Legal Index: D
Damages, default judgment, defamation and the two ways a case can end without a hearing — the 3 per cent discount rate, setting aside a judgment entered in default, the statutory defamation defences, summary dismissal and want of prosecution.
Damages — personal injury
How future economic loss is discounted to present value, what evidence a plaintiff must have pleaded, and when a passenger’s own conduct reduces the award.
Pinzger v Bougainville Copper Ltd [1985] PGSC 17; [1985] PNGLR 160 (Supreme Court)
In assessing damages for personal injuries, account must be taken of notional tax on income received from investing the damages that represent future loss — unless the amount is so small that the notional tax is negligible. The Court applied Todorovic v Waller (1981) 150 CLR 402 and approved Hassard v Bougainville Copper Ltd [1981] PNGLR 182.
The way to account for it is a downward adjustment of the discount rate, and the Court fixed that rate: the proper discount rate for calculating the present value of future economic loss, taking into account both notional tax and inflation, is 3 per cent. That varied the earlier decision in the same litigation, Pinzger [1983] PNGLR 436.
The Court also confirmed that the purpose of awarding interest on damages in personal injury actions is compensatory, adopting British Transport Commission v Gourley [1956] AC 185.
Motor Vehicles Insurance (PNG) Trust v Pupune [1993] PGSC 12; [1993] PNGLR 370 (Supreme Court) — four points. Where evidence of economic loss that was not pleaded is admitted without objection, the defendant cannot on appeal hark back to the pleadings and say it was not pleaded (adopting Domsalla v Barr [1969] 3 All ER 487). Loss of earning capacity is based on the plaintiff’s earnings at the time of the injury. And the trial judge erred both in failing to take account of factors mitigating the loss of earnings, and in failing to take account of the plaintiff’s failure to mitigate.
Motor Vehicles Insurance (PNG) Trust v Tabanto [1995] PGSC 16; [1995] PNGLR 214 (Supreme Court) — on contributory negligence and appellate restraint. Riding in the back of a vehicle that has no PMV licence is not ipso facto contributory negligence, though it is a relevant factor; the question involves a wide range of considerations and each case depends on its own facts. A party who did not object to unpleaded evidence and litigated the matter on its merits cannot object to admissibility on appeal. And the Supreme Court will not disturb a trial judge’s award unless the amount is so inordinately high that it is a wrong estimate.
Tabanto opens with a proposition that reaches well beyond damages: in formulating a principle of law, the Supreme Court must take into account the conditions and circumstances of Papua New Guinea.
Pupune and Tabanto are the plaintiff-side counterpart to PNGBC v Tole. All three say the same thing from different angles: the time to take a pleading objection is when the evidence is led, not on appeal.
A defendant who sits through evidence of an unpleaded head of loss without objecting has, in practical terms, consented to it being tried. See Legal Index: P.
Default judgment — setting aside
What a defendant must show to have a regularly entered default judgment set aside under Order 12 Rule 8 of the National Court Rules 1983.
The State and Davis v Barker [1977] PNGLR 386 (Supreme Court)
Prentice Dep CJ, with whom Frost CJ agreed, held that as a matter of practice an application to set aside a default judgment regularly obtained should be granted only on an affidavit disclosing a defence on the merits. A defendant who cannot show an arguable defence has no answer to the judgment, and setting it aside would achieve nothing.
The Court also stated the approach an appellate court takes to a discretionary decision. To substitute its own discretion, the appellate court must be satisfied that the judge below acted on a wrong principle, allowed extraneous or irrelevant matters to guide the decision, mistook the facts, or failed to take a relevant matter into account — and that the decision was clearly wrong, or that injustice might otherwise be done. That reasoning follows House v The King (1936) 55 CLR 499 and Evans v Bartlam [1937] AC 473.
Smith v Ruma Constructions Ltd [2002] PGSC 13; SC695 (Supreme Court) — states the modern three-part test an applicant must satisfy: (1) an explanation of why the judgment was allowed to go by default; (2) where there has been delay in applying to set aside, a reasonable explanation for that delay; and (3) a defence on the merits. The Court found that the trial judge had referred to these principles but failed to apply them.
Green & Co Pty Ltd (Receiver Appointed) v Green [1976] PNGLR 73 (National Court) — an application to set aside a judgment signed for failure to deliver a defence in time. The application was refused. It is the standard illustration of the principle operating against a defendant who cannot meet it.
The Barker requirement of a defence on the merits governs a judgment that was regularly entered. Where a judgment is irregular — entered before the time for defence expired, or without the affidavits that Order 12 Rule 34 requires — the defendant is in a stronger position, because the judgment ought never to have been entered.
Against the State the time periods are longer: section 9 of the Claims By and Against the State Act 1996 gives 60 days on a writ, not the ordinary 14. A judgment entered before that has run is irregular.
Defamation — fair comment and qualified protection
Defamation in Papua New Guinea is governed by the Defamation Act (Chapter 293), which puts the defences on a statutory footing rather than leaving them to the common law.
Yakham v Merriam [1999] PGSC 58; [1999] PNGLR 592 (Supreme Court)
The Court drew a distinction that decides which statutory defence is available, and to whom.
Fair comment under section 9(1)(b) applies to comments made by members of the public about persons who participate in public affairs. Good faith is not an element of this defence. Strictly speaking it is available to ordinary members of the public who take up the public task of attacking or scrutinising the public conduct of those who engage in public affairs — members of the national and local legislatures, ministers, public servants and the like. The Court referred to Cameron v Consolidated Press Ltd [1940] SASR 372.
Section 11 qualified protection is the provision that governs the other direction. Where government officials publicly scrutinise the conduct of members of the public — citizens and non-citizens alike — because they see it as their legal, social or moral duty, and claim protection for doing so, those matters fall within section 11, not section 9(1)(b).
On the facts, the comments published about the Merriams were made by political, executive and bureaucratic officials of the government, not by ordinary members of the public. The fair comment defence was therefore not the applicable one.
The two defences are not interchangeable, and they carry different burdens. Fair comment under section 9(1)(b) does not require good faith; qualified protection under section 11 is defeated by proof that the publication was not made in good faith.
So a defendant’s status — ordinary citizen commenting on a public figure, or official commenting on a citizen — determines which defence is in play and how much has to be proved. Pleading the wrong one puts a defendant to proof it need not have undertaken, or leaves a gap it cannot fill.
Note also that this is a different decision from Yakham v Merriam [1997] PGSC 32; [1998] PNGLR 555, which arose in the same litigation but decided when leave to appeal is required. The two are frequently confused because the party names and the report series are the same.
Dismissal without a hearing
The competing principle: when the court may, and may not, end a proceeding on an interlocutory application.
Takori v Yagari [2007] PGSC 48; SC905 (Supreme Court)
An appeal against the dismissal of a claim on an interlocutory application. The Court emphasised that a party has a right to have his case heard, guaranteed by the Constitution and the laws of the land, and that the Rules exist to enhance that right rather than to defeat it.
The Court warned against allowing a party to be, in the language it adopted, “driven from the judgment seat” in a summary way, “without a Court having considered his right to be heard”. Summary termination is available, but it is exceptional.
The Court also addressed whether leave to appeal was required, holding that the decision appealed against was final in nature and so fell within the exception to the leave requirement.
Dismissal for want of prosecution
The related power to end a case that the plaintiff has simply failed to pursue.
Nicholas v Commonwealth New Guinea Timbers Pty Ltd [1986] PGNC 39; [1986] PNGLR 133; N539 (National Court)
The power to dismiss for want of prosecution should be exercised only where:
(a) the plaintiff’s default has been intentional and contumelious; or
(b) there has been inordinate and inexcusable delay on the plaintiff’s part or that of their lawyer, giving rise to a substantial risk that a fair trial will not be possible, or to serious prejudice to the defendant.
The Court adopted and applied Allen v Sir Alfred McAlpine & Sons Ltd [1968] 2 QB 229 and Birkett v James [1978] AC 297.
Where there has been long delay, a balance must be struck between plaintiff and defendant, and the Court must decide whether, in the balance, justice demands that the proceedings be dismissed — adopting Witten v Lombard Australia Ltd (1968) 88 WN (Pt 1) (NSW) 405.
Applying that, no order was made even though eleven years had passed since proceedings for wrongful dismissal were commenced. The delay was explained: the plaintiff had left Papua New Guinea for financial and employment reasons, and had been caught up with obtaining an invalid pension, legal aid, and changes of lawyer.
Nicholas is the answer to the assumption that a long-dormant file is automatically liable to be struck out. Eleven years did not suffice, because the delay was explained and the defendant could not show the resulting prejudice.
An applicant must therefore address prejudice and the fairness of a trial, not merely elapsed time. A respondent must be ready to explain the delay period by period.
The principle runs with Takori above: both reflect a reluctance to end a case without hearing it.
Kawaso Ltd v Oil Search PNG Ltd [2012] PGSC 16; SC1176 (Supreme Court — Gavara-Nanu, Kariko and Logan JJ)
A proceeding was dismissed under Order 9 Rule 25(1) for intentional default in complying with an order to answer interrogatories. The appeal was dismissed, but the Court’s reasoning cuts against the way the English formulae are usually applied.
Endorsing Micallef v ICI Australia Operations Pty Ltd [2001] NSWCA 274, the Court observed that a test requiring “inordinate and inexcusable delay” giving rise to a substantial risk that a fair trial would not be possible would compel the discretion to be exercised one way unless particular circumstances were established — and that “a discretion which can only be exercised one way is not in truth a discretion at all”.
Because Order 9 Rule 25(1) is a statutory enactment made by the judges under section 9 of the National Court Act, the Court held that restrictive words ought not lightly to be read into it.
Note the difference in the rules. Nicholas concerns dismissal for want of prosecution and adopts Allen v McAlpine and Birkett v James; Kawaso concerns dismissal for default in complying with a court order under Order 9. They are not directly inconsistent. But a party relying on the English formulae as a fixed threshold should be ready for the argument that they fetter a discretion the Rules left open.
These principles pull in opposite directions and the tension is real. Barker and Smith v Ruma require a defendant to show something of substance before a judgment is undone; Takori insists that a claim should not be extinguished without a hearing.
The reconciliation the cases suggest is one of direction of travel. Where the order under challenge ended a party’s case without a hearing, the court leans towards letting it be heard. Where a party seeks to disturb a judgment properly obtained, the burden is on that party to justify it.
See setting aside a default judgment and dismissal for abuse of process.