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National Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
WS NO. 145 OF 2021 (IECMS)
BETWEEN:
JONATHAN PARAIA
Plaintiff
V
IPI CATERING LIMITED, formerly MOUNTAIN CATERING LIMTIED
Defendant
Waigani: Anis J
2022: 13th May & 7th June
NOTICE OF MOTION – request for adjournment – consideration and ruling – substantive motion based on Order 12 Rule 40(1)(a), (b) and (c), and Order 8 Rule 27(1)(a), (b), and (c) – National Court Rules – main argument for dismissal premised on time-bar – ss 16 and 18 – Frauds and Limitation Act 1988– considerations – whether underlying action founded on equity in regard to the declaratory orders sought - when did time accrue and whether cause of action may be regarding as accruing or recurrent thus meaning that s 16 does not apply
PRACTICE AND PROCEDURES – application of Order 12 Rule 37 – National Court Rules - whether a defendant in an action that is premised on the tort of fraud is precluded from invoking Order 12 Rule 40(1) of the National Court Rules to dismiss the proceeding – whether this Court has jurisdiction to hear the motion under Order 8 Rule 27(1)(a), (b), (c) of the National Court Rules
Cases Cited:
Paim-Kumbipara Holdings Ltd v Mountain Catering Ltd (2022) N9473
Paraia (trading as Paiam Kumbipara) v. Mountain Catering Ltd (2017) SC1687
John Francis Iheari v. Motor Vehicles Insurance Ltd (2006) SC1317
Kappo No. 5 Pty Ltd v James Chi Kong Wong (1997) SC520
Mamun Investment Ltd & 1 Or v. Oda Koim and Ors (2015) SC1409
Oil Search Ltd v. Mineral Resources Development Corporation Ltd (2010) SC1022
Tau Gumu v. Papua New Guinea Banking Corporation (2001) N2288
Jonathan Paraia v. Mountain Catering Ltd (2017) SC1687
Rex Paki v. Motor Vehicle Insurance Ltd (2010) SC1015
Gold Exports Ltd v. Nangamanga Ltd (2018) SC1672
Tukupa Walo Land Group Inc v. Exxonmobil PNG Ltd (2018) N7257
Julius Pololi v. Bryan James Wyborn (2013) N5395
Counsel:
P. Harry, for the Plaintiff
C. Joseph (of Ashurst PNG) as city agent for Kesno Lawyers, for the Defendant
RULING
7th June, 2022
1. ANIS J: At the start of a hearing of a notice of motion to dismiss the proceeding, the plaintiff raised preliminary matters. Counsel raised matters in related proceedings and submitted to the Court that the best way forward would be to adjourn the notice of motion and await the outcome of this related proceeding, namely, WS 1334 of 2013, which counsel submitted was appealed against to the Supreme Court.
2. I heard arguments from the parties on both the preliminary issues and the substantive notice of motion, and I reserved my ruling to a date to be advised. It was quite unusual to hear and reserve on both the request for adjournment and the substantive application. However, I had to, given that the reasons for the adjournment had encroached on the substantive application and issues involved.
BACKGROUND
3. This matter is related to proceeding WS 1334 of 2013 (related proceeding). I dismissed the related proceeding on 9 March 2022. My decision is published as an unreported judgment, Paim-Kumbipara Holdings Ltd v Mountain Catering Ltd (2022) N9473. Briefly, the plaintiff used to operate a bakery shop in Paiam, a small town which is situated next to the Pogera Gold Mine in Enga Province, sometimes in 2008. Arrangements were put in place in terms of contracts between the parties. Essentially, raw bakery goods were purchased on credit by the plaintiff and his business. The plaintiff would use the raw bakery products to bake or prepare baking products and sell them back to the defendant who would also purchase them on credit. The relationship turned sour, so in 2012, the defendant sued the plaintiff and his business. The defendant filed this proceeding, this is, WS 771 of 2012 (initial proceeding). Default judgment was entered in favour of the defendant in the initial proceeding. The plaintiff and his business appealed the decision to the Supreme Court. The appeal was unsuccessful. The final Supreme Court decision has been reported as an unreported decision, that is, Paraia (trading as Paiam Kumbipara) v. Mountain Catering Ltd (2017) SC1687.
4. In regard to the related proceeding, I cannot say much because my decision is now the subject of appeal before the Supreme Court. But for this purpose and to set the background facts, I will say that the related proceeding was commenced by Paim-Kumbipara Holdings Ltd (PKHL) which is a company owned by the plaintiff who is the majority shareholder. PKHL had sued the defendant based on facts that were relative to facts that had been pleaded in the initial proceeding. Upon an application filed by the defendant, I dismissed the related proceeding. I would refer to that judgment for my reasonings.
5. In the present proceeding, the plaintiff is suing the defendant with the aim to set-aside the default judgment order that was made in the initial proceeding, that is, based on allegations of fraud and misrepresentation.
APPLICATION
6. The defendant’s notice of motion seeks the following main relief:
ADJOURNMENT
7. The plaintiff submits that this proceeding is related to the related proceeding. As such, it submits that given that an appeal has been lodged against the Court’s decision in dismissing the related proceeding, that this application should be adjourned to another time to permit the related matter to complete its appeal process.
8. Counsel for the plaintiff Mr. Harry relied on his affidavit filed on 9 May 2022 (Mr. Harry’s affidavit). I note that I was the Judge that dismissed the related proceeding on 9 March 2022. Counsel submits that the appeal has merit because there were serious errors committed by me in the related proceeding; grounds such as purported failure to observe a company as a legal person; purported failure to observe the distinction between a company and a natural person or a director or shareholder. Counsel also submits that the Deputy Chief Justice had already issued an order on 18 June 2021 in this proceeding for the related proceeding to be heard together which I did not regard in the related proceeding. I note that a copy of the sealed order is annexed to Mr. Harry’s affidavit. Term 2 of the Court Order reads:
9. The defendant submits that this proceeding is different from the related proceeding. Counsel submits that the parties are not the same in particular the plaintiff in the related proceeding and the plaintiff herein. Counsel also submits that the cause of action in this proceeding is also different to the related proceeding. Therefore, it submits, it is not necessary to adjourn or delay this proceeding. Counsel also submits that there is no formal application for adjournment before the Court nor an application for stay or for recusal that would permit me to consider the preliminary arguments. Counsel submits that his client’s notice of motion was fixed, and parties had ample time to prepare and are here to argue it; that if the plaintiff wanted to seek an adjournment or other relief, it had time to do so but had failed in that regard.
10. I note the submissions of the parties. For guidance, I refer to the Supreme Court’s decision on adjournments, that is, John Francis Iheari v. Motor Vehicles Insurance Ltd (2006) SC1317. The Court held, and I quote in part:
(1) A Judge hearing an application for adjournment of any proceedings is bound by the principles of natural justice to hear the explanation sought to be given by the party seeking the adjournment.
(2) The party applying for an adjournment has the onus of showing why an adjournment should be granted, ie why refusal to adjourn would result in injustice to it.
(3) The court must determine each such application on its merits, after taking into account a range of considerations including: whether previous adjournments have been granted; whether the party seeking the adjournment is doing so for an improper or unethical purpose; whether the adjournment is opposed; whether other parties would be prejudiced by the adjournment; whether the court would be unduly inconvenienced by an adjournment; whether a long or indefinite adjournment is sought; and whether it is in the interests of justice to refuse the adjournment.
......
11. I make these observations. I note that in practice, a Court may, at its discretion, consider oral application for adjournment and may grant it upon being convinced of the reason(s) given. This is common especially where unexpected situations arise where it gives little or no time for a party to file a proper application. In practice also, where there is ample time, it is expected that a formal application for an adjournment should be filed with supportive evidence. When I consider the present matter, I observe that the notice of motion returned on 8 April 2022. Both parties were present where they fixed the motion for hearing at 9:30am on 13 May 2022. So, the plaintiff, in my view, had more than a month or ample time to file his application for an adjournment. He failed in that regard. The second observation I make is this. I also note that the plaintiff had requested for the adjournment of the notice of motion earlier and it was granted. The third consideration is this. The plaintiff has not filed any affidavit to state his reasons to say why he wants another adjournment and also why he did not have time to file his application within the 3 to 4 weeks’ time that he had. Counsel or lawyers acting for parties, in my view, should not be the ones who should be giving evidence requesting an adjournment on behalf of their clients. Evidence for seeking to delay a matter or proceeding must, in my view, come from the party himself or herself. Court time is precious because it involves use of public funds and of course delay itself would mean a slow in the steps towards justice or a final outcome. There are of course exceptions and that may include personal reasons of counsel such as ill health, conflict, or other Court commitments, to name a few. However, I do not see a valid exception arising here.
12. I therefore dismiss the oral application for an adjournment for these stated reasons.
13. Let me also be clear here. I have not discarded or rejected Mr. Harry’s affidavit. The said affidavit was filed in response to the notice of motion as well as in response to a query or two noted by the Court when the notice of motion first returned on 8 April 2022. I note that as an officer of the Court, the purpose of Mr. Harry’s affidavit is genuine as an officer of the Court, that is, assist the Court see the status of related matters that were filed and were or are subject to appeals before the Supreme Court. I note that this is a very unusual situation where the parties, or should I say the plaintiff in particular, is relying on the same background facts, to commence various Court proceedings. I also note that I had queried the existence of a Court Order that had been made by a different Judge which was drawn to my attention on 8 April 2022 by Mr. Harry, counsel for the plaintiff. Mr. Harry’s affidavit also addresses that. I will need guidance and as such I will allow that evidence to be considered.
COURT ORDER OF 18 JUNE 2021 & PENDING APPEAL
14. The plaintiff argues that the notice of motion should be refused or not be dealt with at this juncture given the existence of an earlier Court Order of 18 June 2021. The said Court Order was made by the Deputy Chief Justice (Kandakasi DCJ). Term 2 of the Court Order is relevant and reads:
15. I note the submissions from the parties. My view is this. I fail to see how the said Court Order prevents me from dealing with one of the matters, that is, even though both matters were ordered to be dealt with together. The 2 proceedings were not ordered to be consolidated into as one or a single proceeding. So, with that, I dismiss the plaintiff’s argument in this regard.
16. In regard to the pending appeal filed in the related proceeding, the plaintiff submits that this proceeding and the application should not be heard but should await the outcome of the appeal. Mr. Harry annexures a copy of the Notice of Appeal to his affidavit, that is, SCA No. 46 of 2022 – Paim-Kumpipara Holdings Ltd v. IPI Catering Ltd, formerly Mountain Catering Ltd. I note the submissions of the parties on this matter. Again, I will dismiss this argument for the same reasons I gave earlier under this sub-heading. I will also add that there is no stay order in place that prevents me from dealing with this matter sitting as a National Court Judge.
CHALLENGE ON SOURCE - JURISDICTION
17. The plaintiff alleges that summary dismissal under Order 12 Rule 40(1) of the NCR is not available in a claim for fraud. As such, counsel submits that the Court lacks jurisdiction to hear the notice of motion. Counsel, however, did not refer to the precise rule in the NCR to make his argument.
18. In my view, the argument was raised in vacuum, that is, without proper preparation or consideration. I recall that I had indicated to counsel whether he was actually referring to Order 12 Rule 37. I note that counsel agreed that that was the correct rule that he had wanted to rely on. Order 12 Rule 37 falls under Division 4. - Summary Disposal. Of relevance I note is Order 12 Rule 37(b), which reads:
This Division applies to all proceedings except proceedings which include
......
(b) a claim by the plaintiff based on an allegation of fraud; or
......
19. Order 12 Rule 40(1) falls under Division 4 so in that regard, the said source is inapplicable. There are case authorities on point as well. For this purpose, I will refer to the Supreme Court’s decision in Kappo No. 5 Pty Ltd v James Chi Kong Wong (1997) SC520, where the Court stated:
This rule clearly states that where there is a claim based on fraud, summary procedure is not available. It is clearly intended that such allegations must be dealt with at the substantive trial. We find that the trial judge made no reference to this rule in his judgment. If his attention was drawn to the rule he may not have entered judgment against the second appellants. We find that the trial judge erred in this regard.
20. For this reason, I uphold the plaintiff’s submission in this regard and find that Order 12 Rule 40(1) of the NCR is not available as a source to the notice of motion given that the claim involve allegations of fraud.
21. Having made this finding, I note that the defendant has also relied on Order 8 Rule 27(1)(a), (b), and (c) of the NCR as the other relevant source to its notice of motion. The plaintiff does not challenge the said source. Order 8 Rule 28(1)(a), (b), and (c) states:
27. Embarrassment, etc. (15/26)
(1) Where a pleading—
(a) discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading; or
(b) has a tendency to cause prejudice, embarrassment or delay in the proceedings; or
(c) is otherwise an abuse of the process of the Court,
the Court may at any stage of the proceedings, on terms or otherwise, order that the whole or any part of the pleading be struck out.
22. I find Order 8 Rule 27(1)(a), (b), and (c) sufficient for the purpose the notice of motion. I find that the defendant has sufficiently invoked the Court’s jurisdiction in regard to the issues raised.
TIME BAR
23. And so, I will now proceed to consider the notice of motion. The first main issue touches on the Court’s jurisdiction, that is, whether the claim is time-barred within the requirement of s 16 of the Frauds and Limitation Act 1988 (FLA). So, I ask myself this. “Is this cause of action time barred?” The defendant submits that the claim is based on a tort, that is, fraud. As such, the defendant claims, the action is caught by s 16 of the Frauds and Limitation Act 1988 (FLA).
24. Sections 16 and 18 state:
16. LIMITATION OF ACTIONS IN CONTRACT, TORT, ETC.
(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.
......
18. CLAIMS FOR SPECIFIC PERFORMANCE, ETC.
Section 16 does not apply to any claim for specific performance of a contract or for an injunction or for other equitable relief. (Underlining mine).
25. The plaintiff opposes the argument. His main arguments are twofold. He claims that the relief sought are declaratory orders thus equitable in nature. As such, he submits that the cause of action is captured by s 18 of the FLA. Secondly, the plaintiff claims that the term “accrued” under s 16(1) can only mean that s 16 does not apply to the present proceeding because the purported fraud and misrepresentation, the plaintiff contends, is a recurrent event.
26. I note the submissions and case law authorities presented by both counsel.
27. Mr. Harry confirms in his submission that the plaintiff has abandoned the other main relief and that the 2 main relief sought in the statement of claim are relief A and B. I quote these relief as follows:
28. The 2 relief are declaratory in nature. The test therefore and I would refer to the Supreme Court’s decision in Mamun Investment Ltd & 1 Or v. Oda Koim and Ors (2015) SC1409, is whether the underlying basis for the declaratory relief claimed is founded or based in equity. When I apply that to the present case. I note that the claim itself is entirely founded on the tort-fraud. Misrepresentation itself is not a cause of action so we can leave it at that. So, with that, it is obvious that the the plaintiff’s first argument on the application of s 18 in response to defendant’s claim under s 16 shall fail. I find that to be the case herein.
29. I turn to the next argument, that is, the date when the cause of action may have accrued. The plaintiff firstly submits that pursuant to the Supreme Court’s decision in Oil Search Ltd v. Mineral Resources Development Corporation Ltd (2010) SC1022, that it is only in the clearest of cases that a Court may hear and determine applications such as this where time bar is an issue. Otherwise, he submits and as held by the Supreme Court, the Court should be slow in considering or deciding on the issue but leave that for the trial Court to determine. On point, the Supreme Court in the Oil Search Ltd case made these remarks at paragraph 23:
23. If a claim is clearly time-barred and provided the statutory defence is pleaded in the defence, a motion for dismissal is warranted and it would be quite appropriate for the National Court to hear and determine it. Where, however, the case for dismissal is not clear-cut, the decision-making process of first, identifying the cause of action, secondly, identifying the date on which the cause of action arose and then, deciding the question of whether the cause of action is founded on a simple contract or is an action upon a speciality, can only efficaciously be carried out at a trial. That this was so in the present case is underlined by the inclusion in the share sales agreement of a 'no immunity' clause, which relevantly states:
To the extent that any of the parties has ... immunity from ... any legal process ... with respect to its property ... each of the parties irrevocably waives that immunity in respect of its obligations under this agreement.
30. The defendant has pleaded time-bar at paragraph 44(b) in its defence filed on 21 May 2021. Let me elaborate that this case is premised on the default judgment that was made by another National Court, that is, the initial proceeding, on 17 April 2013. The allegations of fraud raised herein is against the said initial proceeding, that is, the plaintiff claims allegations of fraud by the actions of the defendant in filing the said proceeding in the first place and also of how it had named the plaintiff as a party to the said proceeding. So, if we compute time from there, it would be on the date when the writ of summons and statement was filed, which was on 7 August 2012. In my view, this is not a case where it is difficult to determine when the cause of action accrued.
31. The present cause of action was filed on 8 April 2021. If we compute time from the date of filing of the initial proceeding, it will be 8 years and 8 months, which is more than 6 years outside the limitation period under s 16.
32. But counsel for the plaintiff also submits that the alleged fraud is ongoing or recurrent by the actions or inactions of the defendant. I asked counsel to assist by furnishing to the Court case authorities to support his argument. Counsel was unable to do so. I must say that I find this claim baseless. Let me elaborate. The present cause of action is premised on the initial proceeding. The allegations pleaded relate to alleged fraud committed by the defendant in, amongst others, misleading the Court by in filing the said initial proceeding and naming the plaintiff and his business as defendants in the manner as it had done. It is therefore clearly the case, in my view, that the alleged fraud or cause of action had accrued as at the date of filing the initial proceeding, which was 7 August 2012. Secondly, I note that the question of when a cause of action may accrue in case of fraud has been settled by the case law. The Supreme Court in Mamun Investment has held that the term accrued under s 16 of the FLA means the date when the cause of action accrued and not the date when a person becomes aware of an alleged fraud. I should mention that the Supreme Court in Mamun Investment overruled or refused the decision in Tau Gumu v. Papua New Guinea Banking Corporation (2001) N2288.
33. The recurrent argument, as stated, is without basis. The alleged act, which was primarily based on the filing of the initial proceeding, had occurred only once on 7 August 2012. And the enforcement actions that may be underway were carried out pursuant to a legally binding order of the National Court. It is misconceived to brand any such enforcement actions as purported fraudulent actions as was done in this case by the plaintiff.
34. In conclusion, I find the cause of action herein to be time barred. I find that the proceeding was filed more than 2 years after the 6-year time limitation period as specified by s 16(1) of the FLA. Therefore, and by law, the action must fail for this reason.
SUMMARY
35. Given my finding that the matter is time barred, it is not necessary to consider the other issues. This matter will therefore be dismissed.
COSTS
36. The defendant claims that in the event the proceeding is dismissed, cost should be awarded on a solicitor/client basis against the plaintiff. The defendant submits that it had warned the plaintiff of this in its correspondence. Counsel referred to annexure D to his affidavit filed on 31 March 2022.
37. I note that counsel for the plaintiff did not dispute the forewarning letter of the defendant dated 23 March 2022. The plaintiff however submits, amongst others, that the initial proceeding was never decided on its merits; that default judgment was entered against the plaintiff without the Court making a finding on the merit of the case which was part of the reasons why the plaintiff has filed this proceeding.
38. Awarding of cost herein is discretionary as noted by the parties. I am satisfied that this is a case where I should exercise my discretion to award cost against the plaintiff on a solicitor/client basis. See cases: Rex Paki v. Motor Vehicle Insurance Ltd (2010) SC1015, Gold Exports Ltd v. Nangamanga Ltd (2018) SC1672, Tukupa Walo Land Group Inc v. Exxonmobil PNG Ltd (2018) N7257, and Julius Pololi v. Bryan James Wyborn (2013) N5395.
39. The plaintiff had been warned of the defendant’s intention to seek cost using this cost scale, namely, solicitor/client. In my view, the time bar issue is obvious. As determined herein, the present action is based on alleged fraud committed by the defendant premised on the initial proceeding. The initial proceeding was filed 8 years ago. The allegations that were raised therein even go further back in time. The defendant has and has always had counsel acting for him in this dispute. And I also take into account the fact that the defendant has pleaded, as part of its defence, the time bar claim made under s 16(1) of the FLA. That, in my view, should have alerted the plaintiff to reconsider its position, and the plaintiff should have taken steps to thereafter to withdraw the proceeding. However, by doing nothing or being persistent has led to this application and now this order by the Court. The action of the plaintiff herein may also be regarded as an abuse or attempt to abuse the Court process, that is, to make a claim over something which is clearly statute-barred or prohibited by law.
40. The parties have also drawn this Court’s attention to another action that had been filed by the plaintiff in the Human Rights Track, namely, WS (HR) No. 37 of 2021. A brief detail of that proceeding is deposed to in Mr. Joseph’s affidavit filed on 31 March 2022. Counsel attaches as annexure E copy of an extracted e-Court file notation form which was printed from the e-court file of the matter in the IECMS server. The notation shows of a Court Order made on 2 December 2021, and it reads in part, Costs of this proceeding shall be costs in in (sic) the pending namely, WS 1334 of 2013 and WS 145 of 2021.
41. I will firstly comment that I find the said manner of ordering cost rather unusual. Having said that, I note that the Order is binding. I also note that I do not have sufficient materials before me nor any firsthand knowledge of the said proceeding or of its background. Therefore, it would be most unfair upon the plaintiff if I simply apply the same cost scale, namely, solicitor/client for this matter, WS (HR) No. 37 of 2021. It may also be seen as an improper exercise of my discretionary powers. As such, I will rather make an order that the plaintiff shall pay the defendant’s cost of proceeding WS (HR) No. 37 of 2021 on a party/party basis which may also be taxed if not agreed.
ORDERS OF THE COURT
42. I make the following orders:
The Court orders accordingly
________________________________________________________________
Harry Lawyers: Lawyers for the Plaintiff
Kesno Lawyers: Lawyers for the Defendant
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