Administration of the Territory of Papua and New Guinea v Grant [1965-66] PNGLR 311 (25 July 1966)

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[1965-66] PNGLR 311 - The Administration of the Territory of Papua and New Guinea v Grant

DEBT - Indebitatus assumpsit - Onus of proof of payment - Effect of absence of pleadings in District Court - Triviality of subject of appeal - Small Debts Ordinance 1912-1961 - Sewerage (Papua) Regulations 1953.

The plaintiff made a plaint in the Central Court of Petty Sessions alleging that the defendant was indebted to it in the sum of £27 3s. 11d. for public utility charges for electricity, water, sewerage and garbage services supplied by the plaintiff for and at the request of the defendant, which sum the defendant had neglected to pay. The relevant legislation required the plaintiff to serve accounts or give notice to the defendant of moneys claimed and required the plaintiff to allow certain times to elapse thereafter before taking proceedings for recovery. At the conclusion of the evidence the magistrate ruled “that the onus rests upon the complainant not only to establish the supply of the services but also to prove that they were not paid for”- and dismissed the plaint. Upon appeal, the Supreme Court was furnished with the magistrate’s “Reasons for Decision”, which concluded as follows: “Therefore, there is no presumption of the continuance of a debt, and the onus rests on the plaintiff to prove that the services supplied were not paid for, thereby giving rise to the causes of action. This onus was not discharged and there must be judgment for the defendant.”

(1) In its context the magistrate’s ruling could not be interpreted as meaning that he was not satisfied that the various services had been supplied.

(2) The magistrate was in error in holding that there was no presumption of the continuance of the debt and in placing the legal burden of disproving payment upon the plaintiff.

(3) Each amount claimed by the plaintiff represented an indebtedness in respect of an executed consideration and was recoverable under an indebitatus count, notwithstanding that there were conditions to be fulfilled before the debts were recoverable. In such an action the defendant must generally allege and prove payment if he wishes to rely on this as a defence.

(4) It was incumbent upon the plaintiff to prove service of the accounts or the giving of notice to pay the moneys claimed and also the lapse of the prescribed times because the relevant legislative provisions had been incorporated as terms in the contracts for supply. However, after hearing the evidence the magistrate could and should have found that these matters had by then been proved because they were no longer in issue and so admitted.

OLLERENSHAW J: This is an appeal from an order of a magistrate sitting in the Central Court of Petty Sessions and exercising its jurisdiction under the Small Debts Ordinance 1912-1961. The order dismissed a plaint, complaining or alleging that the respondent was indebted to the appellant in the sum of £27 3s. 11d. for public utility charges for electricity, water and sewerage and garbage services supplied and provided by the appellant for and at the request of the respondent, which sum the respondent neglected to pay.

There are a number of grounds of appeal, the principal ones, to which alone I need refer, being:

(1) That upon the facts as found by the court the plaintiff is entitled to judgment.

(2) That the court was wrong in law (a) in ruling that the plaintiff had an onus of proving that the debt claimed by the plaintiff from the defendant had not been paid as part of its affirmative case.

I have experienced some difficulty in understanding the “reasons for decision”, which were written by the learned magistrate after this appeal was lodged and have been forwarded to this court in pursuance of the Ordinance. However, I have before me, also in pursuance of the Ordinance, a copy of all the proceedings before the Court of Petty Sessions and from these I have found assistance in coming to a clear conclusion that the crucial point at the hearing of the plaint was as to which party carried the legal burden of proof upon an issue of payment being raised.

The record shows that when the evidence terminated, a submission by counsel for the plaintiff that proof of payment was a matter for the defendant was rejected by the court and that the learned magistrate: “Ruled that the onus rests upon the complainant [sic] not only to establish the supply of the services but also to prove that they were not paid for.”

It has been submitted by counsel for the respondent that in this ruling the learned magistrate was indicating that he was not satisfied that the services (I use this word to include the electricity and water), for which the plaintiff claimed that the defendant was indebted to it, had been supplied and rendered to the defendant-that he was not satisfied that a debt had been proved-and that for this reason, also, he dismissed the plaint. I do not put that construction upon the ruling. In its context, including the evidence, I think that the learned magistrate is saying that it was not sufficient for the appellant to prove the supply but that it also had to prove non-payment. I find confirmation for this construction in the “reasons for decision”, in which the learned magistrate did report, clearly enough, that the evidence established the supply of the services. Although its presentation leaves something to be desired, I think that the evidence was sufficient for this purpose. So, too, in the concluding sentence of these “reasons” he said: “Therefore, there is no presumption of the continuance of a debt, and the onus rests on the plaintiff to prove that the services supplied [the italics are mine] were not paid for, thereby giving rise to the cause of action. This onus was not discharged and there must be judgment for the defendant.”

I should notice here a submission by counsel for the respondent that the magistrate may not have been placing the legal burden of disproving payment upon the plaintiff but may have considered that the burden of adducing evidence, at the stage reached in the trial (sometimes called the persuasive burden), had shifted back to the plaintiff. I have carefully considered the evidence and the circumstances of the debt, to which counsel has pointed, and I do not think that such a view would be justified. Furthermore, the learned magistrate, himself, has shown, in the passage I have cited from his “reasons” that he regarded non-payment as part of the plaintiff’s cause of action. It should be observed here that when he used the word “Therefore” the learned magistrate was indicating that in his view there was no presumption of the continuance of the debt, there being, as he put it in his preceding sentence, “... no evidence of an account stated and acknowledged by the defendant”.

I think that the learned magistrate was in error if he did mean to hold that there was no general presumption of the continuance of a debt. There is in law a presumption of fact of the continuance of a debt and I would quote here the following passage from the judgment of Harvey J. (as he then was) in Re Larney, ex p. Carlton[ccxciii]¹:

“The learned Registrar’s attention does not appear to have been called to the case of Jackson v. Irvin [1809] EngR 134; (2 Camp. 48), where Lord Ellenborough held that it is a presumption of fact in English law that a debt being proved to have once existed its continuance will be presumed. That decision has been referred to with approval by all text writers, as far as I am aware, and will be found to be referred to in all books on the law of evidence dealing with presumptions of fact. But it is only a presumption of fact, and, of course, like all presumptions of fact it has got to be taken in connection with the surrounding circumstances. If the lapse of time has been at all considerable from the date at which the debt is shown to have existed, it may be that the presumption not only ceases to exist, but may tend the other way.” See also 3 Halsbury, vol. 8 at p. 211, para. 360. I would also refer to the references to the presumption in the current editions of such text-books as Phipson on Evidence, 9th ed., para. 292, and 3 Halsbury, vol. 15 at p. 283, and I would think that there is a similar reference in the latest edition of Best on Evidence. It is interesting to notice here that this writer treated “the rule placing upon the defendant the burden of proving payment as a special application of the presumption of continuance” and that, while the High Court, in Young v. Queensland Trustees Limited[ccxciv]², per Dixon C.J., McTiernan and Taylor JJ. considered that this supplied “a rationale that is not unsatisfactory”, it also considered that “the truth is that the rule arises from the nature of debt itself”.

I have already said that the learned magistrate was wrong in law if he directed himself that there was no general presumption of the continuance of a debt. It will have appeared from what I have said about the shifting burden of proof that I do not think that he could have held, upon the evidence, that the presumption had not arisen or could have held that it was rebutted by the lapse of time or any other circumstance nor do I consider that he held that it had been so rebutted.

I do think that the learned magistrate fell into the same error as the Supreme Court of Victoria did in Nelson v. Campbell[ccxcv]³, in which it was held that the burden of disproving payment rested upon the plaintiff, a decision I am inclined to think that the learned magistrate was following because, as that court did, he has placed emphasis upon the plaintiff’s action being for breach of contract by opening his “reasons” with an observation to that effect. This opening lays some stress, too, upon the allegation in the plaint of neglect to pay, which followed the statutory form, and in Nelson v. Campbell[ccxcvi]⁴ a similar allegation in the forms of pleading, to which the court referred, was given an unmerited importance.

In argument before me both counsel have referred to Young v. Queensland Trustees Limited[ccxcvii]⁵, in which the High Court disapproved of Nelson v. Campbell[ccxcviii]⁶ and, at p. 567, said: “The common law does not and never did conceive of indebtedness in a sum certain for an executed consideration as a mere breach of contract: it is rather the detention of a sum of money and that was so whether the creditor enforced his demand by an action of debt or by indebitatus assumpsit.” and, at p. 569: “A debt recoverable under an indebitatus count was not and is not now conceived of simply as a cause of action for breach of duty or obligation. In other words it is a mistake to regard the liability to pay a debt of a kind formerly recoverable in debt or indebitatus assumpsit as no more than the result of a breach of contract, a breach which the creditor must affirmatively allege and prove.”

And so it was held in Young v. Queensland Trustees Ltd.[ccxcix]⁷ that: “The law was and is that, speaking generally, the defendant must allege and prove payment by way of discharge as a defence to an action for indebtedness in respect of an executed consideration.”

Counsel for the respondent in this appeal has not suggested that the appellant’s action is not one for “indebtedness in respect of an executed consideration”, within the meaning of the passage I have just cited, and I think it clear that it was such an action in respect of the indebtedness alleged for water and electricity and the garbage services provided and supplied for and at the request of the defendant. Although the amount sought to be recovered in respect of the sewerage services arises from “a special charge”, fixed by the Notice of Sewerage Rate published in the T.P.N.G. Government Gazette No. 38 of 1963, in pursuance of reg. 210 of the “Sewerage (Papua) Regulations 1953”, as amended by Regulations No. 41 of 1962, it may still be said that it has the characteristics of a “rate” rather than those of a debt for an executed consideration. It is provided by reg. 213 of these Regulations that an amount due thereunder “may be recovered by the Administration as a debt”. In the absence of argument to the contrary and considering the comparative unimportance of this item in the appellant’s claim, I am content to read these words as meaning that the amount “may be recovered as and being a debt” in a material sense, and, without so deciding, as sufficient to allow it to be regarded for present purposes as a debt for an executed consideration within the words of the decision of the High Court-even if such a debt may be excluded from the reasoning for, and was meant to be excluded from the ambit of that decision-as well as being a debt recoverable under an indebitatus count: see, e.g., Karori Borough v. Buxton[ccc]⁸, per Chapman J.; and see also Ex p. Backhouse[ccci]⁹, Ex p. Hobbs[cccii]¹⁰, Ex p. Scandritt[ccciii]¹¹, Hunter River District Water Supply and Sewerage Board v. Scottish Australian Mining Co. Ltd.[ccciv]¹², and Shepherd v. Hills[cccv]¹³.

Counsel for the respondent has been good enough to direct my attention to the article: Proof of Payment by E. H. Coghill in the Australian Law Journal, 30 A.L.J., at p. 450, and so I should add, before leaving this branch of the appeal, that I do not share the doubts aroused in the mind of that learned master about the decision in Young v. Queensland Trustees Ltd.[cccvi]¹⁴ by the decision in Bank of New South Wales v. Laing[cccvii]¹⁵, nor do I understand counsel for the respondent to share such doubts.

I must come now to the main submissions of counsel for the respondent, by which, with his usual tenacity, he has sought to hold the verdict obtained by his client. He directs a bright light upon the various legislative provisions which require the appellant to serve accounts for, or give notice to pay the moneys claimed for the various items and also require the lapse of certain times, after such service, before proceedings may be taken for the recovery of the amounts set out in these accounts-before they become enforceable debts-and he says that these provisions were incorporated in, so as to become terms of the contracts between the parties.

Thus far, I think that he is quite right. While the amounts claimed for electricity, water and garbage services are not statutory debts in the sense of being founded upon statutes, I would think that there could be no doubt that these legislative provisions were incorporated in the contracts: see Gutsell v. Reeve[cccviii]¹⁶, Tobacco Pipe Makers v. Loder[cccix]¹⁷, and De Rossi v. Walker[cccx]¹⁸, and, indeed, in the case of electricity there was evidence before the learned magistrate of express provision for such incorporation.

Upon this premise counsel for the respondent argues that the decision in Young v. Queensland Trustees Ltd.[cccxi]¹⁹ does not apply for the reason that such provisions put the debt now claimed in the same class as debts arising from contracts to pay upon the occurrence of some given event or on a day certain, which, so he submitted, were excluded from its decision by the High Court at pp. 568-569. I do not, myself, so read what appears on those pages nor do I think that counsel’s analogy is correct. In my view the contracts for supply, by the inclusion of these legislative provisions, are like contracts in which the parties have agreed that an actual demand for payment shall be a condition precedent to the existence of an enforceable debt, in which case a demand must be made before the cause of action is complete: see Joachimson v. Swiss Bank Corporation[cccxii]²⁰ and Kilners Limited v. John Dawson Investment Trust Ltd.[cccxiii]²¹, where the law is expressed by Jordan C.J.:

“The general rule is that where there is a direct and not a collateral obligation to pay a sum which is expressed to be payable on demand no demand is necessary to make the sum immediately payable, unless it appears that in a particular case the parties in fact intended to make the demand a term of the contract”

As I have said, these were such contracts. However, this does not avail counsel’s attempt to distinguish the present debt from the debts, the burden of payment of which the High Court cast upon the defendant, for the simple reason that such a debt, upon an executed consideration, provided that it is a liquidated or certain sum, clearly is recoverable under an indebitatus count: see, e.g., Bullen & Leake’s Precedents of Pleading, 3rd ed., at p. 36:

“Whenever a consideration is executed for which a debt, payable at the time of action, has accrued due either under an express promise or under one implied by law, the debt may be sued for in an indebitatus count. And whenever the terms of any special agreement, not under seal, have been performed and satisfied, so as to leave a mere debt due to the plaintiff, he may sue in an indebitatus count, reserving the contract and the performance of it on his part to be proved in evidence. And although the debt was payable only after a certain period of credit, yet after the expiration of the period the indebitatus count is sufficient.”

I have in mind what is to come in this judgment and so I also quote here, as an appropriate introduction to it, this passage from “Bullen & Leake” at p. 463, where the plea of “never indebted” to an indebitatus count is discussed: “If the plaintiff relies on an express contract which was subject to any conditions before the absolute liability of the defendant attaches, he is bound to prove under an issue raised by this plea the happening or performance of those conditions; and on these points the defendant may, under the same issue, give in evidence any facts tending to rebut the proofs of the plaintiff.”

This conveniently brings me to the other main submission of counsel for the respondent, that the appellant did not prove, as part of his case, that the prescribed accounts had been served and the prescribed times had elapsed. This, of course, is true in the sense that counsel for the appellant did not lead any evidence expressly directed to this part of his case, as he should have done in the circumstances now to be mentioned. I have to say here that the learned magistrate did not ask for the defendant to state upon what grounds of defence he relied. Because it was a trial without pleadings, except insofar as the plaint was a pleading, I think that he should have done so in order to ascertain the issues he was to try. In fairness, I should add that counsel for the appellant omitted to ask him so to do, and, as counsel for the respondent has suggested, he may have refrained-I think mistakenly-because the respondent was not represented at the trial. Be that as it may, there is no doubt that, when he commenced to prove his case, counsel for the appellant had the burden of proving the service of the accounts and the lapse of the prescribed times, as one of the elements of his case, because he had not obtained relief from proving any of such elements by having the issues defined. However, the respondent did cross-examine the witness for the appellant and he elected not to give evidence himself. From a close study of the evidence, particularly the cross-examination, I consider it clear that, although at the beginning all matters which it was necessary for the appellant to prove were in issue, at the end of the day there was only one issue, namely, payment, and that the learned magistrate could and should have found that this part of the appellant’s case, involving proof of the service of accounts and so on, had by then been proved because it was not in issue and so admitted. I should add that I do not think that he dismissed the plaint because the appellant had failed upon an issue as to the service of accounts. Notwithstanding an obscure reference to “an account” in the “reasons”, which, to some extent, mis-states the evidence, I do not think that the learned magistrate addressed his attention at all to this part of the appellant’s cause of action, probably because the matter was not raised by the respondent.

Finally, counsel for the respondent has submitted that, even if I were to consider that this appeal should be allowed, I should dismiss it because of the triviality of the amount of money involved. I think that one answer to that submission is that this court was a direct court of appeal from the Court of Petty Sessions, exercising its jurisdiction under the Small Debts Ordinance, 1912-1961, and the amount of £27 3s. 11d. in question is a small debt. I would also mention that in 1958 the legislature by the Small Debts (Papua) Ordinance, No. 29 of 1958, removed the restriction, which limited the right of appeal to causes in which the judgment of the court or the sum sued for amounted to, at least, £10, and I observe that the amount in question in the Supreme Court of Victoria in Nelson v. Campbell[cccxiv]²² was £6 10s. Of course, I do not mean to suggest that an appeal involving, say, a mere $4 and nothing else always would be entertained in the Supreme Court of this Territory or in any other Supreme Court, although one should not forget the twopence of the indignant ferry-traveller that started it all in Robinson v. Balmain New Ferry Co. Limited[cccxv]²³.

For the reasons I have endeavoured to express I consider that the appeal should be allowed. I consider, too, that, in all the circumstances, there should be a fresh trial to give the respondent the opportunity of discharging the onus of proving payment, be he so minded, an onus from which he was relieved in circumstances for which he was by no means entirely responsible. Indeed, counsel for the appellant, I think quite properly in those circumstances, does not ask for more than a new trial. Nor does he, again I think quite properly, ask for costs of this appeal. While courageously accepting the responsibility for whatever contributions may have been his to the result of the first trial, he does, curiously enough, ask for the costs of it. His election to endeavour to disprove payment as part of his case in chief may have encouraged the magistrate in taking the wrong path, and it would not be surprising if a layman were misled by the attitudes of these learned men.

I allow the appeal and quash the order of the Court of Petty Sessions and I order that the case be remitted for hearing before the District Court of the Central District, sitting at Port Moresby.

The exhibits should be sent to the District Court together with the memorandum of this decision and a copy of this judgment.

[ccxciii][1914] NSWStRp 63; (1914) 15 S.R. (N.S.W.) 9, at p. 13.

[ccxciv] (1956) 99 C.L.R. 560, at p. 570.

[ccxcv][1928] V.L.R. 364.

[ccxcvi][1928] VicLawRp 41; [1928] V.L.R. 364, at p. 368

[ccxcvii](1956) 99 C.L.R. 560.

[ccxcviii][1928] V.L.R. 364.

[ccxcix] (1956) 99 C.L.R. 560, at pp. 569, 570.

[ccc][1918] NZGazLawRp 142; [1918] N.ZL.R. 730, at p. 734.

[ccci](1864) 3 S.C.R. (N.S.W.) 85.

[cccii](1887) 3 W.N. (N.S.W.) 134.

[ccciii](1899) 15 W.N. (N.S.W.) 244.