BSP Financial Group Ltd v Wuatai [2025] PGNC 411; N11559 (29 October 2025)

N11559

PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]

OS NO. 35 OF 2025 (COMM-IECMS)

BSP FINANCIAL GROUP LIMITED
Plaintiff

V

SHEELAGH WUATAI
First Defendant

NIKO WUATAI
Second Defendant

WAIGANI: ANIS J
5 SEPTEMBER, 29 OCTOBER 2025

INTERLOCUTORY APPLICATION – Notice of motion to dismiss – Order 12 Rule 40(1) of the National Court Rules and s.16(1)(a) of the Frauds and Limitations Act 1988 - alleged no reasonable cause of action – consideration - ruling

Cases cited
Atlas Corporation Ltd v. Ngnangan (2020) SC1995

Counsel
S Kiene, for the plaintiff
H Leahy with L Abraham, for the defendants

DECISION

1. ANIS J: The defendants applied to dismiss the proceeding for disclosing no reasonable cause of action. The application was contested. I heard the matter on 5 September and reserved my ruling to a date to be advised.

2. This is my ruling.

BACKGROUND

3. On 26 May 2025, the plaintiff filed an originating summons (OS). It seeks declaratory orders, and I will paraphrase them as follows:

• That it has a registered Mortgage over 2 of the Defendants’ properties, namely, Allotment 15 Section 439, Hohola, National Capital District and Allotment 16 Section 8, Boroko, National Capital District (the Mortgaged Properties);
• As such and pursuant to s.74(1)(c) of the Land Registration Act Chapter No. 191 (LRA), the defendants, their agents and servants must deliver up vacant possession of the Mortgaged Properties to it within 14 days from the date of an Order made in that regard;
• Leave be granted to it under Order 13 Rule 3(2) of the National Court Rules (NCR) to issue a writ of possession on the Mortgaged Properties with extended orders to permit the Sherriff or police personnel to, where necessary, enforce the writ of possession and give vacant possession of the Mortgaged Properties to it.
  

MOTION

4. The defendants’ notice of motion filed 13 June 2025 seeks the following main relief:

1. Pursuant to order 12 rule 40(1) of the National Court rules and section 16(1)(a) of the Frauds and Limitations Act 1988, the proceedings be dismissed since no reasonable cause of action is disclosed.
   

5. Two affidavits were relied upon by the defendants in support of their NoM. The first was the affidavit of Maniel Bilak filed 26 March 2025, and the second was the affidavit of Dorothy Misitom filed 1 July 2025. The former affidavit consists of evidence of the plaintiff which the defendants seek to rely on. There was no objection raised by the plaintiff for its use. The plaintiff also relied on it in its submission.

6. In Ms. Misitom’s affidavit, she attaches a letter by the defendants’ lawyers dated 19 June 2025 to the plaintiff. The letter reads in part as follows:

Please note that the above action is out of time. We draw your attention to section 16(1)(a) of the Frauds and Limitations Act. Our client’s default under the loan agreement and its mortgage with the Bank occurred in 7 September 2017. With respect, in our view, that is when the cause of action (referrable to s.16(1)(a) of the Act) arose. With respect, it does not matter which date you rely on whether it be from the Banks letter dated 7 September 2017 forewarning the mortgagor of impending action or the notice of default 18 October 2017, Court action against the mortgagor’s should have been commenced on or before before 18 October 2023.

There, these proceedings are technically flawed. They cannot legally be maintained and the relief the Bank seeks by it’s action is beyond the jurisdiction of the Court to grant. We submit that we do not contend that the Bank cannot take recovery action. What we are saying is the (sic) procedurally, the Bank needs to go back and start again with the issue of it’s letter of demand and the provision of 30 days to our client. Accordingly, the above proceedings should be withdrawn.

ISSUES

7. The issues, in my view, are as follows, (i), what type of proceeding is this; is it a cause of action for breach of contract or an enforcement action or proceeding?, and, (ii), if it is a cause of action for breach of contract, whether the proceeding is time-barred and should be dismissed.

COMMON GROUND

8. The defendants do not dispute the facts as set out in Mr. Bilak’s affidavit. That is, they concede that they had jointly applied for and were granted a loan from the plaintiff in the sum of K4,100,000 on 20 November 2013. They also admit amongst others that as security for the loan, the Mortgaged Properties were secured by the plaintiff. They also concede that they had defaulted on the loan agreement and that a Letter of Demand and Notice of Default were issued to them on 7 September 2017 and 12 October 2017 respectively, and that since then and to date, that they have not fully repaid their loan to the plaintiff.

9. However, the defendants’ main argument in the NoM is that the plaintiff’s cause of action, which is in contract, is time-barred under s.16(1)(a) of the Frauds and Limitations Act 1988 (FLA). As such, they submit that the Court should dismiss the proceeding for disclosing no reasonable cause of action, and that the plaintiff should recommence issuing the notice of default under the terms and conditions of the loan agreement.

10. The plaintiff contends that the NoM is misconceived because the proceeding is not an action for breach of contract but that the plaintiff is exercising its rights as the Mortgagee under the terms and conditions of the Mortgage Agreement had between the parties. As such, it submits that the NoM should be dismissed.

SECTION 16(1)

11. Section 16(1) of the FLA states:

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.

......

CONSIDERATION

12. The proceeding is filed as an originating summons.

13. It is not the first of its kind. Mr. Bilak deposed that on 12 July 2024, the defendants commenced proceeding OS 174 of 2024 against the plaintiff. They sought permanent injunctive relief to prevent the plaintiff from exercising its rights over the Mortgaged Properties. On 7 October 2024, Coates J issued orders preventing the sale of one of the Mortgaged Properties (i.e., Section 15 Allotment 439) up to or until 31 October 2024. Orders were also issued to the defendants to sell the other Mortgage property, namely, Section 8 Allotment 16.

14. To date or as at the date that Mr. Bilak deposed his affidavit on 26 March 2025, the defendants did not sell Section 8 Allotment 16 as ordered by Coates J in proceeding OS 174 of 2024 to off set their loan arrears. Instead, their loan arrears remained unsettled and accrued a total sum of K4,487,061.12.

15. The plaintiff, aggrieved by this, commenced the present proceeding.

16. I note the submissions of the parties in regard to the type of proceeding.

17. It is obvious that the present proceeding is not a cause of action for breach of contract, but rather, it is an enforcement proceeding commenced by the plaintiff to assert its contractual rights under the mortgage or mortgages it has with the defendants as securities for the loan amount of K4,100,000.

18. Further and as such, the time-bar argument is inconsequential. The time limitations that are set out under the FLA, including s.16(1)(a), do not apply to enforcement proceedings. See case: Atlas Corporation Ltd v. Ngnangan (2020) SC1995.

SUMMARY

19. Given my findings on the first issue, the NoM is therefore baseless and shall fail.

COST

20. An order for cost herein is discretionary. I will order cost to follow the event on a party/party basis to be taxed if not agreed.

ORDERS

21. I make the following orders:

1. The defendants’ Notice of Motion filed 13 June 2025 is dismissed.
   
2. The defendants shall pay the plaintiff’s cost of the application on a party/party basis which may be taxed if not agreed.
   
3. Time for entry of these orders is abridged to the date and time of settlement by the Registrar of the National Court which shall take place forthwith.
   

The Court orders accordingly
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Lawyers for the plaintiff: BSP Financial Group Limited in-house counsel
Lawyers for the defendants: Pacific Legal Group