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Mack Contractors Ltd v Wailo [2009] PGNC 279; N5348 (30 July 2009)

N5348

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 135 OF 2007

BETWEEN:

MACK CONTRACTORS LTD
Plaintiff

AND:

SAMSON WAILO, Senior Police Constable
First Defendant

AND:

GARY BAKI as the Commissioner of the Royal Papua New Guinea Constabulary
Second Defendant

AND:

INDEPENDENT STATE OF
PAPUA NEW GUINEA
Third Defendant

Waigani: Hartshorn J.
2009: March 3rd, 5th
: July 30th

Assessment of Damages

Cases cited:
Papua New Guinea Cases

Obed Lalip v. Fred Sikiot (1996) N1457
Coecon Ltd (Receiver/Manager Appointed) v. National Fisheries Authority (2002) N2182
Papua New Guinea Banking Corporation v. Jeff Tole (2002) SC694,
Desmond Huaimbukie v. James Baugen (2004) N2589
William Mel v. Coleman Pakalia & Ors (2005) SC790
Colour Quest Ltd & Ors v. Total Downstream UK PLC & Ors [2009] EWHC 540

Overseas Cases

Kok Hoong v. Leong Cheong Kweng Mines Ltd [1964] AC 993
Pugh v. Cantor Fitzgerald International [2001] EWCA Civ 307

Counsel:

Ms. A. Tagamasau, for the Plaintiff
Mr. G. Korei, for the Defendants

30th July, 2009

1. HARTSHORN J. Mack Contractors Ltd carries on business in the Highlands region. It alleges that it suffered losses to its business as a result of a truck that it had used, being damaged by a policeman. Mack Contractors commenced this proceeding seeking damages from the policeman, the Commissioner of Police and the State.

2. Default judgment was entered against all defendants with damages to be assessed as no defences had been filed. Consequently the hearing before me was for an assessment of damages.

Assessment of damages – law

3. 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."

The claim

4. From a perusal of the further amended statement of claim it is apparent that the cause of action is based upon the tort of negligence - the negligence of the policeman who committed the acts in respect of which complaint is made, and that the State is vicariously liable for those tortious acts.

5. It is pleaded in paragraph 6 of the further amended statement of claim that the policeman damaged a truck, the property of the proprietor of Mack Contractors and used by Mack Contractors in its business.

6. Although there is a further reference to the truck in the further amended statement of claim as "the Plaintiff's truck", it is not in dispute that the truck is owned by a Mr. Mack Lawai and not Mack Contractors.

7. Counsel for the defendants took issue with whether Mack Contractors could properly claim, on the pleadings, for loss allegedly suffered as a consequence of damage to a truck owned by a third party. Counsel for Mack Contractors submitted in response that it was pleaded that Mack Contractors did not own the truck but had used it in its business operations.

8. This gives rise to the question whether the argument of the State as to the sufficiency of the pleading can be considered after default judgment has been entered.

9. 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. As the State has introduced a matter in respect of which there is nothing pleaded, that matter being the entitlement of Mack Contractors to be able to claim for loss sustained as a consequence of damage to a truck owned by a third party, the State is able to take issue on liability on this matter.

10. This interpretation to my mind, accords with the following observations as to the nature of a default judgment by the Privy Council in Kok Hoong v. Leong Cheong Kweng Mines Ltd [1964] AC 993 at 1012:

"default judgments, though capable of giving rise to estoppels, must always be scrutinised with extreme particularity for the purpose of ascertaining the bare essence of what they must necessarily have decided and, to use the words of Lord Maugham L.C. (in New Brunswick Railway Co. v. British & French Trust Corporation Ltd [1939] AC 1,21) they can estop only for what must " necessarily and with complete precision have been thereby determined.""

and the English Court of Appeal in Pugh v. Cantor Fitzgerald International [2001] EWCA Civ 307:

"that on an assessment of damages all issues are open to a defendant save to the extent that they are inconsistent with the earlier determination of the issue of liability, whether such determination takes the form of a judgment following a full hearing on the facts or a default judgment."

11. As default judgment has been entered, from a perusal of the further amended statement of claim it can be taken as proven that amongst others, the State is liable for the damage caused to the truck and the consequent loss.

12. As to the entitlement of Mack Contractors to claim for loss that it alleges that it suffered, although the alleged loss suffered is pleaded, there is no specific pleading as to how that entitlement arises.

13. As to whether the pleading is sufficient to entitle Mack Contractors to be awarded damages, at common law, a person with merely a contractual interest in property cannot claim for loss caused by damage to that property.

14. That this has been and remains the position is evident from the recent English and Wales High Court (Commercial) decision of Colour Quest Ltd & Ors v. Total Downstream UK PLC & Ors [2009] EWHC 540, where at para 471-473, Steel J. said:

"... English law has long set its face against affording title to sue to a person with merely a contractual interest in property which has been damaged: Cattle v. Stockton Waterworks (1875) LR 10 QB. 453, Simpson & Co v. Thompson (1877) 3 App. Cas. 279. In more recent years, this pragmatic exclusion has been re-emphasised in two cases of the highest authority. In Candlewood Navigation Corp Ltd v. Mitsui OSK Lines Ltd (The Mineral Transporter) [1986] AC 1, Lord Fraser approved the statement of principle constituting the limit or control mechanism to be imposed upon the liability of a wrongdoer towards those who have suffered economic loss on consequence of negligence, as contained in the judgment of Scrutton LJ in Elliott v. Steam Tug Co Ltd v. Shipping Controller [1922] 1K.B. 127 at p.139:

"At common law there is no doubt about the position. In case of a wrong done to a chattel the common law does not recognize a person whose only rights are a contractual right to have the use or services of the chattel for purposes of making profits or gains without possession of or property in the chattel. Such a person cannot claim for injury done to his contractual right."

It was again reaffirmed in Leigh & Sullivan v. Aliakmon Shipping Co. Ltd (The Aliakmon) [1985] UKHL 10; 1986 AC 785 by Lord Brandon at p.809:

"My Lords, there is a long line of authority for a principle of law that, in order to enable a person to claim in negligence for loss caused to him by reason of loss of or damage to property he must have had either the legal ownership of or a possessory title to the property concerned at the time when the loss or damage occurred, and it is not enough for him to have only had contractual rights in relation to such property which have been adversely affected by the loss of or damage to it."

15. As this principle or rule of common law was in effect immediately before the coming into operation of The Underlying Law Act 2000, it is adopted and applied as part of the underlying law: s.24(1) of that Act.

16. In this instance, it is not pleaded that Mack Contractors has legal ownership or a possessory title to the truck. Even if that had been pleaded, there is no evidence of any possessory title, such as may perhaps be contained in a sale, lease or hire agreement between the owner of the truck and Mack Contractors.

17. Consequently, Mack Contractors has not properly proved that it is entitled to damages for the loss that it allegedly suffered as a result of the damage caused to Mr. Mack Lawai's Truck.

18. As Injia J. (as he then was) stated in Obed Lalip v. Fred Sikiot (1996) N1457:

"Just because the Plaintiff has obtained default judgment does not mean that he is entitled as of right to receive damages."

19. 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 third defendant.

_____________________________________________________________
Rageau Manua Kikira Lawyers: Lawyers for the Plaintiff
Office of the Solicitor General: Lawyers for the Defendants