Ising v Ande [2014] PGSC 59; SC1359 (4 July 2014)

SC1359

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA NO 174 OF 2010

BETWEEN

ANSON ISING
Appellant

AND

LUCY ANDE
First Respondent

AND

NATIONAL HOUSING CORPORATION
Second Respondent

Waigani: David J, Makail & Kawi, JJ

2014: 24th February & 04th July

SUPREME COURT APPEAL – Property dispute – Grant of title – Registration of title – Allegation of fraud – Setting aside of title – Equitable relief sought – Declaration and mandatory injunction – Whether cause of action time barred – Frauds and Limitations Act, 1988 – ss. 16 & 18.

SUPREME COURT – Practice & Procedure – Mode of proceeding – Originating Summons – Pleadings – Pleading particulars of fraud – Lack of –Effect of – Appropriate mode – Writ of Summons attaching statement of claim – Proceeding abuse of process – Appeal upheld – National Court Rules – O. 8, rr. 2, 3 & 30.

Facts

This is an appeal against the decision of the National Court to declare the sale and transfer of a property by the second respondent to the appellant as having been procured by fraud and therefore void and of no effect. One of the grounds of appeal was that the action was time-barred pursuant to s.16 of the Frauds and Limitations Act 1988. The other was that the first respondent adopted an incorrect mode of proceeding to bring an action based on fraud and was an abuse of process.

Held:

1. Under s. 16 of the Frauds and Limitations Act, 1988, an action founded on a simple contract or on tort must be commenced before the expiry of six years. But this time limitation is subject to ss. 17 and 18 of the same Act.

2. In the National Court, the first respondent sought a declaration to void the sale and transfer of the property and a mandatory injunction to have the appellant deliver up the contract of sale and transfer instrument for the purpose of facilitating the transfer of title to her. The relief sought are equitable relief and by virtue of s. 18, the time limit of 6 years under s.16 does not apply. Simon Puraituk & Ors v. Alfred Hagen & Aero Archaeology Limited (2007) N3204 approved. Accordingly, the cause of action was not time-barred. This ground was dismissed.

3. A writ of summons attaching a statement of claim is the appropriate mode of commencing proceedings for an action based on fraud.

4. In this case, the appellant commenced proceedings by originating summons. No leave was obtained to proceed by way of pleadings, consequently trial was conducted without pleadings and purely on affidavit material. Given the seriousness of an allegation of fraud and in this case, fraud against the grant of title to the appellant, the trial judge erred in law by allowing the matter to proceed to trial on the originating summons and without requiring the first respondent to particularise the allegation of fraud as required by O. 8, rr. 2, 3 and 30 of the National Court Rules. The effect is the entire proceeding was an abuse of process. This ground was upheld.

5. The appeal was upheld and the decision inclusive of the orders of the National Court was set aside.

Cases cited:

Massive v. Okuk and Kendarop [1985] PNGLR 263
Simon Puraituk & Ors v. Alfred Hagen & Aero Archaeology Limited (2007) N3204
William Maki v. Michael Pundia and PNG Motors Limited [1993] PNGLR 337
The Papua Club v. Nusaum Holdings Ltd (No. 2) (2004) N2603
Kol Ripa v. Kombamong Wally Wak, Registrar of Titles & The State (1996) N1463
Counsel:

Mr R Lains, for Appellant
No Appearance, for First Respondent
No appearance, for Second Respondent

JUDGMENT

04th July, 2014

1. BY THE COURT: The appellant appeals against the decision of the National Court in Wabag constituted by Ellis, J of 8th November 2010 where his Honour held and declared inter-alia that the sale and transfer of a property described as allotment 10, section 23, Wabag in Enga Province by the second respondent to the appellant was procured by fraud and therefore void and of no effect.

Background Facts

2. The appellant claims that he purchased the property from the second respondent ("NHC") under the National Home Ownership Scheme after the NHC offered to sell it to him on 14th April 1991. On 07th April 1999, the title was transferred to him. The first respondent also claims that same interest in the property. She claims that in early February 1993, she moved into the property and sometime thereafter arranged with the NHC to purchase it. She was in the process of purchasing it when in May 1999, she discovered that the NHC had transferred the title to the appellant. On 05th June 2009, she commenced proceedings by originating summons and sought, inter-alia, an order to declare as void, the transfer of title to the appellant.

3. From the materials before the Court, it appears that the first respondent filed a motion and sought an interim order to restrain the appellant from evicting her from the property. The appellant filed a cross-motion and sought to dismiss the proceedings for being frivolous, vexatious and an abuse of process pursuant to O. 12, r. 40 of the National Court Rules. Instead of dealing with the motions first, trial judge dealt with them all at the trial, upheld the first respondent's claim and, amongst others, restrained the appellant from evicting the first respondent from the property.

National Court Decision

4. The trial judge found that the transfer to title was procured by fraud because:

(1) The purchase price was substantially less than the market value.
(2) There was lack of supporting documents from the appellant.
(3) There were defects in the documents produced by the appellant.
(4) There was no explanation by the appellant beyond the annexed documents in his affidavit.
(5) The appellant failed to attend court for cross-examination.
(6) The appellant was locally supported by the NHC Manager in Wabag.
(7) That such support from the Manager was contrary to instructions from his superior, namely the NHC's Regional Housing Manager in Goroka.
(8) The appellant did not follow the instruction of the Director of the NHC Highlands Business Unit, sent out a letter dated 25th July 2000 which suggested that he was not prepared to have the title he claimed to have obtained from the NHC scrutinised by the NHC.

Grounds of Appeal

5. According to the notice of appeal, there are six grounds of appeal but they raise four main issues. They are:

(1) Whether the cause of action is time bared pursuant to s.16 of the Frauds and Limitations Act 1988.

(2) Whether the proceedings should have been commenced by writ of summons with a statement of claim setting out the allegations and particulars of fraud.

(3) Whether there was evidence proving fraud.

(4) Who should pay the costs of the proceedings?

Hearing of Appeal

6. At the hearing of the appeal, only the appellant appeared. The respondent did not. The Court file indicates that Mai & Co Lawyers are lawyers on record for the first respondent. Counsel for the appellant referred us to an affidavit of service, a notice of hearing in the Court file and informed us that he served the notice of hearing on Niuage Lawyers in accordance with directions issued by the Chief Justice on 03rd February 2014. Niuage Lawyers failed to file a notice of change of lawyers for the first respondent but have certified the appeal book. Based on this, we were satisfied that Niuage lawyers were given notice of the hearing and proceeded to hear the appeal.

Fraud and Time-Barred

7. In relation to the issue of time-barred, counsel for the appellant submits that the cause of action is one of fraud and arose on 07th April 1999 when the title of the property was transferred to the appellant. Computing the time limitation of six years under s. 16 of the Frauds and Limitations Act 1988 from that date, it expired on 07th April 2005. As the originating summons was filed on 05th June 2009, the first respondent was late by three and a half years. Therefore, the action is time-barred.

8. Counsel further submits that in his decision, the trial judge accepted that the case was eleven and a half years old and should have dismissed it for being time-barred. Instead, he went ahead, heard the matter, upheld it and set aside the title. This is where his Honour erred and for this reason, the appeal should be upheld and the decision quashed.

9. This case is about concealment and discovery of fraud. The first respondent commenced proceedings to set aside the grant of title to the appellant based on fraud. Under s. 16 (supra), an action founded on a simple contract or on tort must be commenced before the expiry of six years. But this time limitation is subject to ss. 17 and 18 of the same Act. Section 16 states:

"16. Limitations of actions in contract, tort, etc.

(1) Subject to Section 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.

(2) ................." (Emphasis added).

10. Section 18 states:

"Section 16 does not apply to any claim for specific performance of a contract or for an injunction or for other equitable relief." (Emphasis added).

11. The trial judge held at page 20 of his decision (see page 196 of Appeal Book) that although the case was eleven and a half years old, the first respondent was claiming an equitable relief by way of a declaration that the title was procured by fraud and it was not appropriate in the circumstances to permit fraud to defeat delay.

12. In the National Court, the first respondent sought a declaration to void the sale and transfer of the property and a mandatory injunction to have the appellant deliver up the contract of sale and transfer instrument for the purpose of facilitating the transfer of title to her. The relief sought are equitable relief: Massive v. Okuk and Kendarop [1985] PNGLR 263. For this reason, we are of the view that by virtue of s. 18 (supra), the time limitation of six years does not apply. By this finding, we also approve the decision by Davani, J in Simon Puraituk & Ors v. Alfred Hagen & Aero Archaeology Limited (2007) N3204 where her Honour held amongst others, that s. 16 (supra) does not apply to a claim seeking an order to declare an agreement to dispose of a war relic known as the "Swamp Ghost" null and void because s. 18 (supra) specifically excludes claims for equitable relief.

13. For this reason, we agree with the trial judge's finding that since the first respondent was claiming an equitable relief by way of a declaration that the title was procured by fraud (and a mandatory injunction to have the appellant deliver up the contract of sale and transfer instrument for the purpose of facilitating the transfer of title to her), it would not be appropriate in the circumstances to permit fraud to defeat delay. Accordingly, we find that the cause of action is not time-barred. This ground is dismissed.

Incorrect Mode of Proceeding and Fraud

14. As to the mode of proceedings and lack of pleadings, relying on William Maki v. Michael Pundia and PNG Motors Limited [1993] PNGLR 337, The Papua Club v. Nusaum Holdings Ltd (No. 2) (2004) N2603 and Kol Ripa v. Komgamong Wally Wak, Registrar of Titles & The State (1996) N1463, counsel submits that as the cause of action is based on fraud, the appropriate mode of proceedings is a writ of summons accompanied by a statement of claim. The statement of claim would set out the allegations and particulars of fraud as required by O. 8, r. 30 of the National Court Rules.

15. The appellant pointed out in the cross-motion that the first respondent commenced proceedings by originating summons and did not particularise the allegations of fraud. For this reason, the proceeding is an abuse of process and should be dismissed. His Honour dismissed this ground.

16. We begin with the basic premise that an allegation of fraud is a very serious allegation. Because of its seriousness, the Court has held that the allegations must be particularised and strictly proven. We refer to the cases of William Maki v. Michael Pundia and PNG Motors Limited (supra); The Papua Club v. Nusaum Holdings Ltd (supra) and Kol Ripa v. Kombamong Wally Wak, Registrar of Titles & The State (supra) for these principles. We further note that they are National Court decisions and not binding on this Court but the principles enunciated are sound and we adopt them.

17. In addition, the need to particularise the allegation of fraud is a requirement under O. 8, r. 30 of the National Court Rules. It states:

"30. FRAUD, etc. (16/2)

A party pleading fraud shall give particulars of any fraud, misrepresentation, breach of trust, wilful default or undue influence which he relies."

18. The second observation we wish to make is that where proceedings are commenced by originating summons, unless the Court otherwise directs (that is, the proceedings progress by way of pleadings), there is no requirement for pleadings: see O. 8, r. 2 of the National Court Rules. Order 8, r. 30 (supra) falls under O. 8, which governs the rules on pleadings. Pleadings consist of a statement of claim endorsed on a writ of summons (O. 8, r. 3), defence (O. 8, r. 4) and reply (O. 8, r. 5).

19. One significant advantage of pleadings is that the statement of claim sets out the relevant facts forming the allegations, the cause of action and issues for trial. The allegations in the statement of claim in turn give the defence the opportunity to respond to them by way of a defence. Where necessary, a reply is given. Put them all together, they provide the foundation and parameters on which evidence may be led.

20. In the context of an action based on fraud, O. 8, r. 30 (supra) is very clear. The particulars of fraud must be given and in our view, unless the Court otherwise directs, pleading the particulars of fraud is done by way of a statement of claim endorsed on a writ of summons. It is not pleaded in an affidavit because an affidavit is not a pleading nor can it be ascertained from the affidavit or oral evidence at trial. In other words, a writ of summons attaching a statement of claim is the appropriate mode of commencing proceedings for an action based on fraud.

21. In this case, the first respondent commenced proceedings by originating summons. No leave was obtained to proceed by way of pleadings, consequently trial was conducted without pleadings and purely on affidavit material. Given the seriousness of an allegation of fraud and in this case, fraud against the grant of title to the appellant, we find that the trial judge erred in law by allowing the matter to proceed to trial on the originating summons and without requiring the first respondent to particularise the allegation of fraud as required by O 8, rr. 2, 3 and 30 (supra). The effect is the entire proceeding was an abuse of process and should have been dismissed. This ground is upheld.

22. Having reached this conclusion, it is not necessary for us to consider the issue of proof of fraud. Finally, as to who should pay the costs, the appellant's counsel's submission is that it was the NHC officers who conspired with the first respondent to sell the property to her contrary to his expressed interest in the same property. As they misled him, they should bear the costs of the proceedings in the National Court.

23. There is one fundamental problem with this request. Section 14(3)(c) of the Supreme Court Act, states that no appeal lies to the Supreme Court without leave of the Supreme Court from an order of the National Court as to costs. While the appellant has pleaded it as a ground of appeal, he has not sought and obtained leave to appeal against it. For this reason, this ground is dismissed.

Conclusion

24. As one of the grounds has been upheld and for clarity sake, the effect of this decision is that the appellant remains the registered proprietor of the property and it must be returned to him. This decision can be implemented in two ways. If the first respondent has been registered as the proprietor, she shall surrender the title to the NHC and NHC shall transfer the title to the appellant. The other option is for a direct transfer where the first respondent shall surrender the title to the appellant and he will apply for transfer of title. We leave that to the parties to decide.

Costs

25. Finally, as we have upheld the appeal, in the exercise of our discretion, we order the respondents to pay costs of the appeal. Those costs are to be taxed, if parties are unable to agree.

Order

26. The orders are:

1. The appeal is upheld.
   
2. The decision inclusive of the orders of 08th November 2010 is set aside.
   
3. The respondents shall pay the appellant's costs of the appeal, to be

taxed, if not agreed.
_______________________________________________________________
Steeles Lawyers: Lawyers for Appellant
Niuage Lawyers: Lawyers for First Respondent