Alliance Trading Association Solomon Islands v Sanau [1999] SBHC 157; [2001] 3 LRC 1 (23 March 1999)

HIGH COURT OF SOLOMON ISLANDS

3 [2001] LRC 1

ALLIANCE TRADING ASSOCIATION SOLOMON ISLANDS

V

SANAU

High Court
Palmer J
8 December 1998, 23 March 1999

Remedies - Damages - Exemplary damages - Fraud - Whether exemplary damages to be awarded in action for fraud - Appropriate guidelines.

The defendant had acted fraudulently towards the plaintiff. That was clear from the affidavit evidence against him and no affidavit in reply had been filed by the defendant to counter the serious allegations. Default judgement was entered against him in December 1993. The instant case arose out of the plaintiff’s action for damages in the sum of $SI195,557 to be paid plus interest and exemplary damages in the sum of $SI25,517.75. In support of his claim for exemplary damages the plaintiff relied on Rookes v Barnard [1964] UKHL 1; [1964] 1 All ER 367 and stated as its grounds: the fraudulent acts and conspiracy committed by the defendant; the defendant’s defence of the court order showing no remorse for the wrongs committed by him; the defendant’s gains through fraudulent schemes calculated deliberately by defendant to exceed the plaintiff’s loss and the plaintiff’s financial loss.

HELD: Application allowed in part. Defendant ordered to pay damages of $SI100,577.

Damages for fraud were not the same as damages for breach of contract and were designed to put the innocent party in the position in which he would have been had the fraudulent representation not been made. They therefore extended to all the actual damage directly flowing from the fraudulent inducement. It was true that, under the second category of instances where exemplary damages could be awarded set out by Lord Devlin in Rookes v Barnard [1964] UKHL 1; [1964] 1 All ER 367 at 410-411, such damages could be awarded when it was necessary to teach a wrongdoer that tort did not pay. However, it also had to be shown that the case in hand was one where the punishment of the offender was justified. The facts of the instant case fell within the second category in Rookes v Barnard. The actions of the defendant in setting himself up in the commercial arena with the intention to defraud could only be described as a clear flouting of the law done deliberately and with a view to profiting from his wrongdoing. The question was therefore whether, taking everything into account, including the loss flowing directly from the fraud and the actions of the defendant in disregard of the rights of the plaintiff, the amount awarded was adequate or not. The plaintiff suffered losses of $S195,577 as a direct consequence of the fraudulent action. Further losses followed in terms of the harm to the dignity and reputation of the plaintiff and in the investigation of the matter at hand. A figure of $SI100,577 was a fair and reasonable assessment of the losses suffered. In the circumstances, that amount was more than sufficient to compensate the plaintiff for the loss suffered and to let the defendant know that tort did not pay. Accordingly, in the instance case an award of exemplary damages would not be made (see pp 10-12, post). Dicta of Lord Widgery in Mafo v Adams [1969] 3 All ER 1404 at 1411 applied. Dicta of Lord Devlin in Rookes v Barnard [1964] UKHL 1; [1964] 1 All ER 367 at 410–411 considered. Doyle v Olby (Ironmongers) Ltd [1969] 2 All ER, Cassell & Co Ltd v Broome [1972] UKHL 3; [1972] 1 All ER 801 and Goh v Yam (8 February 1993, Civil Case 154/1989, unreported) considered.

Cases referred to in judgment
Cassel & Co Ltd v Broome [1972] UKHL 3; [1972] 1 All ER 801, [1972] AC 1027, UK HL
Clark v Urquhart [1930] AC 28, 99 LJPC 1, 141 LT 641, UK HL
Doyle v Olby (Ironmongers) Ltd [1969] EWCA Civ 2; [1969] 2 All ER 119, [1969] 2 QB 158, UK CA
Goh v Yam (8 February 1993, Civil Case 154/1989, unreported)
Mafo v Adams [1969] 3 All ER 1404, [1970] 1 QB 548, UK CA
McConnel v Wright [1903] UKLawRpCh 11; [1903] 1 Ch 546, UK CA
Rookes v Barnard [1964] UKHL 1; [1964] AC 1129, UK HL

Legislation referred to in judgment
United Kingdom
Rent Acts
Theft Act 1968

Other sources referred to in judgment
Mayne and Mcgregor on Damages (12th end, 1961) p 196, para 207

Application
The plaintiff, the Alliance Trading Association Solomon Islands, applied to the High Court to have awarded in its favour damages in the sum of $SI195,577 plus interest and exemplary damages in the sum of $SI125,517.75 following the default judgment of the High Court of 22 December 1993 finding the defendant , Lloyd Sanau, guilty of fraud. The facts set out in the judgment of Palmer J.

G Suri for the plaintiff
The defendant was not represented.

23 March 1999. The following judgment was delivered.

PALMER J. The plaintiff commenced this action by writ of summons specially endorsed filed on 22 April 1993. The claim was, inter alia, for damages arising from fraud and fraudulent misrepresentation.

From the beginning it was obvious that the defendant had acted in a fraudulent manner towards the plaintiff (see affidavit of Jehiel Kwaimani filed 22 April 1993, affidavit of Darryl Bowmand filed 17 May 1993 and affidavit of martin N Hou filed 6 October 1993). These as to the admission made by the defendant and his conduct in dealings with the plaintiff. No affidavit in reply had been filed by the defendant to the matters deposed to in those affidavits, it should be pointed out that the matters raised therein are very serious.

On 22 April 1993 interim orders were issued against the defendant, inter alia restraining him from negotiating any letter of credit though the ANZ Banking Group Limited or the Westpac Bank by the use of bills of lading issued by the plaintiff’s shipping agency.

On 7 June 1993, a consent order was made which included a requirement that the defendant pay to Kaiko Bussan Co Ltd a sum of $US32,628.05 to enable the said company to release to the plaintiff or its agent all bills of lading and shipping documents affecting two shipments of 22 bags of dried sharksfins. In the affidavit of Martin N Hou filed 6 October 1993, he deposed no payments were made by the defendant. This resulted in the plaintiff having to pay Kaiko Bussan Co Ltd the sum of $SI195,577.

On 22 December 1993, default judgment was issued against the defendant. Since that time until now, no steps had been taken whatsoever by the defendant to have the default judgment set aside. The plaintiff now comes to court for damages in the sum of $195,577 to be paid plus interest and exemplary damages in the sum of $195,577 to be paid plus interest and exemplary damages in the sum of $SI125,517.75

The measure of damages for fraud was discussed in the case of Doule v Olby (Ironmongers) Ltd [1969] 2 All 119. it was held in that case that damages for fraud were not the same as damages for breach of contract, but were designed to put the innocent party in the position he would have been in if the representation had not been made.

The Doyle’s case Lord Denning considered the comments of Lord Collins MR in McConnel v Wright [1903] UKLawRpCh 11; [1903] 1 Ch 546 at 554 and Lord Artkin in Clark v Urquhart [1930] AC 28 at 67-68, regarding the difference between damaged for breach of contract and fraud and agreed with Lord Artkin that the formula in McConnel v Wright had been expressed in too rigid terms. The learned Law Lord then went on in his classic style to put in very simple terms what the difference was. I quote:

'On principle the distinction seems to be this: in contract, the defendant has made a promise and broken it. The object of damages is to put: the plaintiff in as good a position, as far as money can do it, as if the promise had been performed. In fraud, the defendant has been guilty of a deliberate wrong by inducing the plaintiff to act to his detriment. The object of damages is to compensate the plaintiff for all the loss he has suffered, so far, again, as money can do it. In contract, the damages are limited to what may reasonably be supposed to have been in the contemplation of the parties. In fraud, they are not so limited. The defendant is bound to make reparation for all the actual damages directly flowing from the fraudulent inducement. The person who has been defrauded is entitled to say: “I would not have entered into this bargain at all but for your representation. Owing to your fraud, I have not only lost all the money I paid you, but, what is more, I have been put to a large amount of extra expense as well and suffered this or that extra damages.” All such damages can be recovered: and it does not lie in the mouth of the fraudulent person to say that they could not reasonably have been foreseen.' ([1969] 2 All ER 119 at 122.) (My emphasis.)

The amount of loss suffered directly arising from the fraudulent behaviour of the defendant had been calculated at SBD$S95,577.00 I am satisfied this amount should be granted in favour of the plaintiff as damages for fraud and fraudulent misrepresentation of the defendant.

The second order sought in the summons for exemplary damages is more troublesome. In his submissions to this court, Mr Suri relies on the case of Rookes v Barnard [1964] UKHL 1; [1964] 1 All ER 367 as authorising the award of exemplary damages in this instance. That case involved an action by the appellant against three respondents claiming damages for using unlawful means to induce BOAC (his employer) to terminate his contract of service and for conspiracy to do so. The appellant had been employed as a skilled draughtsman by BOAC. He was a member of the Association of Engineering and Shipbuilding Draughtsmen (A.E.S.D), a union which had one hundred percent membership. Following a disagreement with the union, the appellant resigned. The respondents then issued a threat to the employer that if the appellant was not terminated by a certain date, the members of the union would be advised to withdraw their labour. The jury found (a) that there was a conspiracy to threaten strike action by members of A.E.S.D to secure the appellant's withdrawal from the design office, (b) that all three respondents were parties to it, (c) that all three respondents made such a threat and (d) that such threats caused the suspension and the dismissal of the appellant. In his summing up the trial judge made the following direction to the jury on damages as follows:

'You have to consider, in relation to exemplary damages, whether this was a deliberately engineered unofficial “wild cat” strike, forced by these three to use, at all costs, an illegal pressure, and whether on the other hand there was provocation, which could reasonably be regarded as provocation for that line of conduct.'

The jury awarded the plaintiff £7,500 damages. On appeal the decision of Sachs J sitting with a jury was reversed. On appeal to the House of Lords it was contended regarding the issue of damages that the learned judge misdirected the jury.

Lord Devlin delivering the judgment of the House of Lords on the issue of exemplary damages made some pertinent comments. His Lordship distinguished damages in the usual sense ([1964] 1 All ER 367 at 407):

'Exemplary damages are essentially different from ordinary damages. The object of damages in the usual sense of the term is to compensate. The object of exemplary damages is to punish and deter ... It must be remembered that in many cases of tort damages are at large, that is to say, the award is not limited to the pecuniary loss that can be specifically proved. In the present case, for example, and leaving aside any question of exemplary or aggravated damages, the appellant's damages would not necessarily be confined to those which he would obtain in an action for wrongful dismissal. He can invite the jury to look at all the circumstance, the inconveniences caused to him by the change of job and the unhappiness maybe by a change of livelihood. In such a case as this, it is quite proper without any departure from the compensatory principle to award a round sum on the pecuniary loss proved.'

His Lordship then embarked on a detailed analysis of case in which the principle of exemplary damages had been recognised and came up with three categories for which Rookes v Barnard is now famous, as the recognised categories established by case authorities under which exemplary damages may be awarded. Of relevance to this case is the second category:

'Cases in the second category are those in which the defendant’s conduct has been calculated by him to make a profit for himself which may well exceed the compensation payable to the plaintiff ... It is a factor also that is taken into account in damages for libel; one man should not be allowed to sell another man’s reputation for profit. Where a defendant with a cynical disregard for a plaintiff’s right has calculated that the money to be made out of his wrongful doing will probably exceed the damages at risk, it is necessary for the law to show that it cannot be broken with impunity. This category is not confined to moneymaking in the strict sense. It extends to cases in which either he could not obtain at all or not obtain except at a price greater than he wants to put down. Exemplary damages can properly be awarded whenever it is necessary to teach a wrongdoer that tort does not pay' ([1964] 1 All ER 367 at 410-411.)

It is this second category that the plaintiff relies in for its claim for exemplary damages against the defendant.

The grounds relied on can be summed up as follows (see written submissions of the plaintiff): (1) fraudulent acts and conspiracy committed by the defendant (not challenged); (2) plaintiff's loss of international business dignity caused by the defendant; (3) defendant’s defiance of court order showing no remorse for wrongs committed by him; (4) defendant gains through fraudulent schemes calculated deliberately by defendant to exceed the plaintiff's loss; (5) plaintiff’s financial loss. The matters raised have not been challenged in any way and for purposes of this application they are accepted as facts established on the balance of probabilities.

The issue

The issue before this court is whether exemplary damages can be awarded in cases of deceit, that is fraud.

The law

In Mafo v Adams [1969] 3 All ER 1404 this question was directly addressed by Sachs LJ. That case involved a plaintiff tenant who was tricked out of the occupancy of the flat he was living in by a blatant fraud perpetrated by the defendant landlord. He sued for damages for fraud. The learned judge applied the principles enunciated in Doyle v Olby (Ironmongers) Ltd [1969] EWCA Civ 2; [1969] 2 All ER 119 and held that the loss flowing from the fraud which can be taken into account included the loss of the protected tenancy under the Rent Acts. He also found in the favour of the plaintiff that he was entitled to compensation for the physical inconvenience suffered. When he came to the question of exemplary damages, he conceded this was a more difficult question. I quote:

'Next one comes to a considerably more difficult question: that is, whether this is a case in which exemplary damages are recoverable, and whether, if so, the sum of £100 was a correct assessment ... The first issue which sprang to mind when this appeal was opened was whether in actions for deceit exemplary damages could ever be awarded. There is in the books no case of exemplary damages ever having been awarded for this cause of action, and but for Rookes v. Barnard [1964] UKHL 1; [1964] 1 All ER 367; 1964] A.C. 1129, I doubt if it would have been argued that they could be recovered today. Moreover, when the case of Doyle v. Olby (Ironmongers) Ltd. [1969] EWCA Civ 2; [1969] 2 All ER 119; [1969] 2 Q.B. 158 came to be decided recently, it may be assumed from the fact that no member of the court mentioned this aspect of the measure of damages that it did not even then come to mind, despite the cynical nature of the conduct of the defendants in that case, that exemplary damages could be awarded for this cause of action. When, however, counsel for the landlord opened the present case, he was minded to concede that, in actions for deceit, such damages could now be awarded, and, after considering the matter carefully, he in fact did make this concession. He did so, basing himself on that sentence in Lord Devlin’s speech in Rookes v. Barnard [1964] UKHL 1; [1964] 1 All ER 367 at p. 411; [1964] UKHL 1; [1964] A.C. 1129 at p. 1227, which states: “Exemplary damages can properly be awarded whenever it is necessary to teach a wrongdoer that tort does not pay.” That passage he interpreted as applying to all actions of tort. So far as this case is concerned, there is thus inter parties agreement on that matter. In the upshot, however, it has in any event become unnecessary to decide the point, having regard to the view held by my brethren and myself, that on the findings of the judge such a claim cannot be supported on the particular facts of the case.' ([1969] 3 All ER 1404 at 1407.)

Sachs LJ however was very cautious about the application of exemplary damages to, inter alia, cases of deceit. This was evident in his comments:

'I state the position carefully in this way, because had that concession not been made, it would have been necessary to have considerable further arguments in the point and to consider that argument with care. I would, indeed, need to be persuaded, despite the generality of the phrase already quoted, that this speech which sought so drastically to limit the circumstances in which exemplary damages can be awarded, was by reason of that phrase or otherwise either intended to, or on its proper construction did, enlarge considerably the number of causes of action in which claims to such damages can be maintained. In his behalf I have in mind actions for trover and detinue as well as a deceit as instances in which such awards have not previously been made; in particular, as regards actions for deceit it would open the door to a flood of claims under that novel head and that, moreover, despite the fact that in most cases the Theft Act 1968 provides for the punishment of those who obtain property by fraud.' ([1969] 3 All ER 1404 at 1407.)

He nevertheless went ahead to consider the application of the second category in this case based on the concession of the parties that it applied.

In contrast, Widgery LJ was more forthright in his views that the comments of Lord Devlin in Rookes v Barnard on exemplary damages was to be interpreted as applying to the tort of deceit:

'The position with regard to exemplary damages is perhaps a little more difficult. I think counsel for the landlord was entirely right in accepting that Lord Devlin’s dicta as to exemplary damages apply to the tort of deceit. As I understand Lord Devlin’s speech, the circumstances in which exemplary damages may be obtained have been drastically reduced, but the range of offences in respect of which they may be granted had been increased, and I see no reason since Rookes v Barnard [1964] 1 All 367[1964] UKHL 1; , [1964] AC. 1129 why, when considering a claim for exemplary damages, one should regard the nature of the tort as excluding the claim. If the circumstances are those prescribed by Lord Devlin, it seems to me that the fact that the tort was one which did not formerly attract exemplary damages is a matter of no consequence. On the other hand , I am firmly of opinion that, since it is now clear that exemplary damages are punitive only and all cases of aggravation which result in additional injury to the plaintiff are to be dealt with by aggravated damages, then it follows that the circumstances in which exemplary damages are awarded should be exceptional indeed. It is not the function of civil courts to punish. In the past, in my judgment, much confusion has been caused because learned judges awarding compensation to plaintiffs for ruffled feelings have sometimes said they were awarding exemplary damages. It is clear now that that kind of case does not come under the exemplary heading at all, and in my judgment, the number of cases hereafter where exemplary damages are property to be awarded will in fact be very few. First of all it must be shown that the case comes within the categories prescribed by Lord Devlin; and , secondly, it must be shown that it is one of those special cases in which the punishment of the offender is justified; and it is, I think, implicit in what Lord Devlin said [1964] UKHL 1; [1964] 1 All ER 367 at pp. 410, 411; [1964] UKHL 1; [1964] A.C. 1129 at p. 1227 that exemplary damages are in the main awarded in cases where the defendant realizes that he is breaking the law, realizes that damages may be awarded against him, but nevertheless makes what had been described as cynical calculation of profit and loss, and says he will flout the powers of the court because on a purely cash bases he can show profit. In my judgment, that is the type who is referred to by Lord Devlin as being one against whom an award of exemplary damages is proper to be made.' ([1969] 3 All 1404 at 1410-1411.)

Next we come to a very important decision of the House of Lords, the case of Cassell & Co Ltd v Broome [1972] UKHL 3; [1972] 1 All ER 801 in which Rookes v Barnard was extensively discussed, following comments made in the Court of Appeal about the application of the dicta of Lord Devlin. The first Law Lord, Lord Hailsham of St Marylebone LC, did not think the dicta of Lord Devlin was meant to extend to fresh torts as thought by Widgery LJ in Mafo v Adams ([1972] 1 All ER 801 at 828):

'I do not think that he was under the impression either that he had completely rationalised the law of exemplary damages, nor by listing the “categories” was he intending, I would think, to add to the number of torts for which exemplary damages can be awarded. Thus I disagree with the dictum of Widgery LJ in Mafo v Adams ... This would be a perfectly logical inference if Lord Devlin imagined that he was substituting a completely rational code by enumerating the categories and stating the considerations. It is true, of course, that actions for deceit could come within the purview of the second category. But I can see no reason for thinking that Lord Devlin intended to extend the category to deceit, and counsel on both sides before us were constrained to say that, though it may be paradoxical, they were unable to find a single case where either exemplary or aggravated damages had been awarded for deceit, despite the fact that contumelious, outrageous, oppressive, or dishonest conduct on the part of the defendant is almost inherently associated with it.' (My emphasis.)

It is pertinent to note however that although he did not think Lord Devlin intended to extend the category of exemplary damages to deceit, he nevertheless thought it could come under the purview of the second category. Unfortunately he did not go on to specify or indicate what actions of deceit could come within the purview of the second category. If the learned Law Lord was presented with the facts of this case, would he have considered it coming within the purview of the second category? I would have thought so.

Lord Reid however^, rule was more specific in his comments, but also did not rule out completely and expressly the application of the second category to appropriate cases appropriate cases. He was one of the Law Lords who sat in Rookes v Barnard and concurred in the decision of Lord Devlin. I quote:

'We are particularly concerned in the present case with the second category. With the benefit of hindsight I think I can say without disrespect to Lord Devlin that it is not happily phrased. But I think the meaning is clear enough. An ill disposed person could not infrequently deliberately commit a tort in contumelious disregard of another’s rights in order to obtain an advantage which would outweigh any compensatory damages likely to be obtained by the victim. Such a case is within this category. But then it is said, suppose he commits the tort not for gain but simply out of malice, why should he not also be punished? Again I freely admit there is no logical reason.' ([1972] 1 All ER 801 at 838.) (My emphasis.)

I asked then if it is established that the defendant in this case had deliberately committed a tort in contumelious disregard of the plaintiff’s rights in order to obtain an advantage which would outweigh any compensatory damages likely to be obtained by the plaintiff, should not the potential liability to pay exemplary damages be considered, never mind the fact it pertains to fraud?

The third Law Lord, Lord Morris of Borth-y-Gest accepted the application of the second category and indirectly recognised that exemplary damages may be awarded even in case of fraud provided it came within that category.

The same can be said of Viscount Dilhorne. He took the view that the function of the House of the Lords when sitting judicially was to state what the law was and apply it and not to abolish or restrict it. He disagreed with Lord Devlin’s dicta where it seemed to him that the effect of restricting the power to award damages in particular to cases prior to Rookes v Barnard where they might have been given.

'As I understand the judicial functions of this House, although they involve applying well established principles to new situations, they do not involve adjusting the common law to what are thought to be social norms of the time. They do not include bowing to the wind of change. We have to declare what the law is, not what we think it should be. If it is clearly established that in certain circumstances there is a right to exemplary damages, thus House should not, when sitting judicially, and indeed...was recognised by Lord Devlin when he said[1964] UKHL 1; , [1964] 1 All ER 367 at 410[1964] UKHL 1; , [1964] AC 1129 at 1226, that it was not open to this House to “arrive at a determination that refused altogether to recognise the exemplary principle”. If the power to award such damages is to be abolished or restricted, that is the task or the legislature. One criticism that can be made of Lord Devlin’s speech is that while recognising that a refusal altogether to recognise the exemplary principle was not possible, he nevertheless restrict the power to award such damages so that they ceased to be obtainable in cases where prior to Rookes v Barnard they might have been given. I agree with Lord Denning MR that the pre-Rookes v Barnard law was well stated in Mayne and McGregor on Damages – where it is said that such damages can only be given –

"where the conduct of the defendant merits punishment, which is only considered to be so where his conduct is wanton, as where it discloses fraud, malice, violence, cruelty, insolence or the like, or the plaintiff’s rights."'

In other words it would seem to me that Viscount Dilhorne was more of the liberal view that exemplary damages could be awarded in cases of fraud.

Lord Diplock however was clearly of the view that Rookes v Barnard was not intended to extend the power to award exemplary or aggravated damages to particular torts for which they had not previously been awarded; such as negligence and deceit.

The position in Solomon Islands

In Goh v Yam (8 February 1993, Civil Case 154/1989, unreported), a defamation case, his Lordship Muria ACJ (as he then was) pointed out that when assessing an award for damages in defamation, the underlying principle of compensatory damages remained an important factor to consider. However, he went on to recognise that punitive or exemplary damages may be awarded in a case where the defendant profited from his wrongdoing by publishing the defamation. I agree.

On the issue before me however whether exemplary damages would apply, it appears this issue had not yet been canvassed. It is also somewhat unfortunate that before me I also have only the written submission of the plaintiff. The defendant did not appear and was not represented.

Bearing in mind the divergent views of their Lordships in Cassell & Co Ltd v Broome [1972] UKHL 3; [1972] 1 All ER 801 what should be the approach taken by this court. On one hand, it is not in issue that the correct measure of damages for fraud is that as set out by Lord Denning in Doyle v Olby (Ironmongers) Ltd [1969] EWCA Civ 2; [1969] 2 All ER 119 at 122:

'In fraud, the defendant has been guilty of a deliberate wrong by inducing the plaintiff to act to his detriment. The object of damages is to compensate the plaintiff for all the loss he has suffered, so far, again, as money can do it. In contract, the damages are limited to what may reasonably be supposed to have been in the contemplation of the parties. In fraud, they are not so limited. The defendant is bound to make reparation for all the actual damage directly flowing from the fraudulent inducement. The person who has been defrauded is entitled to say:

"I would not have entered into this bargain at all but for your representation. Owing to your fraud, I have not only lost all the money I paid you, but, what is more, I have been put to a large amount of extra expense as well and suffered this or that extra damages."

All such damages can be recovered: and it does not lie in the mouth of the fraudulent person to say that they.'

In the facts of this case the straight figure of $S195,577 was the bare minimum that the plaintiff had suffered as a direct consequence of the fraudulent action of the defendant and clearly he was entitled to this. This however did not include the losses flowing from such action in terms of the harm and damage caused to the international dignity and reputation of the company in dealing with its clients or prospective clients overseas. This obviously cannot be accurately calculated in monetary terms. There are also related costs entailed in the investigation of the matter and the time and money involved. In fact there is evidence which showed that the company had to engage someone overseas to carry out an investigation into the matter (see affidavit of Darryl Bowmand Shelley filed 17 May 1993). This naturally must entail further costs. In my respectful view, a round figure of $5,000.00 over and above this amount would be a fair and reasonable assessment of the losses flowing from the fraudulent action of the defendant.

This then brings me to the important question-whether, in the circumstances of this case bearing in mind the law enunciated by the English courts, exemplary damages should be applied to the tort of deceit. Respectfully, the approach I prefer is that described by Lord Widgery in Mafo v Adams [1969] 3 All ER 1404 at 1411:

'First of all it must be shown that the case comes within the categories prescribed by Lord Devlin; and, secondly, it must be shown that it is one of those special cases in which the punishment of the offender is justified; ... that exemplary damages are in the main awarded in cases where. the defendant realises that he is breaking the law, realises that damages may be awarded against him, but nevertheless makes what has been described as a cynical calculation of profit and loss, and says he will flout the powers of the court because on a purely cash basis he can show profit.'

In taking that approach, I ask whether the circumstances of this case come within the second category. In my respectful view, the answer must be yes. I find on the facts that the actions of the defendant can only be described as a clear flouting of the laws done deliberately and with the view to profiting from his wrongdoing. The defendant had set himself up deliberately as a businessman with credentials and entered the commercial arena to deal with his counterparts on equal terms. No businessman in his right mind would enter into any business deals unless he had something to show for what he was offering to sell or to buy; that is, he either had money to buy with or something to sell. In this case, the defendant had set himself up in business as an exporter of marine products. He had a sophisticated sounding business name-‘Solproducts Export Development Company Limited’-to impress it seems any prospective buyer. Unfortunately not only had he been not as good as his word was, but he had turned aside to fraudulent schemes to further his business dealings. These had involved substantial sums of money and repeated and blatant actions of fraud involving some sophistication which enabled him to get away with it but not for long. If this did not come within the second category I do not know what should.

Having so made that finding, the next question that must be address is whether an additional penalty should be imposed bearing in mind the amount of compensation already determined. Mr Suri submits a figure in the region of $SI12,000 exemplary damages should be imposed to let the defendant know that tort does not pay. In my respectful view, the appropriate question to ask is whether the amount awarded is adequate or not, taking into account; including the loss flowing from the fraud, and the actions of the defendant in contumelious disregard of the rights of the plaintiff. In my respectful view, the amount of $SI100,577 is more that sufficient to compensate the plaintiff for the loss resulted of the fraud and to let the defendant know that tort does not pay.

Orders of the court

1. The plaintiff is entitled to recover against the defendant damages for fraud in the sum of $SI100,577 with interest thereon at the rate of 5% from 6 August 1993 until full payment.

2. That the monies restrained by order of this court dated 22 April 1993 including its interest be released as payment towards the amount of damages awarded in favour of the plaintiff.

3. The cost of and incidental to this action be paid by the defendant.