PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 1232 OF 1998

BETWEEN

TONY KULAM KAPIL
Plaintiff

AND

THE COMMISSIONER OF POLICE
First Defendant

THE INDEPENDENT STATE OF PAPUA AND NEW GUINEA
Second Defendant

Mt. Hagen: Lay J.
2007: 4 &13 July

CIVIL - assessment of damages ─ sufficiency of evidence ─ interest on damages.

PNG Cases Cited
Cheong supermarket Pty Ltd v Perry Muro [1987] PNGLR 24
William Mel v Coleman Pakalia, Commissioner Of Police, The Independent State Of Papua New Guinea SC790
Wallace v MVIT [1991] PNGLR 341
 John Tuink Salamon and Ors v the State and Others (1994) N1272
Yange Lagan v the State (1995) N1369. 
Peter Wanis v Fred Sikiot (1995) N1350
Alotau Enterprises Pty Ltd. v Zurich Pacific Insurance Pty Ltd (1999) N1969
PNG Aviation Services Pty. Limited v Somare and the State (2000) SC658
KL Engineering and Constructions (PNG) Ltd V Damansara Forest Products (PNG) Ltd. (2002) N2250. 

Overseas Cases Cited
Parsons v Mather & Platt Ltd [1977] 2 All ER 715
Trident General Insurance Co. Ltd v McNiece Bros Pty. Ltd (1988) 165 CLR 107 

References
Judicial Proceedings (Interest on Debts and Damages) Act 

Counsel
R. Otto, For The Plaintiff
F. Nandape, For The Respondent

13 July, 2007

1.	LAY J.: This is an assessment of damages following entry on 20 September, 1999 of default judgment for damages to be assessed.

2.	The claim arises from an accident involving the plaintiff's Hino truck in June 1994. The truck was taken by a policeman without the plaintiff's permission. The truck was driven with passengers and crashed at the Wabag bridge. As a result four people died, three villagers and a policeman. Two more were seriously injured. 

3.	Relatives of the deceased retaliated and attacked the plaintiff’s village, destroying his houses and livestock. In addition the plaintiff was forced to pay money, livestock and goods to the relatives of the deceased, and his coffee buying and truck hire business was disrupted.

4.	The plaintiff is claiming for the loss of his truck, for the compensation he had to pay and for the loss of houses, business assets, business profits and the loss of coffee he had stored ready for sale.

5.	The effect of the entry of judgment for liability, is that it resolves all questions of liability for the matters pleaded in the statement of claim. Once default judgment is entered, the facts as pleaded and their legal consequences in terms of establishing the cause of action as pleaded must be regarded as proven. The role of the trial judge on an assessment of damages is simply to peruse the statement of claim and be satisfied that the facts and cause of action are pleaded with reasonable clarity. If he is so satisfied, then liability should be regarded as proven: See William Mel v Coleman Pakalia, Commissioner Of Police, The Independent State Of Papua New Guinea SC790 ( Los J, Jalina J, Cannings J).

6.	There is still an obligation on the part of the plaintiff to produce believable evidence in proof of the quantum of damage. If the damage relates to modern commercial enterprises, the court will expect the production of modern trading documentary evidence such as copy invoices, taxation returns, business registration certificates and the like: See John Tuink Salamon and Ors v the State and Others (1994) N 1272 N Woods J. referred to by Injia J. as he then was in Yange Lagan v the State (1995)N1369. Those and other cases support the proposition that if the general circumstances surrounding the making of the claim and the Plaintiff’s evidence give rise, in the mind of the judge, to a suspicion that the claim is inflated or not bona fide or otherwise not in keeping with the expectations a reasonable person would have in respect of that type of claim, in those circumstances, the court is entitled to require, in addition to the evidence of the Plaintiff, some independent evidence, or some supporting documentation, which makes the claim or the quantum of the claim more probable than not.

7.	Lest it be assumed that my reference to and reliance upon part of the judgment of Woods J. John Tuink Salamon and Ors v the State and Ors implies agreement with all that was said by his Honour, I add, with the greatest respect, that I do not agree with comments made by his Honour concerning insurance. His Honour said:

"Then of course there is an obligation in modern enterprises to mitigate and insure and rebuild on insurance. The other party cannot be penalised for a person's failure to follow normal business practice and insure. " 

8.	My understanding of the law is that a contract of insurance is a private matter between the insured and the insurer. A person liable in damages cannot obtain relief by the benefit due from an insurer to a Plaintiff insured. This is because of the doctrine of privity of contract and the fact that in the ordinary case the person liable in damages is a stranger to the consideration passing to support the Contract of Insurance. There may be an exception where the Contract was made for the benefit of a third person, a point not yet decided in this jurisdiction. See Trident General Insurance Co. Ltd v McNiece Bros Pty. Ltd (1988) 165 CLR 107 (High Court of Australia) for a full discussion of the law relating to Insurance Contracts made for the benefit of third parties and the history of the common law on privity of contract.

9.	When this matter came on for trial counsel for the plaintiff indicated that the trial dates had been allocated at a call over by agreement between counsel for the parties. For various reasons eight of the plaintiff's witnesses could not be present at the trial. However, those witnesses swore affidavits in 2000 which were filed and served on the defendants. Pursuant to the Evidence Act, Section 35, the plaintiff served the defendants with notice of its intention to rely on 13 affidavits filed in July 2000. No notice was received by the plaintiff from the defendants requiring the deponents for cross-examination. Therefore pursuant to the provisions of the Evidence Act, Section 35 (2), the defendants "shall be taken to have consented to the use of the affidavit and the affidavit may be used in the proceedings unless the Tribunal otherwise orders".

10.	Counsel for the defendant indicated that he would not be of much assistance to the court because he was only in possession of a copy of the statement of claim faxed to him on the morning of the trial at his request, by the plaintiff's Counsel. The defendants’ file is in Waigani. It is of course completely inexcusable on the part of the defendants lawyers that they were not prepared for trial when the matter had been set down by their express agreement. No application for adjournment was entertained and the trial proceeded on the basis of the affidavits of the plaintiff, no evidence being called for the defendants.

11.	I have perused the Statement of Claim and it seems to me that the facts on which the plaintiff relies and the legal consequences claimed to flow are clearly pleaded. A summary of the heads of damage claimed by the plaintiff appears from the Statement of Claim as follows:

a) compensation paid and funeral expenses	K80,780	
b) pre-accident value of the Hino truck	K 36, 000	
c) pre-arson value of two permanent houses	K 85, 000	
d) four bush material houses	K 1200	
e) personal effects	K 8300	
f) Cash	K 2500	
g) coffee pulpers x 5	K 1500	
h) chemicals sprayers x 4	K 640	
i) parchment processing equipment	K 2500	
j) livestock x 11 pigs	K 2540	
k) grade No. 1 parchment coffee ready to export/sale x 838 bags x 40KG x K. 1.7 5/KG	K 58, 660	
l) coffee blocks-4 years loss of production	K 7,840	
m) loss of business profits at December 1997	K 688, 813	
n) future economic loss, exemplary damages, interest 8%.		

12.	The first head of damage claimed is the claim for the compensation which the plaintiff had to pay in the sum of K. 80, 780. The plaintiff's own evidence of making such payments is confirmed by the affidavit evidence of Bosip Wal, a councillor of the Dange Tribe, North Waghi Council, Aipe Mek, a member of the Banz Peace and Good Order Committee, Mek Enn, a Village Court Magistrate, Nalan Kawa, the then Administrator of Banz District, Pokara Orake the then Acting District Administrator, Jimi District and Senior Inspector Sakawar Kasieng, in 2000 in charge of Task Force Police Department, Wewak and in 1994 Banz Police Station Commander. All of these persons were present and witnessed the compensation payments. I am satisfied on the evidence produced that this head of damage is proven.

13.	The next head of damage claimed is the loss of the Hino truck for which the plaintiff claims in his statement of claim the sum of K36,000. That the truck belonged to the plaintiff and it was completely destroyed was pleaded in the statement of claim and is established by the judgment on liability. There is no sworn evidence of the age or condition of this vehicle or of the model number or market value at the time of the accident. Edmund Toperczer, in June 2000 Regional Truck Sales Manager for Ela Motors, gave evidence that a 1 1/2 year old 8 tonne Hino truck model No. FD171K is worth K120, 000. There is no evidence that that description fits the plaintiff's vehicle. From page two of the plaintiff's letter of 1 May 1995 to the chairman North Waghi Peace and Good Order Committee (annexure "D", to the plaintiff's affidavit sworn 12 July 2000) I find the plaintiff claimed his Hino truck to be a 6 tonner, 3 1/2 years old. In the same letter the plaintiff put the valuation of the truck at K 26, 000. I am prepared to accept that estimate as a fair value and find loss of the vehicle proven at K26,000. The vehicle may well have been worth another K10, 000, but the burden lay on the plaintiff to prove that figure and he has not done so. 

14.	The plaintiff claims K85, 000 for the value of two permanent houses burned down by relatives of the deceased. That the houses existed and were destroyed is confirmed by the judgment and a number of witnesses. John Buri, Managing Director of New Guinea Builders, gave evidence that given the description of the plaintiff’s two permanent material houses, the three-bedroom house is described as an L 40 and the two-bedroom house an H 65 for which he put the current prevailing market price at 13 July 2000 at K80, 000 and K65,000 respectively. On the basis of that evidence I award the sum claimed of K85,000. 

15.	The plaintiff claims for items (d) to (l) in paragraph 9 above. The plaintiff, Senior Inspector Kasieng and the other witnesses mentioned in paragraph 10 above gave evidence that the four bush material houses were valued at K300 each and 11 pigs at K2540. I allow those figures. The plaintiff gave evidence that he lost clothing valued at K1500, furniture K1 000, beddings and mattresses K1000, electrical appliances K2000, automotive parts K1 000, cooking utensils K800, textbooks, business records official documents, stationery and business records K1000, and cash in hand K2, 500. All of those figures seem to me to be reasonable and require no corroboration and I allow K8 300 for the personal and household effects, records and stationery and K2500 for the cash. 

16.	The plaintiff also gave evidence that he lost cherry pulpers to the value of K 1500, chemical sprayers at K 640 and parchment processing equipment to the value of K 2500. All of these values seem to me to be modest and in keeping with the facts proven by the judgment and I award damages in those amounts.

17.	There is a claim for loss of parchment coffee, the quantity being 838 bags of weight at 40 kg each, number one grade at a value of K 1.75/KG, the total value being K58, 660. The plaintiff gave evidence of the quantity and value lost by him as a consequence of the raid by the relatives of the deceased. Jim Collins, Manager, of Namalu Coffee Ltd said that in 1994 Namalu Coffee Ltd had an agreement to buy parchment coffee from the plaintiff and that the plaintiff had a substantial stock which could not be delivered due to the Hino truck accident. He also gave evidence that at that time the company's buying price for number one grade parchment was K1.7 5/KG. I find this claim proven and award the sum of K58,660.

18.	A claim for loss of mature coffee trees is made on the basis of the loss of production for four seasons 1994-1997. There is a claim of K 3, 200 for 7 blocks and K4, 640 for three blocks in the statement of claim and in the plaintiff's evidence. Sampson Kolip Alu, an agriculturalist employed by the division of Primary Industry of the Department of Western Highlands with more than 30 years experience, gave evidence that 10 blocks of coffee is able to return earnings in excess of K7,840. I find the claim proven and award that sum.

19.	Finally, apart from a claim for interest, the plaintiff claims loss of business profits of K688,813. That the Plaintiff carried on a coffee buying business and truck hire business is established by the facts pleaded and the judgment. The evidence in support of the quantum of this claim is the affidavit of Thomas Laka, a qualified accountant. To his affidavit is exhibited a statement of estimated loss of income for the years 1994 to 1997. He said on instructions and information supplied by the plaintiff he prepared an estimated loss of income. He was instructed that the plaintiff had a coffee buying business and a trucking business. Based on those instructions he then prepared an estimated statement of loss of income projected on the basis of assets and businesses the plaintiff had prior to the destruction of his property. 

20.	In the ordinary course of preparing accounts, a bookkeeper or accountant refers to source documentation, such as bank statements, receipts and invoices issued and received, contracts and other documents which show assets acquired, income due and liabilities incurred by the business. The fact that Mr Laka has described his work as an estimate, even for the period ended 31 December 1994, indicates that he was not working from the usual source documents but merely from instructions received from the plaintiff. Notes to the estimates show that Mr Laka has assumed average monthly purchase and sale of 30,000 kg of coffee parchment, all sold at the K 1.7 5/kilo factory door, price for number one grade parchment prevailing in 1994, except for the first month in the coffee season (April) in each year. The roadside purchase price from growers has been assumed at 80t/KG. On average direct and indirect operating costs have been estimated at 50.35 percent of gross coffee sales profit. The estimated gross turnover has been increased by 10 percent each year on no other justification, than that it is advisable. Other income (freight and truck hire) has been based on instructions that K 900 on average was collected per week for 48 weeks of each year.

21.	A number of criticisms can be made concerning the approach to proof of loss of business profits. First, as far as this court is concerned, the only evidence it has concerning the operation of the business of the plaintiff is that he owned a truck, some blocks of coffee and on or about 24 June 1994 had on hand 838 bags of parchment coffee and some coffee processing equipment. There are no bank statements, no accounts for prior trading years, no factory door receipts for previous sales of coffee, no income-tax statements. No evidence of over what period of time the 838 bags of coffee were acquired. In fact, no single document, which independently tends to corroborate any of the assumptions made by Mr Laka in preparing the statement of estimated loss has been presented in evidence. Nor in the preparation of the statement of estimated loss is there any note of the tax obligation of the business. In short none of the documents referred to by Woods J. in John Tuink Salamon and Ors v the State and Others, which the court could ordinarily expect, some of which could be available from other sources even if the plaintiff's own copies were burnt, have been produced to the court. There is no evidence from the plaintiff of how his business operated, what his turnover and expenses were.

22.	There is therefore no reason, for example, for the court to accept that the 838 bags of coffee on hand in June 1994 were all purchased in June, as assumed by Mr Laka in his projection, when they may have been the result of stockpiling since the commencement of the coffee season in April. If that stockpile was in fact purchased over three months instead of one, then it brings into serious question, Mr Laka's assumption that the business turnover was 30,000 kg of parchment coffee per month of the coffee season. There is evidence to support the parchment coffee selling price at the factory door for 1994, but not for subsequent years. There is no direct evidence to support the roadside cherry buying price or any of the other expenses allowed by Mr Laka.

23.	A more fundamental problem was identified by Injia J. (as he then was) in Yange Lagan v the State (1995)N1369 where his Honour pointed out that, where the plaintiff does not give evidence in support of his own claim, but relies on evidence from others, such as Mr Laka in this case, the court is left to rely on hearsay. In that case, doing the best he could with the evidence that was available, his honour awarded a conservative figure for damages. Woods J. took the same approach in the case of Peter Wanis v Fred Sikiot (1995) N 1350. I considered doing that in this case, but there really is quite insufficient evidence to examine whether or not Mr Laka's figures are supported, or for the court to make its own assessment. If the plaintiff had given evidence which supported the assumptions made by Mr Laka, and that evidence was supported by some documents which tended to confirm the plaintiff's evidence, there would have been a basis for making an award. As it is, any award would be pure guesswork. I allow nothing for loss of business profits.

24.	Taxation is a matter between the plaintiff and the Commissioner General. I do not know what other income or allowable expenses the Plaintiff may have had in the relevant period. Any provision I might make for taxation would be a guess. See PNG Aviation Services Pty. Limited v Somare and the State (2000) SC 658 per Sevua J.

25.	In summary I allow and award the following amounts:

a)	K 80, 780 for compensation paid to relatives of the deceased;
b)	K 26, 000 for loss of the Hino truck;
c)	K 85, 000, for the loss of two permanent material houses;
d)	K 3,740, for loss of four bush material houses and 11 pigs;
e)	K 8, 300 for loss of personal and household effects, records and stationery;
f)	K 2, 500 for loss of cash;
g)	K 4, 640 for loss of cherry pulpers, chemical sprayers and parchment processing equipment;
h)	K 58,660 loss of parchment coffee;
i)	K 7, 840 for loss of production from coffee blocks;
j)	nil or loss of business profits. 

There is no evidence to justify a further award for future economic loss or exemplary damages.

26.	In total, I award the sum of K277,460 plus interest. An award of interest is discretionary, as to whether it is awarded at all and for what period it is to be awarded, as to what part of the judgment interest shall be calculated on, and as to the rate to be used: See Cheong Supermarket Pty Ltd v Perry Muro [1987] PNGLR 24, Bredmeyer J.. Where the claim is against the State the maximum rate which may be awarded pursuant to Section 1 (2) of the Judicial Proceedings (Interest on Debts and Damages) Act is 8 percent. The purpose of interest is to compensate a plaintiff for being kept out of money he is legally entitled to: Alotau Enterprises Pty Ltd. v Zurich Pacific Insurance Pty Ltd (1999) N1969 Sevua J. and KL Engineering and Constructions (PNG) Ltd V Damansara Forest Products (PNG) Ltd. (2002)N2250. An award of interest "... is merely doing the plaintiff full justice by having his compensation for delay".: Parsons v Mather & Platt Ltd [1977] 2 All ER 715, 719, relied on by Dougherty J. in Wallace v MVIT [1991] PNGLR 341, 351. 

27.	There are two matters which I consider are relevant to the award of interest in this case. One is the common knowledge that for at least the last several years interest rates on bank deposits have ranged from 0.5 percent to 2.5 -3 percent, a long way from 8 percent. The second aspect is that this action commenced in 1998, 9 years ago. In 2003 a motion to dismiss the proceedings was filed by the defendants. This motion was not moved, it appears from the file, because the private lawyers acting for the defendant ceased to act. The only reason the matter was finally given a trial date was because the Court had the matter listed for summary determination. So on the one hand, current interest rates do not justify an award of 8 percent and the slowness of the plaintiff to bring the matter to trial, and that part of the claim relates to loss of profits for the period after the loss of the vehicle in 1994, does not justify an award of interest for the full period from the date of loss in 1994 until trial on the whole amount. It is not equitable that the defendant should be held responsible for all of the delay since issue of the writ. On the other hand, the defendants could have brought the proceedings to a close at any time by making an acceptable payment into court. In the circumstances an appropriate balance is an award of 4 percent per annum on the whole amount for half the period between the issue of the writ and trial, which is four years 118 days or K36,883.

28.	 In accordance with the authority given by Section 1 of the Judicial Proceedings (Interest on Debts and Damages) Act, I order that the amount of interest be included in the amount for which judgment is given, making a total judgment sum of K314, 343.

29.	ORDERS:

1.	judgment for the plaintiff against the defendants in the sum of K314, 343;
2.	the defendant shall pay the plaintiff's costs of and incidental to the action.

Mawa Lawyers: Lawyer for the Plaintiff
Solicitor General: Lawyer for the Defendants.