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National Court of Papua New Guinea |
PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]
WS NO. 32 OF 2022 [IECMS/COMM]
FRONTIER INTERNATIONAL LIMITED
First Plaintiff
AARON JONATHAN PEYIKIYU
Second Plaintiff
V
GOLDEN HILL TIMBER LIMITED
First Defendant
MOTOR VEHICLES INSURANCE LIMITED
Second Defendant
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Third Defendant
WAIGANI: ANIS J
9, 15, 23 APRIL, 9 MAY 2025
CLAIMS FOR TRESPASS, DETINUE, CONVERSION AND FRAUD – Trial on liability – whether the claims have been established
PRACTICE AND PROCEDURES – whether a shareholder can sue in support of or with the company – where is the interest of a shareholder in a matter whether he is not a party to the dealings and transactions where the company is involved in? – application of s.16 of the Companies Act 1997 – consideration - ruling
PRACTICE AND PROCEDURES – preliminary issues - pleadings – whether claims properly pleaded or formulated – whether the issues were belatedly raised – whether the Court may consider the preliminary issue concerning pleadings or sufficiency of pleadings as a preliminary matter – whether the claims for tort of trespass, tort of detinue, tort of conversion and tort of fraud can proceed against the State and its agents without pleading the relevant provisions of Wrongs (Miscellaneous Provisions) Act – s.1(1)(a) and (4) – Wrongs (Miscellaneous Provisions) Amendment Act 2022 – s.1A - consideration – ruling
PRACTICE AND PROCEDURES – Whether the claim is statute barred under s.16(1)(a) of the Frauds and Limitations Act 1988 – computation of limitation period for a month and a year– whether leap year relevant in computing time – consideration – ruling
Cases cited
Anuta Jabou and Ors v. Alfred Kumasi and Ors (2012) N4607
Augustine Kinumbo v. Paul Nindiwi and 1 Or (2021) N9251
Bluewater International Limited v. Roy Mumu (2019) SC1798
Canaan Investments Ltd v. Origin Energy (PNG) Ltd (2023) N10593
Dodds v. Walker [1981] 2 All ER 609
Eton Pakui v. The State (2006) N2977
Investment Corporation of Papua New Guinea v. Paul Pora and the Sate [1993] PNGLR 45
Jennifer Gawi v. Anna Gawi and Ors (2024) N10860
Kelly Lerro v. Phillip Stagg & Ors (2006) N3050
Kisa v. Talok and Ors (2017) SC1650
Kumura v. The Sate and Ors (2022) N10594
Matrix Constructions (PNG) Ltd v. Air Niugini Ltd (2020) N8283
Mount Hagen Urban Local Level Government v. Sek No. 15 Ltd (2009) SC1007
National Provident Fund Board of Trustees -v- Jimmy Maladina & Ors (2003) N2486
Nii v. Constable Lilou and Ors (2022) N9628
Pacific Assurance Group Ltd v. Pacific International Hospital Ltd (2017) N6992
Papua New Guinea Banking Corporation Limited -v- Jeff Tole (2002) SC694
Paul Pora v. Larry Hull and Ors (2009) N3729
Philip Nare v. The State (2017) SC1584
Phillip Takori v. Simon Yagari & Ors (2008) SC905
Pinda v Inguba (2012) SC1181
Sunset Rentals Ltd v. Pacific View Apartments Ltd (2020) SC1994
The Central Bank of PNG v. Gabriel Tugiau (2009) SC1013
Wheels Entertainment Ltd v. Ryals and 1 Or (2025) N11177
Yalama v. Sukap and Ors (2023) N10628
Counsel
B Lai for the plaintiffs
Nil appearances by the first and third defendants
C Ninawale for the second defendant
JUDGMENT ON LIABILITY
1. ANIS J: This was a trial on liability on alleged torts purportedly committed by the defendants against the plaintiffs.
2. The matter was trialed on 15 and 23 April 2025 between the plaintiffs and the second defendant. The first and third defendants did not make any representations at the hearing. After both parties presented their closing submissions on 23 April 2025, I reserved my decision to a date to be advised.
3. This is my ruling.
BACKGROUND
4. The plaintiffs are suing the defendants, in particular, the second and third defendants, for various torts, namely, trespass, detinue, conversion and fraud. The second plaintiff is a majority shareholder of the first plaintiff. They assert that on 14 April 2016, 29 heavy machinery, plant and motor vehicles (Equipment) which they claim to own, were, through the actions or inactions of the defendants, registered in the name of the first defendant without their consent or authority. The Equipment were intended to be used for construction or log harvest purposes in the business dealings that the plaintiffs had at the material time. The plaintiffs allege, amongst others, that individuals in the employ of the first and second defendants conspired and fraudulently registered the 29 Equipment in the name of the first defendant. As such, they assert that they suffered damages in torts and seek various relief in their Writ of Summons and Statement of Claim filed 14 April 2022 (SoC).
5. At the trial, the plaintiffs abandoned part of the relief that seek restoration of registration records of the Equipment to the name of the first plaintiff.
6. The first defendant, according to the parties, has not shown any interest in the matter. It has not made any appearances since the commencement of the proceeding, including appearances at the hearing.
7. The third defendant is sued under the principle of vicarious liability for the alleged actions or inactions of the second defendant. The plaintiffs assert that the second defendant is a state entity or an agent of the State. The third defendant, however, and as stated above, did not also appear at the hearing to defend itself.
EVIDNECE
8. The parties tendered their evidence without objections and cross-examinations. Their evidence were marked with exhibit numbers.
PRELIMINARY MATTERS
9. The second defendant raised preliminary matters concerning pleadings and Court’s jurisdiction.
10. Let me first address the preliminary matter concerning pleadings. To begin, I note that this Court has the power to consider preliminary issues or matters in regard to proceedings that are filed whether it be after their commencement dates or at trials. See cases: Canaan Investments Ltd v. Origin Energy (PNG) Ltd (2023) N10593, Jennifer Gawi v. Anna Gawi and Ors (2024) N10860, Papua New Guinea Banking Corporation Limited -v- Jeff Tole (2002) SC694, National Provident Fund Board of Trustees -v- Jimmy Maladina & Ors (2003) N2486 and The Central Bank of PNG v. Gabriel Tugiau (2009) SC1013.
11. The Supreme Court in Bluewater International Limited v. Roy Mumu (2019) SC1798 stated at para. 70 and I quote:
“70. It should be clear from the foregoing that, no default judgment can be signed if the pleadings are insufficient. If notwithstanding such insufficiency, a default judgment is signed it has the risk of being revisited and set aside. All Judges should be on guard and ensure that they do not allow applications for default judgment without first checking and ensuring that the pleadings are sufficient in disclosing a cause of action known to law and that there is sufficient foundation either for entry of judgment for a liquidated claim or for an assessment of a plaintiff’s damages. Before that, all lawyers have a professional duty to the Court as officers of the Court to exercise the same care and refrain from bringing applications on pleadings that fail to clearly plead a cause of action known to law and with sufficient particulars to enable assessment of damages possible. Failures to adhere to this should result in an order for costs on a full indemnity basis”.
12. I would add that what is stated by the Supreme Court in Bluewater International Limited may apply in a situation where a judge is considering his or her judgment on liability or quantum, that is, that it is imperative and as a preliminary matter, that the judge must satisfy himself or herself that the claim or cause of action exist in law and that the claim is properly formulated in the pleadings. See case: Mount Hagen Urban Local Level Government v. Sek No. 15 Ltd (2009) SC1007. A judge must pass this preliminary hurdle before proceeding further to making determinations on the substantive matter, or before considering the defence of a defendant.
13. The first ground raised by the second defendant, which is associated with pleadings, is that the second plaintiff has no standing in the matter. The second defendant submits that the second plaintiff is a shareholder of the first plaintiff and that the claim concerns properties purportedly owned the by the first plaintiff. It refers to s. 16 of the Companies Act 1997 (CA) and submits, amongst others, that a company is a legal person which can sue, be sued and own properties under its own name and style; that a shareholder does not own the properties of the company. In support, it makes references to the case of Sunset Rentals Ltd v. Pacific View Apartments Ltd (2020) SC1994 and Investment Corporation of Papua New Guinea v. Paul Pora and the Sate [1993] PNGLR 45.
14. I note the submissions of the parties on this.
15. I uphold the submissions of the second defendant. It is misconceived to assert that a shareholder can directly, or together with the company that he holds shares in, sue a defendant in a claim that only involved or concerned the company and third parties. This is a situation where the second plaintiff has no claim against the defendants either as a shareholder or as a person. An exception to this type of situation is where a shareholder may sue on behalf of a company through derivative action under s.143 of the CA. See cases: Paul Pora v. Larry Hull and Ors (2009) N3729 and Wheels Entertainment Ltd v. Ryals and 1 Or (2025) N11177. The situation in the present case, however, does not give rise to or meet this exception.
16. I therefore uphold the submissions of the second defendant. I find the second plaintiff’s claims against the defendants baseless and dismiss them.
17. The next preliminary issue is this. The second defendant submits that the entire claims lack clarity or are substantially defective; it asserts that the claims are not properly formulated or particularized with the relevant (i) parties and (ii) pleadings, to an extent that they conform with the mandatory pre-requisites as stipulated by law and case authorities. The second defendant submits that given that the claims against it and the third defendants are premised or dependent on vicarious liability, the plaintiffs ought to have but has failed to plead the relevant provisions of the Wrongs (Miscellaneous Provisions) Act 1975 (WMPA). As a result, it submits that the claims are vague or substantially defective and must be dismissed.
18. The first plaintiff (the plaintiff) submits that references to s.1 of the WMPA is belatedly raised and that it is ambushed with such an argument. It submits that the Court should therefore discard the said argument by the second defendant.
19. I note the submissions of the parties.
20. I make the following observations: The plaintiff is the one bringing the defendants to Court. It is not the defendants’ claim. The plaintiff is represented by counsel, but regardless, it is the SoC that dictates and informs the defendants and the Court, that that is how the plaintiff intends to pursue its claims. The SoC as it is presented, tells the defendants as well as the Court that the plaintiff has valid claims under the law, and that premised on the pleaded facts, the Court should find the defendants liable for the torts of trespass, detinue, conversion and fraud.
21. With that, I think the real question to ask now is this. Whose duty is it to diligently plead the cause of action(s) in the present case? Is it the duty of the defendants to tell the plaintiff how it should plead its cause of action to successfully sue them? Or should these be the duty and responsibility of the plaintiff, that is, to ensure that its actions are diligently pleaded, or that they are properly formulated and that they make legal sense before the time the matter reaches the trial stage for hearing? The answer to that is obvious in that it rests with the plaintiff.
23. Let me summarise my observations herein:
24. In conclusion to the above observations, I refer to and adopt or echo what I have stated in the case of Augustine Kinumbo v. Paul Nindiwi and 1 Or (2021) N9251 where at paras. 7 and 8 I stated:
“7. The State, in its defence and submission, raised a preliminary matter which I will deal with first. It claims that because the plaintiffs did not plead the relevant statute and its provision, that is, s. 1 of the Wrongs (Miscellaneous Provisions) Act Chapter No. 297 (Wrongs Act), that their claim is untenable and must be dismissed.
8. I note the submissions of the parties on this. I must say that the plaintiffs’ counsel did not address the issue in detail. In my view, matters that come to Court for trial, the parties are required to assist or address the Court on all aspects of the dispute. I also note that the Court’s role is to ensure that all matters and issues that arise from the dispute are properly addressed. The Court, in my view, and in view of its inherent power, should not proceed and consider matters or issues purely based on what the parties submit should be the issues for trial but rather on all the issues that arise based on the pleadings. Parties that come to trial are required to come fully prepared to argue or address all issues whether favourable or unfavourable to their clients’ interests. If a party fails in that regard, then it may result or contribute to injustice being caused to the matter concerned. The presumption then, in regard to material issues not raised or covered by a party or parties to a proceeding, is that they are left to the Court to decide on them on the Court’s own volition”. [Underlining mine].
25. Again, let me remind myself that I am at the first leg my judgment where I am now considering whether the claim is properly pleaded and is properly before the Court as a competent matter that I should decide on. This fundamental consideration by the Court may be done regardless of submissions that may be made by a party. Or to look at it differently, even if I were to rule that the second defendant has belatedly raised challenges to the pleading allegations or the provisions under the WMPA, it does not prevent me, in consideration liability, to first of all satisfy myself that the pleadings are in order or that the claim is competent and that the relief sought are attainable. These considerations, in my view, always remain within the exclusive jurisdiction of the trial Court.
PLEADINGS
26. With these clarities, I now consider the second preliminary argument concerning pleadings and want of compliances with provisions of the WMPA.
27. Section 1 of the WMPA was recently amended by Wrongs (Miscellaneous Provisions) Amendment Act 2022 (WMP Amendment Act) which came into operation on 12 April 2022. I set out ss.1 and 1A as amended as follows:
PART I. – STATE LIABILITY IN TORT.
Division 1.
General.
1. GENERAL LIABILITY OF THE STATE IN TORT.
(1) Subject to this Division, the State is subject to all liabilities in tort to which, if it were a private person of full age and capacity, it would be subject–
(a) in respect of torts committed by its servants and agents; and
(b) in respect of any breach of the duties that a person owes to his servants or agents under the underlying law by reason of being their employer; and
(c) in respect of any breach of the duties attaching under the underlying law to the ownership, occupation, possession or control of property.
(2) Proceedings do not lie against the State by virtue of Subsection (1)(a) in respect of an act or omission of a servant or agent of the State unless the act or omission would, apart from this Division, have given rise to a cause of action in tort against the servant or agent or his estate.
(3) Where the State is bound by a statutory duty that is binding also on persons other than the State and its officers, then, subject to this Division, the State is, in respect of a failure to comply with that duty, subject to all liabilities in tort (if any) to which it would be subject if it were a private person of full age and capacity.
(4) Where functions are conferred or imposed on an officer of the State as such either by a rule of the underlying law or by statute, and the officer commits a tort while performing or purporting to perform the functions, the liabilities of the State in respect of the tort are such as they would have been if the functions had been conferred or imposed solely by virtue of instructions lawfully given by the Government.
(5) An Act or subordinate enactment that negatives or limits the amount of the liability of a Department of the Government or officer of the State in respect of a tort committed by the Department or officer applies, in the case of proceedings against the State under this section in respect of a tort committed by the Department or officer, in relation to the State as it would have applied in relation to the Department or officer if the proceedings against the State had been proceedings against the Department or officer.
(6) Proceedings do not lie against the State by virtue of this section in respect of anything done or omitted to be done by a person while discharging or purporting to discharge responsibilities of a judicial nature vested in him, or responsibilities that he has in connection with the execution of judicial process.
______________________________________________________________
Wrongs (Miscellaneous Provisions)(Amendment) Act 2022.
Being an Act to amend the Wrongs (Miscellaneous Provisions) Act (Chapter 297) to provide for alleged tortfeasors to be named in court proceedings for purposes of vicarious liability to be established against the State, and for related purposes,
MADE by the National Parliament.
1. GENERAL LIABILITY OF THE STATE IN TORT (AMENDMENT OF SECTION 1).
The Principal Act is amended in Section I by repealing Paragraph (a) and replacing it with the following:
"(a) in respect of torts committed by its servant and agents, who must be named in the court proceedings; and".
2. NEW SECTION 1A.
The Principal Act is amended by inserting immediately after Section l, the following new section:
"1A. PERSONAL LIABILITY.
Subject to Section 5A of the Claims By and Against the State Act 1996, where the court establishes that the acts or omissions of an agent or servant of the State is -
(a) outside of the agent or servant's scope of duties; or
(b) outside of the agent or servant's course of duty; or
(c) not in accordance with lawful instructions,
the agent or servant shall be held personally liable.".
28. It appears that s.1 of the WMPA was amended in view of or after the Supreme Court’s interpretation of the said provision in Philip Nare v. The State (2017) SC1584.
29. I note that the claims herein are premised on various torts, namely, trespass, detinue, conversion and fraud.
30. Let me address the third defendant (or State). The plaintiff is seeking to hold the State vicariously liable for the actions or inactions of the second defendant. The immediate question that comes to my mind is this, whether the plaintiff’s pleading is aligned with such a claim. I refer to the plaintiff’s SoC. The relevant pleadings are contained at paras. 21, 22 and 23, and I quote:
[Underlining mine]
31. I turn my attention to the case law. Case law in this jurisdiction states that the common law principle of vicarious liability has been codified by law, namely, s.1 of the WMPA. See cases: Eton Pakui v. The State (2006) N2977 and Anuta Jabou and Ors v. Alfred Kumasi and Ors (2012) N4607. Case law also states or dictates that a plaintiff that intends to sue the State and its agents for a civil tort(s) under the common law, is required to plead and invoke the relevant provisions of the WMPA in his or her statement of claim: See cases: Pinda v Inguba (2012) SC1181, Kisa v. Talok and Ors (2017) SC1650, Kelly Lerro v. Phillip Stagg & Ors (2006) N3050, Phillip Takori v. Simon Yagari & Ors (2008) SC905, Kumura v. The Sate and Ors (2022) N10594, Yalama v. Sukap and Ors (2023) N10628 and Nii v. Constable Lilou and Ors (2022) N9628.
32. The plaintiff is represented by counsel.
33. Having considered the SoC, I note that it did not plead therein s.1(1)(a) and (4) of the WMPA. I also note that the SoC and the pleadings do not comply or conform to the provisions under amendments that have been made in the WMP Amendment Act or that they do not give clarity as it which provisions of the WMPA shall apply in this case and which provisions may not.
34. As such, the query by the Court as well as the complaint raised by the second defendant is not without merit, and the party with the burden to explain or give clarity would be the plaintiff. The plaintiff has, however, failed in that regard with no proper explanations or submissions in response.
35. The deficiencies in the SoC, in my view, are substantive, and as such, the SoC existing in its current form without any amendments to correct it, makes the claims untenable. With these serious deficiencies, I am unable to proceed further. I cannot turn a blind eye on the law. I must uphold the law, and also, I must make orders that will protect the Court’s process from abuse. Anyone who comes to court to seek justice must do so according to law. It appears that the plaintiff has come to this Court to seek justice without following the law, that is, without complying with the mandatory pre-requisites for suing the State and its agencies under the provisions of the WMPA.
36. Therefore, and in summary, I find that the claims by the plaintiff against the second and third defendants will fail, and I will order that they be dismissed based on this preliminary finding.
37. The second defendant has also raised a preliminary issue that the claim is time barred. It argues that the proceeding was filed a day late taking into account the leap year. The parties do not dispute that the cause of action accrued on 14 April 2016. The SoC was filed on 14 April 2022.
38. Claims that are premised on simple contracts or torts, pursuant to s.16(1)(a) of the Frauds and Limitations Act 1988, are time-barred if they are commenced after 6 years from the date when the cause of action arose.
39. I note the submissions of the parties in this regard.
40. I maintain my view as alluded to the parties at the hearing. Computation of time, like a month, is computed from a day of a month to the corresponding day of the next month, to constitute a month. For example, a month from 16 May 2025 is or will be 16 June 2025. See cases: Pacific Assurance Group Ltd v. Pacific International Hospital Ltd (2017) N6992, Dodds v. Walker [1981] 2 All ER 609 and Matrix Constructions (PNG) Ltd v. Air Niugini Ltd (2020) N8283. In my view, similar manner of computing time should apply for this case. And so, in the present matter, the 6th year fell on the 14th day of April 2022, which is the corresponding day, month and the 6th year when computed from 14 April 2016.
41. In conclusion, I dismiss this preliminary issue raised by the second defendant.
CLAIM AGAINST THE FIRST DEFENDANT
42. The plaintiff, in closing in its written submission, under the heading “ORDERS SOUGHT BY THE PLAINTIFFS”, sought the following:
(1) The Second and Third Defendant are liable for fraudulent transfer of the First Plaintiffs properties as well as trespass, conversion and detinue.
(2) The balance of the claim shall be progressed to trial on assessment of damages.
(3) The Second and Third Defendant shall pay the Plaintiffs costs of the trial on liability which shall be taxed if not agreed.
43. Premised on the above and the submissions of the parties in general, the plaintiff has abandoned its claims against the first defendant.
44. What this means, premised on my various findings, is that the plaintiff’s claims on liability will therefore fail.
SUMMARY
45. In summary, the proceeding shall be dismissed.
COST
46. An order for cost remains discretionary. I will order cost to follow the event on a party/party basis to be taxed if not agreed.
47. I will order both plaintiffs to pay the second defendant’s cost of the proceeding.
ORDERS
48. I make the following orders:
The Court orders accordingly
________________________________________________________________
Lawyers for the plaintiffs: B S Lai Lawyers
Lawyers for the second defendant: Rageau Manua & Kikira Lawyers
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