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James v Bank of Tonga [1997] TOLawRp 31; [1997] Tonga LR 54 (20 June 1997)

[1997] Tonga LR 54

TONGA LAW REPORTS

James

v

Bank of Tonga

Court of Appeal
Hampton CJ, Morling & Burchett JJ
App. 4/97

18 & 20 June 1997

Tort - conversion of goods
Damages - difficulties of assessment - assessment

The Bank had security over certain property, and on default, seized and sold it, including machinery claimed by the appellant as his and nothing to do with the defaulter.

Held:

1. The judge saying that property in the machinery for the appellant was at an end was not an adequate answer to the claim. Once the joint venture was abandoned (if it ever actually came into being) the appellant was left with the machinery which was his property, unencumbered by any continuing right of either of the other parties to the venture.

2. According the appellant was entitled to a verdict; the difficult question was quantum of that verdict.

3. Mere difficulty in estimating damages does not relieve courts from the responsibility of estimating them as best it can, even if, sometimes, that of necessity involves guess work rather than estimation. A court must do the best it can.

4. Appeal allowed; orders below set aside and in lieu a judgment for the appellant.

Cases considered:
Sellar v Adelaide Petroleum [1994] HCA 4; (1994) 179 CLR 332
Commonwealth of Aust. v Amann Aviation [1991] HCA 54; (1991) 174 CLR 64

Counsel for appellant: Mrs Palelei
Counsel for respondent: Mr Appleby

Judgment

The Bank of Tonga, having, it appears, security over property belonging to a customer who had gone overseas owing it money, arranged for the sale of a considerable quantity of goods at his motel. Among the items sold, was some sandalwood processing machinery, which fetched a mere T$1,000. This appeal concerns the appellant's claim to that machinery, asserted by an action in conversion.

Lewis J., who heard the matter, found that the machinery was imported into Tonga, and arrived in 'Eua on 7 September 1990. The uncontradicted evidence established that it had been acquired by the appellant in Brisbane, Australia, and there modified at a cost of $26,000. The appellant, who is experienced in the sandalwood industry, and the mechanic who modified the machinery, each estimated its value at T$100,000. It was imported for use in a joint venture which, it was proposed, would exploit sandalwood trees in the royal forest on 'Eua. The joint venturers were to be His Majesty, the appellant, and a Mr Wong, a financier. The machinery was to be installed in a factory to be built and operated by the Bank's customer, a Mr Vaka'uta, on behalf of the joint venture. Because of His Majesty's interest in the project, the machinery was imported free of duties, by virtue of a document signed by a palace official. That official gave evidence confirming the proposed joint venture, and the parties to it. However, he said it was not reduced to writing, and the "project never got started".

Construction of the factory did commence, and the machinery was installed while the work was proceeding, but the building remained unfinished. However, the machinery was able to be used, and some sandalwood was processed in 1991. The processing did not continue because of the unavailability of mature trees. The mechanic who installed the machinery, a Mr Sadhu, gave evidence of an admission against interest made to him by Mr Vaka'uta, who told him that the machinery belonged to the appellant.

There was simply no evidence at all to the contrary.

But the trial judge found that the appellant had committed the machinery to the joint venture. On that basis, he held: "Property in the machinery for James was at an end". This is not an adequate answer to the appellant's claim. Once the joint venture was abandoned (if it ever actually came into being), the appellant was left with the machinery which was his property, unencumbered by any continuing right of His Majesty or Mr Wong to have it utilized in the furtherance of a project which did not exist. The appellant was entitled to his machinery, just as His Majesty was entitled to his trees, and Mr Wong to the money he might have had to invest in the venture.

Accordingly, the appellant was entitled to a verdict. The difficult question is the quantum of that verdict.

Undoubtedly, the machinery did not retain, as at 16 June 1994 when the Bank sold it, its earlier value of T$100,000. The price paid, though on a liquidation sale, confirms that. It had, for some 3 1/2 years, been inadequately housed in a partly completed factory at 'Eua, an island well known to provide inclement conditions. The evidence suggests there was a serviceable roof, but there were not completely weather proof walls. The market for machinery of this type was restricted.

However, the Court does have some reason to think the real value was substantially above the derisory sum represented by the eventual sale. The bank manager at 'Eua gave evidence of carrying out a valuation of the machinery in 1993, apparently in November. He then put on it a figure of T$22,500.

Where a plantiff has an entitlement to damages, a mere difficulty of assessment should not deter the Court from fixing an appropriate figure, or an estimated figure, though precision may be impossible. This principle is well established. It was restated comparatively recently in Sellars v. Adelaide Petroleum N.L [1994] HCA 4; (1994) 179 CLR 332 at 349, where Mason C.J., Dawson, Toohey and Gaudron JJ said:

"And, where there has been an actual loss of some sort, the common law does not permit difficulties of estimating the loss in money to defeat an award of damages".

The principle was also elaborated by Mason C.J. and Dawson J. in The Commonwealth of Australia v. Amann Aviation Pty. Limited [1991] HCA 54; (1991) 174 C.L.R. 64 at 83, as follows:

"The settled rule, both here and in England, is that mere difficulty in estimating damages does not relieve a court from the responsibility of estimating them as best it can (Fink v Fink [1946] HCA 54; (1946), 74 C.L.R. 127, at p.143; McRae v Commonwealth Disposals Commission [1951] HCA 79; (1951), 84 C.L.R 377, at pp. 411-412 Chaplin v. Hicks, [1911] UKLawRpKQB 104; [1911] 2 KB 786, at p. 792). Indeed, in Jones v Schiffmann ((1971) [1971] HCA 52; 124 CLR 303, at p. 308) Menzies J. went so far as to say that the 'assessment of damages ... does sometimes, of necessity involve what is guess work rather than estimation'. Where precise evidence is not available the court must do the best it can (Biggin & Co. Ltd v. Permanite Ltd., [1951] 1 KB. 422, at p. 438, per Devlin J.)."

Accordingly, it is necessary to estimate the value of the machinery at the time of its conversion by the bank, having regard to the indications in the evidence, to which reference has been made. On all the evidence, the damages should be assessed at T$7,500. The appeal should be allowed; the orders made below should be set aside; in lieu thereof, there should be a verdict for the plaintiff for T$7,500 plus costs; and the respondent should pay the appellant's costs of the appeal.