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CHAPTER 15 – KEY CONCEPTS IN SOME CIVIL MATTERS

This chapter outlines some of the more common civil causes of action. It is not possible in one chapter to deal exhaustively with all types of civil cases that come before a District Court Magistrate. Therefore, this chapter restricts itself to contract, negligence and defamation, together with some related concepts. It is intended to assist Magistrates, especially those who do not have ready access to a law library. However, it is not intended to serve as a substitute for texts, case authority or the Papua New Guinean legislation to which it makes reference.

Parties, particularly those without a lawyer, often do not have a clear idea of the issues or the legal basis (if any) for their claim or defence. Because detailed pleadings are not always required in the District Court, it is up to the presiding Magistrate in such circumstances to listen to the evidence and at the same time understand how (or whether) the claim fits within any cause of action or defence that is known to the law. At the conclusion of evidence, submissions from unrepresented parties (and sometimes lawyers) are unhelpful in revealing the applicable law. This chapter may be used as a handy guide for Magistrates in these circumstances, especially where the case falls within the scope of contract or tort law. Magistrates should be aware that the causes of action and remedies outlined in this chapter are not the only ones within the jurisdiction of the District Court: see 14.2.2.

15.1 CONTRACTS AND THEIR ELEMENTS

Contracts are widespread in contemporary Papua New Guinean society, and are therefore commonly the basis of disputes that come before Magistrates of the District Courts. The essence of a contract is an agreement between two or more parties. All contracts consist of several essential elements. If an essential element of a contract is missing, then it cannot provide a basis for enforcing rights and obligations. In such cases, there may be an alternative cause of action or defence that is available.

The essential elements of a contract considered below are:

·           Offer

·           Acceptance

·           Certainty of offer and acceptance

·           Intention to create legal obligations

·           Consideration

15.1.1 Offer

An offer may be oral, written or even result from conduct or a gesture by a party. The essential feature of an offer is that there must be an intention by the person (the offeror) to be bound by the terms that are contained in the offer if the offer is accepted. An offer can be made to a single person or to the whole world.

Sometimes an offer is preceded by two-way communications in the form of negotiations. It is important to distinguish an offer from an invitation to treat, which is an indication by a party that he, she or it is in the market to sell goods or services and is prepared to consider offers. A shop that displays goods for sale at an indicated price is inviting a party to make an offer. A party that places an advertisement in a newspaper to sell a vehicle at a particular price is making an invitation to treat. The person who responds to the invitation to treat may do so by means of an offer.

An offer maybe withdrawn at any time before it is accepted. It does not matter how this is communicated to the offeree (the person to whom the offer is made). As long as the offeree has knowledge that the offer has been withdrawn (revoked), then a purported acceptance has no legal significance.

15.1.2 Acceptance

An offeree may accept the offer. At the moment the offer is accepted, a contract comes into existence (provided the other essential elements are present).

Unless the person who makes an offer stipulates how an acceptance is to be communicated, or a statute (such as the Statute of Frauds and Limitations or Goods Act) imposes certain requirements, an acceptance may take the form of words, writing or conduct.

Sometimes it is not necessary for acceptance of an offer to be communicated. For example, if the owner of a lost dog makes an offer to pay a reward to anyone who returns the dog, then a person to whom the offer was made may find the dog and present it to the owner (thereby having performed contractual obligations) without previously having communicated to the owner that the offer was accepted.

The Goods Act is an important statute that governs the law regarding the sale of goods in a number of respects.

Section 6 contains provisions that relate to offer and acceptance:

15.1.3 Certainty of offer and acceptance

Even where parties exchange offer and acceptance in matching terms, a contract may not be enforceable if there is uncertainty about what is agreed to or if the parties have left too much to be decided at a later date. For example, an agreement to make an agreement is uncertain and therefore not enforceable.

15.1.4 Intention to create legal obligations

In order for a contract to exist, the parties must have intended to bind themselves in a legally enforceable way. This is seldom stated explicitly but may be inferred from the circumstances. On the other hand, it may be possible to infer from circumstances that, although there is an agreement, there is no intention to make it legally binding. For instance, if a husband tells his wife that if they save their money he will take her for dinner at a restaurant, it is unlikely that a court would infer that there was an intention to be legally bound.

Sometimes parties expressly state an intention that their agreement is not legally binding. Words such as “memorandum of understanding” or “agreement in principle” may be evidence of this intention.

15.1.5 Consideration

In order for a contract to exist, there must be consideration. Consideration is what one party gives or promises in exchange for what the other party is giving or promising. Without consideration flowing in both directions, there is no contract. Courts do not look at the adequacy of consideration or judge whether a contract makes good business sense. Therefore, if a person agreed to sell his or her car for K500, the contract is enforceable even though the car might be worth K10,000. However, other issues, such as fraud, misrepresentation or duress, might exist as defences and therefore render such a contract unenforceable.

Consideration can sometimes take the form of an agreement not to do something. For instance, an employee might agree not to enter into competition with his or her employer. This type of consideration might be in either express or implied terms.

Consideration can take the form of a promise to do or not do something at some time in the future. This is known as executory consideration. When both sides give consideration in the form of promises to do something in the future, the contract is known as an executory contract.

The act of doing something or refraining from doing something may be in the past when an agreement is made. That is, the so-called consideration has passed between the parties before there is any agreement. Generally, this past consideration is not sufficient to form the basis of a contract.

15.2 OTHER CONTRACTUAL TERMS

15.2.1 Contents of the contract

Contracts consist of promises between the parties. These are often referred to as terms of a contract. A term may be express or implied. Some terms are automatically incorporated into the contract by statute: see the Goods Act.

Simple contracts contain few terms, for example, the contract between a seller of petrol and the motor vehicle driver who stops to buy petrol. Other contracts, usually written, contain many terms.

Some terms of a contract are more important than others. They are said to go to the heart of a contract. These terms are sometimes called conditions.

If a person breaches a condition of a contract, the other party is entitled to treat the contract as at an end.

The Goods Act provides for the operation of conditions in contracts to which the Goods Act applies.

Terms that are part of a contract but do not go to the heart of the contract are sometimes called warranties. When a party breaches a warranty, it does not give the other party the automatic right to treat a contract as being at an end. Section 1 of the Goods Act defines warranty, in relation to contracts for the sale of goods, as follows:

<Legislation Quotation>

“‘warranty’ means an agreement with reference to goods that are the subject of a contract of sale:

(a)        that is collateral to the main purpose of the contract; and

(b)        the breach of which:

(i)         gives rise to a claim for damages; but

(ii)        does not give a right to reject the goods and treat the contract as repudiated.”

<End Legislation Quotation>

It is not always obvious whether a term is a condition or a warranty. The provisions of the Goods Act may be a useful guide in making this distinction, even in relation to other types of contracts.

15.2.2 Express terms

Promises that are expressly stated in a contract are called express terms. An express term may be written or oral. These terms are easy to identify (subject to issues of credibility in the proof of what express terms exist in an oral contract).

15.2.3 Implied and statutory terms

Express terms in a contract seldom cover every detail of the intention of the parties. Every contract is likely to have one or more implied terms. An implied term is a term that parties have not expressly dealt with, but that may be presumed to be part of the contract, judging from the circumstances.

For instance, if one party got into a taxi and told the driver to drive to the airport, the taxi driver might say nothing but simply drive off. The express terms in this contract are few. However, there might be a number of implied terms. In this example, an implied term might be that the taxi would not pick up another passenger on the way to the airport. Another implied term might be that the taxi would take a direct route to the airport.

As is demonstrated above, terms may also be incorporated into a contract by statute. The Goods Act sets out a number of terms that are incorporated into certain types of contracts, whether the parties have actually directed their minds to these terms or not. The Employment Act includes a number of statutory terms that are automatically incorporated in various types of employment contracts. Statutory terms bind parties to a contract whether or not they directed their minds to the provisions of the statute at the time that the contract was made.

15.2.4 “Standard form” – exemption clauses

A party entering into a contract may be given a ticket or asked to sign a standard form that has been prepared by the other party. Either of these types of documents frequently contains some “fine print”. The party that is given the written form contract has no real opportunity to negotiate its terms. The question might arise whether these terms form part of the contract. This issue sometimes arises when the party that provided the standard form seeks to rely on one of the terms set out. Often the term in question is one exempting or limiting the liability of the party.

Where a party signs a contract, he or she is taken to have agreed to the terms of the contract. Where a printed form contains terms and a party is not asked to sign the “contract”, then reasonableness governs whether the printed terms form part of the contract. The question becomes whether the party who seeks to rely on the terms on the document did all that was reasonably necessary to bring the terms of the printed document to the attention of the party before the contract was entered into. If a person has an opportunity to read the terms of a contract drafted by the other party, but has not done so, it does not exempt the person from the terms that were not read.

One issue that can arise is how a standard term on a written contract should be interpreted by a court where there is some ambiguity, that is, where the term might have more than one possible meaning. One possible interpretation could favour the party who provided the contract, while another interpretation could be more favourable to the other party. The principle, known as the contra proferentem rule, holds that any ambiguity is resolved in favour of the party against whom the term would be enforced.

15.3 PARTIES TO THE CONTRACT

The general rule is that everyone has the legal capacity to enter into a contract. However, there are several important exceptions.

15.3.1 Children and persons under disability

Persons under a legal disability are not automatically bound by the terms of all contracts, even where the essential elements are otherwise present. Pursuant to s 21 of the Frauds and Limitations Act, a person is deemed to be under a disability if that person is under 21 years of age or is of unsound mind within the meaning of Pt VIII of the Public Health Act.

15.3.2 Children or incompetent persons – contracts for necessaries

The Goods Act contains provisions for the sale of necessaries to persons under 21 years of age and to other legally incompetent persons.

The word “necessaries” has been interpreted to include things such as food, clothing and shelter. Note that the price agreed to by the person buying necessaries may not be binding. The section says that the buyer is bound only to pay a reasonable price.

15.3.3 Young persons – contracts for employment

Contracts of employment with persons under the age of 16 are not permissible in some circumstances and are restricted in others. Section 103 of the Employment Act contains provisions relating to the employment of young persons.

While an infant is not bound by the terms of a contract entered into before the infant is of an age of majority, the infant may ratify a contract when he or she reaches 21 years of age. Section 14 of the Frauds and Limitations Act sets out specifics in relation to this matter.

15.3.4 Agency and assignments of contracts

Agency is a relationship between a principal and an agent. An agent may bind a principal in a contractual arrangement – in almost any case where the principal could bind himself or herself. Agencies can arise by express appointment (which in most cases is either oral or written) or implied authority (which in some circumstances arises out of circumstances between parties, such as husband and wife, employer and employee etc). An agency relationship may be created when the principal ratifies an arrangement entered into by an agent. An agent is not automatically personally bound by the terms of a contract entered into on behalf of a principal, but may be bound, especially where the name of the principal, or even the fact that there is a principal, is not disclosed to the other contracting party.

Assignment of a contract is where a third party accepts the benefits and obligations of one of the parties to an existing contract and becomes bound by its terms. This can happen by operation of law, as is the case when a party dies or becomes bankrupt. It may also happen by means of agreement of the original parties to the contract. In some other circumstances, equity will recognise an assignment of a contract where fairness requires it, even though it has not been legally assigned.

15.4 DEFECTS IN CONTRACTS AND ELEMENTS THAT MAKE CONTRACTS INVALID (VITIATING ELEMENTS)

15.4.1 Misrepresentation

A misrepresentation that is relied upon by a party may affect the range of rights and obligations that exist between the parties pursuant to a contract. A misrepresentation may be innocent, negligent or fraudulent. It might be a misrepresentation that induces a party to enter into a contract but is not a term of the contract itself. A misrepresentation may also be a term of the contract, or it may be a statement that induces a party to enter into a contract.

For a misrepresentation to have an effect on the relationship of the parties to a contract, it has to be a misrepresentation of fact.

If the misrepresentation is serious and goes to the root of the contract, it can give the party who relied upon it the right to treat the contract as being at an end. For instance, if the vendor of a vehicle made a representation that the vehicle was a 1999 Pajero when in fact the vehicle was a 1989 Mazda sedan, the misrepresentation would go to the root of the contract and the purchaser could treat the contract as at an end (rescind the contract). The purchaser would not be obliged to go through with the deal and would be entitled to the return of any monies already paid.

Other misrepresentations may form part of a contract but may not go to the root of the contract. In such a case, the other party does not have a right to treat the contract as being at an end, but may be entitled to damages instead. For instance, if a person was purchasing a car and the vendor made a misrepresentation to the effect that the radio in the car was working when in fact the radio was defective, damages in an amount required to replace or repair the radio would likely be appropriate.

A fraudulent or negligent misrepresentation that is not a term of a contract may still give a party a right to damages or rescission. However, if the misrepresentation is innocent (that is not deliberately made to deceive) and is not a term of the contract, the party who relied upon it may not have any recourse. This falls within the general meaning of the term “caveat emptor” or “buyer beware”.

15.4.2 Illegal contracts

An illegal contract or a contract made for an illegal purpose is, in most cases, of no force and effect. It may involve potential criminal sanctions. An example would be a contract to rent premises for the purpose of prostitution or illegal gambling. An agreement to buy and sell illegal drugs would be unenforceable for the same reason.

15.4.3 Breach

A breach of contract is an event or statement that is inconsistent with, or repudiates one or more terms of, the contract. It may take a number of forms. A party may verbally tell another party that it will not perform its contractual obligations. Alternatively, a party may do something or omit to do something that is an obligation under the contract. In either circumstance, a party is said to have repudiated the contract.

Repudiation may occur at any time between the time the contract is entered into and when it is fully performed. When an innocent party learns that the other party has repudiated a contract by words to that effect, he or she may take action immediately by accepting the repudiation, or may continue to act as if the contract will be performed and then, when it is not, take action.

A breach of contract may be a breach of warranty or a breach of condition. A breach of warranty does not discharge a contract. A breach of condition does not necessarily discharge a contract, that is, it does not give the innocent party the automatic right to treat the contract as at an end. It is a matter for a court to decide. However, at the least, it does give the innocent party a right to be compensated for unavoidable damages suffered as a result of the breach.

If a contract is divisible then a breach will not normally have the result of discharging the entire contract. For example, if a party in Port Moresby hires a company in Mount Hagen to supply potatoes every month for a year, and the company in Mount Hagen is several days late in supplying potatoes in the sixth month, a court would be unlikely to allow the first party to treat the entire contract as at an end (unless the parties had previously agreed that the first party could do so). It is more likely that the first party would be entitled to damages suffered as a result of the breach, and the remainder of the contract would remain in place.

15.4.4 Frustration

Frustration of a contract happens when some event that could not be foreseen at the time a contract was entered into makes it impossible for one or both parties to perform their obligations. The event may occur as a result of the destruction of the subject matter (for example, where a stadium is struck by lightening and burns down, thereby preventing a concert from taking place). Frustration may occur where an expected event, on which the contract depends, does not take place in circumstances that make it unforeseeable. It may also occur where a person with a unique or particular skill, and upon whom the performance of the contract depends, is somehow incapacitated (for instance, when a person who has been contracted to play the piano is unexpectedly hospitalised for burns to the hands). It can occur when intervening events make the performance of the contract illegal (for example, if a new law was passed banning possession of baui, thereby frustrating an executory contract for the sale of buai).

If the event that makes it impossible to perform the contract is something that a party caused, or if it could reasonably have been foreseen when the contract was made, then it is unlikely to amount to frustration.

When a contract is frustrated, the contract is discharged at the date of the frustrating event. The parties’ obligations under the contract cease at this time, but the contract is fully enforceable up until that date. Although case law provides guidance, courts generally attempt to make an order that is fair to both parties in the circumstances. In some circumstances it might be fair for the parties to retain the benefits they have received under the contract and be excused from performing any further obligations. For example, if a contract provides for the hire of a stadium for a concert, and the party who hired the stadium was not obliged to pay until the day of the concert, but the stadium collapses a week before the contract, the status quo may be the fairest result. In other circumstances fairness may require an order for payment of money or return of property by one party. For instance, if a party has paid in advance for a service to be rendered in the future, and the contract is frustrated in a way that makes it impossible to perform the services, a court might order the return of the money to the party who paid for the services.

15.4.5 Discharge

A contract that is discharged is no longer operative. Frustration may lead to discharge. A serious breach that gives another party the right to treat the contract as at an end (rescind the contract) is another way that a contract may be discharged. Fortunately, the majority of contracts are discharged by the parties performing all of their obligations in accordance with the terms of a contract. Magistrates seldom hear about these contracts. Contracts that are discharged by either breach or frustration are more likely to find their way into a District Court.

15.5 REMEDIES FOR BREACH OF CONTRACT

When a contract is breached, a complainant is entitled to a remedy. The general objective is to put a complainant in the position he or she would have been in if the contract in question had been performed. In addition to damages, the law recognises alternative remedies in the form of specific performance, injunction or restitution. The most common remedy for breach of contract is damages. There are several types of damages.

15.5.1 Liquidated damages

Liquidated damages are damages that are capable of exact arithmetic calculation. An illustration of this is where a guest at a hotel runs up a bill for food and accommodation and fails to pay. The amount of damages suffered by the hotel can be easily calculated and is known to both parties. It is an amount equal to what the guest would have paid if he or she had not breached the contract. Another example would be a loan of money at a specified rate of interest. If the money is not repaid according to the terms of the contract, damages are usually a matter of arithmetical calculation. Sometimes parties agree in advance what the damages will be in the event of certain breaches, and include a specific clause setting out the damages payable on breach. They represent a sum that the parties agree would be reasonable compensation in the event of a breach. An example would be where a car rental contract stipulates that there will be a specified charge for each hour or each day that the rental car is overdue. Regardless of the actual loss suffered by the rental company, the parties agree that the contractual charges are a reasonable pre-estimate.

15.5.2 Penalties and liquidated damages

Courts are careful to distinguish liquidated damages from penalties. A contract may stipulate an amount of liquidated damages that will result in the event of a particular breach, but the amount might be excessive, unconscionable and extravagant in relation to the actual loss. In this case, the amount is characterised as a penalty. A court will not enforce a penalty clause in a contract. If the car rental company in the above example stipulated in the contract that damages of K3,500 per day would be payable for each day that the car was overdue, it would clearly be more than a reasonable pre-estimate of damages for breach of the contract, and the court would likely consider it to be a penalty. As such, it would be unenforceable.

15.5.3 General damages

Some losses do not lend themselves to exact arithmetic calculation, but must be assessed by a Judge or Magistrate. General damages in contract cases usually take the form of compensation for some financial loss that a plaintiff has suffered. They may include (but are not limited to) the cost of making right what the defendant has done improperly, finding another, more expensive source of goods or services that a defendant had agreed to supply, and lost profit or lost income that is a result of a defendant’s breach of contract. A court must take into account all of the relevant facts and circumstances in making an award of damages.

The main objective in assessing damages for breach of a contract is to put the plaintiff in the position he or she would have been in if the contract had not been breached. Sometimes, where this approach results in excessive or wasteful damages, an alternative approach is employed. This is a calculation of the difference in value between what the innocent party bargained for and what they actually received. For instance, if a builder agreed to build a swimming pool for a buyer, a term of the contract might stipulate that the pool is to be 240 cm deep at the deep end. Suppose the pool is built in complete conformity with the terms of the contract except that it is only 235 cm deep at the deep end. Suppose also that altering the pool to the correct depth would require the replacement of the entire pool. A court would be likely to approach the assessment of damages on the principle that the buyer should be compensated in damages that are equal to the difference between a pool that is 240 cm deep and a pool that is 235 cm deep.

The common law has only recently allowed damages for distress, frustration and hurt feelings arising from a breach of contract, particularly in the context of the breach of an employment contract. Courts in Papua New Guinea have allowed damages to compensate for these things: see Harding v Teperoi Timbers Pty Ltd [1988] PNGLR 128; Rooney v Forest Council of PNG [1990] PNGLR 406. However, for a case where this head of damages was not compensated, see Jessey Lapon v Dobel Farming & Yrading Pty Ltd [1992] PNGLR 215.

15.5.4 Remoteness of damage

Damages are limited to losses that have arisen reasonably from the breach or that can reasonably be supposed to have been in the minds of the parties at the time they made the contract. Any damages that fall outside the scope are too remote. In the famous case of Hadley v Baxendale, a carrier took a piece of equipment from a mill to be repaired. There was a delay in returning the equipment. This delay amounted to a breach of the contract. The delay resulted in the mill closing for a week and the consequent loss of profits for that week. It was held that these damages, although caused by the breach, were not known to the carrier and could not reasonably have been expected to result from the breach. They were too remote and therefore the carrier was not liable for these losses.

In cases for wrongful dismissal, even a plaintiff who is wrongfully dismissed, and who is unsuccessful in finding other employment before trial, may not be entitled to damages equal to lost income for an indefinite period. A reasonable period of notice, by which an employer could dismiss an employee for no reason, must be found in the contract. It may be an express term but is often an implied term: see Christopher Appa v Peter Wama, Secretary Department of Western Highlands and the State [1992] PNGLR 395.

15.5.5 Mitigation

A party who suffers damages as the result of another party’s breach of contract has a duty to take reasonable steps to minimise the loss. For instance, if a term of a contract provides that goods are to be delivered to a party, but they are not delivered, the party who suffers the loss would be expected to purchase goods elsewhere if there is an available source. An award of damages is reduced by an amount representing the value of any failure to take reasonable steps to mitigate the loss: see Kopen v Independent State of Papua New Guinea [1998-1989] PNGLR 659.

An example of the duty to mitigate commonly arises in employment cases, where a wrongfully dismissed plaintiff has a duty to look for alternative employment. This duty arises immediately on the occurrence of the breach.

15.5.6 Quantum meruit

Quantum meruit means “as much as the thing is worth”. It is an award of compensation that may be used where fairness requires it. Strictly speaking, quantum meruit does not arise out of a contract. It arises where a party provides goods or services to another party, believing there is an agreement, and the other party accepts them. When the first party seeks to be compensated for the goods or services, there is no contract to rely upon and therefore no breach. However, in circumstances where fairness requires, a court will compensate the party in an equal amount to that by which the other party was enriched by the goods or services. This amount may be different from the damages that would be awarded if a contract had existed.

15.5.7 Specific performance

Specific performance is an order that a party to a contract carry out his or her obligations pursuant to the terms of the contract. Generally speaking, specific performance is discretionary and is ordered only when damages will not adequately compensate an innocent party to a breached contract. A party who contracts to purchase a unique or rare item could be in such a position. Land is often regarded as unique, and specific performance is often ordered in relation to contracts for sale of land that are breached by the vendor. In such cases, a vendor may be ordered to sell the thing in accordance with the contract. Specific performance is often ordered where damages in the form of money will not provide the plaintiff with an adequate remedy. For instance, suppose a company required a particular type of aircraft for use in its operations. The availability of this type of aircraft might be quite limited, and in Papua New Guinea there might only be one aircraft that suits the needs of the company. As another example, suppose a person entered into a contract to purchase a specific artefact, and the vendor breached the contract by refusing to sell the artefact. Suppose further that the artefact was unique and there was nothing available that could be purchased as a substitute. In such a case, damages might not be adequate as they would not provide the plaintiff with the ability to put himself or herself in the position he or she would have been if the contract had been performed. A court might consider specific performance (forcing the vendor to sell) to be appropriate in such circumstances: see Woodward v Woodward [1987] PNGLR 92.

Because specific performance is an equitable remedy, courts have been careful to order it only where the plaintiff has not delayed unreasonably in seeking the remedy, and where it is just and equitable to do so under all the circumstances.

The common law has always been reluctant to award specific performance in contracts that require a party to perform personal services for another party, either as an employee or as a contractor: Christopher Appa v Peter Wama and The State [1992] PNGLR 395.

15.5.8 Injunction

An injunction is another equitable remedy that is awarded only in the court’s discretion. It is an order that obliges a party to do or to refrain from engaging in specific conduct or acts. An injunction may be ordered to preserve the status quo where, in the circumstances, a defendant is likely to cause continuing damage to the plaintiff’s interests before a final order can be made at trial, and where damages are not suitable. Courts in Papua New Guinea have been reluctant to order an injunction when another remedy is available: see Ume More v UPNG [1985] PNGLR 401.

Interim injunctions are sometimes awarded to maintain the status quo between the parties. A particular type of interim injunction, sometimes referred to as a Mareva injunction, is made to prevent a defendant from disposing of assets or removing them from the court’s jurisdiction in order to frustrate the enforcement of any judgment that the plaintiff might obtain at trial. However, courts have held that the authority to make such an order comes from s 155(4) of the Constitution: see Mauga Logging Company Pty Ltd v South Pacific Oil Palm [1977] PNGLR 80; Wawa Trading v Lie Tat Swie Lie and Bank of New South Wales [1982] PNGLR 375.

15.6 TORTS

The law of tort cannot be accurately or concisely defined. It is an area of the law that allocates responsibility for behaviour that has an injurious effect on other people. It is based on the notion of fault. The wrong might be deliberate, such as assault and battery, some types of nuisance or defamation. It might be inadvertent, such as negligence. This section examines two of the most common types of tort that come before the District Court; negligence and defamation.

15.6.1 Negligence – the duty of care

The tort of negligence is based on a duty of care that is owed either to a particular person or to a group of people. The test for the existence of a duty is whether a person can reasonably foresee that his or her behaviour will cause injury to somebody. If so, then a duty of care exists towards that person or all people falling within that description.

Although criminal liability and civil liability for negligence overlap in some cases, they are not identical. For instance, a person who causes an accident while driving may be liable civilly but not criminally. Also, the different standards of proof in civil and criminal cases can affect an outcome, even where the defendant’s actions are alleged to be wrong in both a criminal and civil sense: see 5.35.

Negligence does not account for all damages that are caused by someone’s inadvertence. For instance, suppose a person who is carefully driving a vehicle has a sudden heart attack while driving and as a result causes an accident. Others may suffer damages as a result. However, the driver may not have been negligent if he or she could not have reasonably foreseen that his or her behaviour would cause injuries to others. There would be no fault on the part of the driver in such a case, and therefore no negligence.

A determination of whether a duty of care exists has often made use of the concept of the “reasonable man”. This term is widespread and, although not gender neutral, is applicable to both men and women. Determining whether a duty of care exists, therefore, turns on whether a reasonable person would recognise a risk and take care to avoid injuring someone. In this sense, the test for negligence is objective and it does not matter what a defendant actually thought about the possibility of his or her behaviour causing injury to someone.

In another sense, the “reasonable man” does incorporate some recognition of the characteristics of the actual defendant. For instance, a 10 year old would not be likely to be judged by the same standard as a reasonable adult in determining whether particular conduct is negligent. The behaviour of a 10 year old defendant would be measured against that of a reasonable 10 year old. Similarly, the conduct of a professional, such as a doctor acting within the scope of his or her professional duties, would be judged in accordance with the conduct of a reasonable doctor with the same qualifications.

The existence of a duty of care is associated with the risk involved in a person’s behaviour. If the risk is a reasonable one and a reasonable person would take precautions to guard against it, then a person who does not take these precautions and causes damages to another will probably be negligent. The greater the potential harm, the greater the precautions that are required.

It is not necessary that a reasonable person would foresee the exact type of damage that a plaintiff would suffer or the degree of seriousness of that damage. What matters is that a reasonable person would recognise the risk of some damages resulting from his or her behaviour. A particular plaintiff’s susceptibility to a greater-than-normal amount of damage, does not relieve the defendant from liability for the actual damages suffered.

15.6.2 Negligence – causation

In order for a person’s conduct to amount to negligence, a breach of a duty of care must be the direct cause of the injury to the plaintiff. One test sometimes used to assist in determining whether the defendant’s conduct is the cause of the plaintiff’s injury is the “but for” test. If the injury would not have occurred but for the defendant’s conduct, then causation is established (subject to apportionment for other causes, such as contributory negligence: see 15.6.3).

15.6.3 Contributory negligence – Wrongs Miscellaneous Provisions Act

More than one party’s negligence might be the cause of the damages suffered by a plaintiff. When the plaintiff has been negligent, and that negligence has, together with the negligence of a defendant, caused the plaintiff’s damage, we say that the plaintiff is guilty of contributory negligence. Contributory negligence is usually expressed as a percentage. For instance, we might say in a claim by a pedestrian who was not careful in crossing the road and was injured, that there is 30 per cent contributory negligence. Of course the exact percentage would depend on the circumstances of any particular case.

At common law, even the slightest amount of contributory negligence was enough to forfeit the plaintiff’s claim. However, the Wrongs Miscellaneous Provisions Act provides that a plaintiff is entitled to recover a portion of the damages that is equal to the portion that is caused by the defendant.

Sections 40 and 41 of the Wrongs Miscellaneous Provisions Act provides that where the total damages suffered may exceed the jurisdiction of the court, damages based on contributory negligence may be awarded up to the limit of the court’s monetary jurisdiction.

In addition, these sections deal with particular situations involving contributory negligence in relation to:

·           employers;

·           deceased persons; and

·           third parties who suffer damages.

15.7 STATUTORY SOURCES OF LIABILITY FOR FAULT

15.7.1 Occupiers’ liability

Part XII of the Wrongs Miscellaneous Provisions Act replaces the common law relating to the liability of occupiers for damages that are suffered on premises.

An occupier is not necessarily the owner of premises. The occupier may be a tenant or someone else. The key concept in determining who is an occupier is that of control. The control to admit persons to premises or exclude persons from premises is what determines who is an occupier. Premises may have more than one occupier, for instance, a contractor and an owner may both be occupiers in certain circumstances.

Section 52 of the Wrongs Miscellaneous Provisions Act sets out the extent of an occupier’s liability in ordinary circumstances:

“(1)      An occupier of premises owes the same duty (in this section referred to as ‘the common duty of care’) to all his visitors, except so far as he is free to, and does, extend, restrict, modify or exclude his duty to a visitor by agreement or otherwise.

(2)        The common duty of care is a duty to take such care as in all the circumstances of the case is reasonable to see that the visitor will be reasonably safe in using the premises for the purposes for which he is invited or permitted by the occupier to be there.

(3)        The relevant circumstances for the purposes of this section include the degree of care, and of want of care, that would ordinarily be looked for in such a visitor, so that, amongst other things, in proper cases:

(a)        an occupier must be prepared for children to be less careful than adults; and

(b)        an occupier may expect that a person, in the exercise of his calling, will appreciate and guard against any special risks ordinarily incident to it, so far as the occupier leaves him free to do so.”

The section goes on to deal with the effect of warnings that occupiers are obliged to give to visitors about the condition of premises. It also deals with occupiers’ liability where dangerous premises are the result of faulty work by a contractor.

Sections 53 and 54 refer to the relationships between a landlord and tenant, occupiers and third parties. Even where a landlord is not an occupier, he or she may owe a duty in some circumstances as if he or she was an occupier.

15.7.2 Claims by dependants of deceased persons

Although compensation for death is widespread in the customs of Papua New Guinean society, at common law a person whose negligence resulted in the death of a person was not liable in tort to pay compensation to the dependants of the deceased for losses arising out of the death. However, Pt IV of the Wrongs Miscellaneous Provisions Act changes this. It creates a statutory basis for some dependants to claim against the person who wrongfully caused the death of the person upon whom they were dependent.

Section 25 is the key section that creates the right to sue for damages arising from death:

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“Where the death of a person is caused by a wrongful act, neglect or default and the act, neglect or default is such as would (if death had not ensued) have entitled the party injured to maintain an action and recover damages in respect of it, the person who would have been liable if death had not ensued is liable to an action for damages notwithstanding the death of the person injured and notwithstanding that the death has been caused under such circumstances as amount in law to an offence.”

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Section 26 defines the range of people on whose behalf an action may be brought:

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“26.     Actions under Section 25.

(1)        An action referred to in Section 25 shall be for the benefit of the wife, husband, parent and child of the deceased person, and a person who is, or is the issue of, a brother, sister, uncle or aunt of the deceased person, and shall be brought by and in the name of the executor or administrator of the person deceased.”

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Section 24(1) provides a non-inclusive definition of child and parent:

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“‘child’ includes son, daughter, grandson, granddaughter, stepson and stepdaughter;

‘parent’ includes father, mother, grandfather, grandmother, stepfather and stepmother”

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The amount of damages to be awarded is assessed in accordance with s 28:

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“(1)      In an action referred to in Section 25, the court may award such damages as it thinks proportioned to the injury resulting from the death to the respective parties for whom and for whose benefit the action is brought, and the amount so recovered, after deducting the costs not recovered from the defendant, shall be divided amongst those parties in such shares as the court directs.

(2)        In an action referred to in Section 25, damages may be awarded in respect of medical expenses incurred as a result of the injury causing the death, together with reasonable expenses of the funeral or cremation of the deceased person (including the cost of erecting a headstone or tombstone over the grave of the deceased person), if those expenses have been incurred by one or more of the parties for whose benefit the action is brought.”

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Section 29 provides for an award for solatium to a parent for the loss of a child. Solatium is compensation for grief over the loss of a child. This award is limited to K600, but may be in addition to other damages which might fall within s 28.

Section 31 prescribes a limitation period of three years.

15.7.3 Claims against the Motor Vehicles Insurance Trust

At common law an action could be brought against the negligent driver or negligent owner of a motor vehicle for damages. The Motor Vehicle Insurance Trust (Third Party) Insurance Act changes that in respect of claims involving death or bodily injury arising out of the use of:

·           a motor vehicle insured under the Motor Vehicle Insurance Trust (Third Party) Insurance Act;

·           an uninsured motor vehicle in a public street; or

·           a motor vehicle on a public street where the identity of the motor vehicle cannot, after due inquiry and search, be established.

Pursuant to s 54, these types of claims are brought against the Motor Vehicle Insurance Trust as defendant, and not against the owner or driver of the vehicle.

Section 54(3) provides that a claim may proceed even if the owner or driver is:

(a)        dead;

(b)        cannot be found; or

(c)        is the spouse of the person whose death or whose bodily injury has been caused.

15.7.4 Defamation

The Defamation Act consolidates the common law of defamation. A defamatory matter is defined in s 2 of the Act as:

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“an imputation concerning a person or a member of his family, whether living or dead, by which:

(a)        the reputation of that person is likely to be injured; or

(b)        he is likely to be injured in his profession or trade, or

(c)        other persons are likely to be induced to shun, avoid, ridicule or despise him.”

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Defamatory matter that is oral is commonly referred to as slander. Defamatory material that is written is commonly referred to as libel. However, this distinction is unimportant under the Defamation Act. Defamatory material may be published in a written or oral form or by means of signs or gestures.

The Defamation Act provides for a number of protections that serve as defences in actions for defamation. These include protection relating to:

·           petitions to Parliament;

·           official reports;

·           matters of public interest; and

·           fair comment.

These are set out between ss 6-11 of the Act. Defences are also provided to innocent sellers of periodicals and books who are without knowledge of the defamatory nature of the publication.

15.8 REMEDIES FOR TORTIOUS WRONGS

Where liability is established in a claim for negligence or some other wrongful conduct, a Magistrate will be called upon to assess damages. Damages are not presumed, and the legal burden is on the plaintiff to prove damages. Damages break down into several widely recognised categories.

15.8.1 General damages

General damages refer to losses suffered that are not capable of exact arithmetic computation. General damages break down into a number of categories (which are not exact, and overlap to some extent).

Loss or damage to part of the body: This may be serious, such as loss of a limb or paralysis, or may be less serious, such as a scar.

Loss of function or use of the body: This may take the form of an inability to walk, climb stairs, the inability to have sexual intercourse, brain damage or loss of sight.

Pain and suffering: This takes many forms, for example, muscle pain, back pain, arthritis, headaches etc.

Psychological injury: Compensation for this form of general damage is available pursuant to s 36 of the Wrongs Miscellaneous Provisions Act.

Loss of amenities: This refers to a diminishment in one’s ability to enjoy life. It can take many forms, for instance, the inability to sleep through the night, the inability to enjoy a hobby, the loss of the enjoyment of playing a sport or the inability to drive a car because of the effects of an injury.

Loss of expectation of life: Where an injury results in the loss of expectation of life, that may be taken into account in awarding general damages.

Future loss of income or ability to earn an income: This is something that commonly results from physical injuries that leave a permanent disability. Even a partial diminishment of an ability to earn an income is compensable. This type of loss may result from business or employment.

Other losses which will be incurred in the future: This may include the cost of rehabilitation, medical care or other expenses which the plaintiff will incur in the future as a result of the defendant’s wrong. In Simin Dingi v Motor Vehicle Insurance Trust [1994] PNGLR 385, a claim pursuant to the Wrongs Miscellaneous Provisions Act by parents for the wrongful death of their daughter, included an award for loss of expected bride price according to custom.

Awards of general damages can be assessed with guidance from other cases where similar damages have been assessed. General damages include losses that will be suffered in the future and which must be estimated at the time of trial. With its limited monetary jurisdiction, a District Court is not required to hear claims with major general damage components. However, the above principles, as elucidated in the case law of the National and Supreme Courts, are applicable to the assessment of general damages in District Courts. As written reasons for judgments in the District Courts are compiled and made available, this further valuable source of precedent will provide guidance to Magistrates.

15.8.2 Special damages

Special damages refer to items of damage capable of precise calculation: see 15.5.1. These include expenses incurred by a plaintiff up to the time of the trial. For example, if a plaintiff is seeking damages in a civil claim as a result of being punched in the face by a defendant, the plaintiff may have had his or her glasses broken in the assault. If the glasses have been replaced by the time of the trial, the cost of the replacement glasses would be an item of special damage. Medical expenses incurred as a result of the assault would also fall within special damages that would be claimed. In this example, general damages would also probably be awarded.

15.8.3 Exemplary damages

Both general damages and special damages are intended to put a plaintiff in a position that he or she would have been in if the wrong in question had not been committed. Exemplary damages depart from this general principle. In common law, the three possible bases of exemplary damages are:

(1)        where actions by servants of a government have been oppressive, arbitrary or unconstitutional;

(2)        where a defendant’s conduct has been calculated to make a profit for the defendant that exceeds the compensatory damages he or she would suffer; and

(3)        where they are specifically provided for by statute. In Papua New Guinea, the Arrest Act and Search Act specifically provide for exemplary damages in civil actions for unlawful search or arrest.

In Papua New Guinea, cases that involve claims for damages arising out of illegal police raids on villages frequently entail a consideration of exemplary damages. These cases fall within the first category. An example is the case of Pike Dambe v Augustine Peri and Independent State of Papua New Guinea [1993] PNGLR 4. In that case, an award of K30,000 in exemplary damages was made. Although exemplary damages are primarily used to make an example of a defendant in appropriate circumstances and deter the type of behaviour that attracted the liability, this case suggests that exemplary damages in Papua New Guinea may include a compensatory element. See also Helen Jack v Marius Kavani and The State [1992] PNGLR 391 and Kofowei v Siviri [1983] PNGLR 449.

Recent cases have established that, in respect of claims for exemplary damages arising out of police raids, exemplary damages may not be awarded against the state, although, in appropriate circumstances, they may be awarded against individual members of the police force: see Abel Tomba v The State (1997) SC518; Andate More and Manis Andale v Henry Tokam and The State (1997) N1645.

15.8.4 Aggravated damages

Aggravated damages, although seldom awarded, may be used to compensate for fear, indignity, humiliation or public disgrace. These may be awarded, for instance, where the actions of a defendant amount to an unprovoked assault. An example of this is the case of Alex Lathan v Henry Peni; Kathleen Lathan v Henry Peni (1995) N1463. A Magistrate who considers an award for aggravated damages must ensure that he or she does not duplicate elements of compensation contained in general damages.

15.8.5 Mitigation

In an action for damages arising out of a defendant’s wrong, a plaintiff has a duty to take reasonable steps to minimise the damage he or she suffers. If a plaintiff acts unreasonably and the damages become greater because of this, the excess damages are not laid at the feet of the defendant. What is reasonable varies from case to case. In Motor Vehicle Insurance Trust (PNG) v Pupune [1993] PNGLR 370, the Supreme Court held that a failure by a plaintiff to undergo plastic surgery to reduce scarring amounted to a failure to mitigate. Damages were awarded for the scarring at the level that they would have been if the plaintiff had acted reasonably and undergone the surgery. The duty to mitigate is not restricted to personal injury cases. A plaintiff has a duty to take reasonable steps to minimise economic or business losses that result from a defendant’s wrongdoing: See Kopen v Independent State of Papua New Guinea [1988-1989] PNGLR 659; see also 15.5.5.