Perelo & Associate Contractors v Kintau [2024] PGNC 302; N10980 (28 August 2024)

N10980

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS 922 OF 2018 (CC1)

BETWEEN:
PERELO & ASSOCIATE CONTRACTORS
Plaintiff/Applicant

AND:
LUCAS KINTAU, as the Commander, Task Force Unit Lae, Morobe Province
First Defendant

AND:
GARI BAKI, as The Commissioner for the Royal Papua New Guinea Constabulary
Second Defendant

AND:
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Third Defendant/Respondent

Waigani: Bre, AJ
2024: 27^th June & 28^th August

JUDGMENT – Costs and Interest – six years to recover interest on judgment debt - section 16(6) Fraud and Limitations Act 1988 – interest time barred - taxed cost – no evidence of service – effluxion of time – judgment awarded eleven years from date proceeding filed – State evidence that judgment debt paid – interest stops accruing when principal judgement debt paid.

NOTICE OF MOTION - substantive relief sought in interlocutory proceeding – relief sought not claimed in originating summons – originating summons seeks additional relief not granted in original judgment – proceeding improper.

Cases Cited

John Momis v Attorney-General [2000] PNGLR 109
NCDC v Yama Security Services Pty Ltd [2003] SC707
Pius Sankin & Ors v PNG Electricity Commission [2002] N2257

Legislation

Fraud and Limitations Act 1988, s16(6)
Judicial Proceedings (Interest on Debts and Damages) Act Chapter 52, ss 2 and 3(1)
National Court Rules, O4 r 49(9) and O22 r 62

Counsel

Ms G Kubak, for the Applicant/Plaintiff
Ms P Ohuma, for the Respondents/Defendants

RULING

28^th August 2024

1.BRE, AJ: The plaintiff is seeking orders for alleged outstanding balances for interest and business loss from its judgement of 26 October 2007 against the State which was obtained in proceeding WS 56 of 2003 Perelo & Associates Limited v Lucas Kintau & Ors.

2. The plaintiff relies on a certificate of taxation dated 12 August 2012 and seeks an award for costs in the sum of K676,886.00 plus the balance of pre and post judgment interest totaling K72,591.96.

The State denies that the plaintiff is owed any outstanding amounts and adduced evidence showing that the judgement of 26 October 2007 was settled and payments completed by 19 April 2011. The State also denies that it has been served the certificate of taxation dated 12 August 2012.

3. The State raised three preliminary issues which I will address first.
The first issue concerns an objection to the plaintiff's application seeking substantive orders in interlocutory proceedings contrary to Order 4 rule 49(9) of the National Court Rules. The substantive relief sought in the originating summons filed on 7 December 2018 seeks payment for miscellaneous costs arising from the same proceeding and orders of 26 October 2007 but for miscellaneous costs totaling K1,301, 039.00, 8% interest plus additional costs.

The judgment of 26 October 2007 awards the following order:

"The Court orders that.

1. The Court finds in favour of the Plaintiff against all the Defendants jointly and severally.
2. The Plaintiff is awarded the following:
a) Special damages (value of vehicle) - K24,000.00
b) Value of contracts - K85,094.08
c) General damages - K10,000.00
d) Exemplary damages - K10,000.00
Total = K129,094.08
Plus interest at 8% calculated to the time of the filing of the Writ plus costs."

4. The relief sought in the substantive proceeding is different to the relief sought in the notice of motion filed 12 April 2023 (Doc 15). The difference is in the amount claimed as costs arising from a certificate of taxation dated 12 August 2012. The relief sought in the motion should be premised on what the substantive relief seeks, as it is, it is clearly outside the substantive relief sought. The substantive relief does not cite the certificate of taxation dated 12 August 2012.

5. As to the plaintiff’s claim for interest, I accept Ms Ohuma’s submission that the plaintiff is prevented by section 16 (6) of the Fraud and Limitations Act 1988 to claim any arrears of interest in respect of the judgment debt as it expires after the sixth year.

Section 16 (6) of the Fraud and Limitations Act 1988 provides:

" No arrears of interest in respect of any judgment debt shall be recovered after the expiration of six years commencing on the date when the interest became due."

6. In computing time, the principle total damages debt of K129,094.08 was paid to the plaintiff on 10 November 2008. Interest stops accruing from 10 November 2008.

This proceeding commenced on 7 December 2018, 10 years after. Section 16 (6) of the Fraud and Limitations Act 1988 clearly bars the plaintiff's alleged outstanding interest claim.

7. State Counsel also raised objections to the mode of proceeding raising matters for additional payment of alleged judgment debt and submits that these allegations must be pleaded so the State can fairly defend itself. I consider that to counter this, the plaintiff would have considered applying pursuant to Order 22 rule 62 of the National Court Rules for judgment of the taxed costs after certification, but has not done so.

8. I accept the preliminary arguments raised by the State. The plaintiff is seeking substantive relief through interlocutory proceeding which I find is an abuse of process as the plaintiff raises additional alleged amounts of interest and business costs as comprising or arising from the judgment debt which requires clarification and calculation and appear to be outside the terms of the initial judgment of 26 October 2007 or is raising contentious matters from the Court's costs and interests order.

The substantive relief 1, 2, and 3 seeks miscellaneous costs totaling K1,301, 039.00 “that arose during the entire period of the proceeding” and interest on the miscellaneous costs, plus interest of 8% on the judgment amount that remains unpaid plus further orders for “loss of time, costs and interest commencing on 27 October 2007 to the date of satisfaction of this judgement at the rate of K3000.00 per day”. These allegations require substantive pleadings given the State's evidence that it has fully satisfied the judgment debt of 26 October 2007. See John Momis v Attorney-General [2000] PNGLR 109 and NCDC v Yama Security Services Pty Ltd [2003] SC707.

9. I found the evidence of the plaintiff tedious and confusing to follow. The plaintiff seems to be claiming loss of business profits from hire car charges, NHC rentals and BSP loans which seem to be additional amounts not arising from the judgment. I am not persuaded that the claims are the subject of the judgment on 26 October 2007.

In Pius Sankin & Ors v PNG Electricity Commission [2002] N2257 the Court held that:

“an order for costs is not an order for the party entitled to it, to profit from. Instead, it is merely an order for that party to recover what it may have been forced to incur on account of the litigation to which the order relates.”

10. I accept the evidence of the State from Christine Gimots filed 10 March 2020 (Doc 7) that the judgment awarded to the plaintiff on 26 October 2007 has been fully settled. She deposes to the payments satisfying the Court Order and totalling K341,744.44 which were paid by the State in four instalments, spread over several years.

11. The delayed payment may be the reason for the plaintiff seeking the additional interest, however, I do not consider that interest accrues; as the judgment debt was paid in full on 10 November 2008. To my mind, to claim interest on costs and interest on the judgment debt is to claim interest on interest which is prevented by section 2 of the Judicial Proceedings (Interest on Debts and Damages) Act Chapter 52.

12. According to the evidence of Gimots ( Doc 7), the total judgment sum of K129,094.08 was paid to the plaintiff on 10 November 2008, a year after the judgment was awarded to the plaintiff.

The interest component was calculated to K59,748.48 with costs at K152,901.88.
The State's evidence shows the cheque for the costs was raised on 19 April 2011 while the interest component was split into two payments dated 7 October 2014 and 18 March 2020. The plaintiff received these payments.

13. In my view, interest stopped accruing when the principal sum, being the total judgment debt of K129,094.08 was paid to the plaintiff on 10 November 2008. If there is any outstanding interest, it may be from the one-year period of the time of payment of the principal judgment debt of K129,094.08, if the interest payments have not catered for this period. However, this would not prevail as it would be time barred under section 16(6) of the Fraud and Limitations Act 1988.

14. Section 3(1) of the Judicial Proceedings (Interest on Debts and Damages) Act Chapter 52 provides that interest remains outstanding from time to time as the principal judgment debt remains outstanding. Unfortunately, counsel for the plaintiff did not make any submissions on the Judicial Proceedings (Interest on Debts and Damages) Act Chapter 52 which in my view is a relevant law.

I find that the State satisfied payment of the judgment debt in full on 8 March 2020 and interest stopped accruing from that time.

15. As to Counsels' submissions on service of the second taxed costs, and other submissions, whether or not the State is late in objecting to or reviewing the taxed costs back in 2012, the plaintiff did not adduce satisfactory evidence that the taxed costs of 12 August 2012 was served on the State. Referring the Court to a reference in a letter which stated that the taxed cost was attached is not sufficient evidence of service. The plaintiff has also not clarified whether the costs of K152,901.88 paid to the plaintiff are factored in the alleged additional costs of K676,886.00. Further, I find that there is no order for miscellaneous costs in the terms of the order of 26 October 2007 and I agree with State Counsel that this is a new allegation requiring pleadings.

16. Therefore, I find that the plaintiff's claim for payment of interest is time barred and the notice of motion is incompetent for seeking substantive relief when the certified costs are not pleaded in the relief in the originating summons. I also accept the State's submission that the originating summons is not the proper mode to use as new allegations on miscellaneous costs and business expenses incurred are raised.

In terms of the alternative relief sought by the plaintiff, I consider the following are critical factors which persuade me not to exercise my discretion to order the proceeding to be converted to pleadings; delay in progressing the matter to substantive hearing including the substantive length of time since the original judgment of 26 October 2007, the legal defects in the claim pertaining to interest, the lack of evidence about service of the taxed costs of K676,886.00 and the evidence of payment in full of the judgement debt of 26 October 2007 by the State.

17. The plaintiff’s substantive proceeding claims interest on interest and a new relief for business loss. It is my ruling that the interest-on-interest claim is time barred under section 16 (6) of the Fraud and Limitations Act 1988 while; the relief for business loss does not arise from the original judgment of 26 October 2007. These are new allegations which require proper pleadings by way of an endorsed statement of claim. However, because of the length of time since the judgment debt of 26 October 2007 and my view on the interest claim, I am disinclined to order conversion of the originating summons to a statement of claim. I accept the State’s evidence that the judgment debt of 26 October 2007 has been paid in full and satisfied.

18. For the foregoing reasons, I exercise my discretion to refuse the application and dismiss the entire proceeding as the claim for interest is time barred, judgment of 26 October 2007 has been paid in full and the claim for taxed costs is not sought in the substantive relief. It appears the plaintiff's claim for interest and costs has no merit.

ORDER

19. The formal Orders of the Court are:

1) The plaintiffs application is refused
2) The proceeding is dismissed in its entirety.
3) Cost of this proceeding is awarded to the State to be paid by the plaintiff, to be taxed if not agreed.
4) The time for entry of this Judgment is abridged to the time of signing by the Court which shall take place forthwith.
5) The Court File is to be closed and archived.
Orders accordingly,.
___________________________________________________________
Kubak & Kubak Solicitors and Barristers: Lawyers for the Plaintiff
Acting Solicitor General by his employed Lawyer: Lawyers for the Defendants.