N3304

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS. NO. 1715 OF 2003

BETWEEN

JERRY KUSA for and on behalf of himself and
6 current and former members of the Papua New Guinea Defence Force.
Plaintiff

AND

STEVEN RAPHAEL
ACTING SECRETARY DEPARTMENT OF DEFENCE
First Defendant

AND:

COMMODORE PETER ILAU,
COMMANDER OF THE PAPUA NEW GUINEA DEFENCE FORCE
Second Defendant

AND

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Third Defendant

Waigani: Kandakasi, J.
2006: 16 March and 16 May
2008: 10 April

CAUSES OF ACTION – Statutory limitations – Accrual of causes of action – When a cause of action known to law comes into existence, cause of action accrues – Proceedings not commenced within statutory limits – Defendant not engaging in any conduct amounting to estoppel by conduct to prevent it from raising time bar issue - Claim statutory time barred – Frauds and Limitations Act ss.16(1).

CAUSES OF ACTION – Claim against the State – Notice of intention to make a claim against the State condition precedent – Claim pre-existing legislation – Notice must be given with 6 months from date when legislation going into operation - No notice given within prescribed time limits – Proceedings issued without complying with condition precedent – State not engaged in conduct giving rise to possible estoppel by conduct – Defence properly raised – No cause of action lies against the State.

Cases Cited:

Papua New Guinean Cases:
Rawson Construction Ltd & Ors v. Department of Works (04/03/05) SC777.
Tau Gumu v. Papua New Guinea Banking Corporation (07/12/01) N2288.
Philip Takori & Ors v. The State (28/02/08) SC905.

Overseas Cases Cited:
Eddis & Anor v. Chichester Constable & Ors [1969] 2 All ER 912.
 Sheldon & Ors v. RHM Outhwaite & Ors [1995] 2 All ER 558.
Kitchen v. Royal Air Forces Association & Ors [1985] 2 All ER 241.

Counsel:
D.Dataona, for the Plaintiffs. 
F.D. Yapao, for the Defendants.

10 April, 2008

1.	KANDAKASI J:	 Jerry Kusa and his friends (the plaintiffs) are suing the State for a number of allowances they say the State should have paid them as it did for other officers whilst they underwent training overseas as Papua New Guinea Defence Force (PNGDF) officers. The State amongst others, claims that, the claims against it are statutory time barred under s. 16 (1) of the Frauds and Limitations Act 1988 as well as s. 5 of the Claims By and Against the State Act 1996 for not giving notice of the plaintiffs intention to make their claims against the State.

2.	Clearly therefore, the issue for the Court to determine is, whether the plaintiffs’ claims are statutory time barred under s. 16 (1) Frauds and Limitations Act 1988 and for failure to meet the requirements under s. 5 of the Claims By and Against the State Act 1996?

Relevant Facts

3.	The facts giving rise to the issue before me are set out in their statement of claim in these terms. The plaintiffs were employed by the State with the PNGDF as radio and electronic technicians. Between 1990 and 1992, the PNGDF sent them to Australia under the Defence Co-operation Program for training at various times. The plaintiffs claim that, they were entitled to receive various allowances ranging from living to travel and other incidental allowances, which are usually paid to officers undergoing such trainings. They go on to claim that, they did receive the most important of these allowances namely, living, clothing and establishment allowances but not other incidental allowances. This caused them to suffer hardships whilst undergoing their respective trainings. They further claim that, by reason of the State paying the allowances to other officers, it is estopped from denying their claims.

4.	The State says the entitlement to allowances and incidentals for PNGDF officers attending overseas training did not exist until after 1996 when the PNGDF introduced it following the Public Service standing orders. In any event, it says the allowances that were payable at the relevant time were paid for by the Australian government with compliments coming from the PNG government. Further, the State says that the payment of allowances does not necessarily mean that the plaintiffs are entitled to similar payment unless the legal basis for the plaintiffs’ entitlement and the State’s obligation is first established. Based on this, the State says that the plaintiffs have no cause of action to pursue against it.

5.	Following a continuous refusal by the State to meet their claim, the plaintiff decided to take the matter to Court. Before doing that, by letter dated 27 October 2003, they gave notice of their intention to make their claims against the State. Soon thereafter on 1 December 2003, they issued these proceedings. On 31 December, the State filed its defence raising amongst others the time bar issues per s. 16(1) of the Frauds and Limitations Act 1988 and the issue of s. 5 of the Claims By and Against the State Act 1996

Frauds and Limitations Act

6.	Unless otherwise provided for by any other legislation, the Frauds and Limitations Act 1988 provides limitations for all causes of action. In so far as is relevant, s. 16 (1) of the Act stipulates as follows:

"(1)	Subject to Sections 17 and 18, an action—

(a)	that is founded on simple contract or on tort; or
(b)	to enforce a recognisance; or
(c)	to enforce an award, where the submission is not by an instrument under seal; or
(d)	to recover any sum recoverable by virtue of any enactment, other than a penalty or forfeiture or sum by way of penalty or forfeiture, shall not be brought after the expiration of six years commencing on the date on which the cause of action accrued."

7.	 As can be seen, this provision applies to actions founded on simple contracts or tort. Employment and terms and conditions of employment are matters of contract. Given that, there is correctly no issue between the parties that, this provision covers the present case. The plaintiffs argue that, because the State has paid some other officers of the PNGDF allowances of the type they are claiming, the State is precluded from denying their claim and raise this provision against them. 

8.	There are two problems with the plaintiff’s argument. First, the argument ignores the State’s argument that, just because some other people were paid does not make their claim legal and payable. The Supreme Court made this point abundantly clear in its decision in the case of Rawson Construction Ltd & Ors v. Department of Works, where the Supreme Court said in respect of an application for fresh evidence:

"It therefore follows in our view that, if indeed the Solicitor General allowed those other claims without meeting the condition precedent in s. 5 of the Claims By and Against the State 1996, they would be nothing short of illegal claims. Thus, if we admitted the evidence in question, they will not advance the Appellants’ claim in any respect. The law cannot simply permit one illegal claim to proceed merely because another illegal claim proceeded. After all, one wrong or illegal act does not justify or correct another."

9.	 Secondly, the plaintiffs’ argument goes into the merits of the claim as opposed to demonstrating why their claim is not caught by the six years limit under s. 16 (1) of the Frauds and Limitations Act 1988. The plaintiffs were obliged to draw to the Court’s attention to cases in which claims were allowed to stand beyond the six years limitation under consideration. 

10.	My own research and recollection took me to my decision in Tau Gumu v. Papua New Guinea Banking Corporation, a case I drew to both counsel’s attention but they did not refer to in their respective submissions. There, Tau Gumu sued the bank for the bank’s failure to properly lodge his claim for workers compensation by giving the required notice under the relevant legislation. That failure resulted in Mr. Gumu missing out on workers compensation for a medical condition he developed and eventually suffered from whilst in the cause of his employment. The bank raised the issue of statutory time bar under s.16(1) of the Frauds and Limitations Act 1988. I resolved the issue against the bank. In so doing, I found that:

"… the bank’s failure to give the required notice under the WCA [Workers Compensation Act] and notify the plaintiff of that failure, led the plaintiff to believe that the necessary requirements were being taken care of and that he need not do anything in relation to his right to compensation. As such, he did not know that he had a cause of action against the defendant until he became aware of the defendant’s failure to lodge the required notice under section 42 (1) of the WCA in 1998. Knowledge of the Bank’s failure is the most important, if not the material fact in this action. It is the failure of the Bank that is the basis of the action. Without it, there would not be an action. Time must be computed from 1998 onwards". 

11.	I went on to express the view that, equity and justice dictated that, the bank should not be allowed to benefit from its own failure. For it was the bank which created the false impressions and as such, it would be unconscionable to permit it to succeed on its own failure. I found the case analogous to cases in which it has been held that, if there is fraud by the employer, time did not begin to run until the discovery of the fraud. "Fraud" in that context was not confined to deceit or dishonesty but it covers actions of the defendant such as concealing its failure to take steps it should have for the plaintiff until its discovery by the plaintiff. That I found also accorded well with principles governing the issue of time bar for infants, who does not have a cause of action accruing to him or her until after he or she attains his or her age of majority and is in a position to decide whether or not to either commence or pursue a cause of action.

12.	Applying the above views to the case then before me, I found that, the actions of the bank in failing to disclose to the plaintiff that it had not lodged the relevant notice under section 42 (1) of the WCA until discovery of it in 1998 by the plaintiff himself, amounted to concealment by either deliberate or constructive fraud and the cause of action was thus not statutory time barred. It was thus, unconscionable to allow the bank to benefit from its own failure.

13.	In the same case, I further found that the plaintiff’s cause of action was not statutory time barred by virtue of s.22 of the Frauds & Limitations Act 1988, because of the fact that, the plaintiff was under a disability. His medical conditions which required hospitalization and an eventual amputation of one of his legs prevented him from taking any meaningful step until he was able to. He was only able to do that by or after 1998. He took action from that day forward inclusive of his Court proceedings.

Present Case

14.	In the present case, it is clear that, the plaintiffs undertook their studies between 1990 and 1992 according to their own pleadings. Most of the allowances that they were clearly entitled to were paid during or over that period as they underwent their respective trainings. It follows therefore that, if the plaintiffs were indeed entitled to incidental allowances as they claim, they would have been due and owing at that time. In the absence of any evidence of pleading to the contrary, I am of the view that, the plaintiffs cause of action if any accrued at the end of 1992 at the latest. Accordingly, the plaintiffs had until the end of 1998 to issue their proceedings, which they did not until 1 December 2003, almost 4 years after the expiry of the six years limit. 

15.	The question is, did the State say or do anything that could form the foundation to enable the plaintiffs to maintain these proceedings in equity? There is no evidence or indication in the pleadings as to when the plaintiffs first approached the State for these allowances and the legal basis for their claims. Similarly, there is nothing in the pleadings or any evidence as to what the State said or did in relation to their claims apart from denying their claims which prevented them from issuing proceedings within the six years limit. This is necessary and critical in view of the State saying the plaintiffs were not entitled to the kind of allowance they claim they were entitled to and that the decision to include this particular head of allowances came in 1996. In the circumstances, I find that the plaintiffs have not established any foundation for the Court to allow these proceedings to stand even outside the six years limitation.

Claims By and Against the State

16.	Turning then onto the arguments based on s. 5 of the Claims By and Against the State Act 1996, I note that particular provision has been the subject of a number of Supreme and National Court judgments. The decision of the Supreme Court in Rawson Construction Ltd & Ors v. Department of Works is one of the latest on point. That decision reiterated the point that, notice of ones intention to make a claim against the State is a condition precedent. That decision makes it clear that, unless this condition precedent has been met, there can be no action against the State even though a plaintiff might otherwise have a cause of action known to law.

17.	In this case, as already noted, the plaintiff’s cause of action accrued at the end of 1992. By that time, the present subsection of the Act had not being enacted. It would follow therefore that, the requirements for notice of intention to make a claim did not exist. When Parliament enacted the present legislation, two situations existed in respect of causes of action that had accrued against the State as at time of enacting subsection and its commencement date. The first were cases in which proceedings had already been instituted and second were cases in which, no proceedings had yet been issued. Parliament provided for these situations in s. 21. The first subsection provides as to what should become of the proceedings already issued, while the second provides for cases in which no proceedings had yet been instituted. The second subsection is relevant for our purposes. That provision reads:

"(2)	Where upon the coming into operation of this Act no action to enforce a claim against the State has been commenced in respect of an occurrence which took place before that coming into operation, notice shall be given in accordance with Section 5(1) within a period of six months after that coming into operation, or within such further period as—
(a)	the Principal Legal Adviser; or
(b)	the court before which the action is instituted,
on sufficient cause being shown, allows."

18.	Clearly therefore, the plaintiffs were required and were under an obligation to give notice of their intention to make a claim within six months from the coming into operation of the Claims by and Against the State Act 1996. The Act went into operation on 20 February 1997. Given that, the plaintiffs had until 20 August 1997 to give notice of their intention to make their respective claims. They did not do that until 27 October 2003, which was more than 6 years later. No doubt, the plaintiffs did not give proper notice of their intention to make a claim.

19.	When plaintiffs served their Writ of Summons on the State, the State almost immediately filed and served its defence. In its defence, the State specifically raised the issue of s. 5 notice under Claims By and Against the State Act 1996 as well and the time bar issue under s. 16 (1) of the Frauds and Limitations Act 1988. Thus unlike the position, the State took in the case of Philip Takori & Ors v. The State, it did lay the foundation properly to raise these issues, much earlier on in the proceedings. The plaintiffs were hence under notice much earlier on. Accordingly, I am of the view that, they had ample time to provide some legal as well as the evidentiary basis to support their argument that they are entitled to maintain these proceedings well outside the six years limitation and without complying with the notice requirements. Unfortunately, the plaintiffs failed to do so.

The Decision

20.	In the end result, I find that, the plaintiffs have not properly complied with the requirements for notice under s. 5 of the Claims By and Against the State Act 1996. I also find that the plaintiffs have not issued their proceedings within the six years limitation under s. 16(1) of the Frauds and Limitations Act 1988. Further, I find that, the plaintiffs have not provided any foundation in equity for the Court to allow these proceedings to stand notwithstanding the non compliance of the notice requirements as well as the time limitations. Ultimately therefore, I find that, these proceedings are statutory time barred and that, the plaintiffs have not met the condition precedent of notice of their intention to make their claims against the State. Accordingly, I order a dismissal of the plaintiffs claim with costs to the defendants, which shall be agreed if not taxed.

Dotaona Lawyers:	Lawyers for the Plaintiffs
Paul Paraka Lawyers: Lawyers for the Defendants