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Eles Jay Clothing Ltd v State [2006] PGNC 189; N4488 (29 September 2006)

N4488

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO 858 OF 1998

ELES JAY CLOTHING LTD
Plaintiff

V

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Defendant

Buka: Cannings J
2006: 23 August, 29 September

JUDGMENT

DISCIPLINED FORCES – Defence Force – trespass to property – forced closure of retail business – Bougainville Crisis – liability already established by entry of default judgment – conduct of Defence Force soldiers – Wrongs (Miscellaneous Provisions) Act, Section 1 – general liability of the State in tort – whether actions of soldiers within the scope of Defence Force functions and responsibilities.

DAMAGES – loss of business income – plaintiff awarded damages, plus interest and costs.

The plaintiff was operating a second-hand clothing store in Buka during the Bougainville Crisis. It was alleged that the plaintiff's manager's son stole an M16 rifle from the Defence Force. The OIC of the Defence Force detachment at Buka ordered the manager to close down the store and locate her son and the rifle. The store was closed for several months. The plaintiff claims that the order to close the store was unlawful and that it lost business as a result. Liability was established by entry of default judgment and a trial was conducted on assessment of damages.

Held:

(1) The default judgment resolved all questions of liability in respect of the matters pleaded in the statement of claim. Therefore members of the Defence Force committed the tort of trespass to property and the State is vicariously liable for their tortious acts or omissions committed within the scope of their employment and functions.

(2) The State is liable to pay damages for loss of business income of K21,450.00. The plaintiff was awarded interest of K16,645.20, being a total judgment sum of K38,095.20; plus costs.

Cases cited

The following cases are cited in the judgment:

Albert Baine v The State (1995) N1335
Cheong Supermarket Pty Ltd v Pery Muro [1987] PNGLR 24
Coecon Ltd (Receiver/Manager Appointed) v National Fisheries Authority (2002) N2182
Graham Mappa v PNG Electricity Commission [1995] PNGLR 170
Jonathan Mangope Paraia v The State (1995) N1343
Kolaip Palapi and Others v Sergeant Poko and Others (2001) N2274
Kopung Brothers Business Group v Sakawar Kasieng [1997] PNGLR 331
MVIT v Pupune [1993] PNGLR 370
MVIT v Tabanto [1995] PNGLR 214
Obed Lalip and Others v Fred Sikiot and The State (1996) N1457
Palme Tunn v The State, WS No 393 of 1997, 18.12.03, unreported
Papua New Guinea Banking Corporation v Jeff Tole (2002) SC694
Peter Wanis v Fred Sikiot and The State (1995) N1350
Tabie Mathias Koim and 28 Others v The State and Others [1998] PNGLR 247
Waima v MVIT [1992] PNGLR 254
William Mel v Coleman Pakalia and Others (2005) SC790
Yange Lagan and Others v The State (1995) N1369
Yooken Paklin v The State (2001) N2212

ASSESSMENT OF DAMAGES

This was a trial on assessment of damages following the entry of default judgment in favour of the plaintiff.

Counsel

T R Tamusio, for the plaintiff
H Polume-Kiele, for the defendant

29 September, 2006

1. CANNINGS J: The plaintiff was operating a second-hand clothing store in Buka town during the Bougainville Crisis. Somebody alleged that the plaintiff's manager's son stole an M16 rifle from the Defence Force. The OIC of the Defence Force detachment at Buka ordered the manager to close down the store and locate her son and the rifle. The store was closed for several months. The plaintiff claims that the order to close the store was unlawful and that it lost business as a result. Liability was established by entry of default judgment and a trial was conducted on assessment of damages. The store was closed down from 2 February to 20 November 1997. On 1 September 1998 a writ of summons was filed on behalf of the plaintiff.

2. The plaintiff seeks the following remedies:

• damages for loss of business income of K27,407.96;
• special damages for goods lost in transit of K5,957.96;
• interest.
  

3. On 21 July 2006 Sevua J ordered default judgment against the defendants, which originally included the Secretary of the Department of Defence. However, the State is now the sole defendant.

PLAINTIFF'S EVIDENCE

4. Mr Tamusio, for the plaintiff, tendered one affidavit by consent. Column 1 of the table below gives the exhibit number, column 2 describes the deponent and date of the affidavit and column 3 summarises the contents.

TABLE 1: SUMMARY OF AFFIDAVIT TENDERED BY PLAINTIFF

DEFENDANT'S EVIDENCE

5. Ms Polume-Kiele, for the defendant, called no evidence.

ROLE OF TRIAL JUDGE WHEN MAKING ASSESSMENT OF DAMAGES FOLLOWING ENTRY OF DEFAULT JUDGMENT

6. This issue was recently addressed by the Supreme Court in William Mel v Coleman Pakalia and Others (2005) SC790, Los J, Jalina J, Cannings J. The court endorsed the principles expressed by Kandakasi J in the National Court in Coecon Ltd (Receiver/Manager Appointed) v National Fisheries Authority (2002) N2182 and by the Supreme Court in Papua New Guinea Banking Corporation v Jeff Tole (2002) SC694, Amet CJ, Sheehan J, Kandakasi J. The trial judge's role is:

• to make a cursory inquiry so as to be satisfied that the facts and the cause of action are pleaded with sufficient clarity; and
  
• if the facts and cause of action are reasonably clear, liability should be regarded as proven, ie the default judgment resolves all questions of liability in respect of the matters pleaded in the statement of claim;
  
• only if the facts or the cause of action pleaded do not make sense or would make an assessment of damages a futile exercise should the judge inquire further and revisit the issue of liability;
  
• the plaintiff has the burden of producing admissible and credible evidence of the alleged damages;
  
• any matter that has not been pleaded but is introduced at the trial is a matter on which the defendant can take an issue on liability.
  

7. Other principles to apply when the court is assessing damages can be summarised as follows:

• The plaintiff has the onus of proving his loss on the balance of probabilities. It is not sufficient to make assertions in a statement of claim and then expect the court to award what is claimed. The burden of proving a fact is upon the party alleging it, not the party who denies it. If an allegation forms an essential part of a person's case, that person has the onus of proving the allegation. (Yooken Paklin v The State (2001) N2212, National Court, Jalina J.)
  
• Corroboration of a claim is usually required and the corroboration must come from an independent source. (Albert Baine v The State (1995) N1335, National Court, Woods J; Kopung Brothers Business Group v Sakawar Kasieng [1997] PNGLR 331, National Court, Lenalia AJ.)
  
• The principles of proof and corroboration apply even when the defendant fails to present any evidence disputing the claim. (Peter Wanis v Fred Sikiot and The State (1995) N1350, National Court, Woods J.)
  
• The same principles apply after default judgment is entered and the trial is on assessment of damages – even when the trial is conducted ex parte. A person who obtains a default judgment is not entitled as of right to receive any damages. Injury or damage suffered must still be proved by credible evidence. (Yange Lagan and Others v The State (1995) N1369, National Court, Injia J.)
  
• If the evidence and pleadings are confusing, contradictory and inherently suspicious, the plaintiff will not discharge the onus of proving his losses on the balance of probabilities. It is conceivable that such a plaintiff will be awarded nothing. (Obed Lalip and Others v Fred Sikiot and The State (1996) N1457, National Court, Injia J.)
  
• Where default judgment is granted, for damages to be assessed on a given set of facts as pleaded in a statement of claim, the evidence must support the facts pleaded. No evidence will be allowed in support of facts that are not pleaded. (MVIT v Tabanto [1995] PNGLR 214, Supreme Court, Kapi DCJ, Hinchliffe J, Sevua J; Waima v MVIT [1992] PNGLR 254, National Court, Woods J; MVIT v Pupune [1993] PNGLR 370, Supreme Court, Kapi DCJ, Jalina J, Doherty J; Tabie Mathias Koim and 28 Others v The State and Others [1998] PNGLR 247, National Court, Injia J.)
  
• The court must be alert to vague claims, unsupported by corroborating evidence, as they might be false claims. The court must only uphold genuine claims. (Kolaip Palapi and Others v Sergeant Poko and Others (2001) N2274, National Court, Jalina J.)
  

THE CAUSE OF ACTION

8. The statement of claim does not expressly state the cause of action. However, given that it is a claim for damages resulting from unlawful closure of a business, the cause of action is reasonably to be regarded as a common law action for trespass to property. Specifically it is an action of ejectment, for mesne profits, brought within the statutory framework of the Wrongs (Miscellaneous Provisions) Act (Chapter 297). (See J G Fleming, The Law of Torts, 9th edition, LBC Information Services, © 1998, chapter 3, Intentional Invasion of Land.) The common law of trespass has been adopted as part of the underlying law of Papua New Guinea. It continues to be applicable and appropriate to the circumstances of the country, except to the extent it is inconsistent with or has been modified by a written law. It applies in this case by virtue of Section 20 of the Constitution and Sections 3(1)(b), 3(3), 4(1), 4(3)(b), 4(4), and 5 of the Underlying Law Act 2000. I have checked the statement of claim and I am satisfied that it adequately pleads the facts to support the elements of the tort relied on. I am satisfied that the defendant, the State, is vicariously liable for the unlawful ejectment of the plaintiff from its property, committed by members of the Defence Force, and for the resultant losses.

WHAT AMOUNT OF DAMAGES SHOULD BE AWARDED?

9. I will set out in the following table the two categories of damages the plaintiff is claiming, as set out in Mr Tamusio's submission. The table also summarises the defendant's response, as per Ms Polume-Kiele's submission. Interest is not part of an award of damages and is assessed separately.

TABLE 2: PLAINTIFF'S CLAIMS AND DEFENDANTS' RESPONSE

10. I will now set out and consider the submissions and make an assessment in relation to each category of damages.

CATEGORY NO 1: BUSINESS INCOME

Plaintiff's submission

11. Mr Tamusio submitted that the court should work on the basis of what has been set out in Lydia Batan's affidavit.

Defendant's submission

12. Ms Polume-Kiele submitted that there is no admissible evidence to substantiate this claim. Lydia Batan's affidavit does not disclose the break-up of the store's alleged daily takings, nor does it include any supporting documentation in the form of business records. She referred to the dicta of Woods J in Graham Mappa v PNG Electricity Commission [1995] PNGLR 170:

... if you wish to establish matters like loss of profits from the operation of a modern business then it is necessary to comply with the modern law, for example, producing such records as are required by law. If you wish to have the advantages of a modern world of business, then you must comply with the modern matters like tax laws.

13. Ms Polume-Kiele submitted that there was no evidence that the plaintiff was paying taxes or compliant with other laws. It was a very vague claim.

Consideration

14. I agree with Ms Polume-Kiele that the evidence in support of this part of the claim is scanty. However, the fact that damages cannot be assessed with certainty does not relieve the wrongdoer of the necessity of paying damages. Where precise evidence is available the court expects to have it. However, where it is not, the Court must do the best it can. (Jonathan Mangope Paraia v The State (1995) N1343, National Court, Injia J.) The defendant can no longer challenge the elements of the cause of action. I am assessing damages on the basis that the plaintiff's store was unlawfully closed down, that the soldiers committed the tort of trespass and that the plaintiff is entitled to damages. I accept Mr Tamusio's submission that what is sought is a modest sum. It does not seem outlandish or over the top, so even though there is little hard evidence to support it, I will uphold the claim.

Assessment

15. I award K21,450.00 damages for loss of business income.

CATEGORY NO 2: SPECIAL DAMAGES

Plaintiff's submission

16. Mr Tamusio submitted that the plaintiff is entitled to be compensated for goods damaged in transit.

Defendant's submission

17. Ms Polume-Kiele challenges the relevance of the document annexed to Lydia Batan's affidavit in support of this claim. It does not, she submits, show that the goods have been paid for. Therefore the plaintiff is not out of pocket.

Consideration

18. I agree with Ms Polume-Kiele that this is a very vague claim. It has not been properly particularised in the statement of claim and Lydia Batan's affidavit does not shed light on what has allegedly happened. I cannot fathom this part of the plaintiff's case.

Assessment

19. I award nothing as special damages.

SUMMARY OF DAMAGES AWARDED

See table 3 below.

TABLE 3: SUMMARY OF DAMAGES AWARDED

INTEREST

20. In the statement of claim the plaintiff claimed interest under the Judicial Proceedings (Interest on Debts and Damages) Act Chapter No 52. Section 1 is the appropriate provision. It states:

(1) Subject to Section 2, in proceedings in a court for the recovery of a debt or damages the court may order that there be included in the sum for which judgment is given interest, at such rate as it thinks proper, on the whole or part of the debt or damages for the whole or part of the period between the date on which the cause of action arose and the date of the judgment.

(2) Where the proceedings referred to in Subsection (1) are taken against the State, the rate of any interest under that subsection shall not exceed 8% yearly.

21. As Bredmeyer J pointed out in Cheong Supermarket Pty Ltd v Pery Muro [1987] PNGLR 24, this section confers a four-fold discretion on the Judge: (1) whether to grant interest at all; (2) to fix the rate; (3) to grant interest on the whole or part of the debt or damages for which judgment has been given; and (4) to fix the period for which interest will run. I exercise that discretion in the following way:

1 A plaintiff should in the normal course of events receive interest. There is nothing that takes this case out of the ordinary in that regard. The Court will order that interest be included in the sum for which judgment is given.

2 As this is a claim against the State, the maximum rate that can be awarded is, by virtue of Section 1(2), 8%. In view of current economic conditions in the country I think 8% is the proper rate of interest.

3 Interest should be payable on the whole of the sum of damages for which judgment is given.

4 The appropriate period is the whole of the period between the date on which the cause of action arose and the date of the judgment. The cause of action arose on the day the store was closed, 2 February 1997. The date of judgment is 29 September 2006. The appropriate period, for the sake of mathematical convenience, is 9.7 years.

22. I calculate the amount of interest by applying the following formula:

• D x I x N = A
  

Where:

• D is the amount of damages assessed;
  
• I is the rate of interest per annum;
  
• N is the appropriate period in numbers of years;
  
• A is the amount of interest.
  

Thus:

• K21,450.00 x 0.08 x 9.7 = K16,645.20.
  

COSTS

23. The general rule is that costs follow the event, ie the successful party has its costs paid for by the losing party on a party-to-party basis. The question of costs is a discretionary matter. There are no special circumstances in this case that warrant departure from the general rule.

JUDGMENT

24. The court directs entry of judgment in the following terms:

1. damages payable by the defendant, the Independent State of Papua New Guinea, to the plaintiff, Eles Jay Clothing Ltd, of K21,450.00;
   
2. interest payable by the defendant, the Independent State of Papua New Guinea, to the plaintiff, Eles Jay Clothing Ltd, of K16,645.20;
   
3. being a total judgment lump sum payable to the plaintiff, Eles Jay Clothing Ltd, of K38,095.20;
   
4. in the event that the total judgment lump sum for the plaintiff, Eles Jay Clothing Ltd is not paid within 30 days after the date of entry of this judgment interest shall be payable at the rate of 8% yearly from the date of entry of the judgment on so much of the total judgment lump sum as is from time to time unpaid;
   
5. costs to be paid by the defendant to the plaintiff on a party-party basis, to be taxed if not agreed.
   

Judgment accordingly.
____________________________

TR Tamusio & Associates: Lawyers for the Plaintiff
Solicitor-General: Lawyer for the Defendant