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Supreme Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]
SC APPEAL NO 65 OF 2017
BETWEEN
KEITH KINGSTON
Appellant
AND
QBE INSURANCE (PNG) LIMITED
Respondent
Waigani: Makail, Collier & Higgins JJ
2018: 1st May & 21st August
SUPREME COURT – Appeal against dismissal of action – Breach of contract of insurance – Claim for damages – Reasonable costs of repairs – Failure to prove claim for damages – Whether there was evidence to prove damages
INSURANCE LAW – Claim for reasonable repairs – Claim arising from damage to vessel caused by lightning strike – Reasonableness of repairs – Objective test – Claim assessed from point of view of prudent uninsured
INSURANCE LAW – Reasonable repairs – Where insurer instructs insured to act as a prudent uninsured –Prudent uninsured owner test – Information available to a prudent uninsured – Knowledge and circumstances of a prudent uninsured – Perspective of a prudent uninsured in determining reasonable repairs
EVIDENCE – Evidence relevant to the knowledge and circumstances of a prudent uninsured – Whether primary Judge failed to take into account
relevant evidence
EVIDENCE –Admissibility of opinion evidence – Relevance of opinion evidence obtained by a prudent uninsured in determining
reasonable repairs
ASSESSMENT OF DAMAGES – Costs of repairs – Costs associated with repairs – Loss of enjoyment – Proof of –
Damages assessed – Damages awarded in lieu of – Supreme Court Act – Section 16(c)
PRACTICE AND PROCEDURE – Grounds of appeal – Leave to appeal – Questions of mixed fact and law – Supreme Court
Act – Section 14(1)(c)
Cases cited:
Papua New Guinea cases
Bruce Tsang v. Credit Corporation Limited [1993] PNGLR 112
Dillingham Corporation of New Guinea Pty Ltd v. Constantino Alfredo Diaz [1975] PNGLR 262
Sir Arnold Amet v. Peter Charles Yama (2010) SC1064
Nominees Niugini Ltd v. IPBC (2017) SC1646
Ikion Lyanga v. The State (2017) SC1635
Pinzger v. Bougainville Copper Ltd [1985] PNGLR 160
Toale Hongiri Incorporated Land Group v. Wolotou Incorporated Land Group [2012] SC1201
Pung v. Independent State of Papua New Guinea [2016] SC1510
Overseas cases
CGU Insurance Limited v. AMP Financial Planning Pty Ltd [2005] FCAFC 185; (2005) 146 FCR 447
CGU Insurance Limited v. AMP Financial Planning Pty Ltd [2007] HCA 36
Hunter v. Transport Accident Commission [2005] VSCA 1; (2005) 43 MVR 130
Yates v. Mobile Marine Repairs Pty Ltd & Anor (2007) NSWSC 1463
Gibson v Small [1853] EngR 775; [1853] 10 E.R. 499
Irving v Manning [1847] EngR 779; [1847] 1 HL Cas 287
Compagnie Francaise D'Assurance Pour le Commerce Exterieur t/as Coface Australia v Sims Group Australia Holdings Ltd [2013] NSWCA 418
Suez Fortune Investments Ltd v Talbot Underwriting Ltd (“The M/V Brillante Virtuoso”) [2015] 1 Lloyd’s LR 651
Venetico Marine SA v International General Insurance Co Ltd (The Irene EM) [2014] 1 Lloyd’s Rep 349
Angel v Merchants Marine Insurance Co [1903] UKLawRpKQB 77; [1903] 1 KB 811
Craig v State of South Australia [1995] HCA 58; (1995) 184 CLR 163
Hollington v F Hewthorn and Co Ltd [1943] KB 587; [1943] 2 All ER 35
Counsel:
Mr. M. Goodwin with Mr. A. Paru, for Appellant
Mr. I. Molloy with Ms. R. Thompson, for Respondent
JUDGMENT
21st August, 2018
1. MAKAIL J: This is an appeal against the decision of the National Court of 18 April 2017 wherein it dismissed the proceeding with costs to the respondent.
Background Facts
2. The appellant is the owner of a vessel described as a 2003 built 48 Game Fishing Cruiser, named “Tsunami” with two Cummins 6 Cylinder Diesel Motors. On 9 June 2010, he and the respondent entered into a Contract of Insurance for cover under a Policy insuring the appellant’s interest over the vessel. There is no dispute over the terms of the Contract of Insurance and cover for the claim was accepted by the respondent.
3. On 2 July 2010, the Tsunami was struck by lightning (“lighting strike”) while cruising near Karkar Island towards Hankow
Reef, within 100 nautical miles of the coast line of Papua New Guinea and the Tsunami was damaged.
The appellant claimed the costs of repairs to the Tsunami under the Policy.
4. The respondent accepted liability for the reasonable costs of repairs to the vessel. At first the respondent attempted to work with the appellant to have the vessel repaired, including agreeing to have it repaired in Australia rather than PNG. The Tsunami was transported to Brisbane in Queensland in September 2010 and was then transported from Brisbane to the Gold Coast in October 2010 where it underwent repairs.
5. On 19 November 2010, the respondent paid a sum of K400,000.00 to the appellant. However, there was disagreement on what were the reasonable repairs as covered under the Policy. The disagreement concerned mainly, although not solely, the appellant’s insistence to have the vessel’s engines removed. The respondent maintained that the engines were not damaged and their removal was an unreasonable expense.
6. On 30 November 2010, the respondent’s representative, Ms. Deves, sent an email to the appellant and his representatives advising that:
“In light of the (sic) QBE’s position, the only option that now remains for you is to continue to act as a prudent uninsured and effect repairs without any further delay.”
7. The appellant then proceeded to effect and complete repairs on the advice of his experts and representative as a prudent uninsured.
8. On 23 September 2013 the appellant commenced proceedings in the National Court for breach of the Contract of Insurance and claimed the sum of K33,198.74 (being K488,198.74) less the sum of K400,000.00 already paid and less the further sum of K55,000.00, being the deductible) and A$669,579.99.
Issues
9. The primary issue in the National Court was a determination of the reasonable expenses incurred by the appellant to repair the Tsunami, as covered by the Policy, but with the appellant acting as a prudent uninsured. The secondary issue was whether the appellant had proven his damages.
10. As to the first issue, the trial judge held that the test of a prudent uninsured is an objective test as set out in the decision of Gyles J of the Full Federal Court of Australia in CGU Insurance Limited v. AMP Financial Planning Pty Ltd [2005] FCAFC 185; (2005) 146 FCR 447. His Honour applied this test as part of the underlying law of PNG. The test is stated as follows:
“AMP was entitled to reply upon that assurance. It follows that CGU is estopped from denying liability to indemnify AMP for any payment pursuant to a settlement reached accordingly, notwithstanding any policy conditions to the contrary. Whether it did in fact act as a prudent uninsured in making the payments is another and, in my opinion, the main issue. If it did so, it would have acted to its detriment. There would be a clear case of estoppels – whether by representation or convention.... to act as a prudent uninsured is, for relevant present purposes and leaving aside onus, similar to the position of an insured denied cover in breach of contract. A prudent uninsured might arrive at an objectively reasonable settlement in light of its potential liability and pay accordingly.”
11. In the Full Federal Court decision, Emmett J, with whom Moore J agreed, stated that the reasonableness of a settlement must be assessed from the point of view of an uninsured recipient of the relevant demand. The trial judge stated:
“......the question of whether a settlement was reasonable is to be determined according to an objective standard. CGU’s position was irrelevant, since the question must be assessed from the point of view of an uninsured recipient of the relevant demand. Further, the circumstances of that recipient are relevant to the question of reasonableness.”
12. However, in applying the test, the trial judge stated:
“As to what constitutes the reasonable costs remains an objective test, and not something for the Appellant to decide. It is therefore necessary to determine the reasonable costs of repair that were required as a consequence of the lightning strike”.
13. The trial judge went on to dismiss the proceedings as he was not satisfied that the costs of repairs were reasonably incurred.
Grounds of Appeal
14. There are nine grounds of appeal. Each will be considered separately. Where they over-lap they, will be considered together.
15. Ground 3.1 states:
“His Honour, the Judge at first instance (the Primary Judge) erred in fact in applying the test of a prudent uninsured, by applying an objective test based upon the reasonableness of the repairs from the point of view of the insurer, when the objective test of reasonableness, as set in paragraph 8 of CGU Insurance Limited v AMP Financial Planning Pty Ltd [2007] HCA 36, requires consideration of the reasonableness of the repairs from the point of view of the insured.”
16. The appellant through his counsel, Mr. Goodwin accepted that the trial judge correctly stated the test as set out in the decision of Gyles J of the Full Federal Court of Australia in CGU Insurance case and accepted by the High Court in the 2007 decision in CGU Insurance case which was the appeal by CGU Insurance against the decision of the Full Federal Court: see CGU Insurance Limited v. AMP Financial Planning Pty Ltd [2007]HCA 36.
17. The facts of the case were that AMP Financial Planning Pty Ltd (AMP) entered into insurance contracts with CGU Insurance. AMP carried on business as a finance, investment and insurance advisor, licensed security dealer and mortgage originator which it called the Professional Business Practice. The insurance contracts provided for insurance cover for certain types of civil liability incurred by AMP in the conduct of its Professional Business Practice. AMP made payments totalling in excess of $3,000,000 in settlement of demands made against it by persons who made investments on the basis of advice given by two individuals who were representatives of AMP in connection with the Professional Business Practice. AMP claimed, to be entitled, under the insurance contracts, to be reimbursed by CGU for those payments. The Court held that although AMP was free to settle the claims, CGU Insurance was only obliged to provide indemnity where the settlement was objectively reasonable. The obligation remained on AMP to show that the settlements were objectively reasonable.
18. Counsel placed considerable emphasis on the Full Federal Court decision of Emmet J, with whom Moore J agreed that the reasonableness of a settlement must be assessed from the point of view of an uninsured recipient of the relevant demand. In my research, I have not been able to find a local case authority on the appropriate test to be applied in a case where a claim is being made for reasonable repairs by a prudent uninsured such as the one under consideration. This case appears to be the first and should be given due consideration for the development of local jurisprudence. It will also guide the insurance industry and its stakeholders when dealing with this type of claim in future.
19. The cases referred to by the trial judge in his decision are foreign as they have been decided by the Courts in Australia and more than 42 to 43 years after PNG gained independence from Australia on 16th September 1975. By virtue of Schedules 2.2.2(1) and 2.5.12(2) of the Constitution these decisions are not binding on this Court but are of persuasive value. The trial judge acknowledged their persuasive value when he said at [20] of the judgment that they were informative. Be that as it may, that does not mean that they may not be relevant. The test is unless the principle enunciated in these cases is inconsistent with the Constitutionor a statute or inapplicable or inappropriate to the circumstances of the country or is inconsistent with custom, it is open to this Court to adopt them: Schedule 2.2.2(1) (above).
20. The respondent did not contend and give reasons why these cases and the principle or test adopted are inconsistent with the Constitution or a statute or inapplicable or inappropriate to the circumstances of the country and this Court should not be guided by them to determine the appropriate test in a case where a claim for reasonable repairs is being made by a prudent uninsured against an insurer. Other than this, as did the trial judge, I also consider that the test adopted by the Courts in these cases sound and appropriate to the circumstances of this country and will adopt it.
21. However, it is the application of the objective test that was controversial. The appellant contended that the trial judge did not correctly apply the test. The respondent countered by advancing two propositions; first as it is pleaded in this ground of appeal that the trial judge “erred in fact”, this ground is incompetent and should be struck out because leave was not sought and granted to the appellant to rely on it to question the trial judge’s application of the objective test. It relied on section 14(1)(c) of the Supreme Court Act and cited a number of local cases, two of which were Bruce Tsang v. Credit Corporation Limited [1993] PNGLR 112 and Dillingham Corporation of New Guinea Pty Ltd v. Constantino Alfredo Diaz [1975] PNGLR 262 to support its contention.
22. Secondly, this ground is misconceived because the trial judge did not apply the objective test based on the reasonableness of the repairs from the point of view of the insurer. Similarly, it is incorrect for the appellant to assert that his Honour held that the test required a consideration of the reasonableness of the repairs from the point of view of the insured. It was emphasised by the respondent that the question of reasonableness of repairs did not depend on the point of view of either one party or the other. If it was, that would involve a subject test which would be opposite of any notion of reasonableness.
Competency of Appeal
23. The first ground of the respondent’s submission raises a threshold issue as to the competency of the appeal although I note the appellant’s strong objection to the ground for not being raised on proper notice and in time (14 days prior notice) under the Court Supreme Rules, Order 7, rule 15 (Objection to competency of appeal). It was a fair complaint by the appellant but I am not satisfied that he has been adversely prejudiced by the belated objection. A ground such as this going to the competency of the appeal can be considered anytime: Sir Arnold Amet v. Peter Charles Yama (2010) SC1064 and Nominees Niugini Ltd v. IPBC (2017) SC1646.
24. A question of fact arises where there is a dispute in relation to the primary facts as found by the trial judge based on eye witnesses’ account and production of a thing such as a document. The only question of law that can arise on them is whether there was any evidence to support the finding: Dillingham Corporation (supra).
25. In this instance, when the objection is considered together with the ground of appeal, it lacked substance because first the ground of appeal raises a question of law in relation to the application of an objective test. The question is, should the question of reasonableness of the repairs be considered from the point of view of the insurer or the insured? Once that question is determined, the next question is whether the trial judge correctly applied the test in deciding the question of reasonableness of repairs. That question will require a consideration of the evidence presented before the trial judge as proof of the repairs undertaken by the appellant and also the costs incurred. Finally, which evidence the trial judge was to accept and was accepted. This is a question of fact. In the end, while it is pleaded that the trial judge erred in fact in this ground of appeal, it actually raises a question of mixed fact and law. I am satisfied that the appellant has properly engaged the jurisdiction of the Court to question the correctness of the trial judge’s application of the objection test. This ground of objection must fail for these reasons.
Application of Objective Test
26. As to the second ground of the respondent’s submission, it is not the case that the trial judge applied a subjective test to determine the reasonableness of repairs as contented by the respondent. His Honour was plain about the test. It was an objective test but the views of the insured were also relevant. The insured must act reasonably as if he were a prudent uninsured and not incur unreasonable costs of repairs. His Honour expressed this view at [21] of the judgment in this way, “That the plaintiff was required to conduct himself as a prudent uninsured did not increase the liability of the defendant (respondent).”
27. But he appeared to contradict himself when he said that when determining the reasonable costs, “it is not something for the plaintiff (appellant) to decide”. In my view this is where he fell into error and it is a significant error because the view expressed by his Honour was contrary to the decisions of the Full Federal Court and the High Court of Australia in the CGU Insurance cases and resulted in him misapplying the objective test.
28. In the context of insurance cover of a vessel such as the Tsunami, it is important that the vessel is seaworthy at all times for the sake of its crew and passengers. In my view, an owner of a vessel owes a duty of care to his crew and passengers by ensuring that the vessel is seaworthy before it sails out to sea. Such a duty includes ensuring, for example, that its engine is mechanically sound and functional. Where there is an engine failure or malfunction, it must properly be diagnosed and fixed. In my view, an owner who fails to ensure that the vessel is seaworthy would be failing in his duty of care to his crew and passengers and guilty of negligence.
29. It is on these considerations that the view of the owner of the vessel is relevant to determine the reasonableness of repairs where the vessel is insured and the insured owner was authorised by the insurer to carry out repairs. The reasonableness of repairs is based on the view of a prudent uninsured. In my view, this is to remove the perception that because the insurer is going to indemnify the costs of repairs, the insured can incur costs at his pleasure. The costs must directly be connected and not remote to the repairs of the vessel. In other words, there would be no justification for an insured to incur a huge bill for repairs just because the insurer is going to reimburse it. It is not a licence for the insured to increase the indemnity of the insurer and expect the insurer to indemnify all the costs of repairs. He must be reasonable.
30. For these reasons, this ground of appeal is upheld.
Trial Judge’s Assessment of the Evidence
31. There is no dispute that when the Tsunami was struck by lightning, its engine stopped and it lost all its electrical power. In my view, from an owner’s stand point, the first thing he would do is to check the engine and the electrical system on the vessel to find out the exact cause of the power and electrical failure. It is my further view that irrespective of whether the owner is insured or not, a prudent owner would do that. The appellant proceeded to do exactly just that but the respondent disputed the work undertaken by him and in the end parties could not agree on the reasonableness of the repairs. The appellant took it to Court and expert evidence was called to prove or refute the claim for reasonable costs of repairs.
32. The evidence presented in the National Court were from Darren Luck, Roger Green and the appellant for the appellant’s case and Margaret Dewes, Kenneth Christie and Ian Ritchie for the respondent’s case. Darren Luck is a Marine Surveyor and a Licensed Vessel Master. Paul Green is the Managing Director of Maritime Risk Services (Vanuatu) Pty Ltd and Advisor of the appellant. Margaret Dewes is a Marine Claims Advisor and Consultant while Mr. Christie is a Marine Surveyor and Mechanical Engineer and Mr. Ritchie is a Marine Surveyor and Licensed Electrician.
33. The trial judge found that Mr. Luck’s evidence did not specifically address whether the appellant’s claim constituted the reasonable costs of repair that were required to repair the damage caused to the Tsunami by the lightning strike. On the other hand, he accepted the evidence of Mr. Christie and Mr. Ritchie because they inspected the Tsunami in late 2010 on the Gold Coast and reviewed the appellant’s schedule of repairs and concluded that his claims were excessive and/or did not relate to the reasonable costs of repairs as a result of the damage caused by the lightning strike. Their evidence was consistent with the evidence of Ms. Dewes on the reasonableness of the repairs contained in the schedule of repairs.
34. The trial judge’s acceptance of the respondent’s evidence as opposed to the appellant became a contested issue in the appeal as will be seen from Ground 3.2 to Ground 3.8. For this reason, these grounds overlap each other and will be considered together. It follows that when considered together, the question of competence raised by the respondent in relation to Ground 3.2, Ground 3.3 and Ground 3.4, that the trial judge, “erred in fact” and no leave was obtained by the appellant to appeal against the alleged errors of fact by the trial judge as required by Section 14(1)(c) of the Supreme Court Act does not arise.
35. The grounds are set out below:
36. Ground 3.2.
“The Primary Judge erred in fact in finding that Mr Darren Lack, an expert witness of the Appellant, did not address the reasonableness of repairs to the vessel caused by the lightning strike, and then failed to consider and apply that evidence particularly:
3.2.1 Affidavit of Mr Darren Lack sworn 5 December 2014 and filed 28 May 2015 generally at paragraphs 14 to 18, 20 to 23, and 25 to 32, including the express statements of the reasonableness of the repairs and costs he arranged and approved with the Appellant acting as a prudent uninsured at paragraphs 31 and 32;
3.2.2 Affidavit of Mr Darren Lack sworn 14 September 2015 and filed 23 October 2015 generally at paragraphs 3 to 5, particularly paragraph 4(g) confirming insurance related repairs and the Appellants account were always kept separate.”
37. Ground 3.3.
“The Primary Judge erred in fact in failing to consider and apply the evidence of Mr Roger Green for the Appellant in assessing the reasonableness of repairs to the vessel caused by the lightning strikeparticularly:
3.3.1 Affidavit of Mr Roger Green sworn 31 December 2014 and filed 28 May 2015 generally at paragraphs 14 to 28, 30 to 35, including the express statements of the reasonableness of the repairs and costs he arranged and approved with the Appellant acting as a prudent uninsured at paragraphs 34 and 35;
3.3.2 Affidavit of Mr Roger Green sworn 17 September 2015 and filed 23 October 2015 generally at paragraphs 3(a), 4(a)(ii), and (4(d).”
38. Ground 3.4.
“The Primary Judge erred in fact in failing to consider and apply the evidence of Mr Keith Kingston, the Appellant, in assessing the reasonableness of repairs to the vessel caused by the lightning strike particularly:
3.4.1 Affidavit of Keith Kingston sworn 18 March 2015 and filed 28 May 2015, particularly paragraphs 15 to 23, including paragraphs 19 and 20 which specifically state that all of the costs claimed were reasonable and necessary for the repairs to the damage to the vessel caused by the lightning strike;
3.4.2 Affidavit of Mr Keith Kingston sworn and filed 23 October 2015, particularly paragraphs 2(a), 3(b), 4(a), 4(c)(vii), (viii), (xii) & (xix).”
39. Ground 3.5.
“The Primary Judge erred in law in finding that the evidence the Appellant and his advisors received from Harry Bennision, Benson & Brown Marine Electrical Design, Torque Power Diesel (Australia) Pty Ltd t/s Tourquepower, and Twin Disc (Pacific) Pty Ltd, in relation to damage and repairs caused by the lightning strike is inadmissible, so far as that evidence is:
3.5.1 Relevant to the opinion of the Appellant as to whether, as a prudent uninsured, the damage and repairs was reasonable and caused by the lightning strike;
3.5.2 Necessary to obtain an adequate account or understanding of the Appellant’s perception of whether, as a prudent uninsured, the damage and repairs was reasonable and caused by the lightning strike; and
3.5.3 Conveying relevant facts personally perceived by the Appellant and is admissible of evidence of what he perceived in acting as a prudent uninsured.”
40. Ground 3.6.
“The Primary Judge erred in law in finding that the evidence the Appellant and his advisors received from Cummins South Pacific Pty Ltd, the manufacturer, that the vessel’s engines needed to be dismantled and checked for damage caused by the lightning strike is inadmissible, so far as that evidence is:
3.6.1 Relevant to the opinion of the Appellant as to whether, as a prudent uninsured, it was reasonable to dismantle and check the vessel’s engine for damage caused by the lightning strike;
3.6.2 Necessary to obtain an adequate account or understanding of the Appellant’s perception of whether, as a prudent uninsured, it was reasonable to dismantle and check the vessel’s engines for damage caused by the lightning strike; and
3.6.3 Conveying relevant facts personally perceived by the Appellant and is admissible of evidence of what he perceived in acting as a prudent uninsured.”
41. Ground 3.7.
“The Primary Judge erred in fact and in law by finding that Mr Ian Ritchie was the only specific expert on removing and dismantling the vessel’s engines, when Mr Ken Christie was a more relevantly qualified marine surveyor and mechanical engineer with 27 years’ experience, and gave evidence on this point, as discussed in paragraph 3.8 below.”
42. Ground 3.8.
“The Primary Judge erred in fact and in law by failing to take into account the adverse evidence of Mr Ken Christie, when in cross examination he stated that there was a possibility that the vessel’s engines could have been damaged by the lightning strike and the only way was to remove and dismantle the engines.”
43. The appellant contended that the trial judge erred in three respects. First, Mr. Darren Luck did address the reasonableness of repairs and costs. Secondly his Honour did not consider at all the evidence of Roger Green or the appellant. Thirdly, he held that all other expert evidence received by the appellant was inadmissible. These were significant errors, as each of these witnesses gave clear and unequivocal evidence on the reasonable costs of repair. A further error alleged by the appellant was that the trial judge excluded the evidence of “Harry Bennison allowance, difference between QBE and HB, and; comments and to-do questions” as being hearsay and inadmissible. This evidence may be found in a document at annexure “F” to the affidavit of the appellant of 18 March 2015. According to the appellant, it was not hearsay and was admissible for the reasons pleaded at Ground 3.5.1 to 3.5.3 above.
44. Similarly, another error alleged by the appellant was that the evidence of the appellant and his advisors received from Cummins South Pacific Pty Ltd (Cummins) that the vessel’s engine needed to be dismantled and checked for damage caused by the lightning strike was inadmissible. It is not inadmissible for the reasons pleaded at Grounds 3.6.1 to 3.6.3 above.
45. In my view, the trial judge’s finding that Mr. Luck did not address the reasonableness of repairs and costs to the vessel is incorrect because he did. For example, at paragraph 14 of his affidavit filed on 28 May 2015 he pointed out that Cummins needed the engines to be removed. Subsequent reports and advice from Mr. Christie and Mr. Ritchie were contrary to Cummins’ recommendation and less acceptable because of the damage and remote area the Tsunami operated in. Importantly, Cummins would not guarantee any repairs until the completed repairs were proven by running up the engines and testing at full operational parameters. Cummins’s report was significant because it was the manufacturer of the engines and better placed to investigate and report on the condition of the engines. The appellant supported Cummins’ recommendation and insisted that the engines and genset be removed, repaired and fully tested to ensure that they were returned to pre-incident condition. This was in November 2010.
46. Then at paragraph 24 of the same affidavit, Mr. Luck deposed that on 31 March 2011 Cummins supplied the inspection report for the engines of the Tsunami after removal, stripping and inspection. The report found no related damage from the incident. The real issue between the parties was the twin disc. At paragraph 25 of the same affidavit Mr. Luck deposed that on 30 May 2011 he informed Mr. Christie that “the engines were completed and ready for the gearboxes to be fitted, but there had been a delay with the twin disc because of the need to re-order the shaft assembly with better tolerances”. (Emphasis added).
47. Mr. Luck did not further explain if the twin disc was damaged as a result of the lightning strike and it needed to be replaced. In any case, Cummins reported that there was no damage to the engines. If that was the case, there was no need to fit what appeared to be a new set of twin disc. At paragraph 4(j) of his affidavit filed on 16 July 2015 Mr. Christie disputed the claim for repair of gearboxes and shaft and pointed out that they were “new and improved parts” and none were required as a result of lightning damage. In any case, the gearbox had been repaired and replaced previously. This additional work was for new and improved parts not caused by the lightning damage. Mr. Christie’s evidence appeared consistent with the evidence of the appellant where he referred to a timeline of events marked as annexure “E” to his affidavit. In that document, it is noted that on 27 March 2011 the appellant received a report from Robert Iacovella the Service Manager of South Pacific Twin Disc Pacific (Twin Disc) stating that there was no lightning damage to the transmissions but there was some wear caused by other factors. In my view, it was confirmation that the need for twin disc is unrelated to the damage caused by the lighting strike. For these reasons, it is my view that the work undertaken and costs incurred for this did not constitute reasonable repairs and should and will be excluded. (Emphasis added).
48. I note the respondent’s submission that it was not necessary for the trial judge to consider Mr. Green’s evidence or apply anything that he had to say on the issue because he did not claim to have any expertise in electrics or marine surveying or anything of that nature. Similarly, it was submitted that the appellant was not an expert. Any opinions he expressed on the reasonableness of the costs of repairs were that of a layperson and were just his claims. For this reason, it was submitted for the respondent that his Honour was correct in not considering or applying the appellant’s evidence on the issue.
49. I infer that what the respondent is submitting is that it was not necessary for his Honour to give reasons for rejecting Mr. Green’s and the appellant’s evidence. As to the duty to give reasons for accepting or rejecting a witness’s evidence, in Hunter v. Transport Accident Commission [2005] VSCA 1; (2005) 43 MVR 130 at [21] where Nettle JA (as he then was) with whom Batt and Vincent JJA agreed, held:
“But, ordinarily, where a judge rejects or excludes from consideration evidence or other material which is relevant and cogent, it is simply not possible to give fair and sensible reasons for the decision without advertising to and assigning reasons for the rejection or exclusion of that material”.
50. It does not have to be detailed reasons but sufficient enough to explain why the judge rejected or excluded from consideration evidence or other material which is relevant and cogent. In this case, the trial judge gave no reasons for rejecting or excluding the evidence of Mr. Green. Similarly, he gave no reasons for rejecting or excluding the evidence of the appellant. It was left to the appellant to work out the reasons. It may be those suggested by the respondent in its submission as set out at [48] above. Whatever it may be, I consider that as the evidence was conflicting in relation to the cause of the engine and electrical failure and the reasonableness of repairs, it was important that the trial judge gave reasons for not preferring the evidence of the appellant and Mr. Green.
51. Mr. Green was responsible for preparing the scope of work for the vessel’s repair and arranging approval from the respondent through Ms. Dewes. The scope of work was based on a report by the Service Manager of Cummins Mr. Rob Eddington dated 13 July 2010 (Cummins’ report). That report was annexed as annexure “D” to the affidavit of the appellant filed 28 May 2015. It was done in relation to the engines. It was reported that the engines be thoroughly investigated in Australia. The respondent objected to the admissibility of that report. The appellant’s counsel opposed the objection on the ground that it was opinion evidence by the appellant and fell within one of the exceptions to the rule against hearsay evidence. The trial judge upheld the respondent’s objection on the ground that it was inadmissible and excluded it.
52. I am not satisfied that the report was hearsay and inadmissible but not for the reasons given by either parties. The true reasons are that, it was written and sent to the appellant to advise him of the damage to the engines and recommend further checks/investigations in Australia. It was relevant to the issue of cause of engine failure. The appellant was the recipient of the report and capable person to state as a fact that he had received such a report and have it admitted as evidence in support of the claim. The real question is how much weight should be given to it when it is considered against other evidence. This question should be left until close of all evidence and final addresses. I am satisfied that his Honour erred.
53. Next, the trial judge upheld a further objection by the respondent and excluded annexure “F” to the affidavit of the
appellant filed 28 May 2015 on the ground that it was hearsay and inadmissible. It was a document in column form headed “Harry
Bennison allowance, difference between QBE and HB, and, comments and to-do questions” (HB Schedule). It was sought to be
tendered without its author being called to verify its authenticity and accuracy. However, I note that respondent objected to the
admissibility of this document not on the ground that it was irrelevant but hearsay. I am of the view that the trial judge erred
because the document was written to the appellant concerning the work and costs of repairs of the Tsunami and he was capable of verifying
its existence. As to whether it should be taken onto account is a question of weight and should be left until close of all evidence
and final addresses.
54. Turning to the respondent’s evidence, it was Mr. Ritchie’s evidence that it was not possible for the engines to have
been damaged due to the lightning strike and not reasonable that they be removed. He was the expert and as the trial judge had excluded
the Cummins’ report, there was no other evidence to establish that it was necessary for the engines to be removed and dismantled
to check for any damage. His Honour was plain about this at [26] of the judgment where he said “In regard to the cost of removal of the engines, there was no expert evidence including from the manufacturer of the engine,
Cummins, to support the decision of the plaintiff to remove the engines.” If his Honour had not, he would have had the Cummins’ report giving a contrary view to that of Mr. Ritchie.
55. It is my further view that the exclusion of the Cummins’ report also led his Honour to accept Mr. Christie’s evidence as credible based on his experience and as a qualified expert and he overlooked Mr Christie’s explanation during cross-examination that there was a possibility that the vessel’s engines could have been damaged by the lightning strike and the only way to know was to remove and dismantle the engines. This aspect of Mr. Christie’s evidence appeared consistent with the evidence of the appellant and his advisors. Given his explanation, I am not satisfied that he was unequivocally clear on the removal and dismantling of the engines to the check for any damage. This was the issue which the appellant took up in Ground 3.7 of the appeal to show that at the very least, there was doubt as to exact cause of the engine and electrical failure after the vessel was struck by lightning and the only way to put to rest the issue was to remove and dismantle the engines to check if the engines were not damaged.
56. To sum up these grounds, when the Cummins’ report and the HB Schedule are considered against the evidence of the respondent, they reaffirmed the appellant’s view as a prudent uninsured that it was reasonable to dismantle and check the vessel’s engines for damage caused by the lightning strike. To say that it was not necessary to do that as contended by the respondent and upheld by the trial judge is almost unrealistic. These grounds are upheld.
57. It follows that the appellant has succeeded in establishing that the trial judge erred in dismissing the proceeding. There will be a judgment on liability in favour of the appellant and the next issue is damages.
Assessment of Damages
58. While parties did not address the issue of damages and that is perfectly understandable because it was not an issue in the appeal, it was in the National Court. The assessment of damages proceeds from the finding that the costs of repair were reasonable and it is open to this Court to consider it.
59. Section 16(c) of the Supreme Court Act confers a discretionary power on the Supreme Court to “give such judgment as ought to have been given in the first instance.” In Ikion Lyanga v. The State (2017) SC1635 the Supreme Court noted that in civil appeals, the Supreme Court’s discretion is exercised under Section 16 of the Supreme Court Act. Further, it noted that under Section 6(2) of the Supreme Court Act, for the purpose of hearing and determining an appeal, the Supreme Court has all powers, authority and jurisdiction of a Judge exercising the jurisdiction of the National Court.
60. It was suggested by the Supreme Court that in the exercise of its jurisdiction under Sections 6 and 16 of the Supreme Court Act, where there is evidence before it to determine the issue of liability, it is open to the Court to enter judgment on liability. In the same vein, I consider that the discretionary power under Section 16(c) may be exercised where first there is evidence to prove damages and secondly, there will be further delay and costs in remitting the matter for re-trial in the National Court.
61. In this case, almost seven years had lapsed between the date the vessel was struck by lightning on 2 July 2010 and date of judgment of the National Court of 18 April 2017. Then it took another year to bring the appeal on for hearing after its filing on 3 May 2017. Finally, a further three months from the date of hearing to date of judgment of this Court. All up, the appellant had spent more than eight years pursuing this claim. In my view, it would be counter-productive to remit the matter to the National Court for trial on assessment of damages. In terms of what sort of damages the appellant had sought, they were:
Reasonable costs of repair
62. Much has been said about the HB Schedule. It was not surprising that the same document was revised by Ms. Dewes yet it was excluded by the trial judge as being hearsay evidence. However, I have found that it was erroneously excluded. The revised version may be found at annexure “A” to the affidavit of Ms. Dewes filed 13 July 2015. It was the one which the trial judge relied on to assess and award damages. It was more or less the respondent’s response to the appellant’s claim for work undertaken and costs incurred in repairing the vessel. I note most of the claims have been cut by half or in their entirety. I have read the affidavit of Ms. Dewes and except for a vague reference to a review of all her notes and all relevant documents and records before commenting on the HB Schedule, I am unable to find her reasons for cutting most of the claims by half or in their entirety. Apparently, the only document which contained reasons for that was the HB Schedule. I take those reasons into account in my assessment of damages.
63. Other than this, the appellant had produced invoices from service providers as proof to substantiate the claims listed in the HB Schedule and the revised schedule. They may be found behind annexure “F” to the affidavit of the appellant filed 28 May 2015. Some claims are in PNG Kina and others are in Australian Dollar. Item 41 (Strip gearboxes and assess repairs required) and Item 42 (Reassembly after stripping) by Twin Disc in the total sum of AU$14,240.00 are excluded because I have found that they are non casualty related work/repair. Other than this, on the evidence, I allow the sum claimed by the appellant in each item from 1 to 40 and 43 to 53 in the HB Schedule and revised schedule as reasonable costs of repairs.
64. For claims in Australian Dollar, the total sum is AU$553,268.35. To convert to PNG Kina at the prevailing exchange rate at that time suggested by the appellant at 2.18175 gives K1,102,094.53. For the claims in PNG Kina, the total sum is K112,038.74. Adding K1,102,094.53 and K112,038.74 gives a total sum of K1,319,133.27. Finally, deducting K400,000.00 (already paid) from K1,319,133.27 less a further sum of K55,000.00 gives K864,133.27. I award this sum.
Costs associated with the repairs
65. The appellant claimed a sum of AU$116,261.04 or K253,835.87 as legal fees by Australian lawyers and for expert reports. Lawyers’ fees are subject to taxation under Order 22 of the National Court Rules and will not be allowed until the appellant submits an itemised bill of costs showing the work undertaken and costs incurred by the lawyers before a judgment can be entered if it is not settled by the respondent. This claim is misconceived and dismissed.
66. There is evidence in the form of invoices rendered by each service provider (expert) to the appellant for fees for expert report
which may be found behind annexure “F” to the affidavit of the appellant filed 28 May 2015. For Mr. Green, a total of
six invoices were rendered between 29 and 30 January 2013 for work undertaken intermittently between 11 September 2011 and 10 December
2012. The total sum claimed is AU$15,411.57. On the evidence I am satisfied that this claim is reasonable and made out. I award
this sum.
67. For Chris Kilbee and Harry Bennison, an invoice was submitted to the appellant in the total sum of AU$16,818.67 comprising of
AU$5,668.67 for Mr. Bennison (Consulting Surveyor) and AU$11,025.00 for Mr. Kilbee (Adjuster). On the evidence I am satisfied
that this claim is reasonable and made out. I award the sum of AU$16,818.67.
68. Total sum awarded under this head of claim is AU$32,230.24.
Loss of enjoyment
69. Finally, the appellant claimed for loss of enjoyment of the vessel in the sum of K376,160.00. It was based on the New South Wales Supreme Court case of Yates v. Mobile Marine Repairs Pty Ltd & Anor (2007) NSWSC 1463, a decision by Palmer J where the plaintiff Mr. Yates was awarded a sum of $240,263.00 for loss of use of a vessel called the Eagle. The Court awarded this sum because “Mr Yates had invested a very great deal of time and money in planning and building the Eagle. Doubtless he was looking forward greatly to enjoying it throughout 2004 and 2005. He would have done so had the vessel not been rendered unusable”.
70. However, that case can be distinguished from this case because in that case Mr. Yates claimed damages arising from the negligent repair of the engine of the Eagle by Mobile Marine Repairs. In this case, the appellant did not claim damages for the negligent repair of the vessel by the respondent but the purported delay in meeting the reasonable costs of repairs under the insurance contract. For this reason alone, this head of claim is misconceived and dismissed.
Total award of damages
71. The total award of damages is as follows:
Award of Interest
72. Ground 3.9.
“The Primary Judge erred in fact and in law by failing to award interest pursuant to the Judicial Proceedings (Interests on Debts and Damages) Act 2015 to the Appellant on the damages awarded to the Appellant in paragraph 27 of the decision or at all.”
73. In the light of the award of damages by this Court, it obviates the need to consider the ground on the trial judge’s failure to award interest. It suffices that an award of interest on a judgment on damages is discretionary pursuant Section 4 of the Judicial Proceedings (Interests on Debts and Damages) Act, 2015. The rational for the award is to compensate a party for being kept out of money which ought to have been paid to him had judgment been entered earlier: see Pinzger v. Bougainville Copper Ltd [1985] PNGLR 160. In this case, there has been a long delay in bringing on the matter to trial for various reasons and that the total judgment debt is substantial. In the exercise of my discretion, I award interest at 4% from the date of the issue of writ of summons of 23 October 2013 to the date of judgment of 21 August 2018. 4% interest is calculated as follows:
1. Total judgement - K864,133.27 (AU$32,230.24 is excluded).
3. 4% multiply by total judgment debt of K864,133.27 is K34,565.33.
4. Daily rate is K34,565.33 divided by 365 days per annum is K94.70.
6. 4% interest is K167,050.80.
Order
1. The appeal is allowed.
2. The decision of the National Court of 18 April 2017 is set aside.
3. Judgment on liability be entered for the appellant.
4. Damages assessed in the sum of K864,133.27 and AU$32,230.24.
74. COLLIER AND HIGGINS JJ: This is an appeal against the final decision and order of the National Court in proceedings WS No. 1036 of 2013 in which the primary Judge dismissed the appellant’s claim for damages against the respondent pursuant to a contract of insurance between them. In summary, the respondent does not dispute liability under the insurance contract – rather it disputes the amount claimed by the appellant under the policy.
Background
75. Mr Kingston, the appellant, owned a 46-foot game fishing cruiser boat named “Tsunami” (Tsunami). The boat was insured by the respondent, QBE Insurance (PNG) Limited (QBE) pursuant to an insurance policy which covered, inter alia, loss, destruction or damage. Section 1 of the policy provided as follows :
Deaths, Loss, Destruction or Damage to your Boat:
We will pay for loss, destruction or damage to your boat while ashore or afloat, or at our option we pay the reasonable costs to repair, reinstate or replace such items. The maximum we will pay is limited to the sum insured stated in the Schedule.
WHAT WE WILL PAY
We can choose any of the following ways of meeting a claim:
Pay the reasonable costs actually incurred to repair Your Boat;
Pay You an amount equal to the reasonable costs off repairing Your Boat;
Pay You the Sum Insured shown in the Schedule or the Market Value of Your boat, whichever is the lesser.
If the reasonable repair to Your Boat will substantially
Improve its condition; or
Increase its Market Value
beyond what it was before the loss destruction or damage, then You must contribute an appropriate amount towards the cost of repair if We request it.
76. The appellant’s boat was struck by lightning near Karkar Island on 2 July 2010 and the appellant claimed on his insurance policy in respect of the damage. QBE admitted liability under the policy and advanced the appellant K400,000 towards repairs of the boat. The parties agreed that the boat should be transported to the Gold Coast in Australia for repairs.
77. Various persons were consulted by both the appellant and QBE to assist in assessing the extent of the damage to the boat, and the extent to which it required repair.
78. Relevantly, the appellant consulted with Cummins PNG Limited (Cummins PNG), and subsequently Cummins South Pacific Pty Ltd (Cummins South Pacific), the company which supplied the diesel engines and generator set in the vessel. It is not in dispute that he also consulted Mr Darren Lack (a Senior Consultant at Blackpond Marine Consultants), Mr Roger Green (a marine risk and insurance consultant) as well as Mr Harry Bennison, Benson & Brown Marine Electrical Design, Torque Power Diesel (Australia) Pty Ltd (t/as Tourquepower) and Twin Disc (Pacific) Pty Ltd.
79. Relevantly, QBE consulted with Mr Ian Ritchie (a qualified and experienced marine surveyor and electrician), Mr Ken Christie (a qualified and experienced marine surveyor and mechanical engineer) and Ms Margaret Dewes (a marine insurance claims advisor and consultant).
80. We note that his Honour struck out evidence of a report provided by Cummins PNG to the appellant (paragraph 11 of affidavit of Keith Kingston filed 28 May 2015 and Annexure “D” to that affidavit). However further communications between the appellant and Cummins South Pacific remained in evidence before the Court.
81. On 8 August 2010 the appellant emailed Mr Garry Piper, the Sales Director of Cummins South Pacific. That email, and Mr Piper’s reply were annexed to the appellant’s affidavit filed 23 October 2015. The appellant wrote in the following terms :
Garry, as per our discussion the following are engine numbers...
Appreciate your advice as follows.
The boat was struck by lightning which killed both engines and gen set. Cummins Lae have inspected and reported that in their opinion all electronics, controls etc have been destroyed. They have advised that Cummins PNG are unable to undertake the work and it should be done in Australia.
All electronics on the bridge were destroyed and that includes the engine management systems/instruments. See attached as an example.
Could you verify the necessary parts to completely repair these engines are available.
If they are not can later model controls etc be retrofitted?? and please verify the estimated cost for each engine to be repaired.
Does Cummins recommend removal of the engines and rebuilding to ensure bearings and other components which may have been damaged are identified and replaced.
What warranty would Cummins offer should the removal and rebuild is not undertaken.
As an alternative what is the cost of complete new engines??
What value could the old engines be sold for??
The gen set also suffered a similar fate so please comment accordingly.
I would appreciate an early reply so we can discuss with the insurers.
82. Mr Piper replied on 9 August 2010 as follows :
Hi Keith, With reference to your E Mail below we make the following comments.
As you are aware we can give you some off the cuff figures now however these would need to be confirmed by way of quotation which will take some time to prepare.
Since these engines entered service there have been 2 major upgrades to the engine electronic controls and unfortunately these engines cannot be upgraded to take the current controls. For the purpose of this exercise we have priced the engine electronics off current model engines. We are yet to understand whether in fact that entire electronic systems [sic] are available.
The way I see it, there is 2 major issues [sic] with this type of event.
(1) These engines are electronically controlled and although there is surge protection on the positive side, there is No protection on the negative (ground) circuit and as such the entire Electronic circuitry including wiring will be effected [sic].
(2) Seriously there is a strong possibility that electric current has travelled through the engine and propulsion system and through the prop shaft. This would necessitate engine removal, strip and inspection.
83. On 27 October 2010 the appellant emailed Mr Lack, in the following terms:
Darren, the advice given by Cummins was that the engines should be removed, stripped, inspected, rebuilt and Dyno tested given that its [sic] believed the charge from the lightning passed through the engines. The best advice [illegible] by Cummins concurs with this. The service managers at Cat and Komatsu here in PNG similarly concur. [illegible] own service manage [sic] agrees. If so many so called competent service managers and the Cummins themselves agree then I do not believe what is proposed is an acceptable repair.
Twin Disc also have stated the same on the transmissions.
84. At this point the parties reached something of an impasse as to what constituted “reasonable repairs” to the boat under the policy.
85. The extent to which QBE communicated its concerns to the appellant is unclear on the evidence before the Court. To the extent that there was such communication to the appellant, it appears to have been through Mr Lack and Blackpond Marine Consultants. Mr Lack deposed that he had an initial meeting on 11 October 2010 with Mr Ritchie, and a later telephone discussion with Mr Christie regarding how the repairs to the boat would be managed. Mr Christie deposed that between October 2010 and August 2011 he attended and inspected the boat on numerous occasions and had a number of meetings, telephone discussions and email exchanges with repairers and other service providers involved in the repair of the boat. Mr Christie also prepared a preliminary report on 21 October 2010, which Mr Lack deposed that he received on 8 November 2010.
86. Mr Lack deposed that on 16 November 2010 he sent an email to Ms Dewes advising her (inter alia) that :
87. On 15 November 2010 Mr Piper emailed the appellant, in the following terms:
Hi Keith, I have spoke [sic] to Brendan and Derek regarding the lightning strike on your vessel
I must say at this point that a lot of this confusion could have been avoided by simply advising me when service was required as discussed. The plan was for me to discuss your views and the best course of action for engine repair.
This is now a typical insurance cluster with them wanting to limit cost and you as the owner rightly not wanting any risk of future engine reliability.
I have no option to pass this back to Brendan & Derek suggesting that the engines should be dismantled to be 100% sure of no progressive damage being sustained.
88. A meeting was held on 19 November 2010 at the Gold Coast involving (among others) Mr Lack, Ms Dewes, Mr Christie and Mr Ritchie. Mr Lack deposed that prior to the meeting the appellant had requested him to reinforce the appellant’s position to the other parties, namely that he would only agree to the engines being repaired properly in accordance with manufacturer advice and that any repairs must be warranted. Mr Lack also deposed that the parties agreed that he would submit quotations to Mr Christie for approval. Mr Christie and Mr Ritchie both gave evidence to the effect that, at that meeting, they maintained their opinions that there was no expert evidence to justify removal of the engines or gear box, and made clear their views that the evidence dictated the lightning had only caused damage to the electronics which controlled and monitored the engine rather than the actual engines.
89. On 30 November 2010 Ms Margaret Dewes wrote to the appellant referring to the “deadlock” between the parties, criticizing the “contradictory advice emanating from Cummins” (Cummins South Pacific), and referring further to the sum of money advanced by QBE on a “without prejudice” as a gesture of good will to alleviate the financial pressure on the appellant. Ms Dewes stated further:
In light of QBE’s position, the only option that now remains for you is to continue to act as a prudent uninsured and effect repairs without any further delay.
90. In his affidavit filed on 28 May 2015 the appellant deposed that he incurred costs and expenses in carrying out repairs to the Tsunami in the sum of K112,038.74 and AUD562,318.95 exclusive of GST and the claims preparations costs. QBE did not dispute liability under the insurance policy, however it did dispute its liability to pay under the policy the sums claimed by the appellant.
91. The appellant initiated proceedings against QBE in 2013 in the National Court for damages for breach of contract.
92. In his writ of summons filed in WS No 1036 of 2013, the appellant claimed that despite the K400,000 payment, the respondent:
... refused and continues to refuse to indemnify the plaintiff in respect of all the reasonable costs and expenses incurred by the plaintiff in repairing the damage to the Tsunami caused by the lightning strike.
and:
the defendant’s refusal to accept liability under the Contract of Insurance and to indemnify the plaintiff, required the plaintiff to conduct itself as would a prudent uninsured and, further, constitutes a breach of the defendant’s duty of utmost good faith under the Contract of Insurance.
93. The appellant claimed damages of K33,198.74 (being K488,198.74 less the sum of K400,000 already paid and less a deductible amount of K55,000) and AUD$669,579.99 plus interest and costs to be ordered against the respondent.
Decision of the National Court
94. Before the primary Judge the appellant submitted that the issues for determination by his Honour were as follows:
95. His Honour set out in some detail the submissions of the parties. His Honour noted that both parties relied on the decision of the High Court of Australia in CGU Insurance Ltd v AMP Financial Planning Pty Ltd [2007] HCA 36 where the Court held that it was not essential to prove dishonesty in order to establish a breach of the statutory duty of utmost good faith under the Australian Insurance Contracts Act.
96. In that case, the views of Gyles J, who was in dissent in the Full Federal Court were in accord substantially with those of the majority in the High Court. At [8], a passage from the decision of Gyles J is reproduced. In that passage Gyles J said amongst others, as to CGU repeatedly telling AMP that it should act as a prudent uninsured, that whether AMP did in fact act as a prudent uninsured is the main issue and that the test as to whether an insured acting as a prudent uninsured has acted properly, is an objective test. Given this I am in agreement with the submissions of the defendant in this regard. That the plaintiff was required to conducting himself as a prudent uninsured did not increase the liability of the defendant. Further, the act of requiring the plaintiff to conduct himself as a prudent uninsured did not of itself constitute a breach of the defendant’s duty of utmost good faith as the plaintiff appears to be submitting. The defendant still remained liable to meet the reasonable costs of repair that were required as a consequence of the lightning strike. As to what constitutes the reasonable costs remains an objective test, and not something for the plaintiff to decide. It is therefore necessary to determine the reasonable costs of repair that were required as a consequence of the lightning strike.
97. His Honour then turned to the submission of the appellant that the costs and expenses incurred in repairing the boat were reasonably incurred. His Honour examined the evidence of Mr Lack, but concluded that Mr Lack’s evidence did not specifically address whether the appellant’s claim constituted the reasonable costs of repair that were required to repair the damage that had been caused to the boat by the lightning strike (at [23]). His Honour noted that evidence as to the reasonable costs of repair on behalf of the respondent was given by Mr Ritchie and Mr Christie, and that after they had reviewed the appellant’s schedule of repairs they had both concluded that his claims were excessive (at [25]).
98. In regard to the cost of the removal of the engines, there was no expert evidence including from the manufacturer of the engines, Cummins, to support the decision of the plaintiff to remove the engines. Mr Ritchie was the only specific expert on this aspect and his evidence was clear that no damage had been caused to the engines as a result of the lightning strike. Further, there was no expert evidence available at the time to support a removal of the engines.
99. From a consideration of the evidence, I am not satisfied that the plaintiff has properly made out that his claim for the costs of repair constitutes the reasonable costs of repair arising from the lightning strike. I find that the plaintiff’s claim is excessive and does not relate to the reasonable costs of repair that arose from the lightning strike. I further find that the reasonable costs of repair for the damage that was caused by the lightning strike are K112,038.74 and AUD$198,765.60 as per the revised schedule of Ms Margaret Dewes.
100 Because the appellant had not made out any of his claim in respect of the reasonable costs of repair, he failed in his claim that QBE had breached the contract of insurance by failing to pay what the appellant claimed were the reasonable costs repair, and also failed in his claim that QBE breached its duty of the utmost good faith by failing to pay what the appellant claimed to be the reasonable costs of repair. Finally, in view of the absence of relevant evidence, his Honour also refused the claim for other expenses associated with the repairs, and rejected the appellant’s claim of damages for loss of enjoyment of the boat.
Grounds of Appeal
101. The appellant appeals against the orders of his Honour, relying on nine grounds of appeal as follows:
3.1. His Honour, the Judge at first instance (the Primary Judge) erred in fact in applying the test of a prudent uninsured, by applying an objective test based upon the reasonableness of the repairs from the point of view of the insurer, when the objective test of reasonableness, as set out in paragraph 8 of CGU Insurance Limited v AMP Financial Planning Pty Ltd [2007] HCA 36, requires consideration of the reasonableness of the repairs from the point of view of the insured
3.2. The Primary Judge erred in fact in finding that Mr Darren Lack, an expert witness of the Appellant, did not address the reasonableness of repairs to the vessel caused by the lightning strike, and then failed to consider and apply that evidence ...
3.3. The Primary Judge erred in fact in failing to consider and apply the evidence of Mr Roger Green for the Appellant in assessing the reasonableness of repairs to the vessel caused by the lightning strike ...
3.4. The Primary Judge erred in fact in failing to consider and apply the evidence of Mr Keith Kingston, the Appellant, in assessing the reasonableness of repairs to the vessel caused by the lightning strike ...
3.5. The Primary Judge erred in law in finding that the evidence the Appellant and his advisors received from Harry Bennison, Benson & Brown Marine Electrical Design, Torque Power Diesel (Australia) Pty Ltd t/as Tourquepower, and Twin Disc (Pacific) Pty Ltd, in relation to damage and repairs caused by the lightning strike is inadmissible, so far as that evidence is:
3.5.1 Relevant to the opinion of the Appellant as to whether, as a prudent uninsured, the damage and repairs was reasonable and caused by the lightning strike;
3.5.2 Necessary to obtain an adequate account or understanding of the Appellant’s perception of whether, as a prudent uninsured, the damage and repairs was [sic – “were”] reasonable and caused by the lightning strike; and
3.5.3 Conveying relevant facts personally perceived by the Appellant and is admissible of evidence of what he perceived in acting as a prudent uninsured.
3.6. The Primary Judge erred in law in finding that the evidence the Appellant and his advisors received from Cummins South Pacific Pty Ltd, the manufacturer, that the vessel’s engines needed to be dismantled and checked for damage caused by the lightning strike is [sic – “was”] inadmissible, so far as that evidence is:
3.6.1 Relevant to the opinion of the Appellant as to whether, as a prudent uninsured, it was reasonable to dismantle and check the vessel's engines for damage caused by the lightning strike;
3.6.2 Necessary to obtain an adequate account or understanding of the Appellant’s perception of whether, as a prudent uninsured, it was reasonable to dismantle and check the vessel’s engines for damage caused by the lightning strike; and
3.6.3 Conveying relevant facts personally perceived by the Appellant and is admissible of evidence of what he perceived in acting as a prudent uninsured.
3.7. The Primary Judge erred in fact and in law by finding that Mr Ian Ritchie was the only specific expert on removing and dismantling the vessel’s engines, when Mr Ken Christie was a more relevantly qualified marine surveyor and mechanical engineer with 27 years’ experience, and gave evidence on this point, as discussed in [ground 8] below.
3.8. The Primary Judge erred in fact and in law by failing to take into account the adverse evidence of Mr Ken Christie, when in cross examination he stated that there was a possibility that the vessel’s engines could have been damaged by the lightning strike and the only way to know was to remove and dismantle the engines
3.9. The Primary Judge erred in fact and in law by failing to award interest pursuant to the Judicial Proceedings (Interest on Debts and Damages) Act 2015 to the Appellant on the damages awarded to the Appellant in paragraph 27 of the decision or at all.
102. In summary, these grounds concern:
103. The appellant seeks the following orders from the Court:
(1) The appeal be allowed.
Submissions to the Court
104. Both parties provided extracts of argument to the Court. It quickly became apparent at the hearing however that the first ground of appeal was the principal ground, and that the other grounds flowed from the Court’s interpretation of “prudent insurer” principles.
105. In summary the appellant submitted as follows:
106. QBE submits, in summary, as follows:
Consideration
First ground of appeal
107. It is common ground that, under the policy of insurance between the parties, QBE agreed to pay the appellant reasonable costs to repair, reinstate or replace items damaged or destroyed as contemplated by the policy. It is also common ground that the assessment of what constitutes “reasonable costs” in this case is determinable by reference to the concept of the “prudent uninsured”, being the term used by Ms Dewes in her email of 30 November 2010 and further being an expression familiar to insurance law. Ground 3.1 requires this Court to consider the meaning of “prudent uninsured” and the principles applied by the primary Judge at first instance.
108. The term “prudent uninsured”, particularly in the context of marine insurance, is derived from early authorities such as Gibson v Small [1853] EngR 775; [1853] 10 E.R. 499 in which the House of Lords explained that the term “seaworthiness” expresses (at 512):
... a relation between the state of the ship and the perils it has to meet in the situation it is in; so that a ship, before setting out on a voyage, is seaworthy, if it is fit in the degree which a prudent owner uninsured would require to meet the perils of the service it is then engaged in, and would continue so during the voyage, unless it met with extraordinary damage.
(Emphasis added.)
109. The concept has become associated with the reasonableness of costs and expenses incurred by an insured in insurance claims (for example “what a prudent uninsured owner” would do to reasonably repair a damaged vessel: Irving v Manning [1847] EngR 779; [1847] 1 HL Cas 287, 306-7). It was recently considered in Venetico Marine SA v International General Insurance Co Ltd (The Irene EM) [2014] 1 Lloyd’s Rep 349 at [438] where Smith J held that:
The proper approach to the question of what was the cost of repairs is ... what would be their cost to a prudent uninsured shipowner.
110. In the present case, the primary Judge noted both parties relied upon the High Court of Australia case CGU v AMP (op cit). As summarized by Gleeson CJ and Crennan J at [2], that case concerned the liability of CGU to indemnify the AMP pursuant to a contract of insurance, in respect of settlement amounts paid by AMP to certain investors who placed funds for investment with two AMP financial advisors. Those two advisors had carried on business through the medium of a company, the investments made by the company failed, the advisors became bankrupt and their company went into liquidation. The investors lost their money, and because it appeared that AMP may have been liable under Australian corporate law to those investors because its relationship with the advisors, AMP paid out the claims of some of those investors. At the same time, AMP asserted a right to be indemnified by CGU under its insurance policy.
111. The facts of CGU v AMP were complex. Significantly, payment of the settlement amounts outside of a Court order was not within the terms of the cover provided by the contract of insurance between CGU and AMP. Equally, however, it was important to AMP for both regulatory and commercial reasons that it minimise such claims. Accordingly AMP adopted a procedure for dealing with investors which was designed to ensure, as far as possible, that claims for civil liability, within the meaning of the policy, were not made.
112. Relevantly to the proceedings in this Court, it is important to note that, in the CGU litigation, all of the settlement amounts were paid by AMP at a time when it was plain to AMP that CGU was not committing itself to accepting liability to indemnify AMP. As Gleeson CJ and Crennan J observed:
7....The pressure for urgent payment of the settlement amounts came following the meeting of 5 October 2001. At that meeting, CGU's solicitor told the AMP representatives that she was not satisfied that AMP was liable to the investors under the Law, that CGU did not have documentation to support many of the claims, that CGU would not be forced into making decisions on indemnity within 14 days of receiving liability reports, and that she intended to seek an opinion from Mr Archibald QC on AMP's liability to investors. By the end of December 2001, that opinion had not been received. On 2 December 2001, AMP's senior counsel advised AMP that in his opinion AMP was likely to be found liable to investors. Since it was between 5 October 2001 and the end of 2001 that most of the settlement amounts were paid, it could not be suggested that they were paid in reliance on any acceptance by CGU of an obligation to indemnify AMP. On the contrary, they were made at a time when CGU was questioning whether AMP was under any liability to the investors.
113. Their Honours continued:
8. On the other hand, it should be accepted that the conduct of CGU in relation to the protocol for claims settlement involved a representation by CGU that it would not, in any subsequent litigation concerning its liability to indemnify AMP, rely on cl 7.6 of the policy (prohibiting the insured from admitting liability or settling a claim) or upon the absence of any formal claim (as defined) by an investor to whom AMP was liable. CGU repeatedly told AMP that it should act as a prudent uninsured. As Gyles J said:
"AMP was entitled to rely upon that assurance. It follows that CGU is estopped from denying liability to indemnify AMP for any payment pursuant to a settlement reached accordingly, notwithstanding any policy conditions to the contrary. Whether it did in fact act as a prudent uninsured in making the payments is another and, in my opinion, the main, issue. If it did so, it would have acted to its detriment. There would be a clear case of estoppel - whether by representation ... or convention ... To act as a prudent uninsured is, for relevant present purposes and leaving aside onus, similar to the position of an insured denied cover in breach of contract. A prudent uninsured might arrive at an objectively reasonable settlement in the light of its potential liability and pay accordingly."
9. Although the insured event never occurred, estoppel by convention produces the legal consequence that CGU's liability to indemnify AMP operated to cover AMP's reasonable payment of the settlement amounts in satisfaction of its liabilities to investors....
114. At [13] Gleeson CJ and Crennan J noted the following observation of the Judge at first instance in CGU v AMP:
"The real significance of the term [prudent uninsured] to my mind is that CGU made it clear that [AMP] was to be no worse off in respect of [its] rights (if any) under the Policies by negotiating with the Investors and entering into the Settlements. One particular consequence of that is that CGU would not refuse indemnity on the basis that [AMP] had entered into the Settlements without CGU's prior written consent (Policies cl 7.6) or that Investors had not obtained an order of a civil court or an originating process (Policies cl 12.1 and cl 12.2). A prudent uninsured person, being ex hypothesi not bound by any policy of insurance, would not be subject to such restrictions. Neither would [AMP]."
(emphasis added)
115. In the same decision Kirby J observed:
91. Upon these bases, a claim by AMP founded solely in contract, ie on the Policies, could not succeed. It was against the possibility that the foregoing provisions, or any of them, might be relied on by CGU to repel AMP's claim under the contracts of insurance that AMP pleaded estoppel and sought to show that, acting as a prudent uninsured, its settlements of demands by investors were reasonable in all of the circumstances and were made in good faith...
116. The application of principles of “prudent uninsured” is not without difficulty. That which a prudent uninsured would do in any particular circumstances is always dependent on the facts of the specific case. The information available to the insured is clearly of importance in identifying whether, objectively, a prudent uninsured would act in a particular way, including incurring particular costs and expenses. This was illustrated in the New South Wales Court of Appeal decision of Compagnie Francaise D'Assurance Pour le Commerce Exterieur t/as Coface Australia v Sims Group Australia Holdings Ltd [2013] NSWCA 418 where Ward JA (with whom the other Judges agreed) observed:
74. What is required of a prudent uninsured, to meet obligations such as those in clause 2.1 of the policy, must be determined objectively by reference to what was or was not done in the circumstances that existed. Insofar as weight is placed by his Honour on the reasonableness of Mr Nelson's view or belief, it must be noted that there was no suggestion that Mr Nelson had sought any legal advice as to the legal implications of releasing the charge before he gave instructions to do so. The email communications within Sims would permit an inference that Mr Nelson simply assumed that the charge could be released without prejudice to Sims' position (without regard to the prejudice this might cause its insurer if, indeed, the charge covered the amounts due under the TKM contracts). Therefore, I have some difficulty in seeing how it could be said that Sims was acting as a prudent uninsured in acting on the basis of no more than an assumption of the application of the charge.
75. Had it been necessary to determine this issue, I would have been inclined to the view that his Honour had applied a subjective standard to the test and had erred in holding that Sims had acted as a prudent uninsured in acting on the basis of Mr Nelson's belief as to the applicability of the charge to the amounts owing under the TKM contracts.
(emphasis added)
117. Of particular relevance in this case are observations of Flaux J in Suez Fortune Investments Ltd v Talbot Underwriting Ltd (“The M/V Brillante Virtuoso”) [2015] 1 Lloyd’s LR 651, where a vessel was boarded by pirates off the coast of Somalia, the pirates detonated an explosive device in the engine room which caused major damage, the owners caused the vessel to be towed to Oman where cargo was transshipped and the vessel remained as a dead ship in international waters until it was sold for scrap. The owners claimed damages under the insurance policy. The insurers argued, inter alia, that had repairs to the ship been effected in China rather than the Gulf the cost would not have exceeded the insured value so that the vessel would not have been a constructive total loss.
118. Flaux J explained as follows:
87. In assessing the costs of repair, the approach the court should take is to ask what a prudent uninsured shipowner in the position of the claimants would have done in deciding whether or not to repair the vessel and where and how the repair should be carried out. This test was formulated in these terms by Patteson J, giving the advice of the judges of the Exchequer Chamber, adopted by the House of Lords in Irving v Manning [1847] EngR 779; (1847) 1 HL Cas 287, pages 306 and 307 :
“The principle laid down in these latter cases is this : that the question of loss, whether total or not, is to be determined just as if there was no policy at all; and the established mode of putting the question, when it is alleged that there has been, what is perhaps improperly called, a constructive total loss of a ship, is to consider the policy altogether out of the question, and to inquire what a prudent uninsured owner would have done in the state in which the vessel was placed by the perils insured against.”
88. This test has been adopted most recently by Andrew Smith J in Venetico Marine SA v International General Insurance Co Ltd (The Irene EM) [2014] 1 Lloyd’s Rep 349 at para 438 :
“the proper approach to the question of what was the cost of repairs is, as I understand the law, what would be their cost as a prudent uninsured shipowner. In Roux v Salvador (1838) 3 Bing NC 266, page 286... Lord Abinger CJ put it in terms of whether ‘... a prudent man, not insured, would decline any further expense in prosecuting an adventure, the termination of which will probably never be successfully accomplished.”
89. The present case illustrates the practical difficulties which the court faces where the vessel is never in fact repaired or even cleaned before being sold for scrap. All the surveyors and consultants who inspected the vessel did so in circumstances where there was no power on board and there was still oily sludge present in the engine room, all of which made access difficult and hazardous in places. Inevitably this meant that it was not possible to determine with complete accuracy the actual extent of damage to the vessel. This limitation is apparent from the findings made by Dr Mitcheson and others.... It applies particularly in relation to the main engine and other items of machinery and equipment in the engine room, such as the auxiliary engines and turbochargers. None of these items was opened up and, several times in cross-examination, Mr Cuffe accepted, in relation to items of machinery and equipment that appeared to him from photographs to be undamaged or to have suffered limited damage, that, unless they had been opened up and strength tests and other physical tests conducted, you just did not know whether or not they were damaged and required repair or replacement. An inevitable consequence is that it was never possible to draw up a detailed and completely accurate repair specification.
(emphasis added)
119. Importantly the Judge continued:
90. Some assistance as to the approach the court should adopt when faced with such difficulties is to be found in the judgment of Vaughan Williams LJ in Angel v Merchants Marine Insurance Co [1903] UKLawRpKQB 77; [1903] 1 KB 811 at pages 816 and 817 :
“Precise estimates are, of course, impossible, and it seems to me that, unless the insured shipowner is to take upon himself risks which ought not to be borne by him (such as the risk whether the ship will be got afloat at all, or, having been got afloat, will arrive at a port for temporary repairs, and ultimately at home for permanent repairs), a large margin ought to be added to the figures of cost or repair to cover risks of this sort – risks which a ‘prudent insured owner’ would certainly take into consideration in determining whether he should repair or sell...
Now in my judgment the ‘prudent uninsured owner’ test was clearly accepted as the proper test at least down to 1873. The recognition of the test in Irving v Manning [1847] EngR 779; 1 HL Cas 287 and in Rankin v Potter [1873] UKLawRpHL 5; LR 6 HL 83 puts the matter, to my mind, beyond argument. Nor do I think that it is possible to say that Moss v Smith [1850] EngR 155; 9 CB 94, which was cited in Rankin v Potter, had then been recognized as substituting for the ‘prudent uninsured owner’ test an arithmetical test turning on the difference between estimated totals. The prudent uninsured owner test was, I think, adopted for the very purpose of covering considerations which cannot be embodied in the figures of an arithmetical calculation.”
(emphasis added)
120. Turning to the case before the Court, with respect it is apparent that, while the primary Judge stated the principle of the “prudent uninsured” accurately, in applying the principle his Honour applied a test of objective “reasonableness” without regard to the circumstances of the prudent uninsured in these circumstances. We note, for example, the observation of his Honour at [21] that
As to what constitutes the reasonable costs remains an objective test, and not something for the Appellant to decide. It is therefore necessary to determine the reasonable costs of repair that were required as a consequence of the lightning strike.
(emphasis added)
121. Indeed, the primary Judge proceeded to assess what, in the view of the Court, the reasonable costs of repair of the boat were, by reference to the expert evidence of Mr Ritchie. However this was not necessarily what a “prudent uninsured” would have assessed as the reasonable costs of repair in the circumstances. Those circumstances which a prudent uninsured would need to take into consideration included :
122. In such circumstances, a prudent uninsured owner of the boat could well have formed the view that, objectively, it was reasonable to incur the significant expense of dismantling and reassembling the engines to eliminate the prospect of future damage to and loss of enjoyment of the boat, and also eliminate the potential risk to life and limb from sailing a large vessel with potentially unreliable engines in open seas around Papua New Guinea.
123. His Honour accepted the evidence of Mr Ritchie and Mr Christie, on the basis that their evidence was to the effect that it was not necessary to remove the engines of the boat for inspection. It is clear that the views of Mr Ritchie and Mr Christie were communicated to the appellant in or about October 2010 that the appellant had chosen nonetheless to proceed to have the engines removed, and that ultimately once the engines were dismantled and examined it became clear that they were, indeed, undamaged. However, any doubts concerning damage to the engines were only conclusively resolved once the engines were dismantled and inspected. As was the case in the Suez Fortune, in the absence of dismantling and inspecting the engines it was not possible for anyone to incontrovertibly ascertain the damage to the Tsunami’s engines. This was conceded by Mr Christie in cross-examination during the trial, in particular the following exchange:
Q: There is a possibility that the main engines on this boat could have been damaged?
A: Well, I did not see that.
Q: Does it remain a possibility?
A: I do not – in my opinion, when I looked at the engines and I looked at the circuitry around the engines, it did not appear to be damaged. But I cannot confirm there was – I could not confirm there was no internal damage because they had not been checked internally.
Q: I see. And is that necessary, to check internally to confirm that?
A: I did not think so at the time.
Q: But you – I think you just said to be sure, you would need to check internally; is that right?
A: If you would want to be 100 percent certain, then, yes, you would.
Q: And that is the manufacturer’s recommendation, is it not, in most cases where there are engines?
A: In this case, the manufacturer did recommend the engines be stripped.
Q: In fact, other manufacturers would recommend the same, would they not?
A: Yes.
Q: From your experience?
A: But none of these – not the manufacturers that – like, the first instance from Cummins, they did not actually inspect the engine itself so you start from seeing the first recommendation.
Q: But I think what you are saying is, unless you do an internal inspection, you cannot be sure about this?
A: Yes, exactly, yes.
(transcript pages 165-166)
124. During the hearing of the appeal Counsel for QBE described this aspect of Mr Christie’s evidence as being expressed in “generalities and possibilities”. In our view however this evidence compellingly demonstrated the position of the appellant in considering the appropriate course of action to ensure that the engines of the Tsunami had not sustained unknown damage. It was objectively reasonable for the appellant, as a prudent uninsured, in the circumstances of the case, to take heed of the warnings of the engine manufacturers, reinforced by his own advisors Mr Lack and Mr Green, and, to paraphrase language of Vaughan Williams LJ in Angel v Merchants Marine Insurance Co, to reject risks which ought not to be borne by him such as the risk whether the ship would be got afloat at all.
125. Contrary to the statement of the primary Judge at [21], the knowledge and circumstances of the appellant as to what constituted reasonable costs of repair of the boat were relevant, because it is by reference to that knowledge and those circumstances that the court can ask what a prudent uninsured claimant in the position of the appellant would have done in deciding whether or not to repair the vessel and where and how the repair should be carried out. While the cost differential in the repairs proposed by Cummins South Pacific and the repairs proposed by QBE’s representatives was not insignificant, as the case law shows the “prudent uninsured owner” test does not impose an arithmetical test turning on the difference between estimated totals.
126. In our view the first ground of appeal is substantiated. We now turn to the remaining grounds of appeal.
Second, third and fourth grounds of appeal
127. Each of grounds 3.2, 3.3 and 3.4 are drafted in terms of the primary Judge having erred in fact in failing to consider particular evidence. As Counsel for QBE correctly identified at the hearing of the appeal, section 14 (1)(c) of the Supreme Court Act 1975 provides that an appeal on a question of fact lies only with the leave of the Supreme Court.
128. However section 14 (1)(b) of the Supreme Court Act provides that an appeal lies to the Supreme Court on a question of mixed fact and law.
129. In Toale Hongiri Incorporated Land Group v Wolotou Incorporated Land Group [2012] SC1201 the Supreme Court examined the issue of what constitutes a question of mixed fact and law. At [38] the Court observed:
38. The nature of a " question of law " compared with a " mixed question of fact and law " was considered by Prentice DCJ in Dillingham Corporation of New Guinea Pty Ltd v Diaz [1975] PNGLR 262 at p 270. There his Honour commented as follows:
The difficulty courts have in deciding whether questions relate to fact or law , is revealed in numerous judgments. ... Denning LJ (as he then was) tried to enlighten the distinction between "fact" and " law " in the following terms:
"On this point it is important to distinguish between primary facts and the conclusions from them. Primary facts are facts which are observed by witnesses and proved by oral testimony, or facts proved by the production of a thing itself, such as an original document. Their determination is essentially a question of fact for the tribunal of fact, and the only question of law that can arise on them is whether there was any evidence to support the finding. The conclusions from primary facts are, however, inferences deduced by a process of reasoning from them. If and so far as these conclusions can as well be drawn by a layman (properly instructed on the law ) as by a lawyer, they are conclusions of fact for the tribunal of fact and the only questions of law which can arise on them are whether there was a proper direction in point of law and whether the conclusion is one which could reasonably be drawn from the primary facts ... If and so far, however, as the correct conclusion to be drawn from primary facts requires, for its correctness determination by a trained lawyer – as, for instance, because it involves the interpretation of documents, or because the law and the facts cannot be separated, or because the law on the point cannot properly be understood or applied except by a trained lawyer – the conclusion is a conclusion of law on which an appellate tribunal is as competent to form an opinion as the tribunal of the first instance." (British Launderers' Research Association v Central Middlesex Assessment Committee and Hendon Rating Authority [1949] 1 All ER 21 at pp 25, 26.)
(Emphasis added)
130. Failure to have regard to relevant evidence raises an error of law: see for example Prentice DCJ in Dillingham Corporation of New Guinea Pty Ltd v Diaz [1975] PNGLR 262 and Craig v State of South Australia [1995] HCA 58; (1995) 184 CLR 163 at [179]. While in this case grounds 3.2, 3.3 and 3.4 plead error of fact on the part of the primary Judge, each ground also pleads failure by the primary Judge to take into account the relevant evidence identified. The drafting of each of these grounds is flawed as being couched in terms of factual error, however we are satisfied that these grounds of appeal actually raise mixed questions of fact and law, and to that extent leave of the Supreme Court is not required.
131. QBE appears to concede that his Honour did disregard the evidence of Mr Lack, Mr Green and the appellant, and submits further that his Honour was correct to do so. In particular, QBE submitted :
132. Neither Mr Lack nor Mr Green were experts in assessing the potential cost of repairs to the Tsunami. However, for reasons we have already explored in respect of principles referable to acting as a “prudent uninsured”, their evidence was relevant for the primary Judge to take into consideration in examining the facts of the case. In particular, their evidence was relevant to the knowledge and circumstances of the appellant. The views of the appellant himself were also relevant in this respect.
133. In our view this ground of appeal is substantiated.
Fifth and sixth grounds of appeal
134. Grounds 3.5 and 3.6 raise the issue of opinion evidence in the trial. In respect of these grounds the appellant disputes the decision of the primary Judge to disregard non-expert opinion evidence from electrical and diesel specialists, in particular the evidence of Cummins South Pacific, concerning the need for the engines of the Tsunami to be dismantled and inspected for damage.
135. It is common ground that the Evidence Act does not contain a provision on the admissibility of opinion evidence. As a general rule, at common law, witnesses must state facts, not opinions: Hollington v F Hewthorn and Co Ltd [1943] KB 587 [1943] 2 All ER 35. The rationale for this rule was explained in Hollington at 595 (KB), 40 (All ER) as follows:
It frequently happens that a bystander has a complete and full view of an accident; it is beyond question that while he may inform the court of everything that he saw, he may not express any opinion on whether either or both of the parties were negligent. The reason commonly assigned is that this is the precise question the court has to decide; but in truth it is because his opinion is not relevant. Any fact that he can prove is relevant, but his opinion is not. The well-recognised exception in the case of scientific or expert witnesses depends on considerations which, for present purposes, are immaterial...
136. In this case however, while the opinions expressed by, inter alia, Cummins South Pacific, may not have been admissible as to the truth of the facts in those opinions, they were relevant as opinions of persons consulted by the appellant, and relied on by the appellant in making decisions as a prudent uninsured. To that extent we consider that they were admissible as relevant in the trial, and relevant to the decision of the primary Judge.
137. We consider that the fifth and sixth grounds of appeal are substantiated.
Seventh and eighth grounds of appeal
138. In grounds 3.7 and 3.8 the appellant claims that the primary Judge erred by confining his findings to the expert evidence of Mr Ritchie, and disregarding adverse evidence of expert Mr Ken Christie that the Tsunami’s engines could have been damaged by the lightning strike.
139. As a general proposition the weight given to evidence is a matter for the trial Judge, including the extent to which the Court may prefer the evidence of one witness to another, and accept or reject evidence: see for example Pung v Independent State of Papua New Guinea [2016] SC1510 at [38], Prentice DCJ in Dillingham Corporation of New Guinea Pty Ltd v Diaz [1975] PNGLR 262. Failure of the trial Judge to take into account relevant evidence does, however, raise a question of law.
140. In our view ground 3.7 does not raise a question of law. Rather, it is in the nature of a complaint about the manner in which the trial Judge weighed the evidence before him. To that extent this ground of appeal raises no more than a question of fact, and requires leave of the Court.
141. However as we have already indicated we consider that the adverse evidence of Mr Christie was relevant to the primary Judge’s consideration of whether the appellant had acted as a prudent uninsured. To that extent we consider that ground 3.8 is substantiated.
Ninth ground of appeal
142. Pursuant to section 4 (1) of the Judicial Proceedings (Interest on Debts and Damages) Act 2015 the Court has power (inter alia) to order interest at a rate it thinks proper to a sum for which judgment is given. QBE submits however that ground 3.9 is misconceived because the appellant’s proceeding was dismissed by the primary Judge, and therefore there was no “sum for which judgment is given” within the meaning of section 4 (1).
143. In our view QBE’s submission in this respect is correct. Ground 3.9 is expressed in hypothetical terms referable to interest on an award of damages the primary Judge “should” have ordered. We consider this ground of appeal lacks merit.
Conclusion
144. The appeal is substantiated. The appropriate order is to allow the appeal and order judgment for the appellant.
145. In the Notice of Appeal however the appellant has not identified the damages he seeks, but rather seeks an order that the amount be assessed by the Court on each head of damage claimed, plus interest.
146. The matter should be remitted to the National Court for the assessment of damages in accordance with these reasons.
147. The respondent is to pay the appellant’s costs of and incidental to this appeal and to the proceedings in the National Court.
Order
_______________________________________________________________
O’Briens Lawyers: Lawyers for Appellant
Young & Williams Lawyers: Lawyers for Respondent
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