Transafrik International Ltd v Venus Corporation Ltd

In an unopposed assessment of damages, the claimant retains the burden of proving its entitlement and the amount of loss. The court must scrutinise the evidence and is not a rubber stamp, although it should have regard to the overriding objective and proportionate costs. Loss of profits must be proved by reliable evidence addressing all material operating costs, including indirect costs. A valuation claim may be established on the balance of probabilities by evidence of market value and salvage value. Interest should reflect the date at which the loss is valued: a current valuation may attract no interest, while historic loss of income may attract simple interest for the relevant period.

The claimant obtained judgment on liability after the defendant failed to comply with an unless order requiring further information. The matter came before the Technology and Construction Court for assessment of damages.

The claim arose from the defendant’s alleged failure to complete and properly certify repairs to the claimant’s Hercules aircraft. The claimant sought damages for loss of use and diminution in the aircraft’s value, together with interest. The defendant did not appear or participate in the assessment. The central issues were whether the claimed losses had been proved and, if so, their proper quantification.

1. General approach. The claimant bore the burden of proving its entitlement to damages and the amount claimed. Even where an assessment is unopposed, the court must examine the evidence and arguments critically. It is not bound to accept the claimant’s evidence. The court should, however, bear the overriding objective in mind and seek to minimise the costs of an unopposed assessment.
2. Loss of use. The claimant claimed US$150,000 per month as net operating profit. The evidence established gross revenue and direct operating costs, but did not explain why indirect costs included in the claimant’s budget should not also be deducted. The court therefore found, on the balance of probabilities, that the recoverable monthly loss was US$109,000, rather than US$150,000.
3. Diminution in value. The aircraft was treated as a write-off because restarting and re-certifying the repairs, while complying with outstanding maintenance requirements, would be uneconomic. Evidence of comparable aircraft, insurance value and market negotiations supported a repaired and certified value of US$7 million. Salvage value was assessed at US$2 million, producing a proven diminution of US$5 million.
4. Interest and order. No interest was awarded on the diminution claim because the valuation was current as at July 2008. Interest was awarded on the loss-of-income claim from July 2006 to July 2008 at 8 per cent simple interest. The parties were directed to calculate the total and provide a draft order.