PacLII Home | Databases | WorldLII | Search | Feedback

Supreme Court of Papua New Guinea

You are here:  PacLII >> Databases >> Supreme Court of Papua New Guinea >> 2022 >> [2022] PGSC 120

Database Search | Name Search | Recent Decisions | Noteup | LawCite | Download | Help

Kerenga v PNG Power Ltd [2022] PGSC 120; SC2319 (25 November 2022)

SC2319


PAPUA NEW GUINEA
[IN THE SUPREME COURTOF JUSTICE]


SCA NO.18 OF 2020 (IECMS)


BETWEEN:
BOB KERENGA as Chairman of the KAPMA GATEN LANDOWNERS ASSOCIATION of Kau Basis, Dumun Village, Simbu Province
-Appellant-


AND:
PNG POWER LIMITED
-Respondent-


Waigani: Yagi, Polume-Kiele & Narokobi, JJ
2022: 27th May, 25th November


CONTRACT LAW - Accrual of cause of action - when does cause of action accrue –


FRAUDS & LIMITATION-Statute of Frauds & Limitations-S.16


CONTRACTS - cause of action accrues - limitation of time to bring action based on contract


Cases Cited:
Oil Search Limited v Mineral Resources Development Corporation Limited (2010) SC1022
Otto Benal Magiten v Kopina Raka (2002) N2179
Michael Nunulrea v PNG Harbours Ltd (2005) N279
John Hiwi v Rendle Rimua (2015) SC1460.
Bank of South Pacific v Leahy (2002) N2263
Oil Search Limited v Mineral Resources Development Corporation Ltd (2010) SC1022
Otto Benal Magiten v Kopina Raka (2002) N2179


APPEAL


This was an appeal against dismissal of civil proceedings for being time-barred under the Frauds and Limitations Act, Section 16.


Counsel:
Mr. T. Boboro, for the Appellant
Mr. J Sesega, for the First Respondent


25th November, 2022


  1. YAGI J: I have read the leading draft of the judgment of Polume-Kiele J and the supporting draft of Narokobi J. Polume-Kiele J has set out the chronology of events in the proceedings in the National Court up to and including the judgment of 23 March 2020 dismissing the appellants crossclaim for being time-barred pursuant to s 16 (1) of the Frauds and Limitations Act 1988. She has also summarized other pertinent background facts and the pleadings of the respondent as plaintiff in the National Court. I have reached the conclusion that I agree to both drafts.
  2. POLUME-KIELE J: This is an appeal by the Appellant without leave of Court pursuant to Section 14 (1) (a) and (b) of the Supreme Courts Act (SC Act) against the decision of the National Court made on 23 March 2020 dismissing the Appellant's Crossclaim for being time- barred pursuant to Section 16 (1) of the Frauds and Limitations Act 1988.

Relevant facts


  1. On or about 25 March 1988, the predecessor to the respondent, PNG Electricity Commission (the Respondent) entered into an Access Agreement with the Kapma Gaten Landowners of Chimbu Province to enter upon and clear the customary land in the Nilkama Valley for purposes of erecting power pylons and power transmission lines.
  2. Clause 7 of the Access Agreement provides for the respondent to reinstate the land toas near as practicable to its original condition and pay and make good and compensate the landowner for the damages, detriment and deterioration of the land, forest, and owner's property.
  3. For some reason, the project was abandoned by the respondent.
  4. Sometime in 2016, the respondent proceeded to install high voltage power line along the Dumun or the appellants’ section of the Highlands Highway. This led to the appellants disrupting their work progress. The respondent then filed proceedings seeking several reliefs amongst others, injunction restraining the appellants and its servants and agents from disrupting the work being done on the high voltage power line along the Dumun or the Appellant's section of the Highlands Highway.
  5. The Appellant responded and filed their crossclaim seeking damages for environmental destruction and breach of contract.
  6. On 23 March 2020 the National Court delivered its decision (pages 345-368 of Appeal Book Vol. 2) found at paragraphs 53 to 58 (pages 235-266 of Appeal Book Vol. 2) of the judgment that Kerenga’s claim pursued by the crossclaim is time barred and amounts to an abuse of the process of court. The crossclaim is dismissed in its entirety which means that Kerenga will not be entitled to compensation under the TAA as PNG Power has no legal obligation to do so.

Grounds of Appeal


  1. The appellant raised five (5) grounds of appeal in his Notice of Appeal which was filed on 29 April 2020. These are set out below as follows:

Issues for determination


  1. Having heard arguments from Counsels, I am of the view that the main contention raised by the appellant can be listed are as follows:

The Appellant's Position


  1. The appellant in his submission conceded that grounds 1,2 and 3 are related and thus were presented together and that now leads to only having 3 grounds of appeal to pursue.
  2. Here, the appellant says that the trial judge erred when he found that the cause of action accrued in or about 1988 on the signing of the Agreement and abandonment of the project thereof (paragraph 53). He submitted that the finding is incorrect and without basis as there was no evidence to clearly suggest that the appellant commenced its claim for compensation in 1988 or that the Appellant claimed breach of contract in 1988. The appellant submits that his claim and pleadings pleaded clearly show that the appellant began inquiring in 2003. Consequently, he submits that his claim for environmental damages accrued in 2006 and the available evidence supports the pleadings.
  3. The appellant also submits that the trial judge erred in finding that the conduct of the appellant in his claim for compensation under the TAA as election to accept repudiation of the Agreement and he contends that the performance of the agreement was continuous until such time that it was performed.
  4. Further and in addition, the trial judge erred when it failed to give due consideration to the arguments that the respondent was estopped from raising the issue of time limitation.

The Respondents' Position


  1. The respondent on the other hand asserts that the primary Judge was correct when ruling:

“52. It is clear to me, and I find as a fact from the available evidence before me that PNG Power abandoned the project and easement, or corridor has reverted back to the use of the original landowners. It is however not clear from the available evidence as to when the project was actually aborted and for what reason(s). It seems from the evidence of Mr. Tsigese that the corridor or easement cut has significantly regrown and naturally rehabilitated. An internal brief on important legal matters by PNG Power’s Manager, Legal Services forming part of the bundle of documents constituting annexure A to Exhibit 2 shows that PNG Power never returned to the easement or corridor cut to erect power pylons. In the same brief, it is asserted that the landowners were paid K160.00 for each pylon that was proposed to be erected.


"53. Kerenga's evidence is that their claim for compensation commenced in 1988 and has been unsuccessfully pursued from that time to the present time. There is no strong and convincing evidence before the Court to suggest that all landowners who were alive and present at the time the TM was signed personally received payment for the value of trees that had been cut down. It is not clear from the evidence as to the reason(s) why the claim for compensation was made not long after the TAA was signed. If that implies that the project was aborted before compensation was claimed and Kerenga elected to treat the non-performance of PNG Powers obligation to pay compensation or damages under the TAA as a repudiation of the TAA, then Kerenga's cause of action would have commenced accruing around that time. That means that Kerenga should have commenced his Associations' action within six years from the time the project was aborted, i.e., sometime towards the end of 1994. If PNG Power aborted the project later than 1988, then it is difficult from the evidence available to pinpoint or guess the nearest date. Even if the project had been aborted any time after 1988 say within six years of the signing of the TAA and Kerenga elected to treat the non-performance of PNG Power's obligation to pay compensation or damages under the TAA as a repudiation of the TAA, then Kerenga should have commenced their action by year 2000.


“54. In the circumstances, I find that Kerenga's conduct in claiming compensation or damages under the TAA as I have alluded to above amounted to an election to accept repudiation of the TAA. Kerenga's crossclaim is time-barred, and I declare it to be so.


  1. Given that conclusion, Kerenga's crossclaim also amounts to an abuse of the process of the Court. I also note that it is an undisputed fact that Kerenga has previously filed proceedings in both the National Court and the Supreme Court seeking damages, but those claims were all dismissed.
  2. Kerenga's contention that PNG Power is estopped from pleading the statute of limitation as a bar by the application of the principles of estoppel by conduct also known as estoppel' by representation is misconceived and rejected. The maxim equity follows the law and expressed as aequitas sequitur legem which means that equity will not allow a remedy that is contrary to law is accepted and applied in our jurisdiction: Paul Kumba v Motor Vehicles Insurance (PNG) Trust (2001) N2132, Joe Kerowa v MVIL (2010) SC1100, Brian Josiah v Steven Raphael (2018) SC1665, Wylie v Wake [2000] EWCA Civ 349.
  3. Is the action "founded on a special contract" or is it "an action upon a speciality"? The action in the crossclaim is neither founded on a special contract nor upon a specialty. Any contract in the form of a deed is a specialty: John Hiwi v Rendle Rimua (2015) SC1460. The action is founded on a breach of a simple contract in which case the six-year limitation period will apply.
  4. I conclude that Kerenga's claim pursued by the crossclaim is time-bared and amounts to an abuse of the process of Court and therefore will be dismissed in its entirety. This means that Kerenga will not be entitled to compensation under the TAA as PNG Power has no legal obligation to do so."

Did The National Court Err?


  1. In addressing this question, I wish to emphasise at the outset that the material and argument put before the Court were not extensive enough to appreciate the arguments for a review of the trial court’s exercise of discretion.

I have had the benefit of the written submissions and having considered the circumstances in which the matter was tried and argued before his Honour, I consider that his Honour, the trial Judge did not err in his findings on questions of law, his findings were based on the material before the National Court, and it was a proper position to make.


  1. In the case of Oil Search Limited v Mineral Resources Development Corporation Limited (2010) SC 1022, it suggested that a determination of whether an action involving an alleged breach of contractual obligations is time-barred under Sections 16(1) or 16(3) of the Frauds and Limitations Act necessarily entails a finding on three matters:
  2. I consider, with respect, that the learned primary Judge did address all these issues in sufficient detail.
(a) Cause of action
  1. His Honour to some extent addressed the issues of cause of action, identification of the cause of action and whether the action was founded on “a simple contract” or “an action upon a specialty” and he found that the cause of action is "founded on a breach of a simple contract” in which case, the six-year limitation period will apply (paragraph 43).
  2. Essentially, an action for breach of contract must be brought within six years from the date of accrual of the cause of action. Here his Honour the trial judge discussed the general rule in contract which states that “the date on which the cause of action accrued is not on the date of the contract, but the date of the breach and he referred to several case authorities which supported this general rule, such as the case of Otto Benal Magiten v Kopina Raka (2002) N2179, Michael Nunulrea v PNG Harbours Ltd (2005) N279, John Hiwi v Rendle Rimua (2015) SC1460. In John Hiwi v Rendle Rimua (supra), the appellant, who claimed that he was the executive of an incorporated landowners’ association, commenced proceedings by writ of summons in the National Court claiming payments totalling K74.5 million due to the landowners under three agreements with the respondents regarding a gas project. The appellant claimed that the agreements commenced operation in March-April 1990. But he filed and commenced the National Court proceedings in November 2009. The third respondent, the State, moved a motion in the National Court seeking dismissal of the proceedings on the ground that they were time-barred. The motion was upheld and the National Court dismissed the proceedings as being time-barred under Section 16(1)(a) of the Frauds and Limitations Act 1988, which provides that "an action that is founded on simple contract ... shall not be brought after the expiration of six years commencing on the date on which the cause of action accrued". The circumstances in this case are similar to this present case, here, the agreement was signed on 25 March 1988, but the appellant filed and commenced proceedings in 2016, well outside of the six-year period under s 16 (1) (a) of the Frauds and Limitation Act 1988.
  3. In Otto Benal Magiten v Kopina Raka (2002) N2179, the essential fact is that the parties entered into a contract for repairs of the plaintiffs motor vehicle by the defendants. An essential term of the contract was that the defendants’ were to repair the plaintiffs vehicle within three weeks from the 3rd of February 1995. There is also no dispute that the defendants did not have the vehicle repaired within that period as agreed. Indeed, the evidence is that it took the defendants some four months to complete the repairs to the plaintiffs vehicle. There was therefore clearly a breach of the term of the contract by the defendants in that the defendants did not complete the repairs to the motor vehicle within three weeks from the 3rd of February 1995. When they did not, the plaintiffs cause of action commenced to accrue. The contract in this case was to repair the plaintiffs vehicle within 3 weeks. The defendants’ were to do the repairs within a particular time frame. That being the case, when the repairs were not completed within that period, there was a breach of contract by the defendants. That breach occurred on the expiry of the agreed period of repairs. This occurred at the end of February 1995, and this was when the plaintiffs cause of action arose. Thus, the plaintiffs cause of action accrued from that date (that is from end of February 1995) and continued to accrue until it expired some six years later on or about the end of February or beginning of March 2001. In that case, the Court held:
(b) Date on which cause of action accrued
  1. Only when a precise date is identified would the court be in a position to make any calculation of the limitation period of six years or 12 years under Sections 16(1) or 16(3), as the case may be.
  2. In the court below, his Honour, the primary Judge noted that the appellant, PNG Power had submitted that the cause of action accrued either on the date of the TAA agreement, 25 March 1988, or where the innocent party elects to treat himself as discharged from further performance upon a breach of the contract, time begins to run immediately. For instance, if there is an anticipatory breach accepted by him as a repudiation of the contract, his cause of action accrues at once, not from the failure of the party in default. However, his Honour did not say which date was propounded by the respondents and did not himself make any finding on this issue. He seems to have tacitly formed the view that the project was aborted before compensation was claimed and Kerenga elected to treat the non-performance of PNG Power’s obligation to pay compensation or damages under the TAA as a repudiation of the TAA, then Kerenga’s cause of action should have commenced accruing around that time, that means that Kerenga should have commenced his Association’s action within six years from the time that the project was aborted., i.e., sometime towards the end of 1994 or by 2000 if the project had been aborted any time after 1988.
  3. In any event, the date was irrelevant in view of his finding that the cause of action was founded on a simple contract. His Honour concluded that the limitation period was 6 years under s 16 (1) (a) of the Frauds & Limitation Act 1988, even if the date on which the cause of action accrued was in 1994 or 2000, the appellant’s claim is statute barred when it proceedings were commenced in 2016. It was outside of the six-year period stipulated under s 16 (1) (a) of the Frauds & Limitation Act 1988.
(c) Simple contract or speciality?
  1. The primary Judge made a clear finding on this issue, and I have arrived at a view that his Honour was in a position to come to the firm conclusion that he did.
  2. The issue of whether an action is "upon a speciality" is not at all straightforward. There is no definition of "speciality" in the Frauds and Limitations Act or the Interpretation Act or any other written law.
  3. The only reference to the word “speciality” is found in the case of Bank of South Pacific v Leahy (2002) N2263 where Davani J in her ruling stated that: “a guarantee was a speciality because of its nature and form, it being in the form of a deed” however, this issue was not addressed in detail and just as in the present case it is evident that the National Court did not have the benefit of extensive argument on the point and requires thorough consideration as it may have significant practical implications for claims made in a commercial law context.
  4. NAROKOBI J: I have read the judgment of my sister judge, Her Honour Justice Polume- Kiele and agree with the reasons for her conclusion and her proposed orders. I also adopt the background to the proceedings in her honour’s judgment. I would like to however add the following discussions on the issue of when the cause of action accrued and estoppel by representation.
  5. The primary judge stated the following as to when the cause of action accrued at paragraph 54 of his decision (PNG Power Ltd v Kerenga (2020) N8264):

“54. Kerenga’s evidence is that their claim for compensation commenced in 1988 and has been unsuccessfully pursued from that time to the present time. There is no strong and convincing evidence before the Court to suggest that all landowners who were alive and present at the time the TAA was signed personally received payment for the value of trees that had been cut down. It is not clear from the evidence as to the reason(s) why the claim for compensation was made not long after the TAA was signed. If that implies that the project was aborted before compensation was claimed and Kerenga elected to treat the non-performance of PNG Power’s obligation to pay compensation or damages under the TAA as a repudiation of the TAA, then Kerenga’s cause of action would have commenced accruing around that time. That means that Kerenga should have commenced his Associations’ action within six years from the time the project was aborted, i.e., sometime towards the end of 1994. If PNG Power aborted the project later than 1988, then it is difficult from the evidence available to pinpoint or guess the nearest date. Even if the project had been aborted any time after 1988 say within six years of the signing of the TAA and Kerenga elected to treat the non-performance of PNG Power’s obligation to pay compensation or damages under the TAA as a repudiation of the TAA, then Kerenga should have commenced their action by year 2000.” (Emphasis added).


  1. Critical to finding when the cause of action accrued is to establish as a question of fact when the contract was breached (John Hiwi v Rendle Rimua (2015) SC1460). The primary judge found that the breach of contract occurred when the appellant initiated claims for compensation in 1988. It was open to the primary judge to make that finding because the contract did not provide any specific term as to when any compensation under the clause for damages in the agreement would be paid. The claim for compensation is evidence that the respondent had breached its agreement and was required to pay compensation. It was incumbent upon the appellant to commence their action within six (6) years after they approached the respondent for compensation during the year 1988. It was not necessary for the primary judge to establish with certainty a particular date the cause of action accrued as by 2016, when the appellant filed their crossclaim in this proceeding, the proceeding was well and truly statute-barred under s 16(1) of the Frauds and Limitation Act 1988 having expired sometimes in 1994. It was not necessary to make any specific finding of when the cause of action accrued.
  2. The primary judge discussed the evidence presented by the appellant on the efforts by the appellant to pursue their claim, which I presume is what the appellant is relying on to preclude the respondent from claiming that the appellant’s proceedings are time barred. The primary judge made the following observations at paragraph 32 of his judgment:

“32. The claim has been followed up with PNG Power directly and with the involvement of others. Annexure B to Exhibit 2 is a copy of a letter from the Association to the then Minister of Public Enterprises and State Investments, Hon. Ben Micah MP dated 24 January 2013 requesting his assistance and intervention in facilitating payment of compensation. Annexure C to Exhibit 2 is a copy of a letter from the then Minister of Public Enterprises and State Investments, Hon. Ben Micah MP to Mr Joshua Baki ri, Chairman of PNG Power dated 12 February 2013 requesting consideration and immediate settlement of the Association’s claim. Annexure D to Exhibit 2 is a copy of a letter from Dr Clement Waine, Acting Secretary of Department of Public Enterprises & State Investments to Mr John Tangit, Chief Executive Officer of PNG Power dated 23 January 2014 requesting PNG Power to address the Association’s claim. Annexure E to Exhibit 2 is a copy of an undated letter from the Association to the Board of Directors of PNG Power proposing settlement of its claim for K10 million. Annexure F to Exhibit 2 is a copy of a letter from the Association to the Acting Chief Executive Officer of PNG Power dated 17 August 2015 following up on the Association’s claim. Annexure G to Exhibit 2 is a copy of a letter from the Association to the Manager, Legal of PNG Power dated 10 September 2015 following up on the Association’s claim and also giving notice of the possibility of disrupting power supply to all Highlands Provinces failing settlement of its claim. Annexure H to Exhibit 2 is a copy of a letter from Joe Kunda Naur, Provincial Administrator, Simbu Provincial Administration to the Chief Executive Officer of PNG Power dated 3 February 2016 requesting PNG Power to promptly address and expedite payment of the Association’s claim.”


  1. There is no evidence at all that there was representation made by the respondent acknowledging its liability to the appellants, especially from the board of directors of the respondent company. It is trite law that a company is a separate legal entity from its shareholders and can sue and be sued by its own name, separate from its shareholders (Companies Act 1997, s 16). Any representation made by the Minister of State-Owned Enterprises, or the Acting Secretary for the Department of Public Enterprise cannot be equated to the respondent. The respondent is a separate legal entity. The consistent follow-up by the appellant does not restart the clock so to speak as to when the cause of action accrued. If the constant follow-ups resulted in an acknowledgment from the respondent that they had a responsibility to pay the appellant compensation, then the cause of action in my view by analogy to a cause of action arising out of a debt, would accrue from the date of the acknowledgment, and such acknowledgment is required to be in writing (see Frauds and Limitation Act ss 7 and 9).
  2. For the above reasons and the reasons advanced by her Honour Justice Hitelai Polume- Kiele, I would order that the appeal be dismissed with costs to follow the event.

Conclusion


  1. We find that the primary Judge did not err in his determination of the appellant's claim for compensation and dismissal of the proceedings and his cause of action for being statute barred under s 16 (1) (a) of the Frauds & Limitation Act 1988 and the crossclaim amounted to an abuse of process of the Court.
  2. As to costs, as the respondent has succeeded it is appropriate that costs be awarded in favour of the respondent.

ORDER


  1. Orders are entered in the following terms:

Judgment accordingly.


_________________________________________________________________
Chesterfield Lawyers: Lawyers for the Appellant
Twivey Lawyers: Lawyers for the Respondent


PacLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback
URL: http://www.paclii.org/pg/cases/PGSC/2022/120.html