National Court of Papua New Guinea

Livingstone -v- Rawyards Coal Co. (1980) 5 App. Cas. 25 (HL)

Butler -v- Egg & Egg Pulp Marketing Board [1966] HCA 38; (1966) 114 C.L.R. 185

The Albazero [1977] A.C. 774 (HL)

Johnson -v- Agnew [1980] AC 367 (HL)

General Tyre & Rubber Co. Ltd -v- Firestone Tyre & Rubber Co. Ltd [1995] 2 ALL E R 173 (HL)

Enga Enterprises Pty Limited -v- Danny Porakali [1995] N1359

Graham Mappa -v- PNG Electricity Commission [1995] N 1366

Peter Wanis -v- Fred Sheekiot and The State [1995] N1350

Whitfield -v- De Lauret & Co. Ltd (1920) 20 C.L.R. 71

Pike Dambe -v- Augustine Peri & The State [1992] PNGLR 4

Helen Jack -v- Marius Karani & The State [1992] PNGLR 391

Thresia Kandapen -v- The State [1995] N1336

Opa Pu -v- John Dupai & The State Unnumbered National Court Judgement dated 8.3.95

Aimon Aure & Ors. -v- The State & Ors. [1995] N1346

Peter Kuriti -v- The State [1994] N1271

Abel Tomba -v- The State [1997] SC 518

Peter Kuriti -v- The State [1997] Unnumbered Supreme Court Judgement dated 7.4.97

Komaip Trading -v- The State & Ors. [1995] N1367

James Koimo -v- The State [1995] N1322

Texts

Luntz H. Assessment of Personal Injury and Death - 3rd Ed. p. 3 para 1.1.3

Mcgregor, on Damages. 14th Ed. p. 226 para 309.

Mcgregor, on Damages. 15th Ed. para. 1357

Halsburys Laws of England Vol. 12. Para. 1159, 1161, and 1190.

Legislation

Claims by And Against The State Act s. 12.

Counsel

Mr G Langtry: For the Plaintiff

Mr L Pukali: For First and Second Defendants (Until withdrawn).

Mr J. Kawi and R. Saronduo: For the Third Defendant.

JUDGEMENT

BIDAR AJ: In this case, I am concerned only with assessment of damages in an action based on police raid and confiscation of stock of beer on plaintiff’s liquor trading outlet.

Liability was determined with entry of default judgement against defendants on the 10 June 1997. Hence, the matter is before me on assessment of damages only.

It follows that it is necessary to state the facts. Plaintiff is a holder of liquor dealer’s licence and based at Parom Village, East Sepik Province. On the 1st October 1995, while the Manager and Proprietor of the plaintiff’s business group was away in Madang on a business trip, Wewak Police under the command of First and Second Defendants raided the plaintiff’s liquor outlet and confiscated 364 cartons of beer. When the manager, and proprietor, Mr John Simi returned he was arrested and charged for illegally trading and indirectly permitting illegal sale of liquor contrary to the provisions of East Sepik Provincial Liquor Licensing Act.

On the 7th December 1995, Mr Simi defended the charges against him successfully and was acquitted by Wewak District Court.

Among other orders, the Wewak District Court ordered Police to immediately return 364 cartons of beer then still under police custody. Police returned 283 cartons of beer. The other 81 cartons were never returned at all.

RELIEF SOUGHT

Paragraph 8, 9, 10 and 11 of the Plaintiff’s Statement of Claim sets out the basis of the plaintiff’s claim. I reproduce the paragraphs hereunder.

“8. The plafntif uwasle ab selo sell the said 364 cartons of beer between 1st October and 7th December 1995 and therefore lost trading and profit.

9.ټ&##160;; Thentiff7;s losses were caue caused dsed directirectly byly by Firs First Defendant’s omission to make reasonable enquires or assessmenfore exercising his police powers in the circumstances involving a licensed trader with trah trade goods of huge quantity.

10. The secend danendaus c thed the plaintiff’s loss also by not exercising his discretions properly because had he done so, no criminal charges would have been laid and the said stock of beer would have been returned immediately without causing any losses.

11. &&#160 plaintiffntiff claimclaims from the defendants jointly and severally as follows:

12. &#160 plaintiffhfurther clar claims exemplary damages and Costs.”

From the paragraphs reproduced in the plaintiff’s statement of claim, the plaintiff’s action is based on trespass to goods, illegal detention of 364 cartons of beer, conversion and detinue with respect to 81 cartons of beer unaccounted and lost while in police custody and loss of profit arising from sale of beer.

Plaintiff also claims consequential damages including claim for unsold stock, loss of entitlements, loss of market etc.

The plaintiff’s evidence consist of oral and affidavit evidence by its Manager and Proprietor. He was cross-examined on both oral and affidavit evidence by Counsel for the State. Plaintiff’s evidence is that, on the 1st October 1995, Police raided it’s liquor outlet at Parom village, Wewak and confiscated 364 cartons of beer, while it’s manager and proprietor, Mr John Simi was away in Madang on a business trip. Mr John Simi was subsequently arrested and charged with a count of illegal trading and a count of indirectly permitting illegal sale of liquor, contrary to the provisions of East Sepik Provincial Liquor Licensing Act. He appeared before Wewak District Court on the 7th December 1995 and was acquitted of the charges. Among other orders, the Wewak District Court ordered immediate return of 364 cartons of beer to the plaintiff. Of the 364 cartons of beer, only 283 cartons were returned and 81 cartons were not accounted for. Mr Simi admitted on cross-examination the return of 283 cartons of beer by police. During the relevant period a Provincial liquor ban in the East Sepik Province, necessitated the plaintiff to sell 283 cartons of beer at a much lower price of K15.00 per carton, thereby rendering a loss of profit. Plaintiff normally sold beer at K38.00 per carton, prior to police raid and Provincial Liquor ban. In cross-examination, Mr Simi told the Court the stock of beer was bought at Lae and shipped to Wewak.

The freight and relevant taxation was included in the 364 cartons of beer. When the stock of beer landed at Wewak Wharf, plaintiff incurred K100 to transport stock of beer to it’s liquor outlet at Parom village. On further cross-examination, Mr Simi was unable to produce any business records, bank statements or group tax etc, as he left them back in Wewak.

The second witness for plaintiff was Mr Bruno Kaipa. Mr Kaipa is Financial Controller with Leslie Wungen and Co. and a registered public accountant. His evidence is contained in an affidavit sworn on the 24th July 1997. He prepared a statement of account in relation to plaintiff’s records of earnings and losses. The statement of account he prepared was based on information provided to him by the plaintiff’s manager, Mr John Simi, and the invoice from SP Brewery. He admitted the statement of account is based on actual sale and losses of 364 cartons of beer and not 283 cartons which were returned to the plaintiff by police. Again, this witness was not able to produce bill of account invoice from SP Brewery and business records for the same reason that they were left back at Wewak.

The State did not call any evidence, the reason was that the policemen, Joseph Hompwafi and John Kalaut, being first and second defendants withdrew during the trial of the action.

On the evidence, it is incumbent upon the plaintiff to produce business records, such as profit and loss accounts, sales records, bank statements, group tax returns etc to prove business operations and viability of the business. Failure to do so does not assist plaintiff’s cause, particularly the validity of the claim against the defendants.

There is affidavit evidence by Bruno Kaipa to support plaintiff’s claim, however, there is not an iota of evidence, he is the plaintiff’s regular accountant, who looks after plaintiff’s business records. Mr Kaipa’s evidence as to trading and loss account in my view is mere trading assumptions based on what plaintiff told him. No reference whatsoever is made to business records. Furthermore, the trading and loss statement was based on the sale of 364 cartons of beer. Really it should have been based on 283 cartons of beer returned to the plaintiff and 81 cartons not accounted for. State’s submission is that, I should not accept the figures assessed by plaintiff, which I agree entirely.

In John Tuink Salamon & Ors -v- The State [1994] N1272, a case involving claim for compensatory damages for loss and destruction caused by Police, during a police raid. One of the principal claim was for loss of tradestore and tradestore goods. His Honour Woods, J. had this to say:

“John Tuink Salamon claimed for the loss of houses and tradestore, loss of personal possessions, trade-store goods, and damage to vehicle. He is also claiming for loss of business profits since the incident. Whilst I am satisfied on the basis of his affidavits that the assessment is reasonable with respect to the houses and buildings, and personal possessions and also the vehicle damage, there is one aspect of trade-store goods which I feel needed more evidence and this is interrelated with the claim for loss of profits. Included in the trade store goods is K12,785.00 for stock of cigarettes. That seems to be a large item for a tradestore and suggests more than just a mere convenience village tradestore. Whilst the Court may be lenient with strict evidentiary matters with village claims, once you are claiming for what are major economic activity enterprises the court is entitled to insist on proper evidence in the nature of ledgers and account books and even taxation returns to comply with the modern laws.

The plaintiff says all his records were lost in the destruction of the store however with modern activities there are copies and other records, such as copies of records with suppliers of substantial quantities of goods such as this large claimed amount of cigarettes. There is an affidavit by an accountant Ariel Adraincem to support the plaintiff’s claim but he did not appear to be the plaintiff’s regular accountant who looked after plaintiff’s business records but gave a series of trading assumptions based on what the plaintiff told him and there was no reference to actual business records from anywhere. The Court cannot find a judgement based on mere assertions or assumptions.

Whilst I will accept the fact that there is enough evidence to suggest a reasonably well operating tradestore and therefore some moderate loss in the short term, then of course there is an obligation in modern enterprises to mitigate and insure and rebuild on insurance. The other party cannot be penalised for a person’s failure to follow normal business practice and insure. I will allow a figure of loss of profits of K1000.00 per month for a reasonable time namely three (3) months.”

Whilst, I accept the fact that there is sufficient evidence to suggest a reasonably operating liquor trading outlet, and therefore some moderate loss occurred, I will however, not accept mere trading assumptions based on what plaintiff told the accountant, in the absence of evidence of business records, such as account books, bank statements, group tax return etc. Court in my view is entitled to insist on proper evidence on claims as this, involving major economic activity enterprises.

The fundamental principle which governs the whole of law of damages, in whatever area damages are awarded, is the principle of compensation. Damages to be awarded in monetary terms no more and no less than the plaintiff’s actual loss. It simply means that the amount of money to be awarded as damages must be such an amount which puts the injured party who suffered loss or damage to the same position as he would have been if he had not suffered injury or damage for which he now claims.

See Luntz H. Assessment of Personal Injury and Death 3rd Edition Butterworths p. 3 para. 1.1.3.

The principle was formulated in a classic and much quoted case of Livingstone -v- Rawyards Coal Co. (1980) 5 App. Cas. 25 (HL). That case involved extraction of Coal by defendant which plaintiff was entitled to. Lord Blackburn had this to say at p. 39:

“where injury is to be compensated by damages in settling the sum of money to be given for ....... damages, you should as nearly as possible get at that sum of money which will put the party who has been injured, or who has suffered, in the same position as he would have been if he had not sustained the wrong for which he is now getting his compensation. .....”

The principle has been reaffirmed in recent years in areas as diverse as conversion of chattels (Butler -v- Egg & Egg Pulp Marketing Board [1966] HCA 38; (1966) 114 C.L.R. 185; Carriage of goods, (The Albazero [1977] A.C. 774 (H.L.); Sale of land, (Johnson -v- Agnew [1980] AC 367 (HL) and infringement of a patent (General Tyre & Rubber Co. Ltd -v- Firestone Tyre & Rubber Co. Ltd [1975] 2 ALLER 173 (HL).

The principle is also referred to as ‘Restitutio In Integrum’ which is not an absolute principle. It is qualified by other principles two of which are:

(a) &##160; Remotenmoteness of eamaghe- the injured party gets damages which naturally arise from the breach or tortious act and not those which are too remote.

(b) totyitigmte losshere t hast has been commitommitted oted or breach of contract occurs, it is the duty of the injured party to lessen the consequences of such b or tIf hes to such nable steps he cann cannot geot get damt damages ages for lfor loss due to his failure.

Some of the damages claimed in this proceedings is in respect to trespass, conversion and detinue. Similar claims were well explained in Enga Enterprises Pty Limited -v- Danny Porakali [1995] N1359. In that case, plaintiff claimed damages after his vehicle was detained for almost a year by the defendant. he sued for daily hire of K100, costs of repairs, damages and interest totalling K64,766.15 on the basis of consequential loss. The Court held as follows:

“(1) &##160; Claims for consequesequential loss are usually considered too remote and to claim consequential loss it must be proved that:

(a) ; The plaintiffnis in usineusiness of hiring out the cthe chattels that have been converted; and

(b) ҈ The cone consequential lo s be act reof tht.

(2) & << 160respass to chattels is s is actionable without proof of actual damage. goode beetroyed or the plaintiff is permanently deprideprived oved of them the measure of damages is thei their values.

Where goods exist and have been restored but have depreciated in value the measure of damages is the costs of repair, if any, and depreciation.”

The learned authors of the text Mcgregor on Damages 15th Edition, cited by the court in Enga Enterprises case (supra) define consequential loss at paragraph 1357 as “Loss beyond that represented by the market value of goods may be incurred by the plaintiff through being deprived of their use. Whether he can recover such consequential of damage.”

Again at paragraph 1298 of Mcgregor on Damages it is stated that “the normal measure of damages for conversion is the market value of the goods converted. This is well settled.”

To claim loss of profit, plaintiff needs to produce proper business records, see Graham Mappa -v- PNG Electricity Commission [1995] N1366. In that case plaintiff claimed damages for loss of income following damage to his 25 Seater PMV Bus when it was involved in an accident with a vehicle owned by defendant. The matter was heard and award of damages was made. On appeal against assessment of damages, the Supreme Court allowed the appeal and remitted the matter for reassessment before the trial judge.

In rehearing Woods, J. was faced with the issue of sufficient evidence. It seems the only evidence plaintiff led was his statement that the business earned K1,200 a week. Woods, J. had this to say at rehearing: (pp. 2-3).

“This ruling therefore makes it clear that if you wish to establish matters like loss of profit from operations of modern business then it is necessary to comply with modern law, such as produce records as are required by law.

Thus if you wish to have the advantages of a modern world of business then you must comply with modern matters like tax laws. This would require appropriate business records to show whether any profit over and above business running costs were earned and then if a profit was earned there is the requirement to pay taxes. The Courts have been referring to these requirements in recent years especially in the operation of shop or tradestore business. ..

From the evidence of the bank it appears that the plaintiff was a reliable customer and an astute business operator. But is that sufficient to satisfy what the Supreme Court states as sufficient evidence to establish damages in law.

Damages in law must include adherence to the law such as the taxation laws. Thus if a person is making profits over and above the running and operating costs which of course would include salary then a person must file the appropriate tax returns and show profits and pay the appropriate tax. The evidence is quite clear that the plaintiff did not keep any proper business records income and expenditure and did not disclose profit for taxation purposes. Therefore as no proper business records and as tax returns have been produced to the Court to show any profit from the operation of the vehicle this court cannot find that there has been any such loss. The mere assertions and depositing of sums of money in a bank is not sufficient evidence.”

There is no evidence of any business records at all in this case. All I have is mere trading assumptions based on what the Plaintiff told the Accountant. This, I find is not sufficient evidence to establish damages in law.

ASSESSMENT OF DAMAGES

Following the principles discussed and based on the decisions in Enga Enterprises case (supra) and Graham Mappa case (supra), I consider damages should be restricted to the following heads:

(a) Trespass to goods (ie 364 cartons of beer.

(b) ټ Illegallegal detention of 364 cartons of beer for 67 days.

(c) &#Conversion of 81 ca of bhof bhich missing or lost whilst in police custody.

(d) #160; & Lo0; of srofits. .