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Court of Appeal of Fiji |
IN THE COURT OF APPEAL
APPELLATE JURISDICTION
CIVIL APPEAL NO. ABU 0059 OF 2008
(HIGH COURT ACTION NO. HBC 0180 OF 1998L)
BETWEEN
THE NEW INDIA ASSURANCE COMPANY LIMITED
Appellant
AND
JASWANT LAL
Respondent
CORAM: Calanchini AP
Basnayake JA
Kotigalage JA
Counsel: J. Connors with M/s. M. Latianara for the Appellant
V. Mishra with R. Prakash for the Respondent
Date of Hearing: 13 February 2013
Date of Judgment: 13 March 2013
JUDGMENT
Calanchini AP
[1] I agree with the conclusion reached by Basnayake J that the appeal should be allowed.
[2] I wish to add some comments on the matter of damages and in particular on the approach taken by the learned trial judge.
[3] I do not find it necessary to review the conclusion reached by the learned trial judge that the goods damaged by muddy water during the course of the burglary was malicious damage. That was a finding open to the judge on the evidence before the Court.
[4] The learned judge accepted the loss suffered by the Respondent at $167,303.95. In reaching that conclusion the learned trial judge accepted as sufficient evidence for a claim in general damages a list of items, quantities and purchase price per item prepared by the Respondent. The learned judge also accepted that VAT had been paid on those items.
[5] The issue then becomes one of damages. The learned trial judge dealt with damages in terms of special and general damages. The question of damages in an action brought under a contract of insurance was discussed by Pearson J in Fouad Bishara Jabbour and Another –v- Custodian of Absentee's Property of State of Israel [1954] 1 All ER 145 at page 150:
"But the word "damages" is puzzling and seems to be used in a rather unusual sense, because the right to indemnity arises, not by reason of any wrongful act or omission on the part of the insurer (who did not promise that the loss would not happen or that he would prevent it) but only under his promise to indemnify the insured in the event of a loss."
[6] The point is that the contract of insurance in this case was a contract of indemnity whereby the Appellant agreed to compensate the Respondent for the loss sustained by the Respondent. What the Respondent was entitled to claim was a sum of money that would indemnify him for the loss he sustained. To the extent that the word "damages' includes a claim under an insurance policy when the quantum of the loss has been proved it is being used in a different sense from damages that may be claimed as pecuniary recompense given by process of law to a person for the actionable wrong that another has done him.
[7] On the same page Pearson J (supra) said:
"It is established by many decided cases that such a claim as this is a claim for unliquidated damages. _ _ _. Such claim is unliquidated because the Plaintiff has to prove the amount, and even after the adjustment of the amount, the Plaintiff (unless he chooses to sue on an account stated) must still prove the amount, but such evidence might be rebutted, for instance, by proof of a mistake."
[8] One of the authorities upon which Pearson J relied in his judgment in the Jabbour decision (supra) was William Pickersgill & Sons, Limited –v- London and Provincial Marine and General Insurance Co. Ltd [1912] 2 KB 614 wherein at page 622 Hamulton J stated:
"Then as to the nature of the transaction, a policy of insurance is only a promise of indemnity giving a right of action for unliquidated damages in case of non-payment."
[9] The distinction between "liquidated" and "unliquidated damages" is explained in 12 Halsburys (4th Ed) 415 at paragraph 1109:
"The parties may agree by contract that a particular sum is payable on the default of one of them and if the agreement is not obnoxious as a "penalty" such a sum constitutes "liquidated damages" and is payable by the party in default. In every other case, where the court has to quantify or assess the damages or loss, whether pecuniary or non-pecuniary, the damages are "unliquidated"."
[10] The issue then is how should the court determine the amount of unliquidated damages to be awarded to an insured when the insurer fails to honour its promise to indemnify the insured. In Chitty on Contracts (29th Edition) Volume II at page 1209 it is stated:
"The measure of indemnity under the unvalued contract is the value at the date and place of the loss and, if available the market value will prima facie be the amount recoverable, but otherwise the cost of restoration may provide the basis for the indemnity."
[11] In a footnote to the text, the learned authors state that the value does not include loss of profits or other consequential losses unless specifically insured.
[12] In 25 Halsburys (4th Ed. 2003 Reissue) III at paragraph 177 the following appears:
"Proofs of loss are necessarily documentary proofs; the loss may be proved by any satisfactory evidence. In requiring proofs or in deciding as to their sufficiency, the insurers must not act capaciously, they must be satisfied with such proofs as would satisfy reasonable men. In certain cases strict proof may be required."
[13] As to the evidence adduced by the Respondent to establish his loss for the value of the water damaged goods the learned trial Judge noted in paragraph 34:
"In the present case the loss adjuster did not assess a value for the water damaged goods, or in anyway consider the issue of a negotiated settlement for them. The Plaintiff for his part has now no records except a photocopy of a list which is undated but which he says he made at the time. In the list he states the quantity of each particular item and what he says was the cost price excluding VAT. The sum total of those items at cost price he puts at $152,094.50 and to that he adds VAT of $15,209.45. _ _ _. He adds interest, 10%. Hence his total of $182,513.40 from which he is prepared to deduct the excess of $500.00. The probative value of this list, totally unsupported by any evidence at all, rests entirely on my view of the Plaintiff's credibility after cross-examination."
[14] As the learned Judge said the Respondent expected the Court to take his word. There was no documentary evidence of any description to support the material in the list. There was no evidence produced to indicate that he had actually paid VAT.
[15] I have no hesitation in concluding that the list by itself was insufficient to establish the value of the loss at the time and place according to either market value or restoration cost. It was not sufficient to satisfy a reasonable man as to the value of the loss.
[16] It is unfortunate that the learned judge considered the issue of special and general damages in the context of a contract of insurance being a contract of indemnity. There was no evidence that the insurance contract in this case included cover for consequential loss such as loss of profits which might otherwise have fallen under one or other of the rules in Hadley v Baxendale (1854) 9 Exch. 341.
[17] One final observation concerns the question of interest. Interest on claims is regulated by section 34 of the Insurance Law Reform Act 1996 and had it become necessary interest in this case should have been calculated in accordance with that provision.
[18] Without considering the other grounds I would allow the appeal on the basis of the Respondent's failure to prove his claim for unliquidated damages.
Basnayake JA
[19] This is an appeal against the judgment of the learned High Court Judge of the High Court at Lautoka dated 25 July 2008. By this judgment the plaintiff-respondent (plaintiff) was awarded a sum of $267,686.35. Of this sum $167,303.95 was awarded as general damages and $100,382.40 by way of interest at 6% per annum.
[20] The plaintiff filed this action against the appellant with a writ of summons dated 9 June 1998. By this action the plaintiff claimed a sum of $182,013.40, as damages for breach of contract and interest at 12% per annum and costs from the defendant. The plaintiff is a trader. He had insured his stock in trade, furniture, fittings, plant and machinery for a total sum of $250,000. This was on a fire insurance policy. This policy had been extended to cover malicious damage. On or about the 6 March 1997 the plaintiff's stock to the value of $182,513.40 was destroyed due to a hurricane passing through the town of Ba where the plaintiff had his business. The plaintiff claimed that this destruction was due to malicious damage.
[21] The plaintiff was the holder of another policy with the same defendant for burglary. The plaintiff was paid a sum of $ 5000 against a burglary claim which had occurred during floods. The defendant had refused to pay the plaintiff for any other damage caused by riots or civil commotion and/or malicious damage. The defendant admitted that some damage had been caused to the stock and furniture as a result of the hurricane. However, the defendant stated that on a claim lodged on 8 March 1997 through the burglary policy, the plaintiff was paid in full and in the final settlement against the loss of stock. The defendant also stated that there was no malicious damage caused by any persons. The defendant further stated that the plaintiff's claim was out of time.
[22] In this case there was no dispute with regard to the plaintiff's policy No. 922622/1111/10809/93 for a total value of $250,000.00. It was also agreed that the defendant had made a payment on policy No. 922622/4620/4575/96. The trial proceeded on several issues. One main issue at the trial in this case was whether malicious damage had been caused by any person to the plaintiff's stock in trade. Another matter was whether notice given was out of time. The plaintiff's position is that the defendant by his action has waived the notice. Another issue involved in this case is whether the payment on one policy was in full and final settlement of all the claims.
The Judgment
[23] The learned Judge stated that the facts are not disputed. The only dispute is whether what occurred comes within the terms of the policy. The policy No. is 922622/1111/10809/93. This related to a fire policy. This policy has been extended to cover "malicious damage". The issue is whether the cause of the plaintiff's loss falls within the term "riot" or "malicious damage". It is the plaintiff's evidence that he saw 10 or 12 persons inside the shop rampaging through the shop and hurriedly picking goods and that they were pulling items down from the shelves wherein many items fell into flood water. The learned Judge has described the matter in issue succinctly as follows (pg 11):-
"That is the hub of the matter. For what the looters took (pushed away through the flood water in two floating coffin boxes) the plaintiff had a cover with the defendant. This was under a burglary policy No. 922622/4620/4575/96. He claimed and was paid the full amount of his cover, $ 5000.00 less $ 250 excess. The plaintiff had been able to make a detailed inventory of numbers and cost prices of what had been taken. He was also able to make an inventory of what had fallen into the muddy water. That inventory was annexed to the claim which he subsequently made for the loss of those items that fell into the water. That is the claim which was refused and is now the subject of this action".
[24] The learned judge said that "the plaintiff was cross-examined on this inventory but the truth of it was never seriously challenged. The total of the goods damaged in the muddy water was $ 152,094.50. The defendant sent his agent, Toplis & Harding, Loss Adjusters to see this stock and on 15 March 1997 Mr. Anthony R. Brown of that company sent the defendant a written report. The learned Judge (pg 12 HCR) stated thus, "I accept what the plaintiff said. His demeanour and his grasp of the facts were not dented in cross-examination". Dealing with regard to the notice, the learned Judge stated that the plaintiff was required under his policy to give notice of his claim within 30 days (clause 6 of the policy). Notice was given on 15 July 1997; that is three months later. The learned Judge stated that "the whole Ba town was affected by the hurricane and the flood. The local agent of the defendant was well aware of the hurricane and flood and was visiting his clients immediately afterwards. He was advising them. He was accepting claims without the need for written notice to be sent to the defendant's office. The loss adjuster was quickly at the scene. The insurer and its clients were working together to have all the claims made and settled as soon as possible and it can be seen from the documents that the defendant acted promptly. The loss adjuster inspected the damaged goods at the plaintiff's house a week after the flood went down. Offers were made to the plaintiff 4 or 5 days later and settlement cheques were paid over on 25 March 1997.
[25] When it came to the water damaged goods he (plaintiff) gave evidence that he pleaded with the defendant's agents to allow him cover but when they explained and were adamant that there was no cover, that he simply accepted their assurance and thus gave no formal notice. The learned Judge stated that the claim of the plaintiff was for $ 182,013.40. The plaintiff has only a photocopy of an undated list which the plaintiff stated was made at that time. In the list he states the quantity of each item and the cost price excluding VAT totaling $ 152,094.50 and VAT $ 15,209.45. He claimed interest at 10% totaling $ 182,513.40 less $ 500 as excess. The learned Judge states that the probative value of this list rests entirely on the plaintiff's credibility and the plaintiff expects the learned Judge to take his word for it. He (plaintiff) has made no allowances whatever for the possibility of some mistake in his pricing of these items or in his claim of the number of each particular item.
[26] He produced no evidence that he had actually paid VAT of $ 15,209.45. The total amount claimed was $ 182,013.40. The learned Judge states that the plaintiff classified these as special damages. Without documentary evidence he is most unlikely to obtain special damages in that amount (pg 25 of the HCR). The learned Judge then stated that the plaintiff also claims damages for breach of contract and loss of income resulting from the breach. Admittedly the loss of income is not covered by the policy. The learned Judge states thus, "the claim of damages for breach of contract can be taken to be a claim in general damages". So the measure of his damages is his loss and his loss was $ 167,303.95. This is the amount the learned Judge refused to accept as it had not been proved.
[27] The learned Judge also states thus, "it was a mistake for counsel to claim that this amount is special damages because there is none of the evidence needed to prove this amount as special damages. To give the plaintiff any remedy at all I must treat this claim as a claim in general damages (pg. 27 HCR). The learned Judge stated that (pg 29 HCR) he awarded by way of general damages the sum of money which the plaintiff spent to acquire the lost items which includes both their purchase price and the VAT paid upon that. This total is $167,303.95. The learned judge also awarded interest at 6% as the rate accepted for most personal claims. Interest awarded was $100,382.40 totaling $267,686.35.
Grounds of Appeal:
[28] The grounds of appeal are summarised as follows:-
The learned Judge has erred in holding that:-
3, 4 and 8. one months notice has been waived.
5 & 9. The absolute discharge given by the plaintiff has no effect on any claim for a different loss under malicious damage extension.
6. The plaintiff is entitled to flood damage even without pleading.
7. Allowing $2000 for water damage by burst of a pipe without any evidence to support.
10 & 11. By holding in favour of the plaintiff for an exaggerated claim which is not supported by any credible or documentary evidence. The learned Judge has also erred in stating that "after some hesitation I accept all the items on the plaintiff's list. The learned Judge has failed to give credit to the items for which the plaintiff was paid under the burglary claim and the excesses which required to be deducted (clause 7 of the policy excludes any exaggerated claims).
12 & 13. In converting a claim for special damages into general damages.
14. In allowing interest for a period of 10 years.
15. The decision of the learned Judge is unreasonable.
Submission of the learned counsel for the defendant-appellant
[29] Of the above grounds I would be considering grounds 12 and 13 only. Having considered these two grounds I would make an order to dismiss the claim and allow this appeal. Therefore there does not arise any necessity to consider the other grounds of appeal.
Grounds 12 and 13 (damages)
[30] The learned counsel for the appellant was critical in his submissions with regard to the manner in which the learned Judge has found for the plaintiff as to damages. The learned Judge stated that the claim of the plaintiff was for $ 182,513.40. The plaintiff has only a photocopy of a list (list is at pg. 103 of the HCR) undated but which he claims to have made at the time. In the list the plaintiff states the quantity of each particular item and the cost price excluding VAT totaling $ 152,094.50 and VAT $ 15,209.45. He claims interest at 10%. The total is $ 182,513.40 less $ 500 as excess. The probative value of this list rests entirely on the plaintiff's credibility. The learned judge states that the plaintiff expects the Judge to take his word for it. He has made no allowance whatever for the possibility of some mistake in his pricing of these items or in his claim of the number of each particular item. He produced no evidence that he had actually paid VAT of $ 15,209.45.
[31] The learned Judge then states that "the plaintiff classified these as special damages. Without documentary evidence he is most unlikely to obtain special damages in that amount (pg 25). The amount of the special damages claimed is $ 182,513.40. This sum is made up as follows:- 152, 094.50 being the value of the stock lost due to the malicious damage (pg 103). $ 15,209.45 was claimed as VAT totaling $ 167,303.95. Interest 10% totals 15,209.45. Total $ 182,513.40. The plaintiff also claimed damages for breach of contract and loss of income resulting from the breach. Admittedly the loss of income is not covered by the policy. The learned Judge states thus, "the claim of damages for breach of contract can be taken to be a claim in general damages". "So the measure of his damages is his loss and his loss was 167,303.95.
[32] The plaintiff claimed this amount as special damages. The Amount $ 182,513.40 was mentioned in the plaint under the heading "particulars of damage". It is this amount that the learned Judge had refused as it had not been proved. If that claim has been disallowed, the same amount cannot be allowed under a different heading. However, the learned Judge has allowed this same claim under a different category. The amount claimed was $ 182,513.40. This sum includes 10% interest amounting to $ 15,209.45. The learned Judge awarded the plaintiff the above amount once rejected after deducting 15,209.45 which is the amount claimed as interest.
[33] The learned Judge has given the following explanation to justify the award. He states that "it was a mistake for counsel to claim this amount as special damages because there is none of the evidence needed to prove this amount as special damages. To give the plaintiff any remedy at all I must treat this claim as a claim in general damages (pg 27 of the judgment). The learned Judge stated that (pg 29) he awarded by way of general damages the sum of money which the plaintiff spent to acquire the lost items which includes both their purchase price and the VAT paid upon that totaling $ 167,303.95.
Special and General Damages
[34] Salmond (Salmond & Heuston on Law of Torts, Twentieth Edition at 517) states that:
"general damages is that kind of damages which the law presumes to follow from the wrong complained of and which, therefore, need not be expressly set out in the plaintiff's pleadings. Special damages on the other hand, is damage of such a kind that it will not be presumed by the law and it must therefore be expressly alleged in those pleadings so that the defendant may have due notice of the nature of the claim".
[35] The court is not entitled to award as general damages which are in truth special damages. The basic test of whether damages are general or special is whether particularity is necessary and useful to warn the defendant of the type of claim and evidence or the specific amount of the claim that which he will be confronted with at trial (Credit Corporation (Fiji) Ltd. v Khan [2008] FJCA 26).
[36] Similarly in Ratcliffe v Evans [1892] UKLawRpKQB 131; [1892] 2 QB 524, 528 Brown LJ held that special damage "means the particular damage (beyond the general damage), which results from the particular circumstances of the case, and of the plaintiff's claim to be compensated, for which he ought to give warning in his pleadings in order that there may be no surprise at the trial". Where the precise amount of a particular claim of damages becomes clear before the trial, either because it has already occurred and so become crystallized or because it can be measured with complete accuracy, this exact loss must be pleaded as special damage (McGregor on Damages 17th edition paragraph 43-11).
[37] The loss of earnings which should have been pleaded by way of special damage could not be treated as general damages (Ilkiw v Samuels & Others [1963] 2 All ER 879 where Willmer LJ held that in reality the general damages awarded in that case were indeed special damages disguised as general damages). In Credit Corporation case (supra) the loss of earnings was perfectly quantifiable. They could have been pleaded and calculated as special damages. They had to be presented as special damages. The inescapable logic of the absence of pleading is that not much is left as a basis for the award of damages.
[38] In the case under review the learned Judge has rightly rejected the evidence relating to special damages. The plaintiff had pleaded special damages in his plaint and it was for the plaintiff to prove it. The plaintiff attempted to prove special damages by producing an undated photocopy of an inventory. The plaintiff stated that all the documents are with the Accountant who is living in New Zealand. It is for the plaintiff to prove special damages. The learned judge refused to grant special damages as it had not been proved. However the amount stated in the special damages had been categorized by the Judge, arbitrarily as general damages. The plaintiff's case is based on special damages. The plaintiff knew them. He had identified them; he had valued them. Thus it is the plaintiff that has to prove them. If the plaintiff does not do so successfully, the plaintiff must fail and the claim should have been dismissed. In the circumstances I shall allow the appeal. I set aside the judgment of the court below and in lieu thereof I enter Judgment for the defendant/appellant with costs of $2000.
Kotigalage JA
I agree with the conclusion reached by Basnayake JA and I too agree with the comments made by Calanchini AP.
Order of the court
Hon. Mr Justice W Calanchini
Acting President
Hon. Mr Justice Eric Basnayake
Justice of Appeal
Hon. Mr Justice Kotigalage
Justice of Appeal
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