Mamun Investment Ltd v Koim [2015] PGSC 9; SC1409 (24 February 2015)

SC1409

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA 112 OF 2011

BETWEEN:

MAMUN INVESTMENT LIMITED
First Appellant

AND:

NIXON KOI
Second Appellant

AND:

ONDA KOIM, KOIM ROB, AMUNI KOIM, SO KOIM, PAUL PONDA, ELIAS KOMB, ROBERT DUMA and DOKTA KILT representing themselves and an Association known as Mt Hagen Young Men's Christian Association (YMCA)
Respondents

Waigani: Sakora J, Hartshorn J and Poole J
2014: May 1st,
2015: February 24th

APPEAL – whether declaratory relief is equitable relief - Frauds and Limitations Act sections 16 and 18 considered – whether a cause of action may accrue without the knowledge of the aggrieved party

Cases cited:
Papua New Guinea Cases

Douglas Dent v. Thomas Kavali and Ors [1981] PNGLR 488
NCDIC v. Bogibada Holdings Pty Ltd and Anor [1987] PNGLR 135
Ok Tedi Mining Ltd v. Niugini Insurance Corporation and Ors (No 2) [1988-89] PNGLR 425

Overseas Cases

Kitchen v. Royal Air Forces Association & Ors [1958] 1 W.L.R. 563
Cartledge and Ors v. E. Jopling & Sons Ltd [1963] 2 WLR 210
Eddis and Anor v. Chichester Constable [1969] 1 W.L.R. 385
Tito v. Waddell (No.2) [1977] 1 Ch. 106
R. B. Policies at Lloyds v. Butler [1950] 1 K.B. 76
Ramsden v. Lee [1992] 2 All ER 204
Sheldon & Ors v. RHM Outhwaite & Ors [1995] 2 All ER 558
Tau Gumu v. Papua New Guinea Banking Corporation (2001) N2288
AWB Limited v. Honourable Terence Rhoderic Hudson Cole (No.2) [2006] FCA 913
Law Society v. Sephton & Co [2006] UKHL 22; [2006] 2 AC 543, 2WLR 1091
H. Stanke & Sons Pty Ltd & Anor v. O'Meara [2007] SASC 246

Counsel:

Ms. E. N. Suelip, for the Appellants
Mr. D. H. Katter and Mr. J. Holingu, for the Respondents

24th February, 2015

1. SAKORA J. and HARTSHORN J: This is an appeal against a National Court decision that found that amongst others, the defendants now appellants had obtained a property in Mt Hagen known as the YMCA Hall, by fraud. The plaintiffs now respondents oppose the appeal.

2. The appellants rely upon 26 grounds of appeal.

Preliminary

3. The respondents submit that the orders sought in the notice of appeal, for the orders of the National Court in Mt Hagen to be quashed or in lieu thereof, that the respondents' claims be dismissed, are not orders that this court may make pursuant to s. 16 Supreme Court Act, and that this appeal should be dismissed on these grounds alone.

4. We are of the view that in addition to s. 16 giving this court the discretion as to the orders it may make upon the hearing of an appeal, the wording of s. 16 (c) is of sufficient width to allow the making of orders about which complaint is made. These preliminary points raised by the respondents are rejected.

Grounds of appeal

5. The appellants' first ground of appeal is that the trial Judge erred in that he should have found that the respondent's claims were time-barred under s.16 Frauds and Limitations Act 1988 in that they were founded on a simple contract or on tort for which a claim shall not be brought after the expiration of six years after the claim accrued.

6. Before considering this ground of appeal, we are of the view that it would be prudent to consider the second ground of appeal first as it concerns amongst others, whether the respondents' claims are equitable. Section 18 Frauds and Limitations Act provides that s.16 does not apply to any claim for specific performance of a contract or for an injunction or for other equitable relief. If it is found that the respondents' claims come within s. 18 Frauds and Limitations Act, it will not be necessary to consider the first ground of appeal.

Whether s. 18 Frauds and Limitations Act applies

7. In regard to whether the respondents' claims come within s. 18 Frauds and Limitations Act; the relief claimed in the Originating Summons are four declarations, three consequential orders and then the cost of the proceedings. No claim is made for specific performance of a contract or for an injunction.

8. As to declaratory relief and whether it can be categorised as equitable relief, we have considered the following cases:

a) in Douglas Dent v. Thomas Kavali and Ors [1981] PNGLR 488, Bredmeyer J considered the power of the National Court to grant a declaratory judgment. He stated that he considered that the National Court's jurisdiction or power to grant a declaratory order comes from in particular the latter words of s. 155 (4) Constitution. His Honour went on to state that:

"Likewise, I consider that the power of the pre-Independence Supreme Court of Papua New Guinea to grant a declaratory order did not come from O.4 r.11 but rather from the statutory provisions conferring on that court powers of the Court of Chancery in England."

His Honour then in detail considered that statutory history "which produced that result."

b) in NCDIC v. Bogibada Holdings Pty Ltd and Anor [1987] PNGLR 135, Kapi DCJ (as he then was) stated that:

"Declaratory relief is an equitable remedy and, therefore, the jurisdiction of the court is to be found in the principles of equity in England which have been adopted as part of the law in Papua New Guinea."

This however, was a case in which the proceedings were ".... instituted by way of judicial review...."

c) then in Ok Tedi Mining Ltd v. Niugini Insurance Corporation and Ors (No 2) [1988-89] PNGLR 425, Kapi DCJ stated that he agreed with Bredmeyer J in Dent v. Kavali (supra) that the jurisdiction of the Court in granting declaratory orders is now to be found under s. 155 (4) Constitution.

d) in Tito v. Waddell (No.2) [1977] 1 Ch. 106 at p259, Megarry V.C. said:

"In particular, I have it in mind that in ordinary actions for a declaration, as distinct from the Exchequer equity jurisdiction against the Crown, it is well settled that it is discretionary whether or not to make a declaration. That is not because the remedy is an equitable remedy, for as the Court of Appeal made plain in Chapman v. Michaelson [1908] UKLawRpCh 141; [1909] 1 Ch. 238 it is not: it is neither a legal nor an equitable remedy, but statutory."

e) in the Federal Court of Australia decision of AWB Limited v. Honourable Terence Rhoderic Hudson Cole (No.2) [2006] FCA 913, Young J said:

"45. It is a common misconception that a declaration is an equitable remedy. It is not; it is a statutory remedy that is conferred in terms emphasising that its grant or refusal is within the discretion of the Court: see Tito v. Waddell (No.2) [1977] 1 Ch. 106 at 259; Mayfair Trading Co Pty Ltd v Dreyer [1958] HCA 55; [1958] 101 CLR 428 at 454 per Dixon CJ; and Meagher, Gummow and Lehane, Equity Doctrines and Remedies, 4th ed, Butterworths, 2002, at [19-159]. The discretion is to be exercised according to the facts and circumstances of the individual case, and the considerations that may be relevant to the exercise of the discretion are 'so numerous that it is not possible to enumerate them:' see Salmar Holdings Pty Ltd v Hornsby Shire Council [1971] 1 NSWLR 192 at 203."

f) then in H. Stanke & Sons Pty Ltd & Anor v. O'Meara [2007] SASC 246, in a judgment of the Full Court of the Supreme Court of South Australia, after embarking upon a detailed consideration of authority on whether by seeking declaratory relief, an applicant was seeking equitable relief; the Court said:

"There are other cases.... where the plaintiff's case is founded upon equitable principles and the declaration is simply the device which gives effect to those principles."

and then:

"Whilst it may be accepted that applications for mere declaratory relief cannot be regarded as seeking equitable relief, it is necessary to examine the pleadings in each case in order to determine the true nature of the relief sought."

8. In this instance the underlying basis for the declaratory relief claimed is not in equity. It is based upon a breach of a contract of sale and upon the tort of fraud. After giving consideration to the above authority, in our view the relief claimed in the Originating Summons cannot be categorised as "other equitable relief" in s. 18 Frauds and Limitations Act and so the respondents' claims do not come within the wording of s. 18 Frauds and Limitations Act. Given this it is now necessary to consider the first ground of appeal.

Whether s. 16 Frauds and Limitations Act applies

9. The appellants submit that there is no dispute that the subject contract of sale was signed on 20th August 1990 and the National Court proceeding was filed in September 2008 - a period of 18 years. Clearly, submit the appellants, the claim of the respondents is statute barred.

10. In his consideration of this issue the trial judge after referring to the case of Tau Gumu v. Papua New Guinea Banking Corporation (2001) N2288, stated at p18 that:

"It is apparent from the evidence of Mr. Onda Koim that the alleged fraud perpetrated by [the] defendants was not discovered until very recently."

11. The trial judge finds at p20 that by:

"... the time the plaintiffs discovered and confirmed the non-payment of the purchase price of the property on 27th November 2008, the registration of the transfer of title of the property to the second defendant had already occurred on 13 December 1990."

12. It is clear then that the trial judge was of the view that in an action based on fraud the period of limitation does not begin to run until the aggrieved party has discovered the fraud, and that he relied upon Tau Gumu's case (supra) in that regard.

13. Section 16 (1) Frauds and Limitations Act is relevantly:

"(1) Subject to Sections 17 and 18, an action-

(a) that is founded on simple contract or on tort,....

shall not be brought after the expiration of six years commencing on the date on which the cause of action accrued."

14. It is similar to and likely has the same source as s. 2 (1) Limitation Act, 1939 of England which was relevantly:

"The following actions shall not be brought after the expiration of six years from the date on which the cause of action accrued, that is to say:-

(a) actions founded on..... tort......"

15. In the House of Lords case of Cartledge and Ors v. E. Jopling & Sons Ltd [1963] 2 WLR 210, Lord Pearce said at p223:

"Past cases have been decided on the basis that the time runs from the accrual of the cause of action, whether known or unknown,.....

16. His Lordship referred to numerous cases in which it was held that a cause of action accrued and time began to run irrespective of the plaintiff's lack of knowledge. This continues to be the position as is illustrated by the following passage of Lord Hoffman in the House of Lords decision of Law Society v. Sephton & Co [2006] UKHL 22; [2006] 2 AC 543, 2WLR 1091:

"The normal period of limitation prescribed by section 2 of the Limitation Act 1984 for an action founded on tort is six years from the date on which the cause of action accrued. Since a cause of action may accrue without the knowledge of the injured party (Cartledge v Jopling [1963] AC 758) the six year period may expire before he is able to bring proceedings."

17. Lord Pearce in Cartledge v Jopling (supra) then referred to R. B. Policies at Lloyds v. Butler [1950] 1 K.B. 76, a case involving a plaintiff whose car was stolen and found in possession of the defendant, an innocent purchaser, more than six years later, and said at p224:

"The judge in holding that his action for conversion was statute-barred, rightly relied strongly on the fact that section 26 of the Limitation Act, 1939 created a special exception where the action was based on the defendant's fraud or where the right of action was concealed by the defendant's fraud. And even in such cases the legislature apparently considered that the right of action accrued in spite of the plaintiff's ignorance, since the Act provides that "the period of limitation shall not begin to run until the plaintiff has discovered the fraud." Moreover, the Act of 1939 was passed in the light of the earlier cases to which I have referred and had the legislature intended to secure a different result it would have said so."

18. Section 26 Limitation Act 1939 is relevantly:

"Where, in the case of any action for which a period of limitation is prescribed by this Act, either- (a) the action is based upon the fraud of the defendant or his agent..... or (b) the right of action is concealed by the fraud of any such person as aforesaid, or (c) the action is for relief from the consequences of a mistake, the period of limitation shall not begin to run until the plaintiff has discovered the fraud or the mistake....... or could with reasonable diligence have discovered it."

19. Section 26 Limitation Act does create an exception where an action is based on fraud as stated by Lord Pearce. A consideration of two of the cases cited in Tau Gumu's case (supra), Kitchen v. Royal Air Forces Association & Ors [1958] 1 W.L.R. 563 (incorrectly cited in Tau Gumu (supra) as 1985) and Eddis and Anor v. Chichester Constable [1969] 1 W.L.R. 385, reveals that the periods of limitation were prevented from running because of the operation of s.26 Limitation Act.

20. Similarly in Sheldon & Ors v. RHM Outhwaite & Ors [1995] 2 All ER 558, s. 32 (1) (b) Limitation Act 1980 operated to postpone the running of time as there was deliberate concealment by the defendant of facts relevant to the plaintiffs' cause of action. Further, in Ramsden v. Lee [1992] 2 All ER 204, s.33 Limitation Act 1980 operated to allow an action for personal injuries to be brought pursuant to the discretion of the court notwithstanding that the period of limitation had expired.

21. The equivalent of s. 26 Limitation Act 1939 and sections 32 and 33 Limitation Act 1980, are not incorporated into our Frauds and Limitations Act. Further, that specific exceptions were made in the English Limitation Acts to provide that certain causes of action shall not begin to run (as distinct from the date of accrual of the cause of action being altered) is indicative of the legislature being of the view that a cause of action accrues in s. 2 Limitation Act, our s.16 Frauds and Limitations Act, irrespective of the plaintiff's knowledge of that fact.

22. Given the above and that our Frauds and Limitations Act does not provide for the exceptions referred to and in particular in respect of a cause of action based on fraud, we are of the view that the decision in Tau Gumu's case (supra) should not have been followed and that the trial judge erred in so doing and in finding as he did that the plaintiffs' cause of action accrued from the date of the discovery of the alleged fraud. The date that the plaintiffs' cause of action accrued at the latest, was 13th December 1990, the registration date of the transfer of title. Consequently as the respondents' action is founded on simple contract and on tort and it was brought after the expiration of six years commencing on the date on which the cause of action accrued, it is caught by s. 16 (1) Frauds and Limitations Act.

23. We also make mention of the trial judge's comment at p16 that the onus is upon (the defendants) to establish that the action is time barred under s. 16 (1) Frauds and Limitations Act and that "For the law states that, the onus of proof is upon him who alleges."

24. As Lord Pearce said at p224 in Cartledge v Jopling (supra):

"I agree that when a defendant raises the Statute of Limitation the initial onus is on the plaintiff to prove that his cause of action occurred within the statutory period. When, however, a plaintiff has proved an accrual of damage within the six years ...... the burden passes to the defendants to show that the apparent accrual of a cause of action is misleading and that in reality the causes of action accrued at an earlier date."

25. Given the above findings it is not necessary to consider the other submissions of counsel.

Orders
26. The Orders of the Court are:

a) This appeal is upheld and the decision and orders of the National Court at Mount Hagen in OS 546 of 2008 made on 19th August 2011 are reversed.

b) The respondents' shall pay the appellants' costs of and incidental to this appeal and of and incidental to the National Court proceeding.

27. POOLE J: I respectfully agree with the decision of Sakora J and Hartshorn J and with the orders proposed. It may be regrettable that our Frauds and Limitations Act has not been amended in such a way as to take into account concealed fraud but, until it is, s.16 cuts off time for civil actions at six years. There is, of course, no time limitation on proceedings under the Criminal Code for fraud.

_____________________________________________________________
Mirupasi Lawyers: Lawyers for the Appellants Holingu & Holingu Lawyers: Lawyers for the Respondents