Motor Vehicles Insurance Limited v Kol [2007] PGSC 38; SC902 (28 November 2007)

SC902

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA 69 OF 2006

BETWEEN:

MOTOR VEHICLES
INSURANCE LIMITED
Appellant

AND

MAKI KOL
Respondent

Hagen:
Kandakasi, Lenalia and David JJ.

2007: 27 February
28 November

DAMAGES – Assessment of – Personal injuries – Leg injury – 80% to 100% loss of efficient use of – Plaintiff an unfaithful high school student at time of sustaining injury and loss – Award of K60,000 not inordinately high but lower – No cross-appeal- No proper foundation to increase award claimed in submissions.

DAMAGES – Economic loss – Plaintiff obliged to prove his loss – Unfaithful student with no evidence of engaging in any economic activity -Not entitled to past economic loss - Future economic assessable based on estimated residual disability and likely restriction in choice of employment - A global award to cover risks of either employment or unemployment in future and other contingencies in life, such as early death – Award of K75,000 based on allegation of K50 weekly loss without evidentiary support set aside and substituted with global amount of K20,000.

Cases Cited:

Papua New Guinea Cases:
Dillingham Corporation of New Guinea Pty Ltd v. Constantino Alfredo Diaz [1975] PNGLR 262.
John Alan Smerdon v. Tali Kaipeng Raquel [1973] PNGLR 313.
Kerr v. Motor Vehicles Insurance (PNG) Trust [1979] PNGLR 251.
Andrew Moka v. the Motor Vehicles Insurance Limited (2004) SC729.
Pangis Toea vs. MVIT & PNG [1986] PNGLR 294.
Koko Kopele vs. MVIT [1983] PNGLR 223.
Pendagi Ban vs. The State (Unreported National Court Judgment) N827. Auwa Joe vs. The State [1988-89] PNGLR 545.
Cecilia Dir vs. MVIT [1991] PNGLR 433.
Richard Tom Mandui v. The Commissioner of Corrective Institution Services and The State [1996] PNGLR 187.
Korrolly, Tovue and Kolita v. MVIT [1991] PNGLR 415.
Rose Terema v. MVIT [1994] PNGLR 41.
Tambi -v- The State [1988-89] PNGLR 648.
Tom Tinpul v. Yere & Mt. Hagen Golf Club [1998] PNGLR 582.
Richard Mandui v. The State & Commissioner Correctional Services [1996] PNGLR 187.
Kepa v. Boi Gerek & The State [1991] PNGLR 424.
Coady v. MVIT [1987] PNGLR 55.
Nali Matabe vs. The State & MVIT [1988-89] PNGLR 309.

Overseas Cases Cited:
Livingstone v. Rawyards Coal Co [1880] UKHL 3; (1880) 5 App Cas 25 (HL).

Counsel:
J. Naipet, for the Appellant.
S. Kak, for the Respondent.

28 November, 2007

1. BY THE COURT: The National Court assessed and awarded damages in favour of Maki Kol at K60,000 for general damages, K2,000 for special damages, K19,257 for past economic loss and K75,400 for future economic loss against the Motor Vehicles Insurance Limited (MVIL) out of a motor vehicle accident. In the accident, Maki Kol suffered a serious injury to his left leg resulting in an estimated residual disability ranging between 80 percent and 100 percent.

2. MVIL is appealing against the damages assessed and awarded against it except for the award of K2,000 in special damages. In support of its appeal, the MVIL argues firstly that, the award of K60,000 for general damages represents an increase of more than fifty percent (50%) from past comparable verdicts and arrived at after applying a formula that is contrary to the purpose of awarding general damages. Hence the MVIL argues that the award is inordinate and excessive. Secondly, the MVIL says the award of K19,257 for past economic loss and K75,400 for future economic loss were without the support of any evidence and, in any case, excessive and without applying the usual 3 percent compound interest tables. Proceeding on that basis, the MVIL argues for a set aside of these awards and be substituted with no award for past economic loss and a lower amount for future economic loss. Of course, Maki Kol says the learned trial judge did not fall into any error and argues for an upholding of the decision of the National Court. Alternatively, it argues that, the learned trial judge erred in awarding general damages at K60,000 which was inordinately low and asks for an increase of that part of the damages to K90,000.

ISSUES

3. Going by the arguments of the parties, the following are the issues presented to us to determine:

(1) Was the award of K60,000 in general damages erroneous, inordinate and excessive or low having regard to the comparable verdicts and principles for award of such damages?

(2) Was the award of K19,257 for past economic loss and K75,400 for future economic loss excessive and without the support of any evidence and in any case erroneously arrived at?

(3) Was the learned trial judge obliged to apply and if so did the learned trial judge err in not applying the usual 3 percent compound interest table before arriving at his decision on future economic loss?

4. We are of the view that, the second and third issues can be dealt with together under the broad heading, economic loss, while the first issue can be dealt with on its own. We deal with the first issue first and then deal with the second and third issues.

First Issue- General Damages for Pain and Suffering

5. This was not the first time the National Court had to deal with an assessment of damages for personal injuries and more so following a motor vehicle accident. Both this and the National Courts have dealt with many such cases, so much so that, the principles governing the assessment of general damages for pain and suffering are now well settled.

6. Generally speaking, a desire to compensate one’s loss and suffering is at the very core of the whole body of law governing the assessment of damages, be it for a breach of contract situation or personal injuries. Usually, the law looks at awarding damages in monetary terms not more or not less than what has actually been suffered or lost. Lord Blackburn in Livingstone v. Rawyards Coal Co,[1] formulated the classical and often quoted principle in the following terms:

"where any injury is to be compensated by damages, in settling the sum of money to be given for ... damages you should as nearly as possible get at that sum of money which will put the party who has been injured, or who has suffered, in the same position as he would have been in if he had not sustained the wrong for which he is now getting his compensation."

7. In time, this principle has become known as the principle of restitution in integrum. This principle applies to personal injuries cases with emphasis on the plaintiff being compensated to make good "so far as money can do’" his loss or damage.[2] At the same time, it is accepted that, an order for payment of money cannot possibly fully restore a condition of physical injury or loss by a person. In other words, assessing damages for personal injuries is not a matter of mathematics. It is rather an estimate in money terms, what one’s loss or injury is, with the aim of, trying to restore the loss as is nearly as is possible to do. This therefore, leaves much room for difference of views in assessment of damages in anyone given case. That is why, it is settled law that, an appellate court reviewing an assessment of damages can only interfere with the trial judge’s assessment of damages if it is satisfied that the trial judge acted on a wrong principle of law or has misapprehended the facts or for other reasons has made a wholly erroneous estimate of the damage suffered.[3]

8. In addition to the main principle set out above, there are a number of other well accepted principles of law governing the assessment of damages. One of them is the need to take into account the prevailing circumstances, especially the economic conditions at the time of the assessment of damages in the country as well as the views of the community as to what is fair and reasonable compensation. However, where the plaintiff is an expatriate who is temporarily in the country, the conditions prevailing in his country of origin needs to be taken into account.[4] The main reason for this is simple. The plaintiff will have to use the money awarded in compensation to cover for his loss in the country where he or she is going to live and within that country’s prevailing economic circumstances.

9. Another principle is the need to take into account, awards in previous similar or comparable cases and arrive at an award of damages that are similar to the awards in the comparable verdicts. This does not however, mean that the Court must be oblivious to the change in circumstances since the award in the past comparable verdicts. Instead, they are duty bound to take into account such things like rise in inflation and chances in the economy since the awards in the previous cases. A latest statement and application of that principle in our jurisdiction is by the Supreme Court in the case of Andrew Moka v. the Motor Vehicles Insurance Limited.[5] This is how the Court put it after referring to a number of earlier cases:

"We are of the opinion that in the light of the high rate of inflation existing at the present time the courts ought to consider that as a factor in considering awards for general damages for pain and suffering. We consider that due to inflation, the award for general damages for pain and suffering ought to be much higher now then what the Court was awarding in 1988 and 1998, when the above cases were decided."

10. Bearing the foregoing principles in mind, we now proceed to consider the award of damages in this case and the arguments against the National Court’s award of damages. We note and accept Maki Kol’s argument that, he sustained serious injuries to his left leg. That part of his leg is as good as useless, given the estimated residual disability being put between 80% and 100% by the various medical reports.

11. The MVIL refers to and relies on the case of Pangis Toea vs. MVIT & PNG;[6] Koko Kopele vs. MVIT;[7] Pendagi Ban vs. The State;[8] Auwa Joe vs. The State[9] and Cecilia Dir vs. MVIT.[10] On the basis of these authorities, the MVIL argues for a reduction of the award by the National Court in the sum of K60,000 to an award between K20,000 and K25,000. In so submitting, the MVIL argues that, the award by the National Court is inordinately high, which this Court must reduce.

12. We note that, in the first case, Pangis Toea suffered serious arm and leg injuries which resulted in his arm being rendered totally and permanently useless with a shortening of the leg. He was awarded K35,000.00 in general damages.

13. In the second case, Koko Kopele suffered a fractured leg injury, which resulted in a permanent loss of mobility. He was however, still able to walk with the aid of a walking stick. The Court awarded him K12,000.00 in general damages.

14. In the third case, Pendagi Ban aged 14 years at the time of the accident, suffered injuries consisting of a fractured left leg and abrasions to her head. She recovered with a shortening of her leg by 3cm, which of course affected her mobility and movement in her leg. She was awarded K14,000.00 in general damages.

15. In the fourth case, Auwa Joe who was aged 13 years old at the time of the trial, suffered serious multiple injuries including a fractured leg, which resulted in the shortening of her leg and a permanent limp. She was awarded K14,500.00 in general damages.

16. In the final case, the Court awarded K35,000 in general damages. There, Cecilia Dir, a widow with a high school son, suffered shoulder and leg injuries, from which she recovered but with an estimated 60% residual disability in the efficient and effective use of her hips and legs. The Court found that the plaintiff was not able to return to any form of income generating activity to support herself and her son.

17. We accept the MVIL’s argument that, the injuries suffered by the plaintiffs in Pangis Toea and Cecilia Dir cases were more serious compared to the injuries suffered in the present case, in that, Maki Kol suffered injuries only to his left leg from which he has recovered but with an estimated 80% to 100% residual disability. Of the cases cited and relied on by the MVIL, we accept that, Koko Kopele’s case comes closer to the present case.

18. At the same time, we note that, more serious leg injury cases are cases in which there is a 100% loss of the efficient use of a leg or both of the legs. Cases, which fall into that category, are amputee cases, either below or above the knee. They attract general damages at K40, 000 maximum as in Richard Tom Mandui v. The Commissioner of Corrective Institution Services and The State[11] where the plaintiff also suffered other injuries and disabilities and suffered other set backs in his life. At the lower end of awards in leg amputation cases is K25, 000.00 as was the case in Korrolly, Tovue and Kolita v. MVIT[12] and K26, 000.00 as was the case in Rose Terema v. MVIT.[13]

19. More recently, in Andrew Moka v. MVIL,[14] the Supreme Court on appeal from a decision of the National Court, increased an award of K23,000 to K35,000. That represents an increased by over 134 percent from an award of K15,000 in the earlier case of Tambi -v- The State,[15] which the trial judge in the Andrew Moka case relied upon to arrive at the assessment of K23,000. Of course, the National Court in that case, took into account, the rise in inflation and the decrease in the purchasing power of the Kina since the award in Tambi’s case.

20. Andrew Moka, suffered head and leg injuries. He recovered completely from his head injury. Unfortunately he did not fully recover from his leg injury which left him with an estimated residual disability of 40 percent loss of efficient use of his affected leg.

21. In the present case, the learned trial judge, had regard to the decision in Tom Tinpul v. Yere & Mt. Hagen Golf Club;[16] Richard Mandui v. The State & Commissioner Correctional Services[17] and Kepa v. Boi Gerek & The State.[18] The first two cases involved possible and actual amputation of the respective plaintiff’s legs and the respective plaintiffs were awarded K40,000 each in general damages. The third case was a quadriplegic case which attracted an award of K140,000 in general damages.

22. In the case before him, the learned trial judge noted correctly that, the case before him came closer to the first two cases, in that, Maki Kol’s affected leg was as good as useless as was the case in the first two earlier cases his Honour considered. His Honour also noted correctly in our view that, even if amputation was possible, there was nothing to amputate and that Maki Kol’s disabilities could not be improved upon by any amputation and by say, the fitting of an artificial leg. Then taking into account the award in those two cases and the rise in inflation, the learned trial judge considered an award of K60,000 reasonable in general damages and awarded that amount.

23. This Court’s decision in the Andrew Moka case makes it clear that, the awards in the 1980s and 1990s are outdated and had increased the awards in personal injuries claims by over 134 percent. We agree with the observations of the Supreme Court in that case. On our part, we consider this necessary in the light of changes in the economy where costs of living have become far higher or expensive, with the purchasing power of the Kina substantially reduced. Dwelling on the kind of awards made in the 1980s and 1990s will no doubt place injured people like Maki Kol in a disadvantaged position in two respects. First, they will be left to live with their injuries and disabilities for the rest of their lives. Secondly the amount of compensation instead of restoring their losses as much as money is able to, it will leave them in a position where they will have no adequate compensation for their losses and may have to look elsewhere for their survival.

24. The award by the learned trial judge in this case, increased the award by well short of even a one hundred percent (100%) increase from the comparable verdicts His Honour considered. We do not consider the amount awarded by the National Court as reasonable compensation especially in today’s economic environment. We note that, without any formal cross appeal by Maki Kol, is seeking an increase of the award by the National Court up to K90,000. If there was a formal and proper cross appeal on foot, we would not hesitate to increase the award to K80,000 but because there is no such cross appeal, we are disinclined to increasing the award. In the circumstances, we are prepared to confirm the award by the National Court and dismiss the appeal against the award of general damages.

Second and Third Issues - Economic Loss

25. This now leaves for us to deal with the two remaining issues concerning the award of K19,257 and K75,400.00 respectively for past and future economic losses.

26. The principles on which both past and future economic loss can be awarded is clear, so much so that, there is no need for us to cite any particular authority on point. One of the most important principles is that, a plaintiff must establish his economic loss, before the Court can make an award for any such losses. This is not a difficult thing to do. If the plaintiff was engaged in an income earning activity as at the time of his or her sustaining the injuries, he or she must produce evidence of both the income generating activity and its monetary value, the amounts he or she has lost and stands to lose as a result of the injuries and the disabilities. Where a plaintiff produces such evidence, the Court is duty bound to assess the plaintiff’s past and future economic losses. On the other hand, if a plaintiff fails to produce any such evidence, the Court can either make no award or make a nominal award having regard to the reduction in the plaintiff’s income earning capacity to support him or herself and his or her dependants.

27. Where the plaintiff is an infant as in the present case, the decision of this Court in Coady v. MVIT,[19] which the learned counsel for the MVIL drew to our attention, is instructive. The relevant principles can be stated in terms of the following:

(a) Whether there is a substantial risk that the plaintiff’s range of employment opportunities will be restricted or affected as a result of the injury;

(b) If there is such a substantial risk, the Court must assess and quantify the present value of the risk of the financial damages which the plaintiff will suffer if the risk materializes; and

(c) Damages should be assessed according to established practice rather than by adopting an award of a conventional sum.

28. The first two principles need no elaboration as they are self-explanatory. With regard to the last principle, we note that, the established practice in assessing economic loss is as we already noted. However, we add a few points by way of further elaboration. First, if the evidence produced demonstrates a loss of specific amount of money as in the case of a loss of salary or income from a business, the Court must assess the damages on the actual. Secondly, where the evidence shows the plaintiff being engaged in other forms of income generating activity such as subsistence style dwelling where no specific amounts are involved, a reasonable amount of monetary value must be subscribed to such activity, the rate of which are quite fairly established in a number of judgments already. Thirdly, where there are no such evidence, the Court could make an award in global figures as was done in the case of Nali Matabe vs. The State & MVIT.[20]

29. In the present case, Maki Kol, was an unfaithful high school student. In fact, he ran away from school to attend a bride price ceremony when he was involved in the accident. He produced no evidence of being a bright student or a sportsman or having such other promising qualities revealing a brighter future that was hampered by the injuries he sustained. Similarly, he produced no evidence of utilizing the times he stayed away from school, weekends, school holidays and or public holidays in any income generating activity either on his own or in association with or helping his parents. Such evidence in, our view, is necessary and required particularly at this stage of our country’s development which is showing a clear case of many young people dropping out of school and or otherwise not being engaged in any form of meaningful employment and are merely loitering and roaming around the streets in our towns, cities and highways with some of them committing crimes such as armed robbery.

30. All Maki Kol was able to do was to claim before the learned trial judge and again before us on appeal that he lost about K50.00 per week. That was without the support of any evidence. As noted, most of the authorities such as the latest of Andrew Moka’s case, make it clear that evidence of actual economic loss is required before there can be an award for either past or future economic loss. In that case, even though there was evidence of Andrew Moka being employed at the time of accident and hence his injury, he produced no evidence of losing out on his salary as a result of the injuries he sustained. Given that, the National Court declined to make any award for past economic loss. On appeal, the Supreme Court upheld the decision not to award any past economic loss.

31. However, the position the National Court took in relation to past economic loss with the subsequent endorsement of the Supreme Court, did not prevent me from making an award for future economic loss. Given the plaintiff’s injuries and in particular his estimated residual disability of 40 percent, the National Court assessed his future economic at 40 percent of what he was able to earn at the time of his injury. That was in the light of evidence that, the plaintiff was not able to return to his pre-accident employment. The National Court then deducted by one third Andrew Moka’s damages on account of his failure to mitigate his loss. The Supreme Court endorsed the National Court’s approach on the assessment of damages generally but decided to reduce the rate of deduction to one quarter.

32. Having regard to the case authorities and the kind of evidence that were either produced or not produced as noted above, we are of the view that, there should have been no award for past economic loss. We would therefore, uphold the appeal against the award of K19,257 for past economic loss and have that part of the damages set aside. However, I am of the view that Maki Kol is entitled to some compensation for the risk of rendering him incapable of fully providing for himself in future in view of his injuries and estimated residual disability. But this does not mean that his loss should have been assessed on the basis of his claim of a loss of K50 per week, since he did not produce any evidence of his loss in that amount or at all.

33. The law as already noted is clear, where no specific amount of loss is established, the Court assessing a person’s damages in a personal injuries claim must make a nominal or global award that reflects that person’s residual disability, the absence of any particular loss in Kina terms being established and the duty that is always on a plaintiff to take steps to mitigate his loss. This proceeds on the basis that, the injuries a person suffers and in particular the residual disabilities, if serious, would no doubt affect his or her ability to generate an income to support him or herself.

34. Considering all of the foregoing discussion, we are of the view that, the learned trial judge with respect, erred when he decided to award damages based on Maki Kol’s claim of having suffered K50 weekly loss producing a total of K75,400. We note with respect that, the learned trial judge did not give any consideration to the question of whether there was a substantial risk that the plaintiff’s range of employment opportunities will be restricted or affected as a result of the injury he sustained. That error in our view, with respect, caused the learned trial judge not to assess and quantify the present value of the risk of the financial damages which the plaintiff stood to suffer if the risk materializes. Further, we find with respect that, the learned trial judge did not apply the 3 percent compound interest table and then allow for contingencies of life, such as early death or the plaintiff being able to find meaningful employment despite his disability. On the whole, it is thus clear to us, with respect that, the learned trial judge erred in awarding economic loss in the way he did and as such, it must be set aside.

35. If the learned trial judge proceed to assess Maki Kol’s damages in accordance with the principles we have just discussed above, he would have found that the range of employment opportunities for the plaintiff were restricted. Given his injuries, the trial judge would have found that Maki Kol may be restricted to work or be involved in an income generating activity that did not require the use of both of his legs. That would have represented certain percentage loss out of his total income generating ability. It would then have been incumbent on the learned trial judge to put a monetary value to that risk or restriction and arrive at a figure. The learned trial judge would then have correctly proceed to factor in risks such as Maki Kol not applying himself, or him being able to find a good paying job despite his disability, or dying much earlier than the anticipated remaining working life.

36. In any case, it would have been most difficult for the learned trial judge and now on appeal for this Court to put a monetary value to what the Maki Kol’s future economic loss would be in the absence of any evidence of any specific monetary value. In those circumstances, it would have been appropriate, and we find it appropriate that a nominal or global award would have been and is appropriate. Hence, after allowing for the risks we have just outlined, we consider a global amount of K20,000 in future economic loss appropriate and reasonable. Accordingly, we would order a set aside of the award of K75,400 by the National Court and have it substituted with K20,000 in future economic loss for Maki Kol.

Costs of the Appeal

37. The final aspect we turn to is the issue of costs of the appeal. The MVIL failed in the first part of its appeal, which concerns the assessment of general damages. It has however succeeded in relation to the second part of its appeal. Rather than ordering costs at fifty percent (50%) each way, we consider it appropriate that each party should bear their own costs. Accordingly, we would order each party to bear their own costs in relation to the appeal without affecting the costs ordered by the National Court.

Orders

38. In the end, we order as follows:

1. The Appeal against the award of K60,000 in general damages is dismissed and the award by the National Court is hereby confirmed;

2. The Appeal against the award of K19,257 in past economic loss is upheld and that award is hereby set aside.

3. The Appeal against K75,400 for future economic loss is upheld, reduced and substituted with the sum of K20,000.

4. Each party shall pay their own costs of the appeal.

______________________________________________

Mirupasi Lawyers: Lawyers for the Appellant.
Paulus M. Dowa Lawyers: Lawyers for the Respondent.

---

^[1] [1880] UKHL 3; (1880) 5 App Cas 25 (HL), at 39.
^[2] See Dillingham Corporation of New Guinea Pty Ltd v. Constantino Alfredo Diaz [1975] PNGLR 262, for an acceptance and application of this principle.
^[3] John Alan Smerdon v. Tali Kaipeng Raquel [1973] PNGLR 313.
^[4] See Kerr v. Motor Vehicles Insurance (PNG) Trust [1979] PNGLR 251 for a detail discussion of the principle and its application.
^[5] (2004) SC729.
^[6] [1986] PNGLR 294.
^[7] [1983] PNGLR 223.
^[8] (Unreported National Court Judgment) N827.
^[9] [1988-89] PNGLR 545.
^[10] [1991] PNGLR 433.
^[11] [1996] PNGLR 187.
^[12] [1991] PNGLR 415.
^[13] [1994] PNGLR 41.
^[14] (supra).
^[15] [1988-89] PNGLR 648.
^[16] [1998] PNGLR 582.
^[17] [1996] PNGLR 187.
^[18] [1991] PNGLR 424.
^[19] [1987] PNGLR 55
^[20] [1988-89] PNGLR 309