|
|
Home
| Databases
| WorldLII
| Search
| Feedback
Supreme Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE SUPREMECOURT OF JUSTICE]
SCA NO.16 OF 2017
BETWEEN:
COVEC (PNG) LIMITED
Appellant
AND:
PETER KAMA representing himself and for and on behalf of DAMIN KAMIN CLAN of KUMAI TRIBE OF KUP, KEROWAGI DISTRICT, Simbu Province
Respondents
Waigani: Kandakasi DCJ, Kassman & Toliken JJ
2017: 29th June
2020: 4th February
APPEALS – Supreme Court – Civil – Judgement on damages reviewed and awarded on claims made in statement of claim after striking out pleading in reply to defence that contradicted certain parts of the statement of claim
APPEALS – Supreme Court – Civil – duty of trial judge to ensure pleadings are settled with clarity so that evidence adduced at trial covers issues raised in the pleadings and will lead to a determination of the issues
TORTS – Claims of conversion defined
RESTITUTION – Claims of unjust enrichment defined
DAMAGES – Trespass and conversion – Assessment of damages – Evidence establishing claim – award by trial court quashed – assessment of value of chattels removed and assessment as to corrections to land to make good adduced at trial - no rebuttal – awarded
PRACTICE & PROCEDURE – A contradiction by a party in its own subsequent pleading – No such pleading permitted by the Court Rules – Offending pleadings struck down – Order 8, Rule 19 National Court Rules.
Facts
The Appellant entered the Respondent’s land, erected a stone crushing plant, extracted sand, gravel and stones from the land and processed that material through the crushing plant and used the products in rehabilitation work on the Highlands Highway. The Respondent successfully obtained judgement in a sum over K25 million for damages for the value of the sand, gravel and stones extracted and used by the Respondent for its economic gain and a further K1 million in exemplary damages.On appeal the Appellant claimed the award of damages was made without foundation in the Respondent’s pleadings or evidence and there was no basis for the award of exemplary damages.
By the Court:
Cases Cited:
Papua New Guinea Cases Cited:
PNGBC v. Jeff Tole (2002) SC 694
MVIL v. KaunaKiangua (2015) SC1476
ManiosaYakasa v. David Piso (2014) SC1330
MVIT v. John Etape [1994] PNGLR 596
RimbunanHijau (PNG) Limited v. Ina Enei (2017) SC1605
MVIT v. SalioTabanto [1995] PNGLR 214
Public Officers Superannuation Fund Board v. SailasImanakuan (2001) SC677
Henry ToRobert v. Mary Torobert (2012) SC119
NCDC v. Yama Security Services Pty Ltd (2003) SC707
Curtain Bros (PNG) Ltd v. UPNG (2005) SC788
Media Niugini Ltd v. Anderson PawaAgiru (2012) SC1203
Rex Paki v. MVIL (2010) SC1015
Kanga Kawira&Ors v. Kepaya Bone &Ors
Mathew Pok v The State (2007) SC864.
Madiu Andrew v. Mineral Resources Development Co Ltd (2004) N2601
Papua New Guinea Banking Corporation v. Tole (2002) SC694
MVIL v. John Etape [1995] PNGLR 214
MVIL v. James Pupune [1993] PNGLR 370
ManiosaYakasa v. David Piso (2014) SC1330
Buna v. The State N2696
Wahad v Wilkinson [2006] PGNC 94
Overseas Cases Cited:
Lamb & Anor v. Kincaid & Anor (1907) [Vol. XXXVIII] Supreme Court of Canada 516
Blay v Pollard and Morris [1930] 1 KB 628
London Passenger Transport Board v Moscrop[1942]1 All ER 97
Livingston v Rawyards Coal Co (1880) App. Cas. 25
PeruvianGuano Co. v. Dreyfus Bros. & Co.
Lamb v Kincaid (1907) 38 S.C.R
Jegon v Vivian [1871] UKLawRpCh 21; (1871) L.R. 6 Ch. App. 742
Wood v Morewood [1841] EngR 164; (1841) 3 Q.B. 440
Wilson v Robinson (London) Ltd [2006] EWCA
Fairfax Gerrard holdings Ltd v Capital Bank Plc [2007]
Hall v Barclay [1937] 3 All E.R. 620
Greening v Wilkinson (1825) C. & P. 625
Sachs v Miklos [1948] 2 K.B. 23
Martin v Porter (1839) 5 M. & W. 352
Wood v Morewood [1841] EngR 164; (1841) 3 Q.B. 440 at 441
Porter v Mercer
Jegon v Vivian [1871] UKLawRpCh 21; (1871) L.R. 6 Ch. App. 742
Kuddus v Chief Constable Leicestershire [2002] A.C. 122
Rookes v Barnard [1964] AC 1127
Broome v Cassell & Co [1972] UKHL 3; [1972] A.C. 1027
Legislation Cited:
Constitution sections 155(2)& (4)
Supreme Court Act Chapter Ch. No. 37 sections 6(2), 8(1)(e)& 16
National Court Rules Order 8 Rules 18 and30
Counsel:
J.R.Griffin QC and R. Mann-rai, for the Appellant
C. Gagma and T.Dalid, for the Respondents
DECISION
4th February, 2020
1. KANDAKASI DCJ: I have had the benefit of reading the draft judgment of my learned brother Kassman J. With the greatest of respect, I agree with his Honours views on the pleadings, their effect, the relevant law, what transpired at the trial and the summation of the learned trial judge’s findings and the Appellant’s (Covec’s) appeal. I will add my views to that appropriately. However, with the greatest of respect I don’t agree with his Honour’s proposed outcome of the appeal and the reliefs this Court can grant for reasons I will get into now.
The Appeal and Background
2. Before us is an appeal against a judgment of the National Court. Before the National Court was a claim for damages for trespass, conversion and loss of profits by the Respondent (Kama) against the Covec. That followed Covec’s entry of Kama’s land, identified as Portion 1239C located close to the Bihute Correction Services Institution in the Eastern Highlands Province (the Land”), without any prior approval and consent but with the resistance of Kama, which resulted in Court proceedings and other steps taken by Kama to enforce his rights over his Land as its landlord.
3. Upon entering Kama’s Land, Covec erected a stone crushing plant, extracted from the Land sand, gravel and stones (valuable materials). These valuable materials were processed and used by Covec to for its contractual rehabilitation work on a certain portion of the Highlands Highway (road works) under a commercial contract it had with the State. Upon conclusion of earlier proceedings, Kama issued proceedings, WS 712 of 2007. Peter Kama representing himself and for and on behalf of Damin Kanim Clan of Kumai Tribe of Kup, Kerowagi District, Simbu Province v.Covec (PNG) Limited, which led to this appeal. Eventually, Kama successfully obtained judgement in the sum of K25,686,064.00 in damages and a further sum of K1,000,000.00 in exemplary damages (the judgment).
4. Before coming to its decision on the damages, the National Court found despite denials and contest by Covec, that Peter Kama represented himself and was acting for and on behalf of Damin Kanim Clan of Kumai Tribe of Kup, Kerowagi District, Simbu Province. The Court also found Kama and his people were the registered owners of Land. The Court also found Covec entered the Land without the authority, approval or consent of Kama and his people, erected a crusher plant and wilfully extracted the valuable materialsfrom the Land and nearby or adjoining river banks and used them for its economic gain in the form of the road works. At the trial, Covec failed to call and adduce any evidence in support of its defence to the claims by Kama. It claimed it had the evidence directly on the issues before the Court but were in its head office in China and did not produce them. Kama produced evidence supporting his claim which were not seriously objected to and contested. Covec challenged through cross examination only earlier estimates of the value of the valuable materials but failed to object or challenge evidence disclosing a revision of the earlier estimates and an assessment of the total materials that could have been extracted and used by Covec to advance its economic or commercial interest. That assessment was carried out at the end of the road works. The judgment of the National Court was based essentially on that unobjected to and or unchallenged evidence.
5. Aggrieved by the judgment especially, the award of damages, Covec lodged its appeal. In support of its appeal, Covec argues that, the award of damages was made without foundation in the Kama’s pleadings or evidence and there being no basis for the award of exemplary damages. Kama is contesting the appeal and argues to the contrary.
6. The parties’ arguments and the background to the appeal presents two main issues for this Court to determine. These are:
(1) Was there foundation in:
(a) the pleadings; and or
(b) the evidence,
for the National Court to award the sum of K25,686,064.00 in damages and a further sum of K1,000,000.00 in exemplary damages?
(2) Is Covec entitled to take issue on the award of damages without first:
(a) giving discovery and adducing in evidence the most direct evidence on the issues before the Court; and
(b) objecting to and seriously contesting the evidence adduced by Kama?
Issue 1 (a) - Was there Foundation in the Pleadings?
7. As already noted, Kassman J.’s judgment covers what was pleaded by Kama and his people in their statement of claim, the defence to that and Kama and his people’s reply to the defence. Upon those pleadings the parties went to trial.Again as already noted, at the trial Kama and his people called witnesses who gave evidence and were cross-examined. Covec, neither objected nor took issue with the witnesses that were called by Kama and his people through whom came the critical evidence on the issues before the National Court and now before us. The only issue Covec took is as noted in Kassman J’s judgment especially that part of the judgment that cites the dialogue between, counsel for Covec, the bench and a witness, Peter Gola. That mainly concerned, pre-estimates of the valuable materialsthat were likely to be taken from Kama and his people’s Land. That estimate was carried out in 2007. There is no record of Covec, through its learned counsel taking issue with the estimates the witness gave based on site inspections carried out the after the completion of the road works.
8. Further, prior to the trial, Covec was required by a notice of discovery and later by an order of the National Court dated 15th July 2015 (directed to all parties) to produce all of the relevant documents. This Covec failed to do based on its claim of all its documents being sent to its head office in China and being kept there.
9. I add to the discussion on point by Kassman J. in his judgment, the relevant law on pleadings, trial and conduct of the parties at a trial of a matter are now well settled in our jurisdiction. In PNGBC v. Jeff Tole (2002) SC 694, I summarised (with Sheehan J agreeing) the law on pleadings in the following terms:
“The law on pleadings in our jurisdiction is well settled. The principles governing pleadings can easily be summarized in terms of, unless there is foundation in the pleadings of a party, no evidence and damages or relieves of matters not pleaded can be allowed. This is the effect of the judgements of this Court in Motor Vehicles Insurance (PNG) Trust v. John Etape [1995] PNGLR 214 at p.221 and Motor Vehicles Insurance (PNG) Trust v. James Pupune [1993] PNGLR 370 at pp. 373 –374. These judgements re-affirmed what was always the position at common law and consistently applied in a large number of cases in our country. The list of such cases is long, but reference need only be made to cases like that of Repas Waima v. Motor Vehicles Insurance Trust [1992] PNGLR 254 and Carmelita Mary collins v. Motor Vehicles (PNG) Insurance Trust [1990] PNGLR 580 at p. 582 for examples only.
This position follows on from the objects behind the requirements for pleadings. As the judgement in Motor Vehicles Insurance (PNG) Trust v. James Pupune (supra) at p. 374 said in summary, pleadings and particulars have the object or functions of:
‘1. they furnish a statement of the case sufficiently clear to allow the other party a fair opportunity to meet it;
2. they define the issues for decision in the litigation and, thereby, enable the relevance and admissibility of evidence to be determined at the trial; and
3. they give a defendant an understanding of a plaintiff's claim in aid of the defendant's right to make a payment into court. See Dare v. Pulham (1982) 148 CLR 658 at 664.’”
10. This summation of the relevant principles has been adopted and applied in many subsequent National and Supreme Court decisions. The decisions in MVIL v Kauna Kiangua (2015) SC1476 (per Davani J.) and the one in Maniosa Yakasa v. David Piso (2014) SC1330 (per Lenalia, Murray and Logan JJ.) are examples. In the second case, the Court relevantly quoted from my decision in PNGBC v. Jeff Tole and said:
“60. We do not question the correctness of the observations made in PNGBC v Tole insofar as they require that a party be put on notice as to the relief which is sought against that party and have an opportunity to be heard in respect of the granting of that relief. Where that has occurred, natural justice will have been observed. The point of pleading rules in relation to the relief sought is to ensure that the party against whom that relief is sought has notice. Where, however, natural justice has in fact been afforded to that party in respect of the seeking of other relief, to deny the other party that relief on the basis of an absence of a formal amendment would, with respect, be a miscarriage of justice. The rules of court are a handmaiden of justice, not its master.”
(Emphasis supplied)
11. The point made by the decision in Maniosa Yakasa v. David Piso was already made in the earlier decision in MVIT v. John Etape [1994] PNGLR 596. There the Court per Kapi DCJ, Brown and Konilio JJ., said:
“Where the plaintiff however is allowed to embark at the trial, on matters which are generally included in his allegation of ‘loss of income earning capacity’ by calling evidence relating to his salary loss for instance, the defendant cannot complain unless he objects at the time before the trial Judge and is overruled. No such objection to the evidence which the plaintiff sought to lead in the absence of particulars, was made at the trial.
We would reiterate what this Court said in Motor Vehicles Insurance (PNG) Trust -v- Pupune (SC 452 of 14 December 1993) that where evidence is led without objection, a Court is entitled to make findings on the basis of such evidence provided it is within the general ambit of the plaintiff's claim. Here the general ambit included both general damages for injuries suffered and a claim for loss of income earning capacity. Loss of wages in those circumstances may well illustrate the loss of income earning capacity.”
12. In short, these authorities make it clear that unless there is foundation in a plaintiff’s pleadings, no evidence and damages or reliefs of matters not pleaded can be allowed. If, however, at the trial of a matter by the conduct of the parties, they have allowed evidence to be led and not objected to or no issue is taken on matters not pleaded being allowed in, can empower a trial court to grant such reliefs as the justice of the case warrants. For the strictures of pleadings and the rules governing them are only “are a handmaiden of justice, not its master” to use the words of the Court in Maniosa Yakasa v. David Piso (supra).
13. In the present case, the pleadings clearly provided the foundation of Kama and his people’s claim. His claim in short was for damages for Covec illegally entering or committing the act of trespass onto their Land and further committing the act of conversion by taking the valuable materials from the Land, which Covec used for its economic gain at Kama and his people, the landlords’ expense. The economic gain for Covec was in it getting the valuable materials and using them to discharge and fulfill its contractual obligation for parts of the Highlands Highway road works and receiving payment from the State. Based on that pleading, Kama and his people prayed for certain reliefs.
14. Covec took issue specifically on what was prayed for in the prayer for reliefs. That was apart from making submissions against the finding of liability and award of damages and questioning one of Kama and his people’s witnesses, Mr. Gola. Again as we already noted, Covec neither objected nor challenged the evidence being led on the estimated value of the valuable materials after the completion of the road works. The reliefs sought or those that can be awarded must be based on what is pleaded in the main body of the pleadings as to a plaintiff’s cause of action. Ultimately, an assessment of damages and award of damages is dependent on the matters pleaded and or the evidence adduced on matters not pleaded allowed in by the conduct of the parties. In the exercise of the discretion vested in a trial judge, the reliefs prayed for may or may not be granted and instead, such other reliefs the Court considers appropriate to do justice may be awarded. Of course, where a cause of action and what kinds of reliefs a Court can give are governed by statute as in the case of election petitions under the relevant Organic Law, the Court will lack discretion to grant any relief outside what is authorised by such law.
15. Here, the National Court essentially found Kama and his people were the owners of the Land the subject of this proceeding and that they established their claim for damages for trespass and conversion. At the same time, the Court found Kama and his people failed to establish their claim for loss of profits and the other reliefs sought except only for exemplary damages. Thereafter, the Court proceeded to assess damages based on the evidence that was before it. Covec takes no issue on the National Courts essential findings. Its main complaint is against the award of damages.
16. Covec argues that, in Kama’s prayer for relief at paragraph 14(a), is the closest we can get to for the award made by the learned trial judge. This paragraph reads:
“a) The sum of K9,300,000.00 Million being 30% of the value of the contract received as profit from the sale of sand, gravel, stone and chips without deductions from cost or as verified from payments received by the Defendant from the road contract HHRP 10 & 11 - CSTB 1536 from the State.”
17. Paragraph 14(a) is one of a number of prayers for reliefs. It is not the main part of Kama’s pleadings. The foundation for the prayer for reliefs is in the main part of the pleading in particular paragraphs 9 and 11(c) and (d). The essential findings of the learned trial judge confirm the actions of Covec were acts of “trespass” and “conversion”. By its actions, Covec dealt with Kama and his people’s chattels in a manner inconsistent with Kama’s rights and Covec deprived Kama and his people of their use and possession forever of their chattels being the valuable materials on their Land without their consent and or approval.
18. In these circumstances, I find there was foundation in the pleadings and the learned trial Judge correctly found Covec committed
the torts of trespass and conversion which entitled Kama to damages.
Issue 1 (a) - Was there Foundation in the Evidence?
19. This takes me to the next question of, was there foundation in the evidence for the National Court’s award of damages? As noted, the only evidence on Kama and his people’s damages came from Kama and the witnesses he and his people called. Most relevantly, the evidence came from Mr. Gola.
20. I carefully examined the evidence tendered, the oral submissions at trial and written submissions filed after trial and the decision of the learned trial judge. Having done so, I find the learned trial judge based is award of damages on the evidence of Mr. Gola, a civil engineer by profession. There was no objection by Covec as to the witness’ qualification and experience to give the evidence he gave at trial. I repeat, neither did Covec question his independence nor did it call any evidence to rebut what was said by Gola in his affidavits tendered and oral evidence as a witness for Kama and his people. As found by the learned trial judge, Kama maintained in the prayer for relief the claim for loss of profits in paragraph 14(a). In Gola’s oral evidence during examination in chief and cross-examination, he said the claim by Kama changed from seeking royalties or “compensation for the extraction of the sand, gravel and other resources” to a claim for loss of profits which was obviously a higher or more substantial amount claimed.
21. I note that, in evidence as an annexure to Gola’s Affidavit filed 11 July 2016, was a letter on the letterhead of Aritene Works Ltd signed by Mr. Gola addressed to Kama dated 10 September 2007. In that letter, Gola stated:
“We are pleased to forward you our report on our findings and cost estimates for the two project items you requested for; (a) Extraction of Gravel Las Dombil K1,828,998.50 (b) Waghi River Training K1,623,103.90.”
22. This was a pre-estimate estimate of the raw materials that could be extracted from Kama and his people’s Land, well before the completion of the road works. This was not the only evidence Mr. Gola gave. He also gave evidence of having carried out a further inspection and assessment of the valuable material that could have been extracted from Kama and his people’s Land after the completion of the road works. Except only to ask a few questions on the figures, on the pre-estimatesthis evidence was not challenged or rebutted in any material manner by Covec.
23. As I have already said, the learned trial judge found the claim for K9.3M was not established because the profit that was made on the material extracted from Portion 1239C was not proven in evidence. Kama says they could not obtain that evidence due to the refusal by Covec to produce that documentation that was in its possession and control. Covec maintained that evidence was not in the jurisdiction and was taken by Covec officials to their head office in China. No doubt, neither Kama and his people, nor the Court was going to get a real picture on the level of profits made by Covec unless the evidence on expenses were presented by Covec. Having the evidence come from a source other than Covec would be hearsay and not necessarily accurate and or incomplete.
24. In these circumstances, the National Court was left with what Kama was able to produce and that was through the evidence of civil engineer Peter Gola.Based on that evidence the learned Court assessed Kama’s damages for trespass and conversion at K25,680,064.00. The Court arrived at that figure as an overall award in damages for trespass and conversion to avoid an award of double compensation. That the Court did after finding Kama’s claim for environmental damage, loss of gardens, start-up rice project and other heads of damages were not properly pleaded and also not being made out. Then in the end,the Court found Kama pleaded and made out his claim in trespass and nuisance.
25. A similar case which is almost on all fours with the present case was presented in the case of Rimbunan Hijau (PNG) Ltd v. Ine Ibi & Ors (2017) SC1605. The judgment was delivered after the National Court’s decision in this matter. That was also a case of trespass and conversion but for log ponding and shipment operations. At the trial the appellant did not produce in evidence the most critical evidence of the total number of logs stored and shipped out of the respondent’s land and the income generated therefrom. Also, the appellant failed to object or failed to challenge the only evidence produced by the respondent. The evidence produced by the respondent was mainly newspaper cuttings.The Court comprising of Salika DCJ., Kandakasi J., (as they both then were) and Toliken J., made the following important pronouncement at paragraph 41 of the judgment:
“... we observe that a landowner would be hard placed to access any evidence on the specifics and more so the full nature and extent of a trespassers gain or benefits from the use of the land. Naturally, a trespasser would be in possession of such information. The onus should be on the trespasser therefore to fully disclose all relevant information or evidence. Such disclosure should be made upon the landowner making a claim against a trespasser to enable an expedited settlement through direct negotiations, mediations or a form of ADR and only failing that, resolution by trial. Any failure to disclose or produce the kind of evidence in question, should result in any secondary or tertiary evidence being allowed to overcome the lack of any direct evidence, as a practical application of the best evidence rule principle.”
26. Then applying what it pronounced to the case before it, the Supreme Court said at paragraph 47 and 48:
“As we noted earlier, RH neither objected to the evidence adduced for Moga, nor did it adduce any evidence in rebuttal and presented the actual position on the number of log shipments and their value. No doubt, RH was in a position to adduce into evidence the correct and relevant records but it failed to do so and failed to object to the only evidence Moga was able to adduce into evidence. Now with the Courts worldwide encouraging more settlement through direct negotiations, or mediation or a form of ADR as we already noted above, all parties should be dealing with each other in a fair, frank and open manner. Again, as already noted, the days of a party putting his foot down and forcing a plaintiff to his prove are long gone now in light of the Courts these days requiring and prompting more out of Court settlement through direct negotiations, mediation or a form of ADR. This means necessarily that, a party who is in possession or is required and or expected to have in his possession any relevant information, documents or such other evidence, which hold the key to resolving a dispute, must disclose them, unless such a party is precluded by an order of the Court or any clear legislative provision from doing so. Where there is a failure to so disclose, the Court is entitled to admit into evidence whatever evidence the opposing party is able to produce and make use of such evidence in order to do justice on the substantive merits of the case.
...Here, RH was the party which had or should have had in its possession the relevant records or evidence of the volume of logs exported and their market value for the whole of the 8 years it was in occupation of Moga’s Land. If RH did not have in its possession such evidence or record, the duty was on RH to provide a reasonably convincing explanation as to what became of the evidence. RH neither produced the relevant evidence, nor did it provide any reasonable explanation for not being able to produce them. In those circumstances, the learned trial Judge did the best he could to arrive at a decision. Now on this appeal, RH tries to do what it failed to do in the Court below in terms of taking issue with the admission into evidence and the Court making use of evidence adduced in the Court below. On Moga’s objection, we decided against RH’s belated attempt at raising arguments or raising issues it should have raised in the Court below. The evidence and the pleadings were thus before the learned trial Judge for him to consider, unopposed as they were. Unlike in a criminal case, all that the learned trial Judge needed to be satisfied with was the question of, did Moga as the plaintiff, establish its claim on the balance of probabilities. The learned trial Judge decided to make use of the evidence before him in the light of no objections or argument against him doing so and arrived at his decision.”
27. In the present case, the learned trial judge found and decided in the following terms:
“No information was given by the Defendant as to the value of the contract but oddly, the Amended Defence in its paragraph 8(i) says the value of the road contract for which the Defendant used the deposits had not (sic) pleaded. Also, significant to the defence, no evidence is given as to the quantity and type of material extracted. One would think that information would be documented in daily records at the time of extraction. No witness or evidence was called by the Defendant. In this situation, the Court has to rely on the evidence of the Plaintiff.”
28. As this Court said in the Rimbunan Hijau v. Ina Enei (supra) case, Covec was under a duty to provide the relevant evidence on both the valuable materials it extracted and the gains it made out of its trespass and conversion and illegal sale and use of Kama and his people’s property. It failed to do so, claiming, the evidence was taken away to its head office in China. In taking that position, Covec failed to comply with the requirements for giving discovery when a notice to do so was filed, served and was backed up by a formal order of the National Court. The claim of the evidence being sent to China and being kept there is, in my view, no reasonable explanation. The evidence was still within the custody, care and control of Covec irrespective of where they were located. It failed to produce the most relevant evidence which could have enabled a better assessment of Kama’s claim. Covec’s failure to produce the required evidence deprived the Court of arriving at an assessment based on the real value of Covec’s gains, if it was any less than what the learned trial judge assessed ultimately. In the absence of the required evidence from Covec and the lack of any serious objection and challenge against the use of the only evidence that was before the National Court, the learned trial Judge was entitled to assess Kama’s damages on the basis of what was admitted and available before him.
29. In arriving at its decision to award damages at K25,680,064.00, I note the learned trial judge took into account Mr. Gola’s affidavit and oral evidence and noted that in 2007, he gave an estimate of the value of materials that could be extracted and used to rehabilitate 24.8 kilometres of road. The learned trial judge also noted that, the witness, had that revised in 2016 when the road works were completed and he was able to estimate the total amount of valuable materials that could have been extract and used. In the witnesses revised report, he noted the total number of valuable materials that could have been extracted, processed and or otherwise used for the road works based on the evidence of the road works actually carried out by Covec. The learned trial judge noted that, the witness took into a count a number of factors set out in a table produced by the witness and annexed to his affidavit which produced a total of K27,031,647.00.
30. The National Court also had regard to a Canadian case, namely Lamb & Anor v. Kincaid & Anor (1907) [Vol. XXXVIII] Supreme Court of Canada 516. That was a case in which the Appellants took gold from their neighbour’s land and mixed them with theirs but failed to keep proper records of minerals taken from each of the parties’ land. The Court found that the appellants had “destroyed the means to ascertain the respective quantities... proportion of expenditure of recovering [gold] and consequently, they are liable in damages for the total value of so much of the intermixed products.” His Honour correctly, found that, although that cases was not binding on him, it was an example of a case on point. Then ultimately, his Honour decided:
“Given that there is a margin in an estimate which may be less or more than the actual quantity, the Court would reduce the total by 5% for assessing damages, i.e. K25,680.064 and award that sum to the Plaintiff.”
31. The National Court went on to find at page 11 of the judgment:
“The Plaintiff does, on the one hand, claim damages for the value of the loss of the deposits, but on the other hand claims for the profits of the Defendant derived from the Highlands Highway Rehabilitation Project contract with the State. There is no evidence tendered of the profits of that contract, yet the Plaintiff has clear evidence of the value of the deposits taken. The “profits” claim is not made out.”
32. Whilst I agree with Covec that the learned trail judge found Kama and his people’s claim for K9.3M was not established because the profit that was made on the material extracted from Portion 1239C was not proven in evidence, there was evidence adduced by Kama and his people without any serious objection by Covec that went to a claim for damages for trespass and for conversion as well as Covec’s gain from those conduct. Given that, with respect, I fail to see how the learned trial judge could have fallen into a serious error which warrants correction on appeal. Instead, I am of the view that the finding and the award of damages the learned trial judge eventually arrived at were clearly open to him on the evidence adduced in Court as a matter of law.
33. In the whole of the circumstances of this case, I am firmly of the view that the decision to award the damages the learned trial judge decided to award was the fairest the decision the Court could arrive at having regard to Covec’s conduct at a number of levels. Firstly, it illegally entered Kama and his people’s Land. It then proceeded to take the valuable materials and converted them and turn them into its economic gain at the expenses of Kama and his people. Secondly, strong resistance demonstrated by Kama and his people could have caused Covec to reconsider and check on the accuracy of the information it had regarding the ownership of the land on which it decided to enter, extract the valuable materials and economically gain from that. Thirdly, when it was required by the relevant notice and later an order of the Court to give discovery of the relevant documents, it failed to do so. Finally, when the matter went to trial it was required to provide the most critical evidence it was in control and possession of and only it could produce in an easily admissible form. This Covec also failed to do. The award arrived at by the National Court was a decision that delivers justice by ensuring in effect that Covec does not retain the gain it has made from its illegal conduct in the form of trespass and conversion of Kama and his people’s Land and the valuable material derived therefrom. Awarding damages lesser than the amounts the National Court decided to award against Covec would also have the effect of and could amount to rewarding it for its illegal conduct, failure to comply the requirements for discovery including a Court order and its refusal and failure to produce the most critical evidence that were within its power and control to produce and adduce in evidence but failed to do so without any good reason. Further, making any award lesser than what the learned trial judge decided to award would have the effect of defeating fairness and justice and strike at the core of the Courts existing to administer and do justice.
Exemplary damages without foundation [Grounds (d), (e) and (f)]
34. Turning then to the award of exemplary damages, Covec’s argument is that there was no basis for such an award.As I noted in the foregoing, there was a clear articulation of the claim for trespass and conversion made in the body of the Amended statement of claim and, despite the subsequent contradiction by Kama and his people in their pleadings and in their reply, evidence was received, tested and accepted as to the value of valuable materials extracted from Kama and his people’s land which was assessed at K25,680,064. Covec by its very conduct make that task unnecessarily harder.
35. This Court in Rimbunan Hijau v. Ina Enei (supra) restated the law on exemplary damages as follows at paragraph 51 in the following terms:
“Turning then to the award of K150, 000.00 in exemplary damages, we note the relevant principles are clear. In Abel Tomba v. The State,... the Supreme Court considered the circumstances in which exemplary damages could be awarded. Relying on McGregor on Damages, 5th Edition, Amet CJ (as he then was) expressed the view that exemplary damages may come into play “whenever the defendant’s conduct is sufficiently outrageous to merit punishment, as where it discloses malice, fraud, cruelty, insolence or the like.” This easily covers cases in which a defendant acts illegally and is in breach of clear legislative provisions and other requirements in total disregard and disrespect for the rights and interests of others. This is why as the learned trial Judge noted, “exemplary damages are vindictive and punitive in nature” to punish the party against whom the award is made. It is usually at the discretion of the Court to award such amounts as the Court considers appropriate in exemplary damages having regard to the conduct of a defendant in the particular circumstances of each case. The main purpose of awarding exemplary damages is dual in purposes. The first is to punish and the second is to deter the party against whom the award is made as well as others from engaging in future and further such conduct or behaviour.”
36. The Court than repeated its earlier requirement for the State or others who enter other people’s land to properly ascertain the correct landowners, then seek and secure their consent before entering the land they propose to enter as part of obtaining their “social license to operate”. Then only upon discharging that obligation and having secured such consent or a license, they may then proceed to enter the land and conduct their business or the activities they want to carry out on the land in question.
37. Applying the above principles to the case before it, the Court found Rimbunan Hijau had failed to properly discharge its above obligations. That meant that, Rimbunan Hijau entered Ina Enei and his people’s land illegally, conducted business upon the land and substantially gained at the expense of Ina Enei and his people. The operations also caused destructions to the subject land. In these circumstances, the Court was of the view that a higher award of damages in exemplary damages was warranted. However, since there was no cross appeal, the Court decided to confirm the award made by the trial judge.
38. The present case is almost on all fours on the question of exemplary damages with the Rimbunan Hijau v. Ina Enei (supra) case as well, but a bit more on the worse end. Covec entered Kama and his people’s land without first seeking and securing their consent and approval. Covec took various court actions and steps against them when they resisted rather than negotiating with them people. A number of Court proceedings were issued and Kama and his people were dealt with adversely. A tribal fight broke out between Kama’s people and a competing landowning group. All this was because of the way in which Covec went about entering and then taking out the valuable materials from the Land and gained from it. Then at the trial, Covec failed to produce the evidence of its actual gain, which was allegedly over K9 Million. These was preceded by no initiative demonstrated by Covec in seeking to resolve the dispute knowing fully well that it failed to duly discharge its legal and moral duties and responsibility to properly ascertain the true and correct owner, seek and secure the owner’s consent on mutually acceptable terms. Hence, I find the decision to award exemplary damages had foundation both in the pleadings and the evidence presented before the Court and as a matter of law. Accordingly, I find no error on the part of the learned trial Judge in his award of exemplary damages that warrants anydisturbance by this Court of the learned trial Judge’s exercise of discretion to award and order damages for exemplary damages as he did.Accordingly, I would affirm the award by the learned trial Judge for exemplary damages in the sum of K1,000,000.00.
Issue 2 – Failure to Object and Contest Matters not Pleaded
39. This leads us to the second issue of whether Covec is entitled to take issue with the award of damages having regard to its failure to give discovery and its failure to specifically object to and contest evidence adduced by Kama and his people and appropriately taking the issue up at the trial. My discussions on the foregoing have infact answered this question. However, for clarity, I note the relevant law on point is very clear and is now well settled. Where a party fails to object to evidence being led at a trial on matters not pleaded or failing to take an issue at the trial precludes a party from harking back at the pleadings and what it failed to do at the trial. The decisions of the Supreme Court in Motor Vehicle Insurance (PNG) Trust v. John Etape (supra) Motor Vehicle Insurance (PNG) Ltd Trust v. James Pupune (supra) are on point. In the latter case, the Supreme Court said relevantly:
“It is clear from the authorities we have referred to that if a party allows an issue which is not pleaded to be litigated fairly, he cannot on appeal hark back to the pleadings and argue that the issue was not pleaded. We agree with counsel for the respondent that the appellant cannot now raise this on appeal. We would dismiss this ground of appeal.”
40. The decision in Motor Vehicles Insurance (PNG) Trust v. John Etape and Motor Vehicles Insurance (PNG) Trust and MVIT v. Salio Tabanto [1995] PNGLR 214, reiterated that principle. I considered these and the other relevant Supreme Court decisions on point in detail in my judgment in Paru Aihi v. Peter Isoaimo& Anor (2013) SC1276. This was noted and approved by this Court in its decision in Rimbunan Hijau v. Ina Enei (supra) as follows:
“A very detailed and useful discussion of the relevant principles with their genesis and current position is in this Court’s decision in Paru Aihi v. Peter Isoaimo & Anor,... per Kandakasi J. with whom, Yagi J., the other member of the Court agreed. After a careful consideration of almost all of the cases on point his Honour noted there are two schools of thought. Led by the decision in Van Der Kreek v. Van Der Kreek,... is one view that a party can be allowed to raise a legal point without first raising it in the National Court and succeed. The other view is led by the decision of Supreme Court in MVIT v. James Pupune,... which stands for the complete opposite regardless of whether the issue is one of law or fact. As clearly pointed out in that judgment, a large majority of the judgements of this Court including the 5 member Supreme Court decision in Isaac Lupari v. Sir Michael Somare & Ors... support that view. At paragraph 30 of His Honour’s judgment stated in summary the core of the reasons for this line of authorities as follows:
‘(a) the fundamental principle of fairness requires all issues concerning any matter before a court must be first presented to the court below before raising it on appeal;
(b) adhering to (a) above enables, the opposing parties to present their arguments on those issues before judgment;
(c) the trial Judge is given the opportunity in fairness to consider the issues on their merits and come to a decision;
(d) The appeals process concerns the errors and omissions of a trial Judge and not that of either or both of the parties. Hence, it would be unfair to raise in the appellate court an issue that was not in fairness presented in the court below;
(e) Public policy requires finality in litigation with no allowance for ‘second bites at the cherry’ so to speak;
(f) Better case management requires all related issues be raised and dealt with once in one proceeding in the interest of saving time and money for the parties as well as the courts; and
(g) The appellate court has no original jurisdiction except for a rehearing based on the record of proceedings in the court below and nothing outside that.’”
7. To this, His Honour at paragraph 31 added:
‘Allowing an issue to be raised in the appellant court without it being first raised and considered in the court below, would deny the right of an aggrieved party his or her right of appeal or a review of the decision on the issue. One might argue that an application under the ‘slip rule’ could take the place of one’s right of appeal or review. Unfortunately, that cannot be right, because of the rule’s limited application compared to an appeal or review process.’
8. His Honour then went into a detailed consideration of the line of cases following the Van Der Kreek v. Van Der Kreek as well as authorities on the relevant principles governing departure from the Supreme Court’s earlier decisions. Then at paragraph 51 His Honour concluded:
‘In the final analysis on the issue of whether a matter not raised in the Court below can be allowed on review, I am persuaded to follow the James Pupune line of cases for the reasons that line of cases give as outlined in paragraph 30 above. At the same time, I note that this Court has no choice but to follow the James Pupune line of cases because of the five (5) member bench decision in the Isaac Lupari case, unless and until another 5member bench Court overturns that decision and line of cases for good reason.’
9. We agree this is a correct statement of the law. Unless the decision in the Isaac Lupari case and those following the James Pupune line of cases gets changed by a 5 or more member Supreme Court for good reason, the law is now well settled.”
41. Having regard to the authorities on point as well as some of those earlier decisions of this Court as in Rimbunan Hijau v. Ina Enei (supra), Covec is precluded from raising issues it should have raised at the trial. It is now not open to Covec to hark back on the pleadings and take issue on the matters it allowed to go through by its own conduct at the trial. This is dictated and bolstered by the particular circumstances of this case. First, unlike the case in Rimbunan Hijau v. Ina Enei case, Kama and his people produced real basis in the form of direct evidence from his witness Mr. Gola. This witness carried out inspections of the road works done at their completion from which he gathered the evidence of the material that could have been extracted from Kama and his people’s land and used by Covec for the road works. But as did the appellant in the Rimbunan Hijau v. Ina Enei case, Covec produced no evidence in rebuttal. The relevant and necessary evidence, had been and always remained in the custody, control and care of Covec. There was no need for Kama and his people to be put to the expenses of chasing or looking for that evidence. Covec had a duty to produce the evidence that were directly relevant and were in its custody, care and control. This reminds me of the decision of this Court in Public Officers Superannuation Fund Board v Sailas Imanakuan (2001) SC677, where the appellant failed to give a fair, frank and full discovery of its documents and sought to produce them at the trial in its defence. The Court found that the trial judge did not fall into error when the court found the appellant failed to give a fair, full and complete discovery of the documents it had in its possession and was seeking to relying upon.
40. Secondly, cross examination failed to destroy the credibility of the witness or the basis for Kama’s witness Mr. Gola arriving at his estimates. Nevertheless, the learned trial judge did allow for some margin of error and reduced the estimates by 5% before arriving at his decision to award the damages in the amounts he decided to award.
42. Thirdly, Covec had in its possession the relevant evidence of the valuable materials extracted and used in the road works and the economic gains it made from them. Covec was under an obligation to produce it voluntarily. As noted by the decision in Rimbunan Hijau v. Ina Inei (supra) and many other decisions of this Court as in Henry Torobert v. Mary Torobert (2012) SC1198 and NCDC v. Yama Security Services Pty Ltd (2003) SC707, parties are required to take all steps necessary to settle their disputes and reserve the Courts only for matters that strictly require a judicial determination. A production of the relevant documents or evidence supporting one’s claim or a defence to a claim can no doubt enable the parties to promptly settle a claim and avoid unnecessary delays, costs and avoid unnecessarily taking up the Court’s limited time conducting a trial and arriving at a decision in a case that could have been settled.
43. In the present case, Covec failed to voluntarily disclose the relevant documents and evidence on point. Following that failure, a notice of discovery was served on it by Kama and his people, which Covec also failed to adhere to. Further, before the trial, the National Court ordered all parties to give discovery. Despite that order, Covec failed to give discovery. A failure to give discovery in certain circumstances can prove fatal as proceedings could be determined against the party failing to give discovery. The decision of this Court in Curtain Bros (PNG) Ltd v. UPNG (2005) SC788, and the many that have followed it, such as the decision in Media Niugini Ltd v. Anderson Pawa Agiru (2012) SC1203 and Rex Paki v. MVIL (2010) SC1015 make that point clear. The decision in Paki v. MVIL, is a case that comes closer to the present case. There, the appellant failed to give discovery and gave various reasons for not doing so. That was despite repeated opportunity being given to him to do so. The lack of discovery concerned invoices he should have given and kept records as liquidator of the respondent. Based on his lack of discovery the National Court struck out his defence and entered judgment with damages to be assessed. The Supreme Court dismissed an appeal against that decision and affirmed it. Here in this case, having failed in its duty to enable the parties to explore the prospects of settlement by a fair, frank and complete discovery of its records of the valuable materials extracted from Kama and his people’s Land and the extend of Covec’s economic gain from them, it was and is now precluded from taking issue with the evidence produced by Kama and his people which formed the foundation for the eventual assessment and award of damages.
Conclusion
44. In summary, on the basis of the foregoing reasons, Iwould dismiss the appeal against the assessment of damages resulting in the award of K25,680,064 as well as the award of K1 Million for exemplary damages as having no merit.
Costs and Interests
45. This leaves only the question of costs and interests to be determined. Normally costs follow the event, unless a case is made out for a different order. In this case, Covec has failed in its appeal. Costs should therefore follow that event. The same goes for the National Court proceedings. Accordingly, I would order costs of both the appeal and the National Court proceedings in favour of the Respondents with such costs to be assessed on a party and party basis and to be taxed, if not agreed.
46. Turning to the question finally on interests, we note, this is usually a matter that falls within the discretion of the Court. In the Court below, the learned trial Judge ordered interest at the usual rate of 8% per annum. Neither a case has been made out, nor do we find any reason for us to disturb that award. Accordingly, I confirm the same to be added onto the judgment sum from 1stMay 2009 to the date of this decision and thereafter in accordance with the Judicial Proceedings (Interest on Debts & Damages) Act 2015.
47. KASSMAN J: In this appeal, it is argued the National Court erred when it departed from the case as pleaded, awarded damages exceeding twenty five million Kina (K25 million) in circumstances where the evidence adduced could not justify such an award and awarded exemplary damages in the amount of one million Kina (K1 million) in circumstances where there was no basis for such an award.
48. The Appellant Covec (PNG) Limited (“Covec”) filed this appeal on 16 February 2017 from the judgment of His Honour Justice Neil (“the learned trial judge”) given on 10 January 2017 in proceedings WS 712 of 2007. Peter Kama representing himself and for and on behalf of Damin Kanim Clan of Kumai Tribe of Kup, Kerowagi District, Simbu Province -v- Covec (PNG) Limited (“the National Court proceedings”). In this decision, the Respondents Peter Kama representing himself and for and on behalf of Damin Kanim Clan of Kumai Tribe of Kup, Kerowagi District, Simbu Province are referred to as “Kama”.
National Court Decision
49. Despite vehement denials by Covec, the National Court found that Kama was the registered owner of land identified as Portion 1239C and, without the authority of Kama, Covec entered Portion 1239C, erected a crusher plant and operation and wilfully extracted valuable mineral deposits from Portion 1239C and nearby or adjoining river banks. Further, the National Court found the products from the operation of the crusher machine were used by Covec in road construction and reconstruction work on the Highlands Highway without the authority of Kama. At trial, Covec failed to call and adduce any evidence in support of its defence to the claims by Kama. The National Court ordered Covec to pay Kama K25,686,064.00 in damages. The National Court also ordered Covec to pay Kama exemplary damages of K1,000,000.00.
Objection to Competency of the Appeal
50. On 13 April 2017, Kama filed Notice of Objection to the Competency of the appeal. At the hearing of the objection and the appeal, Kama was granted leave to withdraw the objection to competency.
Pleadings
51. In the statement of claim filed on 12 July 2015, Kama claimed to be the owner by custom of land known as “Las Dombil” having an area of 16.7 hectares at Portion 1239C Milinch Minj Fourmil Ramu which is more particularly described in Special Agricultural and Business Lease Volume 15 Folio 43 (“Portion 1239C”). In paragraphs 6, 7, 8 and 9 of the statement of claim, Kama claimed Covec wrongfully entered Portion 1239C and erected a crusher plant. Covec then extracted material from nearby river banks adjoining Portion 1239C without the authority of Kama. Covec then used that material in its operation of the crusher plant, the products of which Covec used in road construction work that it conducted on the nearby Highlands Highway. In paragraph 9 of the statement of claim, Kama states “The Plaintiffs claimed compensation for the extraction of the sand, gravel and other resources on the subject land ...” Particulars of the alleged wrongful and negligent actions of Covec were set out in paragraphs 10 and 11 of Kama’s Amended Statement of Claim and included particulars of negligent and wilful trespass by Covec into Kama’s land and particulars of conversion by Covec of Kama's property.
52. I restate in full what Kama claimed in the prayer for relief in paragraph 14(a) to (j) because Covec claims that is decisive:
“a) The sum of K9,300,000.00 Million being 30% of the value of the contract received as profit from the sale of sand, gravel, stone and chips without deductions from cost or as verified from payments received by the Defendant from the road contract HHRP 10 & 11 - CSTB 1536 from the State.
b) The sum of K3,840,000.00 Million being for the loss of rice seed multiplication business commencing from 2007 to date and/or as assessed and quantified by the court.
i) Interest at 8%p pursuant to the Judicial Proceedings (Interest on Debts and Damages) Act.
j) Cost of these proceedings.”
53. Covec in its Amended Defence said it erected the crusher plant on Portion 543 and it extracted gravel from Portion 543.Covec argued Portion 543 was owned by the State and Covec had the approval of the State to do what it did on Portion 543. By that pleading, Covec refuted the claims by Kama of wilful trespass and conversion. Covec conceded the materials extracted were used in the construction and rehabilitation of the Highlands Highway but that material was taken from Portion 543 occupied by State institution Correctional Service Barawagi. Essentially, Covec then went on to deny all claims of Kama and also raised issue with the lack of particulars in the Amended Statement of Claim contrary to the requirements of Order 8 Rule 30 of the National Court Rules which provides “A party pleading shall give particulars of any fraud, misrepresentation, breach of trust, wilful default or undue influence on which he relies.” This argument was not pursued by Covec at trial.
54. In the Reply, Kama maintained its claim that Covec’s crusher plant was erected on its land Portion 1239C and not State land Portion 543 and the materials extracted by Covec were extracted from its land and not State land. Most critically, Kama then said its claim “... is not a claim for fraud nor does the pleadings plead negligence, trespass and conversion, thus Order 8 Rule 30 of the National Court Rules does not apply.” In stating in the Reply that it did not plead trespass and conversion was a contradiction by Kama of it’s pleading in the Amended Statement of Claim where the claims and particulars of trespass are provided in paragraphs 6, 7 and 8 and the claims and particulars of conversion are provided in paragraphs 9, 10 and 11. The statement by Kama in the Reply was an obvious contradiction in Kama’s pleadings that went to trial without correction.
Trial
55. The matter went to trial in Goroka on 13 and 14 October 2016. Witnesses for Kama gave evidence and were cross-examined. Covec did not call any witnesses to give evidence and neither did Covec tender any documents in support of any aspect of its amended defence. Submissions on liability and quantum were presented orally. Parties then filed written submissions.
Essential findings
56. The learned trial judge made the following essential findings:
57. In judgement delivered in favour of Kama, the conclusion and orders of the learned trial judge were:
“1. The Plaintiffs: Peter Kama, Anna Kama and Micah Kama are the registered proprietors as joint tenants of portion 1239C Milinch Mendi, Fourmil Ramu, Simbu Province being the whole of the land in Special Agricultural and Business Lease Volume 15 Folio 43.
Orders.
The Court Orders that:
1. Judgement for the Plaintiff against the Defendant for K26,980,064, and
2. The Defendant to pay the Plaintiff's costs under National Court scale and as Special Damages the professional costs of consultants, engaged by the Plaintiff and incurred in the proceeding.
3. The sum of K25,980,064 to accrue interest at the yearly rate of 8% from 1 May 2009 to date of judgment and thereafter in accordance with the Judicial Proceedings (Interest on Debts and Damages) Act 2015.
4. Time is abridged to time of settlement which is to take place forthwith.”
Grounds of Appeal
58. Covec’s grounds of appeal are:
“(a). His Honour erred in law in awarding damages of K25,680,064.00 in respect of the taking of deposits of material from Kama's land by Covec in circumstances in which the relevant claim made by Kama was the claim made in paragraphs 14(a) of the Statement of Claim in the Amended Writ of Summons, namely a claim for the sum of K9,300,000.00 being 30% of the value of the contract received as profit from the sale of sand and gravel, stone and chips without deductions from the cost or verified from payments received by Covec from the road contract HHRP 10 & 11 - CSTB 1536 from the State.
(b) His Honour erred in law and brought about a denial of natural justice in awarding damages by reference to a claim for damages which had not been pleaded or litigated.
(c) His Honour erred in law or in mixed fact and law in stating that Kama has clear evidence of the value of the deposits taken "in circumstances in which:- (i) The value of the deposits could only be determined in conjunction with evidence as to the cost of extraction of the deposits, or other relevant costings; and (ii) The evidence that was given at trial on this topic incorrectly assumed that all of the gravel utilised in the relevant road works was obtained from property of the Respondents.
(d) His Honour erred in law in awarding exemplary damages of K1,000,000.00 against Covec in circumstances in which he failed to determine or articulate any or any proper basis for an award of exemplary damages.
(e) His Honour erred in law in awarding exemplary damages of K1,000,000.00 in relation to the removal of the deposits from the property of Kama in circumstances where there had been no proper award of primary damages in relation to such removal.
(f) His Honour erred in law or in mixed fact and law in failing to take into account the fact that, by paragraphs 10 and 11 of the Statement of Claim in the Amended Writ of Summons, Kama alleged negligence on the part of Covec and did not particularise or establish adequately or at all, matters that could justify an award of exemplary damages.”
59. As stated above, Covec contends the National Court erred when the learned trial judge (a) departed from the case as pleaded; (b) awarded damages in the amount of K25,686,064.00 in circumstances where the evidence before him could not justify such an award; and (c) awarded exemplary damages in the amount of K1,000,000.00 in circumstances where there was no basis for such an award.
60. Covec has not challenged the essential findings of the learned trial judge which were fatal to the defence raised by Covec. At trial, Covec did not offer any evidence to contradict the essential claims by Kama and this was confirmed by the learned trial judge. From my examination of the Notice of Appeal, Covec now concedes the crusher machine was erected by Covec on Portion 1239C and not Portion 543, material used in the operation of the crusher machine was extracted from Portion 1239C (and not Portion 543) and nearby or adjoining river banks and Kama was at all material times the registered owner of Portion 1239C. This is critical because, despite the obvious contradiction in Kama's pleadings in its Amended Statement of Claim and Reply as stated above, the essential findings of the learned trial judge vindicate the claims by Kama of trespass and conversion by Covec. In this appeal, Covec argues the learned trial judge erred in the assessment and award of damages in favour of Kama including the award of exemplary damages.
Departure from the case pleaded by the plaintiff Kama [Grounds (a) and (b)]
61. I have already examined Kama’s Amended Statement of Claim, Covec's Defence and Kama's Reply to Covec's Defence. Kama made several claims against Covec including claims of trespass and conversion in paragraphs 6, 7, 8, 9 and 10 of the Statement of Claim. The learned trial judge awarded Kama the claim for the value of gravel, sand, stone and chips alleged to have been extracted from Kama's land at Portion 1239C and used by Covec in rehabilitation of a section of the Highlands Highway. Covec argues the award in the judgment of the learned trial judge was solely an award for damages for conversion. Covec argues Kama did not seek an award of damages for conversion in the Amended Statement of Claim but that is not correct. As stated above, Kama made claims of trespass and conversion and we repeat paragraphs 8 and 9 of Kama’s Statement of Claim which are abundantly clear:
“8. The Defendant trespassed into the subject land with the use of force and arms aided by armed members of the disciplined forces (Police personnel and CIS warder guards) and local groups in order to extract sand, gravel and other resources on the subject land for the building of the Highlands Highway.
9. The Plaintiffs claimed compensation for the extraction of the sand, gravel and other resources on the subject land, environmental damages as well as other damages caused by the quarrying but the Defendant just ignored claiming that the “Las Dombil” land is part of CIS Barawagi and State Land and that the Plaintiffs had no right to claim compensation of any sort.”
62. Kama provided detailed particulars of Covec’s “negligent/wilful trespass” in paragraph 10 of the Amended Statement of Claim and detailed particulars of Covec’s “negligent conversion of Kama’s property” in paragraph 11 of the Amended Statement of Claim.
63. Despite the pleadings in paragraphs 8, 9, 10 and 11 of the Amended Statement of Claim, I note Kama did in fact plead in paragraph 3 of its Reply that its claim “... is not a claim for fraud nor does the pleadings plead negligence, trespass and conversion.” As stated above, this was a contradiction in Kama’s pleading. In my view, this contradiction in Kama’s pleading is cured by Order 8 Rule 18 of the National Court Rules which provides:
“A party shall not in any pleading make an allegation of fact, or raise any ground or claim, inconsistent with his own previous pleading.”
64. The contradicting pleading in the Reply by Kama offended this rule of court. In Civil Procedure in Papua New Guinea National Court of Justice by Dominic Henley Katter, Robert John Gordon and Erik Graham Andersen, the authors offer the following annotations:
“A plaintiff who desires to make a new or alternative claim must amend the statement of claim: Warnock v Victorian Railway Commissioner (1885) 7 ALT 54; Green v Horne [1888] VicLawRp 82; (1888) 14 VLR 220” and “The rule does not prohibit a subsequent pleading explaining an earlier pleading (South Suburban Land Co v Hughes [1889] VicLawRp 108; (1889) 15 VLR 308), or changing the submission as to the legal effect of the pleaded facts (Re Vanderwells Trusts (No 2) [1974] Ch 269. For the other cases on the application of this rule, see Earp v Henderson [1876] UKLawRpCh 233; (1876) 3 Ch D 254 and Fenton v Fenton [1966] 2 NSWR 605.”
65. In Australian Civil Procedure Tenth Edition by BC Cairns the author says:
“The reply only answers the defence, it cannot raise a new cause of action or allege any matter inconsistent with the allegation in the statement of claim.The departure rule applies generally, although it first becomes important at the reply. If the plaintiff claims on an alternative basis, the alternative must be set out in the statement of claim. Of course, the departure rule does not prevent the pleading of matter that explains or expands what is alleged in the statement. In Herbert v Vaughan [1972] 1WLR 1128 at 1131 the plaintiffs, executors of a will, claimed for a gift of real estate to the defendant to be set aside on the ground of his undue influence.They alleged that he was in a position of confidence with the testatrix, who was dependant on him for financial advice. The defendant’s version was set out in detail in the defence. He alleged that before the death of the testatrix and her husband, he had managed their estates. The testatrix’s husband told the defendant that he and his wife had decided to make a gift of one estate to him and asked that he instruct his solicitors to prepare the necessary deed. He did so and presented it to his employers who duly signed it. In response to this, the plaintiffs filed a reply which was in two parts. It alleged first, that the husband was not competent to advise the donor on her interests in the estate. Accordingly, she had not, the plaintiffs alleged, had the benefit of independent advice. The second part caused the difficulty in that it alleged that the testatrix’s deceased husband exercised undue influence over his wife to procure her consent to the gift to the defendant. The defendant applied to have that allegation struck out because, he argued, it departed from the allegations in the statement of claim.For the plaintiffs to allege that the gift had been procured by the undue influence of the defendant is different from contending that it was procured by the undue influence of the husband. This argument found favour and the court struck out that part of the reply.”
66. By denying in the Reply that claims of trespass and conversion were made by Kama in the statement of claim, that pleading was inconsistent with Kama’s pleadings in paragraphs 8, 9, 10 and 11 of the Amended Statement of Claim. That part of the pleading in the Reply must be struck out for the reason it was inconsistent with the pleading in the statement of claim. This striking out is ordered pursuant to the provisions of Order 8 Rule 18 of the National Court Rules.
67. This deals with the first part of the appeal that the learned trial judge erred when it departed from the case pleaded. The case pleaded by Kama was that Covec trespassed into Kama’s land and converted valuable minerals taken from Kama’s land. The inconsistency in the pleading in the Reply I have found offended the rules of court. On that pleading in the reply being struck out, the claim of Kama in the Statement of Claim remained as stated and discussed at length above.
Award of damages without foundation [Grounds (a) and (b)]
68. Turning to the award of damages, I agree with Covec that, in Kama’s prayer for relief, the closest to the award made by the learned trial judge is the claim in paragraph 14(a) which was:
“a) The sum of K9,300,000.00 Million being 30% of the value of the contract received as profit from the sale of sand, gravel, stone and chips without deductions from cost or as verified from payments received by the Defendant from the road contract HHRP 10 & 11 - CSTB 1536 from the State.”
69. I also agree with Covec that paragraph 14(a) is not a claim for conversion but it is a claim for unjust enrichment as Kama claims a share of the profits allegedly made from the use of material extracted by Covec from Portion 1239C in the performance of its contract with the State for rehabilitation of a section of the Highlands Highway.
A claim of “conversion” defined and applied
70. Conversion is defined as:
“an act ... of wilful interference, without lawful justification, with any chattel in a manner inconsistent with the right of another, whereby that other is deprived of the use and possession of it. Two elements are combined in such interference: (1) a dealing with the chattel in a manner inconsistent with the right of the person entitled to it, and (2) an intention in so doing to deny that person's right or to assert a right which is in fact inconsistent with such right. But where the act done is necessarily a denial of the other's right or assertion of a right inconsistent with it, the tort may have been committed, though the doer may not know of or intend to challenge the property or possession of that other. If a person, not being an agent or bailee, deals with the goods of another as his own, his intention is irrelevant, for liability in conversion is strict.” (See Salmon on the Law of Torts, 16th Ed., at pp 96-97; Wahad v Wilkinson [2006] PGNC 94).
71. The essential findings of the learned trial judge confirm the actions of Covec were acts of “trespass” and “conversion” as Covec wilfully entered Kama’s land and extracted valuable mineral deposits from Kama’s land and processed those materials in the crusher plant the products of which were then used by Covec in its work on the Highlands Highway. Covec dealt with Kama’s chattels in a manner inconsistent with Kama’s rights and Covec deprived Kama of the use and possession forever of its chattels being the valuable mineral deposits.
A claim of “unjust enrichment” defined and applied
72. In The Law of Torts in New Zealand, 5th Ed 2009 by Hughes Burrows Smillie Hawes, (“the authors”) in attempting to define a “tort” say at pages 1 and 2:
“... a tort is a civil wrong, other than a breach of contract or a breach of trust, which is remediable by way of an action for unliquidated damages. ... The law of torts is concerned with those situations where the conduct of one person causes harm to or invades the interests of another. It is the body of rules that determines whether or in what circumstances that person is liable to pay compensation to the injured party.”
73. Then at pages 7 and 8 the authors go on to say: “Outside contract and tort there is a source of civil obligation of uncertain scope based on the idea of unjust enrichment.”
74. The authors then take from The Law of Restitution by Goff & Jones, Sweet & Maxwell 1998 page 15 saying the principle of unjust enrichment presupposes three things:
“First, the defendant must have been enriched by the receipt of a benefit. Secondly, that benefit must have been gained at the plaintiff's expense. Thirdly, it would be unjust to allow the defendant to retain that benefit.’ The authors go on at page 8 saying ‘In these circumstances, the plaintiff can make a claim for the restitution of the unjustly gained benefit. The sums recoverable are not damages. They are measured by the amount of the gain made by the defendant rather that by the loss suffered by the plaintiff. ... Sometimes a right to restitutionary relief exists concurrently with a right to sue in tort, as where a defendant has wrongly disposed of another’s property and is liable both in an action for damages for conversion and for the restitution of the proceeds of the sale. In such a case, the plaintiff can elect to ‘waive’ the tort and pursue a restitutionary remedy instead.”
75. On the same essential findings by the learned trial judge, Kama was entitled to make a claim against Covec for restitution of the unjustly gained benefit. Firstly, Covec was enriched by the receipt of the benefit being the valuable mineral deposits which were processed in the crusher plant the products of which were then used by Covec in its work on the Highlands Highway. Secondly, that benefit was gained by Covec at Kama’s expense. Thirdly, it is unjust to allow Covec to retain that benefit.
76. Despite those findings, the learned trial judge found that Kama did not prove by any evidence the claim in paragraph 14(a) of the Amended Statement of Claim. The learned trial judge found the claim for K9.3M was not established because the profit that was made on the material extracted from Portion 1239C was not proven in evidence. At the 11th page of the judgment, the learned trial judge said:
“The Plaintiff does, on the one hand, claim damages for the value of the loss of the deposits, but on the other hand claims for the profits of the Defendant derived from the Highlands Highway Rehabilitation Project contract with the State. There no evidence tendered of the profits if that contract, yet the Plaintiff has clear evidence of the value of the deposits taken. The "profits" claim is not made out.”
77. Kama did not file any appeal from the decision of the learned trial judge in this respect.
78. Despite that, and as discussed above, the pleadings of Kama clearly raised claims of trespass and conversion. As a result, it was open to the learned trial judge to make findings on those claims which were made, and which were established in evidence.
79. I have also carefully examined the evidence tendered at trial, the oral submissions at trial and written submissions filed after trial and the decision of the learned trial judge. I have done that to ascertain the basis for the learned trial judge's assessment and award of damages of K25,680,064. We find this was based on the evidence of Peter Gola (“Gola”), a civil engineer who was a witness called by Kama. There was no objection by Covec to his qualification and experience to give the evidence that he gave at trial. Neither did Covec question his independence. Covec did not call any evidence to rebut what was said by Gola in his affidavits tendered and oral evidence as a witness for Kama. We have considered Gola's evidence. I note Gola explicitly states or explains why Kama’s pleading was altered from one of a claim for trespass and conversion in paragraphs 9, 10 and 11 of the Amended Statement of Claim which was then specifically withdrawn in paragraph 3 of the Reply. As found by the learned trial judge, Kama maintained in the prayer for relief the claim for loss of profits in paragraph 14(a). In Gola's oral evidence during examination in chief and cross-examination, he said the claim by Kama changed from seeking royalties or “compensation for the extraction of the sand, gravel and other resources”to a claim for loss of profits which was obviously a higher or more substantial amount claimed.
80. In evidence, as an annexure to Gola's Affidavit filed 11 July 2016, was a letter on the letterhead of Aritene Works Ltd signed by Gola addressed to Kama dated 10 September 2007. In that letter, Gola stated:
“We are pleased to forward you our report on our findings and cost estimates for the two project items you requested for; (a) Extraction of Gravel Las Dombil K1,828,998.50 (b) Waghi River Training K1,623,103.90."
81. This was not challenged or refuted in any material manner by Covec. In examination by Kama's lawyer, Gola referred to that report and described the estimate as “the bill or quantities summary” [Appeal Book Vol 3, page 811 lines 11to 16]. Then during cross-examination [Appeal Book Vol 3, pages 836 line 30 to page 837 line 115], Covec's lawyer Mr Peri asked Gola “When I look at the figure 1,829,950.00, that is for the extraction of gravel at Las Dombil. Correct?” to which Gola replied “Correct”.
82. The dialogue continued:
“Q: So what would be the figure, which you can break it down to ---that would be the figure in total for the sub base cost, road base and bitumen surface? A: The K1,828,000, you mean that figure? Q: Yes. That would be taken into account or you add the full sub base cost, road base, bitumen surface. Once the gravel is extracted, then it goes into the crusher and the sub base comes out, the road base comes out and the bitumen surface comes out or the chips come out. That is what I am asking you. So, the figure of 1,828 that would be for the three different things that comes out, whether they are road base or whatever, they all come under the same rate and to assist ---- Q: So what is the figure, royalty, or is it something different? A:It was the royalty we were asking for at that rate, at that time.”
83. Then Mr Peri continued further on in cross-examination addressing the different figures. We note on 10 September 2007, Gola gave the estimate at K1,828,998.50 and in a letter dated 23 August 2016 Gola gave the estimate “for loss of profit” at K27,707,439.00. That letter from Gola to Kama dated 23 August 2016 is annexed to the Further Affidavit of Gola filed 13 September 2016 [Appeal Book Vol 3, pages 841 lines 18 to 30]. Cross-examination of Gola continued:
“Q: Mr Peri: Yes, I will restate the question. The amount you quoted in your letter dated 10 September 2007 is different, obviously different from the amount you quoted July 2016. His Honour: Yes, all right. A: Why is there a difference? The difference is that the material costs at that time was when they were asking for – we are – were asking for the royalty price for that. Now this one is a loss of profit. Now their rates have increased.”
84. As I have stated above, the learned trial judge found the claim for K9.3M was not established because the profit that was made on the material extracted from Portion 1239C was not proven in evidence. Kama says they could not obtain that evidence due to the refusal by Covec to produce that documentation that was in its possession and control. Covec maintained that evidence was not in the jurisdiction and was taken by Covec official to their head office in China. To this contention, I wonder if that information was in fact available in offices of the State such as the Department of Works, the Department of Finance and Office of the State Solicitor or even the Supply & Tenders Board.Highly technical officers of the State in those offices would have been involved in the design, costings and contract negotiations, tender, grant and execution of the final contract terms between the State and Covec for the rehabilitation work conducted on the Highlands Highway.Officers of the Department of Works and the Department of Finance would have also been involved in duties in monitoring performance and compliance with terms of the contract by Covec and the vetting of progress and final payments by the State to Covec. Processes of the court available under the rules of court as to discovery and inspection of documents were available to Kama to extract that documentation from the Department of Works and Department of Finance either voluntarily or by compulsion from an order of the court on application by Kama. That did not occur. The learned trial judge was left with what Kama was able to produce and that was through the evidence of civil engineer Peter Gola which we have discussed above.
Law on relief granted not sought or requested in that party's pleadings
85. A party will not be granted relief that was not sought or requested in that party’s pleading. In Blay v Pollard and Morris [1930] 1 KB 628Scrutton LJ emphasised the necessity of amending pleadings to obtain orders not originally sought:
“Cases 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 by amendment. In the present case the issue on which the judge decided was raised by himself without amending the pleadings, and in my opinion, he was not entitled to take such a course.”
86. In London Passenger Transport Board v Moscrop [1942] 1 All ER 97 Lord Russel of Killowen at p 105 added that:
“This appears to me to have been a complete recasting of the plaintiff’s alleged cause of action, and the matter was unfortunately carried through without any amendment of the statement of claim. This should not be so. Any departure from the cause of action alleged or the relief claimed in the pleadings should be preceded, or, at all events, accompanied, by the relevant amendments, so that the exact cause of action alleged, and relief claimed shall form part of the court’s record, and be capable of being referred to thereafter should necessity arise. Pleadings should not be ‘deemed to be amended’ or ‘treated as amended’. They should be amended in fact.”
87. The principles set out in the decisions in Blay v Pollard and London Passenger Transport Board v Moscrop have been repeatedly referred to and applied in Papua New Guinea. See for example Magasaki Ltd v Bai [2007] PGNC 90, Rabaul Shipping Ltd v Aisi [2006] PGNC 155, Workcover Authority of NSW Placer (PNG) Exploration Ltd [2006] PGNC 47 and Pok v State [2007] PGSC 21. In Pok v State, Injia DCJ (as he then was), Gavara-Nanu and Davani JJ cited with approval the following statement of Kandakasi J in Madiu Andrew v Mineral Resources Development Co. Ltd [2004] PNGNC 170:
“Pleadings in a civil claim play a very vital role. They lay the foundation for a claim and dictate the kind of evidence the parties can call and the grant of a relief subject to evidence proving it. Both this court and the Supreme Court have denied plaintiffs grants of reliefs that have no foundation in the pleadings even if there is evidence of it.”
88. An earlier decision of this Court in Papua New Guinea Banking Corporation v Tole [2002] SC694 concerned an appeal where the employee had failed to specifically plead the special damages which it sought and obtained on assessment of damages after grant of default judgment. Despite being duly notified, the employer (PNGBC) failed to turn up at the hearing on assessment of damages. Further, despite pleading the employee was “deprived of his salary and allowances and benefits ... particulars of which will be provided after discovery and prior to trial”, no particulars were provided by the employee. Then in the prayer for relief, the employee just sought “General Damages”. This is almost similar to what Kama did in his prayer for relief. The court in Tole also reaffirmed the principle that if matters not pleaded are raised at trial without objection, those matters may be the subject of submissions for relief and an award of damages. That followed MVIL v John Etape [1995] PNGLR 214 and MVIL v James Pupune [1993] PNGLR 370. However, the court in Tole said the distinguishing feature of Etape and Pupune was those matters went to trial on liability and damages with all parties appearing. In Tole, the employer did not appear at trial and, at worst, was entitled to expect judgment against it on the pleadings filed by the employee. Despite the lack of pleading as to special damages, the court went on to examine the evidence adduced at trial and awarded damages that had no foundation in the pleadings. The appeal by the employer was upheld on that basis.
89. This Court in Yakasa v Piso SC1330 said:
“We do not question the correctness of the observations made in PNGBC v Tole insofar as they require that a party be put on notice as to the relief which is sought against that party and have an opportunity to be heard in respect of the granting of that relief. Where that has occurred, natural justice will have been observed. The point of pleading rules in relation to the relief sought is to ensure that the party against whom that relief is sought has notice. Where, however, natural justice has in fact been afforded to that party in respect of the seeking of other relief, to deny the other party that relief on the basis of an absence of a formal amendment would, with respect, be a miscarriage of justice. The rules of court are a handmaiden of justice, not its master. The correct position was stated by French J (as the present Australian Chief Justice then was) in Bomanite Pty Ltd v Slatex Corp Australia Pty Ltd [1991] FCA 536; (1991) 32 FCR 379 at 391: “The substantive goal of this Court is to do justice between parties according to law. That objective is not to be compromised by undue rigidity in the application of the procedural requirements which are its handmaidens.” The “substantive goal” of the National Court is no different. It is to do justice according to law.”
90. At paragraph 66 the Supreme Court in Yakasa v Piso also said:
“The rules of court with respect to pleadings are directed to the end of achieving procedural fairness but, where it can be seen that, in the circumstances of a particular case, procedural fairness has been achieved, albeit without strict compliance with the rules of court, it would be to elevate form over substance to set aside the resultant relief. The true position is as stated by Mason CJ and Gaudron J in Banque Commerciale SA (EnLiqn) v Akhil Holdings Ltd [1990] HCA 11; (1990) 169 CLR 279 at 286-287: “The function of pleadings is to state with sufficient clarity the case that must be met: Gould and Birbeck and Bacon v. Mount Oxide Mines ltd. (In liq.), per Isaacs and Rich JJ. In this way, pleadings serve to ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her and, incidentally, to define the issues for decision. The rule that, in general, relief is confined to that available on the pleadings secures a party’s right to this basic requirement of procedural fairness. Accordingly, the circumstances in which a case may be decided on a basis different from that disclosed by the pleadings are limited to those in which the parties have deliberately chosen some different basis for the determination of their respective rights and liabilities. See, e.g., Browne v. Dunn; Mount Oxide Mines. Ordinarily, the question whether the parties have chosen some issue different from that disclosed in the pleadings as the basis for the determination of their respective rights and liabilities is to be answered by inference from the way in which the trial was conducted. It may be that, in a clear case, mere acquiescence by one party in a course adopted by the other will be sufficient to ground such an inference.”
91. In the National Court, Cannings J held in the case of Buna v. The State N2696:
“The fact that damages cannot be assessed with certainty does not relieve the wrongdoer of the necessity of paying damages. Where precise evidence is available the court expects to have it. However, where it is not, the Court will do the best it can.” (Jonathan MangopeParaia v. The State (1995) N1342 Injia J).
92. As this court said in Yakasa v Piso, “The rules of court are a handmaiden of justice, not its master.”In this case, natural justice has in fact been afforded to Covec in respect of the seeking of other relief and to deny Kama that relief on the basis of an absence of a formal amendment would be a miscarriage of justice.
93. Whilst I agree with Covec that the learned trail judge found Kama’s claim for K9.3M was not established because the profit that was made on the material extracted from Portion 1239C was not proven in evidence, there was evidence adduced by Kama without serious objection by Covec that went to a claim for damages for trespass and for conversion. As discussed above, in evidence were assessments by Kama’s engineer Gola as to “(a) Extraction of Gravel Las Dombil K1,828,998.50 (b) Waghi River Training K1,623,103.90.” The Waghi River Training estimate was reviewed up in 2016 to the sum of K2,110,034.07. This was not challenged or refuted in any material manner by Covec.
Powers of the Supreme Court
94. In performing its function on the hearing of appeals or reviews or such other power, the Supreme Court exercises powers according to law and that is provided in the Constitution and the Supreme Court Act Chapter No. 37.The relevant provisions are sections 155(2) and (4) (the national judicial system) of the Constitution and sections 6(2) (appeal to be by way of rehearing), 8(1)(e) (supplemental powers of supreme court) and 16 (decision etc on appeal) of the Supreme Court Act.For clarity we set those provisions out in full:
95. Using powers provided by law particularly the power in exercising jurisdiction of the National Court and to give such judgement as ought to have been given by the learned trial judge or at first instance, I will award damages for trespass and conversion to Kama in the amount of K3,939,032.57 being the total of the assessments as to “(a) Extraction of Gravel Las Dombil K1,828,998.50”and “(b) Waghi River Training K1,623,103.90” subsequently reviewed to K2,110,034.07.
Award of exemplary damages without foundation [Grounds (d), (e) and (f)]
96. In awarding exemplary damages of One Million Kina (K1,000,000), Covec claims there was no basis for such an award. In my view, there was a clear articulation of the claim for trespass and conversion made in the body of the Amended Statement of Claim and, despite the subsequent contradiction by Kama in its pleading in the Reply, evidence was received, tested and accepted as to the value of sand, gravel rocks extracted from Portion 1239C in the sum of K1,828,998.50 and an estimate for correction for the extraction or conversion in the “Waghi River Training” assessed at K1,623,103.90. The decision to award of exemplary damages had foundation and I find no error on the part of the learned trial judge to disturb the learned trial Judge’s exercise of discretion to order and award damages for exemplary damages. The award by the learned trial judge of exemplary damages of One Million Kina (K1,000,000) is confirmed.
Conclusion
97. In the end by way of summary, I will uphold the appeal in part by finding the learned trial judge erred in awarding damages for conversion of “the value of the deposits extracted” in the sum of K25,680,064. I will instead award Kama damages of K3,939,032.57 consisting of: (a) conversion of sand, gravel, rocks extracted from Portion 1239C in the sum of K1,828,998.50; and (b) correction to the acts of trespass and conversion by accepting the Waghi River Training estimate of K2,110,034.07.
98. As for the appeal against the award of exemplary damages, I will refuse the appeal as there was a clear articulation of the claim for trespass and conversion made in the body of the Amended Statement of Claim and, despite the subsequent contradiction by Kama in its pleading, evidence was received, tested and accepted as to the value of sand, gravel, rocks extracted from Portion 1239C and the finding of liability for trespass and conversion was not appealed. Although the appeal from the assessment of damages is partly upheld, I have no reason to disturb the award of exemplary damages. The award of exemplary damages of K1,000,000 is therefore confirmed.
99. Further, I note Covec wilfully continued its defiance of the law of trespass and conversion by refusing to produce at trial records in its possession, custody and/or control that were vital to an accurate assessment of the gravel extracted from Kama’s land. My dismay at Covec’s flagrant breach of the laws and refusal to observe the rules of court for discovery and production of documents relevant to the issues raised in the pleadings is reflected in my orders as to costs of the proceedings.
100. As to costs, I note Kama and Covec each contributed to the failure to correct the discrepancies in the pleadings and Covec raised no objection at trial to the presentation of evidence on damages for conversion now granted and failed to address this issue in submissions at trial which is fundamental to the outcome of this appeal; (a) Covec shall pay Kama’s costs of the National Court proceedings, such costs shall be assessed on a solicitor and client basis, be taxed if not agreed; and (b) Covec shall pay Kama’s costs of this appeal, such costs shall be assessed on a party and party basis, to be taxed if not agreed.
101. I will also order Covec to pay Kama interest on the award of damages now awarded (K3,939,032.57) at the yearly rate of 8% per annum from 1 May 2009 to the date of this decision and thereafter in accordance with the Judicial Proceedings (Interest on Debts & Damages) Act 2015.
Orders
102. Accordingly, I make the following formal orders:
103. TOLIKEN J: I have had the opportunity to read the draft judgments of both the Deputy Chief Justice and Kassman J. While the deputy Chief Justice’s reasons for dismissing the appeal are very compelling, after much thought and hovering between the two well-reasoned opinions, I must, however, concur with Kassman J that the appeal should be partly allowed, but for slightly different reasons.
104. I have no intention on dwelling on the procedural aspects of the appeal. These and the grounds of appeal and the factual background of the case have been sufficiently canvassed by my brothers. My discussion will almost entirely be devoted to the manner in which the trial Judge assessed the damages he awarded.
THE RESPONDENTS CLAIM AND AWARD AT TRIAL
105. The Respondents claimed several heads of damages including the value of materials extracted, environmental damage to the land, loss of profit from a rice growing project on the subject land and damages for anxiety and stress, and exemplary damages among others. The trial judge correctly disallowed most of the heads of damages claimed but allowed the claims for cost of materials extracted and exemplary damages only and awarded K27,031,647.00 less a deduction of 5% for a total of K25,680,064.00 and K1,000,000.00 respectively. Were these awards justified?
106. The Respondents claimed in their Amended Statement of Claim K9300000 which they said represented 30% of the value of the contract received as profit from the sales of sand, gravel and chips without deductions from cost or as verified from receipts of payments from the State for the Highlands Highway Rehabilitation Project. His Honour the trial Judge correctly found that this claim (loss of profits) was not proved. His Honour, however, found and there was clear evidence that there was trespass and conversion and awarded K27, 031,647 and discounted 5% for a final figure of K25,680,064.
107. Both the Deputy Chief Justice and Kassman J concluded (and I respectfully concur with them) that the trial judge correctly found that the Respondents did not prove their claim of relief for loss of profit as no evidence was forthcoming from either party.
108. Their Honours, however, again separately held that the trial Judge was well within his discretion to award damages for claims which evidence was led over which the Appellants made no objections to on the authority of cases such as Motor Vehicles Insurance (PNG) Trust v Pupune (1993) SC 452; MVIT v Etape [1994] PNGLR 596; PNGBC v Tole (2002) SC 694; Yakasa v Piso (2014) SC1330. These authorities state that while plaintiff must at trial not depart from that which he had pleaded without having first amended his claim, a trial court can nevertheless award damages or grant a relief which he did not plead if the defendant did not object to evidence being led in support of that claim or relief, or if natural justice will be denied the plaintiff if it does not award such relief.
109. I concur with my brothers also that the Respondents had sufficiently pleaded the torts of trespass and conversion notwithstanding that they may not have pleaded these in their prayer for relief.
110. There is no question therefore that the Respondents were entitled to damages for trespass and conversion. It appears to me, however, that the trial Judge premised his award of damages entirely on the tort of conversion. There is no discussion in his judgment specifically on damages on the Appellant’s trespass on the Respondents’ land from which the act of conversion ensued and upon which the award of damages for conversion ultimately resulted.
111. My brothers do not address this in their judgments, apparently because this was not addressed by the parties in this appeal, but if the damages awarded was for conversion, which I believe they were, then I feel that it is proper that I say something in that respect, notwithstanding, because the measure of damages for these causes of action are different and the trial Judge ought to have discussed this in his judgment but did not.
112. There is no question that the Respondents ought to be compensated for their loss. However, as is trite, the principal purpose for damages, whatever the tort or cause of action, is to as nearly as possible, put the plaintiff in the same position, had they not suffered loss due to the wrongful actions of the defendant. As Lord Blackmore famously said in Livingston v Rawyards Coal Co. (1880) App. Cas. 25 –
... where any injury is to be compensated by damages, in settling the sum of money to be given for reparation of 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 in if he had not sustained the wrong for which he is now getting his compensation or reparation. That must be qualified by a great many things which may arise — such, for instance, as by the consideration whether the damage has been maliciously done, or whether it has been done with full knowledge that the person doing it was doing wrong. There could be no doubt that there you would say that everything would be taken into view that would go most against the wilful wrongdoer - many things which you would properly allow in favour of an innocent mistaken trespasser would be disallowed as against a wilful and intentional trespasser on the ground that he must not qualify his own wrong, and various things of that sort.”
113. In this case the Respondents ought to have been compensated for the loss of the valuable materials which the Appellants converted and of course for trespass so that they are put back to the same position, they were before they suffered loss, as best as possible. Of course, the economic value of the materials would have remained unrealized had they remained in the ground and hence of no real monetary value to the Respondents unless they were extracted and sold. And so, damages in this case ought to put the Respondents to the same position had they sold their resources themselves.
114. And this means that the trial judge ought to have properly assessed the damages by applying the correct principles for the torts of trespass and conversion. In my respectful opinion, His Honour did not do that. All he did was accept the latest estimates provided by Mr. Gola to arrive at his final award. As to assessment of damages, there is no discussion at all in His Honour’s judgment on trespass and the Respondents appear to have not taken any issue with that and they did not appeal against that error. I should not therefore say anything further about that.
115. However, if I am to understand the judgment correctly, all the discussion centered around the value of the materials extracted from the Respondent’s land, thus leading me to hold that the award was entirely for conversion. If that were indeed the case, then, the assessment ought to have started with a consideration of the measure of damages, the time at with the value of the converted materials ought to be assessed, whether the cost of extraction ought to be deducted or not from any award and of course the issue of exemplary damages.
MEASURE OF DAMAGES FOR CONVERSION
116. It is trite that the basic or normal rule of measure of damages for conversion is the market value of converted goods. This has been well settled and is based upon what Greer L.J. said in Hall v Barclay [1937]3 All E.R 620 at 623:
“When you are dealing with goods which can readily to bought in the market, a man whose rights have been interfered with is never entitled to have to pay to buy a similar article in the market.”
117. There the defendants had converted certain davits and testing apparatuses belonging to the plaintiff which were left unused for many years after they had erected two experimental davits for the appellants and sold them as scrap. The equipment had no market value at which they could be sold hence the Court of Appeal held that the Appellant was not limited to the selling value the chattels possessed as scrap at the time of conversion. In the absence of market value for such goods where such goods would be readily available, he could recover the cost of acquiring replacements. See Wilson v Robinson (London) Ltd [2006] EWCA Civ 1088; Fairfax Gerrard holdings Ltd v Capital Bank Plc [2007] 1 Llyods Rep. 171 where Hall v Barclay had been followed in recent times.
118. The time at which the market value of the good or chattel converted is to be assessed is at the time of conversion. McGregor on Damages, 19th edition at 36 – 011 (p.1281) says:
There is a good deal of authority for taking the time of conversion as the time at which the market value is to be assessed. This was originally laid down in Mercer v Jones [(1813) [1813] EngR 712; 3 Camp. 477], an action for conversion of a bill of exchange, where Lord Ellenborough directed that interest on the bill should only be allowed up to the time of conversion. He said: “In trover the rule is, the plaintiff is entitled to damages equal to the value of the article converted at the time of conversion.” The same rule has been restated both in the Court of Appeal in Henderson v Williams [[1895] 1 Q.B. 521] and by the Judicial Committee of the Privy Council in Solloway v McLaughlin [[1938] A.C. 247] and and Again in BBMM Finance (Hongkong) v Eda Holdings [[1990] 1 W.L.R. 409]
(Underlining added)
119. The value of goods and chattels is, however, often subject to market fluctuations. And so, in Greening v Wilkinson (1825) C. & P. 625, an action for conversion of cotton warrants, Abbott C.J. differed from Mercer v Jones, holding that it was not good law when considered against a rising market. He therefore directed the jury that they have the discretion to “give the value at the time of conversion, or at any subsequent time ... because the plaintiff might have had a good opportunity of selling the goods if they had not been detained.” (McGregor on Damages, at 36 – 012) This suggested that the value of the converted goods can be fixed at the judgment. And so, it was held in Sachs v Miklos [1948] 2 K.B. 23 that if the value of the goods has increased since conversion, the increase can be recovered as consequential loss. There the Court of Appeal held at p.39:
“The value of the goods converted, at the time of conversion, is one thing ... but it does not follow that that sum is the measure of the plaintiff’s loss. The question is what is the plaintiff’s loss, what damage he has suffered, by the wrongful act of the defendants.”
118. The learned authors of the text McGregor on Damages, at 36 – 013 at pp. 1282 & 1283 submit (where there is a case of market fluctuations) that “the soundest approach is to start off with the value of the at the time of conversion as the prima facie measure; this is in accord with the general principle are to be assessed at the date of the wrong. The effect upon this measure of damages of increase or decrease in the value between the wrong and judgment must then be considered. Increases must be divided into those that would have happened without intervention by the defendants, i.e. rises in the market value, and those that are due to acts done or expenses incurred by the defendants.”
120. The current case is not one where, I think, the converted goods had been subjected to a rising market per se, neither is it one where the Respondents can be said to have suffered consequential loss. Nonetheless the defendants, in the course of their trespass and act of conversion had incurred costs in extracting and carting away valuable materials from the Respondents’ land. Should these costs be deducted from the damages awarded to the Respondents?
121. McGregor on Damages again says at 36-29 at p. 1293:
“Where mineral in the earth is wrongfully severed and raised by the defendant, its value at the pit’s mouth is greater by virtue of the severance and raising than its value in the earth, since it is of no use to anyone until severed and raised. Therefore, the exact loss to the claimant whether in an action of trover for wrongfully converting his minerals or in an action for trespass to goods for wrongfully taking them away, is measured by the price at the pits mouth less both the cost of severing and the cost of raising. If the defendant is not allowed to deduct these costs, the claimant is not allowed to deduct these costs, the claimant is paid for expenditure he never incurred. On the other hand, if the defendant is allowed to deduct this outlay, it may be said that he is being paid for his own unlawful act.”
122. In determining the measure of damages for conversion in unauthorized mining old English cases have sought to make a distinction between the cost of raising incurred before the mineral as part of the land becomes a chattel and the cost of raising which is incurred after that. In Martin v Porter (1839) 5 M. & W. 352, it was held that no deduction was to be made for the cost of severance and that the value of the minerals was to be fixed at the time they first became chattels. But as the learned authors of McGregor on Damages at 36 – 032 again say at p. 1294, this general rule was qualified in Wood v Morewood [1841] EngR 164; (1841) 3 Q.B. 440 at 441, where Baron Parker directed the jury that they might award damages in trover for the value of the coals at the time they first became chattels if the defendant was guilty of fraud and negligence on the principle laid down in Porter v Mercer. But if they thought that the defendant was not so guilty and acted fairly and honestly in the full belief that he had a right to do what he did, they might give the fair value of the coals as if the coalfield had been purchased by the plaintiff. There was clearly then a distinction – the strict rule approach of Porter v Mercer and the milder rule in Wood v Morewood.
123. In Jegon v Vivian [1871] UKLawRpCh 21; (1871) L.R. 6 Ch. App. 742 at 763, Lord Hatherley said:
I think that the milder rule of law is certainly that which ought to guide this court subject to any case made of a special character which would induce the court to swerve from it, otherwise on the one hand a trespass might be committed with impunity if the rule in poenam were not insisted upon: so on the other hand persons might stand by and see their coal worked, being spared the expense of mining, and getting it.”
124. Clearly what Lord Hatherley is saying here is that if the owner stood by and watched the trespasser adversely deal with his land or chattels, the owner cannot be allowed to benefit from his inaction.
125. In Livingston v Rawyards Coal Co. (supra at 39) where the House of Lords approved Jegon v Vivian, Lord Blackburn described the distinction between the cost of severance and cost of raising a “technical rule.” This was a case in which the defendant had inadvertently or innocently mined coals from under the plaintiff’s property. The plaintiff neither knew of the existence of coal under his tiny plot (1 ½ acres) nor did he have the means and financial capacity to profitably severe and raise the coal from under his land. His Lordship said:
Now, my Lords, there was a technical rule in the English Courts in these matters. When something that was part of the realty (we are talking of coal in this particular case) is severed from the realty and converted into a chattel, then instantly on its becoming a chattel, it becomes the property of the person who had been the owner of the fee in the land whilst it remained a portion of the land; and then in estimating the damages against a person who had carried away that chattel, it was considered and decided that the owners of the fee was to be paid the value of the chattel at the time when it was converted, and it would in fact have been improper, as qualifying his own wrong, to allow the wrongdoer anything for that mischief which he had done, or for that expense which he had incurred in converting the piece of rock into a chattel, which he had no business to do. Such was the rule of the Common Law.
126. In Lamb v Kincaid (1907) 38 S.C.R 516 which the trial Judge in the instant case cited in his judgment, a dispute arose between the parties over their boundaries to their mining concessions or placers. The defendants prevailed in the Gold Commissioner’s court, but while an appeal by the plaintiffs was still pending, the defendants entered the location and extracted auriferous material from both their own portion and the disputed portion and intermixed them without keeping any account of the gold recovered from each portion. In the Supreme Court of Canada, Justice Duff, with whom the majority agreed, found there was no question of inadvertence or negligence of the part of the defendants. Rather they deliberately invaded the plaintiffs’ territory which they readily admitted. The court then held (from the head notes) that “a correct appreciation of the evidence disclosed a sinister intention on the part of the defendants, that they had deliberately blended the materials taken from both parts of the location, converted the whole mass to their own use and thereby destroyed the means of ascertaining the respective quantities so taken and the proportionate expense of recovering the precious metal therefrom, consequently, they were liable in damages for the total value of so much of the intermixed products as were not strictly proved to have come from the undisputed portion of the location.”
127. Even though this case is of persuasive authority only, it is instructive to quote the relevant statement by Duff J. in full here because it seems to me very similar to the circumstances of the instant case. At pp. 528 & 529 His Honour said:
In the leading case Wood v. Morewood ([23]), for example, the test which Baron Parke instructed the jury to apply was: Did the defendant actfairly and honestly (not honestly only) in the bonâ fide belief that he had a right to do what he did?(not merely that he owned the coal taken). If the title is in dispute and the dispute is in course of active litigation an abstraction of mineral may be innocent or non-innocent, according to the circumstances; according, for example, to its effect upon the trespasser's adversary in respect of his position in the dispute, or upon the adversary's rights, in the event of his success in litigation. If, in that event—the adversary's success—the trespasser can compensate him fully in money and if the trespass places him at no disadvantage either in the dispute itself or in the ascertainment of compensation or otherwise, then the trespass may be perfectly innocent in all but a legal sense. Apparently such a case, in the opinion of Lord Hatherly, was disclosed by the circumstances of Jegon v. Vivian ([24]), although I venture to think there will be few cases in which the appropriation by one party to a litigated dispute of the subject matter of the litigation, will not place upon that party a heavy burden of explanation.
If on the other hand the act is an adverse act, designed to put the adversary at a disadvantage in the dispute, the mere fact that the trespasser believes he is acting within his legal rights will not, I think, bring him within the category of the innocent. PeruvianGuano Co. v. Dreyfus Bros. & Co.([25]), per Lord Watson at page 171. At least as effectively, would it appear to me, is he excluded from that category, if his act of trespass is designed, in the event of his own defeat, to deprive his adversary of, or to embarrass him in obtaining the whole or part of that to which he shall prove to have been entitled. In such a case he cannot be said to act "fairly and honestly," to use the language already quoted from the charge of Parke B. in Wood v. Morewood ([26]); or "wholly ignorantly and innocently," in the language of Lord Blackburn in Livingstone v. Rawyards Coal Co. ([27]) at page 40; or without any "sinister intention" in the language of Lord Cairns, in the same case at page 31. He is in a word, a wrong-doer in foro conscientiae - not in the eye of the law merely.
That the design of the defendants in committing the trespass complained of was to frustrate the plaintiffs' appeal by depriving them, in the event of their success, of the fruits of success, is in my opinion the only view fairly consistent with the whole of the facts in evidence.”
128. The principle that obtains from these authorities then is this: A defendant may pay for the market value only of the materials
after they become chattels at time of conversion if he acted fairly and honestly in a bona fide belief that he had the right to do what he did, wholly ignorantly, without sinister intention, or where the plaintiff passively stands
by and does not protest the act of trespass or conversion from continuing. This is the milder rule. If, on the other hand, the defendant’s
conduct is willful, or is designed to deprive, frustrate or embarrass the plaintiff in exercising his full rights to his land or
chattels, or the defendant persists in his wrongful conduct in the course of active opposition or litigation between him and the
plaintiff, the plaintiff is entitled to recover the market value of the converted chattels together with the cost of severing the
mineral. This is the strict rule.
129. This must, however, be understood in the context and prevailing mining practices at the time those cases were decided. Then,
minerals under the ground were mostly accessed through tunnels and shafts by digging, whether manually or mechanically. The minerals
were severed and then raised to the surface. Today mining operations and practices have changed dramatically and while there are
still underground operations most are now open cut.
130. Be that as it may, willful or outrageous conduct of the defendant are normally met with exemplary damages. At common law though exemplary damages were not available for conversion as opposed to trespass. Hence the development of the strict rule as a penal measure. This, however, changed with the seminal case of Rookes v Barnard [1964] AC 1127 which was approved in Broome v Cassell & Co [1972] UKHL 3; [1972] A.C. 1027 and Kuddus v Chief Constable Leicestershire [2002] A.C 122. In Rookes v Barnard, Lord Devlin set out three categories under which exemplary damages should now be awarded. These are (1) oppressive, arbitrary or unconstitutional action by servants of the government, (2) where the defendant’s conduct has been calculated to make a profit for himself which may exceed the compensation payable to the plaintiff and (3) exemplary damages are expressly provided by statute. In Kuddus v Chief Constable Leicestershire (supra.) it was laid down by the House of Lords that the court must look at the defendant’s behavior rather than the plaintiffs cause of action that must be considered as to the appropriateness of an award for exemplary damage.
131. I would venture to say here, then that the technical rule in deciding whether to allow a plaintiff to recover the cost of raising or extracting materials from another person’s land on a suit for conversion, ought now to guide the court in deciding whether to award exemplary damages as well as the measure of such damages in profit-motivated torts including conversion. Hence, where the defendant acted fairly and honestly, with bona fide belief that he had the right to do what he did, was wholly ignorant, and acted without any sinister intention, or the plaintiff did not object or protest the trespass or conversion from continuing, exemplary damages should seldom be awarded, if ever at all. Where the defendants conduct is willful, or is designed to deprive, frustrate or embarrass the plaintiff in exercising his full rights to his or her chattels, or the defendant persists in his wrongful conduct in the course of active opposition or litigation between him and the plaintiff, exemplary damages ought to be awarded commensurate with the degree and severity of the defendant’s wrongful conduct, the higher the degree, the higher the award.
132. In a commercial world driven by the singular purpose of making a profit and sometimes sheer greed unfortunately, it becomes very easy, if not tempting, to do so at all costs. Profit-motivated torts unfortunately proliferate, and in this country, where commerce has and continues to be largely driven and controlled by multi-nationals, whose principals and managers, sometimes, in their haste may refuse or neglect to engage and meaningfully negotiate with resource owners for mutual benefit. They thus can easily take advantage of the ignorance of our people. The recent case of Rimbunan Hijau (PNG Ltd) v Enei (2017) SC 1607 (Salika, DCJ, Kandakasi J (as they then were) Toliken J), which the Deputy Chief Justice has discussed sufficiently in his judgment, pertaining to the grounds of appeal in the instant case, is a case in point, though the respondents’ claim was based entirely on trespass to their customary land wherein the appellant there used the land as a log pond over a long period of time amidst persistent opposition by the respondents and total ignorance and non-compliance of court orders recognizing the respondent’s clan as the true owners of the land. When discussing exemplary damages, we said the following which brings to bear the point I am making here:
59. All persons, incorporated or natural, including businesses, local or foreign as well as the State are required to recognize and
respect the rights and interests of customary landowners before entering any land, occupying and making use of it. Before doing that,
especially on any customary land, a person wishing to do so must first exercise care by carrying out due diligence to correctly identify
the customary landowners through a transparent and open process as described by Kandakasi J in his decision in Kanga Kawira&Ors
v. Kepaya Bone &Ors (supra). Once the owners are properly identified, they should then be properly organized into ILGs in accordance
with the ILG Act. This is necessary to ensure there is a properly organised legal identity with a proper structure in place to deal
with the interested party and properly receive, manage, distribute and account for the funds received for the landowners. Thereafter,
through the duly appointed or recognized leader of the landowners, the interested party should then legally seek and secure its “social
licence” to enter, occupy and conduct its business on the relevant customary land. Any failures should be met with damages
representing the value added or contributed to the trespasser’s business by the use of the customary land.
CURRENT CASE
132. Turning now to the instant case, this was a clear case of trespass and conversion where the Appellant illegally and willfully entered the Respondents’ land and extracted valuable deposits of gravel, sand and stones for use in the Highway Rehabilitation Project. The evidence before the court below conclusively showed that land from which the materials were extracted was “Las Dombil” (Portion 1239C) which the Respondents owned and still do. The Survey Plan produced by the Respondents at trial clearly showed that.
133. The Respondents did not passively stand by and watch the Appellant’s illegal activities on their land in order to give them the impression that they acquiesced to the illegal activities. They protested, went to the Land Courts over it and went to the extent of getting a qualified surveyor to confirm their land’s boundaries with the adjoining State land on which Barawagi Correctional Institution is on for instance. Their efforts were, however, thwarted by CS officers who prevented the surveyor from traversing through CS land to get to Las Dombil, as that was and is the only means of access to the land. CS officers and their commander were emboldened by a Memorandum of Understanding (MOU)between the Institution and the Appellant for the extraction of some 30,000 metric tonnes of gravel and sand from the Waghi and Koronigle rivers which abut the Institution land. His Honour the trial judge correctly ruled the MOU illegal.
134. The Appellant’s conduct, as the Deputy Chief Justice noted in his judgment, is almost on all fours with Rimbunan Hijau (PNG) Ltd v Enei. Here the Appellant entered the Respondents’ land, may be mistakenly at first to extract valuable materials to be usedat the
Highlands Highway Rehabilitation Project. However, when the Respondents lawfully objected to this intrusion on to their land, the
Appellant resisted and persisted in their wrongful act, emboldened by officers from the Barawagi Correctional Institution, with whom
they had signed an illegal MOU to extract material from State land, but as it turned out to be, not a single load of materials was
taken from the Institution’s land. So persistent were they in their efforts to continue with their trespass and conversion
of the Respondents’ land and chattels that they went to the extent of securing restraining orders in the National Court against
them despite knowing that the Respondents’ ownership of the land had been recognized by the Land Court in Kundiawa.
135. The Appellants were very well aware of the Respondents’ claim to the land. Did they take steps to ascertain that the land
was really within the CS Barawagi boundary? No, they did not. Instead they took out orders in the National Court preventing the Respondents
from entering their land. Their friends from CIS Barawagi even prevented the surveyor from conducting an inspection survey to confirm
the boundaries. The Appellants were therefore hell bent in their illegal trespass on the Respondent’s land and ended up extracting
valuable materials from the land, which, once extracted or severed, became chattels, thus justifying the Respondent’s claim
for conversion.
136. As regard the award for the value of the material extracted by the Appellants, the trial Judge was entirely swayed by the evidence of Mr. Mark Gola, a civil engineer with 34 years of experience in road construction, hence, an expert in his field – there being no evidence from the Appellants as they called no witnesses. According to Mr. Gola, the Highlands Rehabilitation Project which commenced in 2007 was for the rehabilitation of 24.8 kilometers of road between Kundiawa and Miunde.
137. In 2007 Mr. Gola initially estimated the value of materials needed to be K1,828,998.50 when the projected started, Costs for River Training was estimated at K1,623,103.90. It appears that the estimates were done by one Ekas Ohuma, a Senior Geotechnical Engineer, who submitted two Reports to Mr. Gola by letter dated 31st August 2007 titled Extraction of Las Dombil River Gravel and The Waghi River Training (Las Dombil)which letter is annexed to Mr. Gola’s affidavit of 11th July 2016. (See pp. 201 – 230 of the Appeal Book Vol.1).
138. In the summary to the report on the bill of quantities of materials extracted from Las Dombil,at p. 220 (AB) the following is stated:
“Figures of quantities enclosed are during physical inspections. We are of the opinion that that the total materials excavated from Las Dombil to complete all works will be between 50,0000 – 60,000 m3 of gravel.
139. From these reports a total of 88699 cubic metersof gravel would have been extracted from the land. The estimated cost of the River Training included mobilization, survey, materials, plant/equipment and labour. It was necessary to construct a 500m protection wall along the Waghi River abutting Las Dombil.
140. The Report further says that “The Costings are of approximate values. Should actual counts and measurements were taken per activity the total cost will rise.” (sic) And that is exactly what appears to have happened.
141. According to Mr. Kama, in his supporting affidavit sworn and filed on 11th July 2016 (Document No.99, para.7 at p. 49 of the Appeal Book) the project was completed in July 2009. On 07th July 2016, Mr. Gola was engaged by the Respondents to undertake a revised up-to-date estimate of the quantities of material used on project. Two days later on 09th July 2016, he furnished his revised report to Mr. Kama. Mr. Mr. Gola was able to make a more accurate estimate of quantity of materials actually used. His revised estimates included the costs for labour, materials and plant and equipment for each different item resulting in significant increases from the basic rate of K35.00 for the 2007 estimates. He assessed the bill of quantities then at K26,994,318.00.
142. On 03rd August 2006, Mr. Kama again requested Mr. Gola, in writing, to review the previous assessment yet again. On 23rd August 2016, Mr. Gola furnished his revised report to Mr. Kama wherein the bill of quantities was revised upwards to the value of K27,031,647.80 to which 2.5% for spillage (K675,791.00) was added to bring it to a total of K27,707,439.00. (See Mr. Gola’s further affidavit in support sworn 12th and filed on 13th September 2016, Document No.118, pp. 303 – 316 of the Appeal Book) The trial judge extrapolated this in his judgment at p.904 of the Appeal Book. His Honour, however, appears to have omitted the amount for spillage thus citing the total value at K27,031,647.00 only. The total bill of quantity came to 535,519.90 cubic meters, an increase from 88699 cubic meters from the 2007estimates.
143. Noting that Mr. Gola had initially valued the extracted materials in 2007 at K1,828,998 and then increased it twice within a span of month in 2016 to K26,994,318.00 and finally to K27,031,647.00, it becomes necessary to ask; (1) what ought to have been the measure of damages?; (2) at what time ought the value for the extracted material be fixed? and (3) was the award of K27,031,647 justified in the circumstances?
144. I have considered His Honour’s judgment and the transcript of the evidence and I find that he had misapprehended the evidence of the Respondents on one important point – the value of the materials extracted from the Respondent’s land. In his judgment which appears at pp. 898 to 912 of the Appeal Book, he says at p. 902 that the value of at least 30,000 cubic meters of gravel noted in the MOU between CS Barawagi and the Appellant was K31 million. He relied on Mr. Kama’s supporting affidavit (Document No. 97). That, however, is not what Mr. Kama said. Rather Mr. Kama said at paragraphs 4 and 5 of his affidavit (p. 48 of Appeal Book):
145. Clearly what Mr. Kama is saying there as valued at K31 million was the contract between the State and the Appellant for the rehabilitation that stretch of Highlands Highway between Kundiawa and Miunde, and not the value of materials extracted from the Respondents’ land. As that was the only evidence before the trial Judge, sketchy and without any solid foundation it may seem, because the party who could have provided the details of that contract – the Appellant – did not give any evidence at all – had His Honour not misinformed himself, he would have definitely not assessed the damages at K27,031,647.00 prior to discounting 5% to arrive at the ultimate amount of K25,680,064.00. For indeed, that would have constituted about 87% of the contract value for the work on the Highway.
146. I am of the respectful view therefore that His Honour, the trial Judge erred, in that he did not apply the proper principles
for awarding damages for conversion. As we have seen, it is settled that normal measure of damage for conversion is the market value
at the time of conversion. Hence, His Honour ought to have started off by assessing the market value of the materials at the time
of conversion when they were extracted from the land.And the figures to guide him obviously would have been the 2007 estimates because
these in my view more accurately reflected the quantity of the raw materials extracted from the Respondents land and hence the value
which would have been attached to them.
147. Instead His Honour, as I alluded to earlier, simply accepted the last of the updated estimates by Mr. Gola of 2016, which, despite being professionally done, came almost 10 years after the project was completed. And this resulted in over-compensation to the Respondents. They certainly were not placed or restored to the same position they were before they suffered loss. They in fact ended up with a windfall. And I doubt very much that they could have made that much money had they sold the materials themselves by either extracting the materials themselves and selling them solid form or aggregate, or if they had entered into an agreement with the Appellants or other contractors for that matter. Given that the value of the contract between the State and the Appellant for the rehabilitation of the 24.9km stretch of the Highlands Highway between Kundiawa and Miude at K31 million, I doubt whether the final award of K25, 680,064 was a just compensation for the Respondents loss, lesser them in the same position had they not suffered loss.
148. The matter ideally ought to be remitted for a proper assessment of damages, but because appeals to the Supreme Court are by way of a rehearing, I feel inclined, like my brother Kassman J, to exercise the Supreme Court’s review and appellate powers Section 155 (2) and (4) of the Constitution and the Supreme Court Act, sections 6(2) (appeal to be by way of rehearing), 8(1)(e) (supplemental powers of supreme court) and 16 (decision etc on appeal).
149. So, would the award of K25, 680,064be, in these circumstances, a fair value at the time of conversion for the Respondents valuable chattels? The Respondents would obviously argue that the latest of the 2016 estimates would most accurately represent the market value of all the pavement materials of the different types of courses used on the road project. That may be the case, but I would like to think that it would not have been in the contemplation of the parties had they mutually contracted that the Respondents would be paid the value of the crushed pavement materials in their various courses. In all fairness, they would most likely have contracted for the sale and supply of raw materials– sand, gravel and rocks or stones which have been used direct on the road project or crushed by the crusher installed on the land for theproduction of pavement materials in their different courses. That being the case, the 2007 estimates, would, in my opinion, most accurately and fairly represent the value of the materials at the time of conversion. While the estimated volume of materials was placed 30,000 cubic meter in the MOU between the Appellant and CIS Barawagi, the volume estimated by Mr. Gola then was88699 cubic meters worthK1,828,998.50 at the rate of K35.00 per cubic meter before they shot up to a staggering K27,707,439.00 in 2016 being the estimated value of more than 535,519.90cubic meters of pavement materials in their different courses and associated costs as specified in the bill of quantities.For the River Training the 2007 cost estimate, if I understand correctly, this is the estimated cost of putting up protective walls along the river banks on the land and therefore the 2016 updated estimates of K2,110,034.07 should perhaps be allowed to stand.
150. I have considered the award proposed by my brother Kassman J. and I agree with him. I therefore also award the Respondents K1,828,998.50 for the loss of their value materials and for River Training costs, I award K2,110,034.07 for a total sum ofK3,939,032.57. This sum would in my opinion put the Respondents back in the position they would have been had they not suffered loss, no more no less.
EXEMPLARY DAMAGES
151. I agree with my brothers that a case for exemplary damages was made out despite the Appellant’s argument to the contrary. The Appellant’s behavior is exactly the kind of behavior this court in Rimbunan Hijau (PNG) Ltd v Enei (supra.) spoke about and condemned which must be visited be visited upon with exemplary damages.Theydisplayed total contempt towards the Respondents and acted with total abundance, impunity and disregard for the Respondents and the law for that matter when they refused to recognize the Respondents rightful claim to their land. They acted with sinister intention. They did not act fairly and honestly, even when faced with unassailable evidence that theyillegally entered and extracted valuable materials from the Respondents’ land. As we have seen the Respondents did not passively standby and watch the intrusion onto their land and conversion of their valuable materials. They resisted and did everything in their power to stop the wrongful acts of the Appellant.The Appellant’sconduct both during the time it committed the wrong against the Respondents and at the trial must be condemned and I join my brothers in expressing the court’s total displeasure in the Appellant’s contempt for the Respondents and for the law and the rules of court.
152. That aside, I too find no error in the trial judge’s award and accordingly affirm the award of K1000000.00.
CONCLUSION/ORDERS
ORDERS OF THE COURT:
Judgment and orders accordingly:
____________________________________________________________________
Mannrai Lawyers: Lawyer for the Appellant
Gagma Legal Services: Lawyers for the Respondents
PacLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.paclii.org/pg/cases/PGSC/2020/9.html