitted that an appropriate quantum of damages for the appellant’s pecuniary loss comprising damages for injury to the appellant’s reputation (non-pecuniary loss) and damages for injury to the appellant’s trade reputation or goodwill is the sum of K2.5 million.
I have already considered that the appellant is entitled to the sum of K100,000.00 for damages for injury to its reputation.
I am also of the view that the appellant is entitled to damages for injury to its trade reputation or goodwill. What then is "trade reputation" or "goodwill". In Andrews v. John Fairfax & Sons Ltd [1980] NSWLR 225 at 256, Mahoney, AJ. said:
"The trade reputation, goodwill and the like ("goodwill") of a company is an asset, and injury to it may be compensated by damages: Lewis v. Daily Telegraph Ltd [1964] AC 234. Such injury consist in depreciation in the value of the goodwill as an asset in the reduction of the income which otherwise would have been derived from the use of it, or in a combination of both. No doubt in the ordinary case, the depreciation in the value of the goodwill will be measured by the fall of the company’s relevant profits or super-profits; and care will, in assessing damages, need to be taken to avoid overlapping....................."
Although damages for injury to goodwill are not at large, as with damages for injury to reputation, I would accept the appellant’s counsel’s submissions on the appellant’s loss for injury to trade reputation or goodwill. I think it is quite reasonable to treat this loss as tantamount to damages for direct financial loss suffered by the appellant and the evidence of its financial losses are largely uncontested.
As far as the appellant’s evidence before the trial Judge was concerned, I reiterate that the appellant had suffered loss of profit in 1985 in the sum of K313,316.00. Between 1985 and 1995, the appellant made a massive loss of K1,335,81.00 in nett profits. In my view, these evidence were sufficient for the trial Judge to have made an award for the appellant pecuniary loss which would have comprised of damages for injury to trade reputation and goodwill and the appellant’s actual financial losses.
I am inclined to accept Mr Shepherd’s submissions in respect of those damages, however, not necessarily the quantum he has submitted. The appellants total nett profit losses comprising of the above figures amounted to K1,448,397.00, just below K1.5 million. In my view, the appellant is entitled to that amount for pecuniary loss.
In relation to the taxation aspect of this appeal raised by the appellant’s counsel, I have always maintain the view that a Court is not the Chief Collector of Taxes, therefore Courts ought not to be bogged down with the taxation of damages awarded.
My summary of damages the appellant is entitled to is therefore as follows:-
company’s reputation : K 100,000.00
2. Aggravated damages : K 100,000.00
3. Damages for injury to
company’s trade reputation
or goodwill and damages for
direct monetary loss
(pecuniary loss) : K1, 500,000.00
Total award : K1, 700,000.00
The appellant is entitled to his costs, however interest shall be at the rate of 8% for the reason Salika, J has alluded to.
_______________________________________________________________
Lawyer for the Appellant : Shepherds Lawyers
Lawyer for the Respondents : Warner Shand Lawyers
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