Kimbe Nivani Properties Ltd v Nivani Ltd [2018] PGSC 75; SC1742 (2 November 2018)

SC1742

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA NO: 156 OF 2018

BETWEEN:
KIMBE NIVANI PROPERTIES LIMITED (1-11424)
Applicant

AND:
NIVANI LIMITED (1-30946)
First Respondent

AND:
DAVID JOHN STEIN
Second Respondent

Waigani: Dingake J
2018 : 24 October

Cases Cited:

Matiabe Oberia v Police & The State (2005) SC801

Sir Julius Chan v Ombudsman Commission of PNG (1999) PNGLR 240

Counsel:

Mr. I. Molloy with Mr. J. Kihanges, for the Applicant
Ms. Samantha Kiene, for the Respondents

2 November, 2018

1. DINGAKE J: This is an application for leave to appeal against the decision of the National Court delivered on the 20^th of August, 2018 in proceedings WS No. 858 of 2017, in so far as the Court dismissed the applicant’s claims for breaches by the second respondent as Director under the Companies Act 1997 as being time barred.
2. It would seem having regard to the papers filed of record that the claims for breaches by the Director of his duties under the Companies Act were dismissed on the basis that they were claims in tort and were time barred by virtue of Section 16(1) (a) of the Frauds & Limitations Act.
3. The applicable principles for granting or refusal of leave were stated in the well-known case of Matiabe Oberia v Police & The State (2005) SC801.
4. The principles are as follows:
   • (i) Is there an arguable or prima facie case demonstrated that the trial judge was wrong?
   • (ii) Does the appellant have recourse in the Court below?
   • (iii) Was the ruling within the discretion of the Court?
   • (iv) Has it been shown that its exercise of discretion was manifestly unreasonable, exercised on wrong principle or a mistake of fact?
   • (v) Does the decision have any bearing on the final determination of the issues between the parties?
5. It is trite learning that where leave to appeal is sought with respect to an interlocutory order, as in this case, the bar is somewhat higher.
6. In the case of Sir Julius Chan v Ombudsman Commission of PNG [1999] PNGLR, 240, at p. 248 the Court held that:
   • “So to obtain leave to appeal an interlocutory judgment, it is not simply a matter asserting there is an arguable case; that there has been some error. It is not the case that every error will effect the outcome of the substantive proceedings. What must be shown is, not only that there is patent error, but also that the error effects a party’s substantive rights or will prevent the proper determination of the issues.”
7. In contending that it has an arguable case, the applicant contends, inter alia, that it was erroneous to find, as the learned judge did, that claims for breaches of Companies Act 1997, were claims in tort.
8. A finding as to whether a claim for breaches of the Companies Act can be characterized as a claim in tort, or otherwise, has immediate practical consequences having regard to the applicable time limitation period to commence proceedings because if it is a claim in tort the applicable limitation period is six (6) years. Contrarily, if the claim for breaches by a director of his obligations under the Companies Act was categorized as actions on a “speciality”, as contended by the applicant, the limitation period could be twelve (12) years.
9. The applicant also argues, among other things, that even if the Court below had correctly characterized the claims against the second respondent as company director for breaches of the Companies Act as a claim in tort, the Court erred in not finding that the breaches were continuing, rendering the claim not time barred.
10. I am not required to be convinced that the grounds advanced by the applicant are likely to succeed but whether they are arguable. It seems to me the argument on the proper classification, “tort” versus “actions on speciality” and whether the breaches were continuing are fairly arguable.
11. In the result, I am persuaded that the applicant’s proposed grounds of appeal, set out in the application for leave, raise an arguable case and that this is a proper case, in which leave to appeal should be granted.
12. The orders of this Court are as follows:

10.1 The appellant is granted leave to Appeal.

10.2 The costs of and incidental to the application for leave to appeal be costs in the appeal.
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Lawyers for the Applicant: In Person

Office of the Public Solicitor: Lawyers for the Respondent