HIGH COURT OF SOLOMON ISLANDS

Civil Case No. 401 of 2005

NELSON NIMELIA

V

SOLOMON ISLANDS HOME FINANCE LIMITED

Date of Hearing: 17 September & 25 October 2008
Date of Ruling: 21 November 2008

D. Marahare for the Claimant
W. Rano for the Defendant 

JUDGMENT ON ASSESSMENT OF DAMAGES

Faukona, J.

On 4th October 2006, this court entered a judgment in favour of the Claimant limited to liability for encroachment. The following orders are relevant.

1.	A verdict and judgment be entered for the Plaintiff limited to liability for encroachment.

2.	Any relevant material on which the plaintiff seeks to rely for proof of each damage for encroachment be filed within 21 days with the Defendant having a further 21 days to file any relevant material in answer.

3.	…………………

4.	…………………

5.	………………...

The parties now come to court to argue on the quantum for the value of encroachment. The Claimant has already entitled to a verdict by virtue of the orders, but how much would he be entitled to as a remedy for loss as a consequence of the encroachment. I need not to look far, but first, to examine the circumstances from which the orders were made. Before doing so, it is relevantly necessary to outline the outcome of the assessment researches and material evidence adduced by the parties.

Mr. Marahare submitted on behalf of the Claimant that Brown J, in his orders insisted that the annuity formula should be adopted in calculating the loss of rental income. The formula is, present value of annuity (pva) = 1/1(1-1(1+) n)

I	=interest

N	=number of years

Affidavit of Mr. Buin filed on 17th August 2007, calculated the loss rental over 39 years using the formula and arrived at $411,406.58.

Rental paid to other companies due to encroachment	$ 440,951.00
	
Refund of Architecture fees	$ 44,656.00
	
Cost of re-drawing the design and building plan	$ 184,620.00
	
Interest on profits 	$ 103,793.00
	
Total Claim	$1,185,426.58

Alternative claim is $5,225,837.00 (exhibit SI-I-SI-4) annexed to Imbe’s Affidavit filed on 31st October 2006.

The figures arrive at according to Mr. Marahare derive from various valuations reports, and they are;

1.	The encroachment of the overhang of defendant’s building 8m2 confirmed by Dunge’s report annexure "S14".

2.	The encroachment of the septic tank and soak-way 30m2 (see Dunge’s valuation report).

3.	The encroachment by the same septic tank and soak-way 46.926m2 (see David Gapirongo’s Assessment annexed to his Affidavit filed on 20th July 2007).

For the Defendant Mr. Rano admitted the only encroachment done by the Defendant is in terms of a slab at the bottom floor measuring 2.66m2 (see Jivugolomo’s Affidavit filed on 29th November 2006), and the overhang on the top balcony measuring 2.66m2 which had been removed. He argued that the manhole, soak-way and underground cables were not owned by the Defendant. They are public instrumentalities which are owned by Solomon Islands Water Authority (SIWA) and Solomon Islands Electricity Authority (S.I.E.A.), see Loboi’s Affidavits deposed on 17th August 2007, and 3rd July 2008. He further argued any assessment for damages sought must therefore be limited or restricted to encroachment only. There cannot be any other assessment for consequential loss or special damages such as loss of profit, or loss of business or rental. They were not pleaded and particularised in the statement of claim. If such consequential loss were intended, the court would not under any circumstances limited the liability to encroachment only. Finally he submits that the Claimant is entitled to damages by way of mesne profits in the sum of $26,000.00, no more, no less.

Facts from which the Orders were made

The orders were made based on Counsels submissions and on certain specific materials available. And that is Claimant’s Summons and Affidavit in support filed on 28th July 2006, his Amended Writ of Summons and Amended Statement of Claim both filed on 20th January 2006, and the Defendant’s Defence filed on 25th May, 2006.

I have examined the materials upon which the Orders of 4th October 2006 were made, quite diligently. My finding has affirmed quite convincingly the road map to take, in order to arrive at a fair assessment of damages.

It would appear that the Writ of Summons filed together with the Affidavit in support, filed on 28th July, 2006 were replicas of the original Writ of Summons and the Statement of Claim filed on 19th September 2005. The only change which appeared in the Amended Statement of Claim filed on 20th January 2006 is the relief sought. Previously the relief sought as per statement of claim attached to the Claimant’s affidavit file on 28th July 2006 is set out as thus:-

For an order that the Defendant pays to the Plaintiff in respect of:-

(i)	Dentals		
(a) Since transfer of the FTE to the Plaintiff 
-113 months x $2,500.00 per month
	282,500.00	
(b) For the remainder of the 50 years lease
-487 months at $2,500.00 per month
	1,217,500.00	
(ii)	Land Compensation
	200,000.00	
(iii)	Revised x Readjustment costs (Construction Fees)	227,000.00	

When the amended statement of claim was filed on 20th January 2006, and perhaps the only amendment contemplated, it appears as thus.

That the Defendant be ordered to pay loss and damages to the Plaintiff for trespass and encroachment to his land and in particular.

(a)	Compensation for trespass to be assessed

(b)	Loss for rentals to be assessed

(c)	Land Compensation to be assessed, and

(d)	Revised and readjustment cost (construction fees) to be assessed.

Against the only amendments, is the Defendant’s defence filed on 25th May 2006, who admitted on paragraph five, two encroachments, one on the top balcony comprising an area approximately 2.66m 3, and the slap on the ground floor basement comprising a total area of approximately 2.66m 3.

Noted from the amended statement of claim paragraphs 4 and 7 which made special reference to the case of Solsports Ltd and Nimelea v Pacific Architects Ltd, HC-CC No. 141 of 1997, indicated that the only encroachment which was pleaded and particularised was the overhang of the Defendant’s building. Apart from that there were no other pleadings and particularisation of the slap, manholes and under ground cables.

However, the Claimant has achieved some bonus when the Defendant admitted his slap was erected on the ground floor basement.

Upon those facts revealed by the materials and the admission by the Defendant that the Orders were made. Order 1 was a liability for damages awarded to the Claimant. Order 2 is a doing order limited to relevant materials the Claimant seeks to proof each of the damages for encroachment. In my view, "each damage" the court refer to, were not in a broader sense to cover wide range of encroachment damages, but restricted to the two encroachment damages admitted by the Defendant. Literally it does not include encroachment damages which the Claimant now seeks relief for remedy that is, for two manholes and 11,000 volts cables that run underground of the Claimants land.

Should the Claimant wish to include additional encroachment of those instrumentalities, that could have been pleaded and particularised at the pleading stage, and the court would have considered at its deliberations. To consider further and new areas of encroachment at this stage is more than late. The function of this court is to assess the damages awarded by the order of 4th October 2006, and no more or less. I am mindful that the counsels do not indulge in urging the court to conduct further new hearing to determine extra ordinary issues which had not been pleaded. Had it been done, the court would have heard parties on any evidence of the extent of loss suffered by the Claimant, and would hear the evidence on the issue of ownership of the manholes and the underlying cables.

It seemed quite obvious that the witnesses called by the Claimant were purposely to prove the ownership of the manholes which were not issues before the court on 4th October 2007. Quite clearly, that this court ought to determine and assess what money can buy for the two encroachments – which the Defendant had admitted and a judgment was agreed upon to be entered without a trial.

The purpose of pleading

The purpose of pleading is to narrow down the issues, to certain points of controversy in fact or law, which the court is required to determine. Practically each party is bound by his own pleadings to the contentious issues unless abandoned or amended. In the case of Blay v. Pollard and Morris Scrutton L.J. said;

"But no fraud is alleged in the pleadings; no application has been made; and I cannot think a judge should find fraud or conduct amounting to fraud when it has never been pleaded.

"…Case must be decided on the issues on the record; and if it is desired to raise other issues they must be placed on the record".

In Patty v Tikani Kabui, J, as he was then stated on page 4 paragraphs 6;

"In this case, I cannot think otherwise that to say that the claim in the Statement of Claim is for general damages only for trespass. I cannot read into general damages specific damages unless such are particularized and pleaded:

In Chow v Attorney-General, Kabui J again stated on page 2, paragraph 4.

"Loss of revenue and accrual of interest on loan from the bank was consequential losses that in my view ought to have been specifically pleaded".

Those three case scenarios bring home strict rules in regards to pleadings. The Claimant cannot come to court and seek relief of what has not been pleaded and particularized, or any party for that matter. The courts will not grant, unless they are pleaded and on record.

Can a Claimant enters through the back door and deviates from his pleaded case. There is nothing of such. The rules related to pleading are universally applied and no exception will be granted to anyone. In Waghorn v George Wimpey and Co Ltd  Geoffrey Lane J said;

"In the present case, counsel for the plaintiff seeks to bring himself within the terms of that passage saying that this is just a variation or a modification or a development of what is averred and it’s not something new, separate and distinct".

And in paragraph 2 His Lordship continued;

"In my judgment this is not a case which is just a variation, modification or development of what is averred. It is a case which is new, separate and distinct and not mere technicality".

And he continues;

…"If the Plaintiff’s case had been pleaded to the effect that it was whilst he was on the way to that valve that he had slipped, then preparation of the case would have been entirely different and its presentation would have been different. There was no application here for leave to amend. The upshot of the matter is that in my judgment this was so radical a departure from the case as pleaded as to disentitle the Plaintiff to succeed".

I have formed an opinion of what the orders of 4th October 2006 meant. This is not a new jurisdiction given to this court to deal with some new matters in a different mode with a different procedure, unless the contrary be expressed or plainly implied be given to this court to exercise according to its inherent powers. However, I am bound by the specific function to assess the damages only. The verdict and award had been made, and it would be outside of the scope to entertain issues that were not pleaded and particularized. See Spencer v. Commonwealth per Isaacs J. Or even to entertain another trial to establish the ownership of other encroachment instrumentalities whether directly or indirectly.

In doing so would have brought inconsistency to the operation of the principal of issue estoppel. In Dika v Somana, Palmer CJ adopted the comments by Dixon J in Blair and Others v Curran and Others and I quote the relevant parts of page 5, paragraph 1 and 2;

"A judicial determination directly involving an issue of fact or of law disposes once for all the issue, so that it cannot afterwards be raised between the same parties or their privies.

Nothing but what is legally dispensable to the conclusion is thus finally closed or precluded. In matters of fact the estoppel is confined to those ultimate facts which form the ingredients in the cause of action, that is, the title to the right-established.

Matters cardinal to the latter claim or contention cannot be raised, if to raise them is necessarily to assert that the former decision was erroneous".

For the sake of clarity, it is not the intention of the court assessing damages, awarded under a verdict, to re-entertain issues or maters that had not been pleaded in the materials available before a trial court on 4th October 2006. Issues related to two manholes and 11,000 volts live cables located within Claimant’s land were not pleaded and particularized. They are new issues and should the Claimant wish to relitigate, must obtain leave. Leave has never been sought for whatever motive, is anyone’s guess. May be to capitalise on the verdict to have an easy ride, or perhaps out of some oversight. If leave should be sought and granted then it must only be granted on new evidence being discovered which the turnover case for the Claimant would appear differently had those evidence available to him. See Arnold v. National Westminster Bank PLC.

Even if I would consider, I am satisfied on the facts that-

(1)	they are not pleaded and particularized

(2)	the affidavit of Loboi filed on 17/8/07 and 3rd August 2008, are overwhelming evidence. Exhibits "FL2" and "FL3" are two letters from the authorities admitting the manholes and the underground cables as theirs. The two manholes are owned by the Solomon Islands Water Authority (SIWA) and the live cable wires are owned by the Solomon Islands Electricity Authority (SIEA). Those public instrumentalities were installed and have the protection of the statutes that create them, in particular S. 47 of S.I.W.A. Act and S. 38 of S.I.E.A. Act. Once they are fixed to the land they retain the ownership, maintain, control and manage because they are for public use. In North Share Gas Co Ltd v Commissioner of Stamp Duties (NSW) the High Court of Australia held:

"… mains and services have been placed in the ground for no temporary purpose, but to serve the end for which they are designed. In other words, they will remain in the soil until they have exhausted their useful lives, and then only will they be removed. They remain, however, the property of the company.

Loboi’s evidence is not shaken at all by the sworn statements of Delafaasia and Aseri, and even submissions made by the Claimant’s Counsel in paragraph 15 of his submissions.

Has Special damages being pleaded or shown by evidence

What is meant by special damage? In Ilkiw v Samuels and Others, the court define special damage as monetary loss which the Plaintiff has sustained up to the date of trial. In Chow v Attorney-General, Kabui, J said;

"……loss of revenue and accrued interest were consequential loss that ought to have been specifically pleaded".

What actually comprises special damages or consequential damages? They are items that come under heading such as loss of profit, loss of business and rentals etc.

Has the Claimant pleaded and particularize those items in his Statement of Claim supported by an affidavit filed on 28th July 2006, or his amended Writ of Summons and Amended Statement of Claim filed on 20th January, 2006. Having thoroughly perused those materials, I find there is no pleading and particularization in relation to special damages which the Claimant now claim. In fact they appear as a relief sought and no more. The Claimant should have done better, if he so desired those item heads be taken ti consideration when assessing the damages.

In Ilkiw’s case Lord Diplock said on page 890;

"As regards question of damages, I would put it this way. Special damage in the sense of a monetary loss which the plaintiff has sustained up to the date of trial must be pleaded and particularized".

In my view, it is plain law- so plain that there appears to be no direct, because everyone has accepted it as being the law for the last hundred years- that one can recover in an action only special damages which was been pleaded, and, of course proved".

One exception where special damage were not plead and particularized but can be awarded is when evidence given at the trial has sufficient proof that special damage exists. In Chow v Attorney-General, Kabui J said on page 5, paragraph 2;

"The problem here is that the Plaintiff had omitted to plead any special damage in the Statement of Claim and yet at the trial for assessment of damages, produced evidence of special damage. The Plaintiff did not apply for an amendment of the Statement of Claim to include her claim for special damage. Counsel for the Plaintiff might have thought it was unnecessary to do so because Counsel for the Defendant pointed out the omission to plead special damage after evidence of that had already been admitted at the trial. I feel that if I rule against the Plaintiff on this point, there would be injustice against the Plaintiff".

Whilst each case depend on its own circumstances, I am not convinced that new evidence led by the Claimant in this case at the assessment trial, reveal additional encroachments which could have been properly pleaded earlier. These new encroachments have given rise to enormous amount of special damages claim. Even if I would consider those evidence I am satisfied that the manholes and the 11,000 volts electrical cables under ground are not own by the Defendant, but rather public utilities that are owned by public authorities.

Assessment of damages

Assessment of damages is often refer to as a difficult task, especially in trespass or encroachment case where the damage has to be measured in monetary term. In this case the damages are real, therefore, becomes necessary to determine what the measure of damages is. The function of damages are compensatory, to put the Claimant whose rights has been invaded, in the same position as he had been respected. The question then, what has the Claimant lost?

There is no dispute that the Claimant owns the land Parcel No. 191-020-97, Point Cruz, Honiara. There is no dispute that it is a commercial land. There is no dispute that sometimes in 2005 or before that, the Defendant had demolished the overhang on the balcony (Western side).

In this case the verdict was made on the admission by the Defendant on two encroachments, the overhang and the slap on the basement floor of Claimants property. There was no trial and no evidence adduced to proof the extent of Claimant’s loss and other encroachments. Additional encroachments which are now raised in this court are new and had not been pleaded and particularized. In the light of that this court will only assess consequential losses attached or related to the overhang and the slap on the base floor. Order 2 Mr. Marahare refer to as provided for further materials for proof, does not mean new claims of encroachment. Two encroachments had been admitted and Claimant is urged to proof each damage related to that.

Very important that this case must be distinguished from Chow’s case and Ikiw’s case. In both cases the Claimants never pleaded special damages; however, the courts did eventually award special damages. As commonly known, that each case has to be decided based on the set of facts available before it. No two cases are similar in all facts and issues to full perfection.

A number of affidavits were filed by both Counsels in terms of valuation reports and assessment of loss and damages suffered by the Claimant because of the encroachments. Different methods of assessment were applied to assess the possible value of the loss.

The Claimant said they are using the formula present value annuity (pva=1/1(1-1) (1+) n.

I	=interest

N	=number of years

It was submitted that this is the formula insisted by Brown J to be used. Unfortunately that has not been included in the Orders. He may have made mention of it verbally, but is not part of the Order.

Apart from that there are other reports compiled. Mr Gapirongo calculated that area of encroachment as approximately 46.926m2 of land covered by the septic tank and soak-way. Because of that, building plan has to be redesigned to fit the remaining availability of land. To redesign the plan it costs money, and the Claimant suffered loss. Further to that the Claimant also lost land interest and likely income that could have generated. He arrived at $207,000.00 being value for loss of business in the past, and for 39 years to come, the full life of fixed term estate.

Mr. Zoleveke of CBL also produced an assessment report confirmed loss of revenue based on 72.32m2 area of encroachment. He arrived at $1,116,839.00 for loss of revenue and loss of land due to encroachment.

Mr. Silverio Buin also compiled a report confined to the potential profit for the ground floor, from the years 2000 to 2005. The figure he arrived at is $1,965,228.00

Tropical Architecture also filed a report in regards to rental of second and third floor of the proposed building. The figures he arrived at are $1,073,385.00, from the years 2000-2006. On revised and readjustment, the rental calculation arrived at is $1.26 million, right up to the life span of the fixed term estate. And for building adjustment is $227,000.00.

Mr. Dunge also filed a valuation for compensation report. He estimated that the area of encroachment is 30m2, inclusive of all encroachment alleged by the Claimant. The figures he arrived at are $200,000.00 being the value of the land for compensation.

From those reports it appears that there are inconsistencies in regards to the areas of encroachment. Gapirongo said 46.926m2 was encroached into. Mr. Zoleveke said that the encroachment area was 72.32m2 and Mr. Dunge said that encroachment area was 30m2. How would one calculate the value of damages in such circumstances? The encroachment base should form a good starting point to work out the value of damages and the likelihood of losses that were suffered. It is quite difficulty to work out a realistic outcome in an unequal base. No one would belief it. Two reports covered the years 2000-2006, the other two reports calculated until the life of the fixed term estate, [39] years. In Ilkiw’s case, any claim for special damage in monetary loss which the Claimant sustained up to the date of trial, and not for unknown years ahead. 

Mr. Rano in his submissions highly criticised the method use by Mr. Dunge as "before and after" method. The same criticism was levelled against Gapirongo’s method of capitalisation of net rents. He submitted that Dunge was over rated and his method can only be appropriately used to assess compensation when a land is under the process of land acquisition. For Gapirongo’s method Mr. Rano refer to Robinson Brothers (Brewers) Ltd v Houghton and Chester–he-Street Assessment Committees Scot LJ outline, what matters to be considered in arriving at the rental of the land.

It would appear that all the valuation and assessment reports filed by the Claimant assume that the Defendant owns the manhole and soak-way. And it also assumes that the Claimant would be permanently affected by the encroachment for the remaining life span of the fixed term estate. And failed to consider even if there is no encroachment, the Claimant would not construct his building because the underground cables and pipes and two manholes are owned by SIEA and SIWA. They are public instrumentalities and they are there for public purposes. It would appear that those instrumentalities were put in place before the land was allocated to the Claimant. If it was later, the Claimant would have objected to their instalment, as the land was he’s. If installations were before allocation, then, by right thinking businessman, ought to deal with the owners of those installations before spending money on getting architectural plan etc. In my personal view, money spent on architectural drawing is out of own making and planning by the Claimant and no one should bear the cost for that. 

Further more, some of the reports failed to address that the overhang has already been severed, and from thereon until now it pauses no threat of accruing further loss and damages for encroachment.

So what is the right valuation method? To arrive at a most appropriate method of assessment, it has to be noted that this case concerns trespass and encroachment, and temporary loss of use of land because of interference by way of encroachment and trespass. And above all, matters not pleaded and particularise cannot be part and partial of the consideration for assessment. I have pointed out earlier that I will only assess damages related to overhang and slap on the base. The only two matters the Defendant admitted and a verdict was made accordingly on 4th October 2006. Isaac J point out in Spencer case that "the Court tries the issues raised, and does not treat as still in contention any matters admitted between the parties on the pleadings as they stand".

Realistically, all the valuation and assessment reports intended to support the Claimant’s case are based on assumptions. Could have been better if consideration is had to the two restrictive encroachments admitted by the Defendant. Worst still other encroachments alleged with a special damages attach to them were not pleaded, and I think rightly, that the Claimant cannot recover any special damages as he would like to expect. There are serious inconsistencies in the reports and no assistance to the court at all. 

For the Defendant, Mr. Rano submitted that this case is a temporary loss of use of land for wrongful use. Therefore the Claimant is entitled to damages by way of mesne profit. The claim for mesne profits is always in the form of a claim for damages for a continuing trespass upon the land. This action covers profits and other losses which the Claimant suffered. In Clifton Securities Ltd v Huntley and Others Denning J stated on page 284 paragraphs 2;

"When the rent represents the fair value of the premises, mesne profit is assessed at the amount of the rent, but, if the real value is higher than the rent, then the mesne profit must be assessed at the higher value".

I am convinced that the assessment report compiled by Mr. Jivugolomo (see affidavit field on 29/11/06) is more or less reflective of the actual encroachments, and the area coverage which may have deterred the Claimant from achieving his full benefit. Converting the areas of encroachment into actual figures before and after encroachment, Mr. Gorepava in his valuation report (see Affidavit filed on 29/11/06) has systematically verified the value of the actual encroachments. He arrived at a figure of $26,000.00. That figure is closer representative of the reality, than the Claimants reports. I am satisfied that $26,000.00 should be the rightful value of damages incurred by the Defendant. And that figure represent a fair value which, in my view is the mesne profit which the Claimant is entitled to.

Order:

1.	Assessment of damage calculated at $26,000.00 to be paid by Defendant to the Claimant.

2.	At the previous hearing costs were reserved. To be fare to both parties since the case now going the Defendant’s way – cost be in the cause.

THE COURT