N5345

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 68 OF 2002

BETWEEN:

MACATA ENTERPRISES LIMITED
Plaintiff

AND:

INDEPENDENT STATE OF PAPUA NEW GUINEA
First Defendant

AND:
DETECTIVE SERGENT, JULIE GEVERE
Second Defendant

Waigani: Hartshorn J.
2009: March 9th,
: May 26th

ASSESSMENT OF DAMAGES – Retrospective effect of Judgments

Cases:

NCDC v. Namo Trading Ltd (2001) SC663
Alfred Alan Daniel v. Pak Domoi Ltd (2004) SC736 
Brennan v. Bolt Burdon [2004] EWCA Civ 1017
National Gaming Control Board v. NWM Trading Ltd & Ors (2004) OS 111 of 2003, Waigani, delivered 29th March 2004
William Mel v. Coleman Pakalia & Ors (2005) SC790 
Oio Aba v. MVIL (2005) SC779
A v. Governor of Arbour Hill Prison [2006] IESC 45 
NWM Trading Ltd & Ors v. National Gaming Control Board (2008) SCA 30 of 04, Waigani, delivered 18th August 2008 
Polem Enterprise Ltd v. Attorney General & Anor (2008) SC911 

 Counsel:

Mr. N. B. Kubak, for the Plaintiff 
Mr. G. Emang, for the Defendants

26th May, 2009

1. HARTSHORN J: Macata Enterprises Ltd owns horse racing gaming machines. It alleges that members of the police illegally seized 180 of the machines and only returned 20.

2. Macata commenced this proceeding seeking amongst others, damages. Default judgment was entered in favour of Macata with damages to be assessed as the State had not filed its defence. Macata and the State entered into Deeds of Release concerning damages and costs but this court set those aside.

3. Consequently, the hearing before me was for an assessment of damages.

Preliminary argument

4. Counsel for Macata relied upon written and oral submissions. In the course of his oral submissions counsel for Macata informed the court amongst others, that:

a)	there was a decision of Davani J., National Gaming Control Board v. NWM Trading Ltd & Ors (2004) OS 111 of 2003, Waigani, delivered 29th March 2004, (NGCB case (supra)) which had declared amongst others, that a licence granted by the National Capital District Commission did not authorise the conduct of a gaming business with horse racing machines without a licence or permit under the Gaming Machine Act 1993,

b)	there had been an appeal against part of the decision in the NGCB case (supra), but that was dismissed following a successful objection to competency: NWM Trading Ltd & Ors v. National Gaming Control Board (2008) SCA 30 of 04, Waigani delivered 18th August 2008.

c)	as a consequence of the NWM Trading (supra) decision, which was after default judgment was entered in this proceeding, Macata would only claim damages for the period up to the date of the decision in the NGCB case (supra).

d)	Macata maintained its claim for damages up to the date of the decision in the NGCB case (supra) as that decision did not operate retrospectively.

5. Counsel for the State submitted amongst others, that as a consequence of the decision in the NGCB case (supra) and NWM Trading (supra), the current state of the law was that if an operator did not have any approval from the National Gaming Control Board it was not entitled to have horse racing machines in his possession. Macata could not prove that it had such approval and so it was not entitled to any damages in this proceeding.

6. This gives rise to the following questions:

a)	is the argument of the State as to liability able to be considered after judgment has been entered?

b)	if so does the law in NWM Trading (supra) have retrospective effect?

Assessment of damages – law

7. The Supreme Court in William Mel v. Coleman Pakalia & Ors (2005) SC790 stated:

"The principles that apply to a trial on assessment of damages following entry of default judgment were summarised by Kandakasi J. in Coecon Ltd (Receiver/Manager Appointed) v National Fisheries Authority (2002), National Court, N2182.

His Honour stated:
A survey of the authorities on assessment of damages after entry of judgment on liability mainly in default of a defendant's defence, clearly show the following:

1.	The judgment resolves all questions of liability in respect of the matters pleaded in the statement of claim.

2.	Any matter that has not been pleaded that is introduced at the trial is a matter on which the defendant can take an issue on liability.

3.	In the case of a claim for damages for breach of contract as in this case, such a judgment confirms there being a breach as alleged and leaves only the question of what damages necessarily flow from the breach.

4. 	The plaintiff in such a case has the burden to produce admissible and credible evidence of his alleged damages and if the Court is satisfied on the balance of probabilities that the damages have been incurred, awards can be made for the proven damages.

5. 	A plaintiff in such a case is only entitled to lead evidence and recover such damages as may be pleaded and asked for in his statement of claim.

The Supreme Court adopted and applied those principles in Papua New Guinea Banking Corporation v Jeff Tole (2002) SC694, Amet CJ, Sheehan J, Kandakasi J.

Kandakasi J. applied those principles recently in the National Court in Desmond Huaimbukie v James Baugen (2004) N2589. We believe His Honour succinctly and correctly stated the law. We elaborate on the first principle by saying that 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. (See Keith Reid v Murray Hallam and Allcad Pty Ltd (1995) N1337, National Court, Kapi DCJ and Andale More and Manis Andale v Henry Tokam and The State (1997) N1645, National Court, Injia J.)….....................

Turning back to the issue raised above as to the role of the trial judge after entry of default judgment, we consider the following to be the correct approach:the trial judge should make a cursory inquiry so as to be satisfied that the facts and the cause of action are pleaded with sufficient clarity; if it is reasonably clear what the facts and cause of action are, liability should be regarded as proven; 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."

8. Of the 5 points listed by Kandakasi J. in Coecon Ltd (supra) and adopted and approved in William Mel (supra) and PNGBC v. Tole (supra), point 2 is pertinent here. Counsel for Macata, by informing the court that Macata was only claiming damages for the period up to about 2003 as a consequence of NWM Trading (supra), has introduced the question whether the law in NWM Trading (supra) is retrospective and answers that question by submitting that it is not.

9. The State in essence, submits that the law in NWM Trading (supra) does have retrospective effect.

10. As this question was introduced by Macata and it was not pleaded, pursuant to point 2 of the list, the State is able to take issue on liability on this question, which it has.

NWM Trading – retrospectivity

11. As to whether a judicial decision applies retrospectively, the Supreme Court in Polem Enterprise Ltd v. Attorney General & Anor (2008) SC911 considered the question in detail. In the course of its consideration, the Court referred to the decision of A v. Governor of Arbour Hill Prison [2006] IESC 45, a decision of the Supreme Court of Ireland, and reproduced amongst others, the following passage:

"Judicial decisions which set a precedent in law do have retrospective effect. First of all the case which decides the point applies it retrospectively in the case being decided obviously the wrong being remedied occurred before the case was brought. A decision in principle applies retrospectively to all persons who, prior to the decision, suffered the same or similar wrong, whether as a result of the application of an invalid statute or otherwise, provided of course they are entitled to bring proceedings seeking the remedy in accordance with the ordinary rules of law such as a statute of limitations. It will also apply to cases pending before the courts. That is to say that a judicial decision may be relied upon in matters or cases not yet finally determined. But the retrospective effect of a judicial decision is excluded from cases already finally determined. This is the common law position."

12. The Supreme Court then gave consideration to, and agreed with the approach taken in the English Court of Appeal case of Brennan v. Bolt Burdon [2004] EWCA Civ 1017. That was a civil case settled out of court. After settlement a court decision overturned a previous court decision upon which the settlement had been based. The Court of Appeal rejected an application to set aside the settlement as being based on a mistake of law, finding that the parties to the settlement were not mistaken as to the law as it existed at the time of the settlement.

13. In Brennan's case (supra) and in the Polem Enterprise case (supra), deeds of settlement between the parties finally determined these matters.

14. As to when a matter is finally determined, from a consideration of the Supreme Court cases of NCDC v. Namo Trading Ltd (2001) SC663, Alfred Alan Daniel v. Pak Domoi Ltd (2004) SC736 and Oio Aba v. MVIL (2005) SC779 amongst others, it is apparent that where judgment has been entered, but the action remains on foot with it being necessary for the parties to return to court to complete the action, such a judgment is interlocutory; the action has not been finally determined.

15. In this instance, default judgment was entered with damages to be assessed. This action remains on foot with it being necessary for the parties to return to court to complete the action. This action has not been finally determined. This case differs from the Polem Enterprises (supra) and Brennan v. Bolt Burdon (supra) cases in that respect. The decision in NWM Trading (supra) may be relied upon here as this is a matter or case not yet finally determined.

16. I mention also that by its conduct in deciding not to claim damages for the period up to about 2003, it can be argued that Macata is by implication, accepting that the decision in NWM Trading (supra) delivered in 2008, does have retrospective effect. 

17. As a consequence, relying upon the law in NWM Trading, as Macata has not pleaded that it had the requisite approval from the National Gaming Control Board and it has not given evidence that it had such approval in any affidavit filed since default judgment was entered, Macata was never entitled to have the horse racing machines in its possession. It is not therefore entitled to any damages as claimed. The plaintiff has therefore failed to prove the claim that it has made. I refuse to make any award of damages in favour of the plaintiff. The costs of and incidental to the assessment of damages shall be paid by the plaintiff to the first defendant.
_____________________________________________________________
Norbert Kubak & Co Lawyers: Lawyers for the Plaintiff 
Office of the Solicitor General: Lawyers for the Defendants