Unreported National Court Decisions
N1359
PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]
WS NO 913 OF 1991
ENGA ENTERPRISES PTY  LTD - PLAINTIFF
V
DANNY PORAKALI - DEFENDANT
Waigani
Doherty J
2-3 August 1995
30 August 1995
CONVERSION AND DETINUE OF CHATTELS - basis for assessing damages.
The defendant detained the Plaintiff’s vehicle valued at K12,000 for about 1 year.  The plaintiff sued for a daily hire rate of K100 per day, cost of repairs, damages and interest totalling K64,766.15 on the basis of consequential loss.  The defendant did not file any defence.
Held
1.       Claims for consequential loss are usually considered too remote and to claim consequential loss it must be proved that:
(a)      the plaintiff is in the business of hiring out the chattels that have been converted; and
(b)      that the defendant must anticipate the consequential loss; and
(c)      the consequential loss must be as a direct result of the tort.
2.       A trespass to chattels is actionable without proof of actual damage.  Where the goods have been destroyed or the Plaintiff is permanently deprived of them the measure of damages is their value.  Where the goods exist and have been restored but depreciated the measure of damages is the cost of repairs, if any,and depreciation.
Cases Cited
Kopen v State of Papua New Guinea [1988-89] PNGLR 659
Hillesden Securities Ltd v Ryjack [1983] 1 WLR 959
Strand Electric & Engineering Co Ltd v Beresford Entertainments Ltd [1952] 2 QB 243
Stock-on-Trent Council v W&J Wass Ltd [1988] 1 WLR 1406
Re: Simms [1934] 1 Ch 29
Halsbury’s Laws 4th Edition Vol. 12
MacGregor on Damages 15th Edition
Counsel
Mr Aigilio for the Plaintiff
Mr Nonggorr for the Defendant
JUDGMENT
30 August 1995
DOHERTY J:  This was a claim for damages arising from a wrongful conversion of a motor vehicle owned by the plaintiff which it alleged in the Statement of Claim was “on 22nd September 1989 wrongfully converted by the defendant” “by registering it in his own name and for a period of about one calendar year wrongfully used the said vehicle for his own purposes and wrongfully deprived the plaintiff thereof.  In consequence thereof the plaintiff suffered loss and damage” the plaintiffs claimed a daily hire charge including insurance cover totalling K36,500.  It further pleaded that the defendant wrongfully detained the vehicle, the vehicle value was K12,000 and claimed K4,551.10 special damages for the cost of repairs to the vehicle and damages for detention, damages for conversion and interest.
The writ was served on the 11th January 1992 and on the 11th February 1992 the plaintiff moved a notice of motion for default judgment to be entered.  That was not actually entertained nor entered until the 10th November 1992.  At no time was a notice of intention to defend nor defence entered.  A garnishee was applied for in February 1993.  There was a notice of motion by the defendant seeking to set aside the default judgment but this was not successful and the matter was set down for hearing on assessment of damages.
Three affidavits were filed relating to hire of the vehicle and the defendant gave notice of his wish to cross examine the witnesses.
He did not actually appear at the hearing on the assessment but did appear and was heard in submissions on law.
This is a ruling on that assessment.
The witnesses produced by the plaintiff gave evidence that they were residents of Wabag, one worked formerly as the Town Manager and another as a provincial materials officer with the Department of Education.  There was no direct evidence from any official of the Plaintiff corporation to show what its business was, and the usual terms of that business.
Both witness said that they knew that the company Enga Enterprises Pty Ltd, the plaintiff, was a company that had trucks and small vehicles which were available for hire.  One witness hired the vehicle for one day at a rate of K120, the other witness hired it for 1 1/2 days.
They said there were no hire car firms in the province of Enga.  Both would normally use the government pool vehicles and only if none was available would they go to Enga Enterprises Pty Ltd.
The K120.00 per day rate was inclusive of driver and fuel.
There was no evidence in rebuttal of that and accordingly I find that on two different occasions a vehicle was rented to two different people.
In submission Mr Aigilio claimed K100.00 per day for 365 days being the period which the defendant had the vehicle within his control.  He said it was an executive vehicle that had only been used previously by a company general manager before being purchased by the plaintiff.  However there is no evidence to that effect and the Court cannot accept the evidence from the bar table.  He further submitted that the damages should be based for loss suffered as a direct result of the conversion and the wrongful use of the vehicle.  He based the K100.00 on the market rate of hire for such a vehicle at that time.  Again that rate was based on evidence from the bar table.
In support of his submission he referred to McGregor on Damages 15th Edition and to several cases referred to therein, for example Hillesden Securities Ltd v Ryjack [1983] 1 WLR 959 when a company was held to be entitled to recover the full market hire charge to date of return and to Strand Electric & Engineering Co Ltd v Beresford Entertainments Ltd [1952] 2 QB 243 as the basis for a submission that the plaintiff was entitled, in the circumstances, to recover damages of the full market rate of hire for the whole period of detention and that it was immaterial that the plaintiff may not have been able to hire the vehicle during the entire detention period.
In citing Strand Electric Co v Beresford Entertainments Ltd, Counsel apparently overlooked as a fact that it was distinguished by the later case of Stock-on-Trent Council v W&J Wass Ltd [1988] 1 WLR 1406.
Those paragraphs in McGregor which Counsel relies on are headed “Consequential Losses” and at para 1357 states “loss beyond that represented by the market value of the goods may be incurred by the plaintiff through being deprived of their use.  Whether he can recover such consequential loss turns on the principles of remoteness of damage”.  The writers of McGregor on Damages show that recovery is comparatively limited.  The cases referred to, such as Strand Electrical v Beresford Entertainments, (supra) show that the plaintiffs were in the business of hiring out their equipment.  This is what the plaintiff seeks to enforce before this Court and relies on the Strand case which held it was immaterial that the plaintiffs might not have had their equipment hired out 100 per cent of the time.  The plaintiffs in the Strand Electric case were in the business of hiring equipment and it was this equipment which was the subject of the proceedings.
As I have already noted that case has been distinguished.  Halsbury’s Laws 4th Edition Vol 12 para 1161 states: “in actions for detinue the judgment is usually for the return of the chattel detained or its value, together with damages for its detention...”  Further at para 1163 it states “the basic rule is that the measure of damages in the case of damage to a chattel is the cost of repair, but if it is unreasonable from a business point of view to repair the article, or if the article is damaged beyond repair, then the basic measure is the cost of replacement in an available market.”
In McGregor on Damages at paragraph 1298 it is stated “the normal measure of damages for conversion is the market value of the goods converted.  This is well settled”.
The special situations relating to consequential loss referred to in Hillesden Securities v Ryjack [1983] 1 WLR 959 related to the necessity to hire an alternate vehicle and the other cases, such as Strand Electric, turn on the fact that they were in the business of hiring out the equipment that had been converted.
Counsel also refers on Re: Simms [1934] 1 CH 29 and quotes: “It may be conceded that in an action for the conversion of chattels a plaintiff may in certain cases recover by way of special damage any loss of profit he may have suffered by the conversion”.  However Simms held that special damage may, in certain cases, be allowed but it must be, as in all cases of damages, be the direct result of the tort.  What the case of Re: Simms makes clear, as has been noted by the authors of McGregor on Damages, is that the plaintiff’s loss of profits on contracts made with third parties has tended to form too remote a head of damage.  That such a loss may be recoverable is recognised but it has been allowed only where it could be anticipated by the defendant (I quote here from para 1359).
In the case before me the plaintiffs claim a total of K64,766.15 after the damages I have quoted above and interest.
The defendant in reply on points of law says that the vehicle has been returned to the plaintiff and he is in possession of it and he cannot now claim its full value.  He further says there is no evidence to support the claim in conversion or the amount which the plaintiff claims.  He says there is no direct evidence to show that any loss whatsoever was suffered and the plaintiff adduced in support only the three affidavits showing the limited hire referred to above.
Neither counsel has been able to refer me to any case law in this jurisdiction on this particular point of assessment of damages in conversion.  I have considered the decision in Kopen v State of Papua New Guinea [1988-89] PNGLR 659.  That case dealt with damage to a motor vehicle which was used as a public motor vehicle for carrying passengers which was subsequently repossessed by the Hire Purchase Company.  The Court considered the basic rule for damages and negligence but noted that the plaintiff was also suing for consequential loss.  It quoted as follows at p.660: “the further ruling in connection with the loss of a profit-earning chattel is that, where a chattel used by a plaintiff in the course of his business is damaged or destroyed, the plaintiff is entitled to loss of profit during a reasonable period to effect repair”.  That case turns on the tort of negligence but certain principles of consequential loss are also be applicable to the case before me.
I consider, based on the precedents I have referred to above, that a person seeking to claim the hire charge and profits for every day that he did not have possession of the chattel must prove that he was in regular business of hiring out that chattel at that rate and the defendant knew and could anticipate the loss.  In the case before me there is only evidence of occasional hire to others when hire from the Department of Works was unavailable.  Only three isolated incidents of hire have been put before the Court in evidence.  I find there is no evidence to show that the plaintiff was in the regular business of hiring out this vehicle which would enable him to claim a daily hire rate.
Further the case law shows that the normal measure of damages would be the cost of the repairs plus damages for detention.  The amount of the repairs claimed in the writ have not been challenged by the defendant and therefore I assess it at K4,551.10.  There is no evidence before me that the defendant could have anticipated or did anticipate any loss of profit.  There is a suggestion, from the bar table, that the defendant is in some way related to the plaintiff company, however that is not evidence properly adduced before the Court and cannot go to showing the knowledge of the defendant at the time.
I consider the statement in Halsbury’s Laws Vol 12 para 1161 that in actions for detinue the judgment is usually for the return of the chattel detained or its value together with damages for its detention and at para 1159 “A trespass to chattels is actionable without proof of actual damage, and a plaintiff is at least entitled to nominal damages for any unauthorised direct physical interference with chattels in his possession. Where the goods have been destroyed or taken permanently from him the measure of damages is their value, and where the goods still exist and have been restored to him but have depreciated in value the measure of damages is the extent to which they have depreciated” is a fair and relevant statement of law applicable to Papua New Guinea as part of the underlying law as no evidence of custom has been adduced before me.
There is no direct evidence of the defendant’s knowledge to substantiate the claim for K36,500 damages for profit and as this is too remote and is not substantiated in fact.  I consider that he is entitled to some damages for the depreciation which I assess as the amount of K1,500 on the basis of the value of the vehicle pleaded in the writ together with the cost of repair of K4,551.10 totals K6,051.10.  The plaintiff is entitled to interest from the date of the service of the writ and costs to be agreed or taxed.
Lawyers for the Plaintiff: Marat Lawyers
Lawyers for the Defendant: Warner Shand Lawyers