Seeto Kui (Holdings) Ltd (trading as Mainland Plumbing & Hardware) v Horn [2023] PGSC 122; SC2466 (3 October 2023)

SC2466

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA NO. 10 OF 2023

BETWEEN:
SEETO KUI (HOLDINGS) LIMITED trading as
MAINLAND PLUMBING & HARDWARE
Appellant

V

MATHIAS HORN
Respondent

Waigani: Anis J
2023: 17^th August, 3^rd October

APPLICATION FOR LEAVE TO APPEAL – leave sought under s.14(1)(c) – Supreme Court Rules – questions of facts only – questions of mixed fact and law filed in separate notice of appeal - whether allegations of errors of facts exist as alleged and if so whether they should warrant a full Court’s determination – consideration - ruling

Cases Cited:

Wawoi Guavi Timber Company Ltd v Ken Norae Mondia (2007) SC1028
Oberia v Charlie [2005] SC801
Nou Nou and Ors v Richard Puara (2022) SC2251

Counsel:

J Kais, for the Appellant
A Sinen, for the Respondent

RULING

3^rd October 2023

1. ANIS J: The appellant filed its Application for Leave to Appeal (leave application) on 11 January 2023. The application was contested, and so after hearing it on 17 August 2023, I reserved my ruling to a date to be advised.

2. This is my ruling.

BACKGROUND

3. The material facts are as follows. The appellant is seeking leave to challenge certain findings of facts of a final decision of the National Court made in proceeding WS No. 545 of 2019 (WS 545). The appellant and the respondent were plaintiff and defendant respectively in the said proceeding. The appellant’s claim was dismissed in its entirety by the trial Judge. The appellant had made a claim for outstanding debts that were premised on 2 agreements. There was no issue before the trial Court of the existence of 2 agreements. The first agreement, a credit facility agreement (first agreement), was entered between the appellant and a company called Buka Metal Fabricators Limited (Buka Fabricators) on 13 December 2001. Under the agreement, the appellant would allow its goods to be acquired on a credit basis by Buka Fabricators, and for payments to be made at a later date. The second agreement, which was described as a personal guarantee for credit (second agreement) was also signed on the same day as the first. It was entered between the appellant and the respondent. Under the second agreement, the respondent gave his personal guarantee to fully repay any monies that were to be advanced under the first agreement, in the event that Buka Fabricators defaulted under its terms and conditions. According to the second agreement, if a default was to occur under the first agreement, a notice of default would be served on the respondent and the respondent would be required to fully repay the defaulted sum, that is, within 14 days after he is served with the default notice by the appellant.

4. From 19 September 2009 to 15 January 2010, the appellant supplied goods to Buka Fabricators that were worth K139,674.75. Buka Fabricators defaulted by failing to pay the said money. On 12 July 2010, the appellant served a letter of demand on Buka Fabricators for payment of the goods plus interest, for a sum K153,642,23. On 15 December 2010, Buka Fabricators made a part payment of K2,000.

5. On 31 May 2016, the appellant filed proceeding WS No. 567 of 2016 (WS 567) against Buka Fabricators. On 18 May 2017, the appellant, in WS 567, obtained default judgment against Buka Fabricators for a sum K151,742.23, interest at 18% per annum and costs. On 19 July 2017, the respondent paid the appellant a sum of K137,674.75 to settle Buka Fabricators’ judgment debt. On 19 April 2018, in WS 567, the appellant applied back therein and amended or varied the earlier default judgment sum, that is, wherein the default judgment sum of K151,742.23 was replaced with K137,674.75 as the corrected default judgment sum.

6. Then on 13 May 2019, the appellant file WS 545. This time the appellant sued both Buka Fabricators and the respondent in regard to the 2 agreements. Later, on 19 August 2019, the appellant amended its claim and only sued the respondent. It was at that time that the trial Court, upon an application filed by the respondent to dismiss the proceeding, dismissed WS 545. The trial Court’s decision was made on 2 December 2022 (appealed decision). The appellant filed a notice of appeal and this leave application to challenge the appealed decision.

LAW

7. The Supreme Court’s power to determine applications for leave to appeal on questions of facts is discretionary. See case: Wawoi Guavi Timber Company Ltd v Ken Norae Mondia (2007) SC 1028. And such applications may be head and determined by a single Judge of the Supreme Court: Order 7 Rule (3) of the Supreme Court Rules 2012 as amended (SCR).

8. The next relevant consideration is the criteria for granting leave to appeal. The criteria are stated in the case of Oberia v Charlie [2005] SC801 which were later adopted in Nou Nou and Ors v Richard Puara (2022) SC2251. They are summarised as follows:

(a) Is there an arguable or prima facie case or has it been demonstrated that the primary judge was wrong?

(b) Does the appellant have other recourse in the original jurisdiction?

(c) Was the ruling within the discretion of the judge constituting the original jurisdiction? If so, has it been shown that the exercise of that discretion was manifestly unreasonable exercised on the wrong principle or a mistake of fact?

9. The Supreme Court in O’Neil v Eliakim (2016) SC1524 also said this:

“The requirement of leave is designed to filter out applications or intended substantive appeals which are groundless or hopeless at the early stage.”

10. And the Supreme Court in Wawoi Guavi Timber Company Ltd v Ken Norae Mondia (supra) said:

“The grant or refusal of leave to appeal is of course discretionary. The main test is whether the applicant has shown that there is a prima facie case or an arguable case that the decision was wrong, and that substantial injustice will be done by leaving the erroneous decision un-revisited or unrevised on appeal. The court is not determining the merits of the appeal itself. It will suffice if the Court is persuaded that the proposed appeal raises issues of law or mixed fact and law which are fairly arguable and require judicial discretion.” [Underlining mine]

11. I adopt the above criteria as relevant for this purpose and on the question of whether I should grant leave to the 5 intended questions of facts.

12. In the present matter, however, I note that my considerations will be limited to (i), whether the questions of facts are questions of facts as alleged and (ii), whether they are sound or arguable as pleaded that should warrant further determination by the full Court.

CONSIDERATION

13. The appellant pleads a total of 5 alleged errors of facts that it says were committed by the trial Judge. They are pleaded at pages 5 to 9 of the leave application.

14. I will summarise and address each of the grounds separately.

15. The appellant firstly claims that the trial Judge erred when he failed to make a finding of fact that the 2 distinct but related agreements, which were the first agreement and the second agreement, were separate and distinct between different parties, namely, that the first agreement was entered between the appellant and Buka Fabricators whilst the second agreement was entered between the appellant and the respondent.

16. I note the submissions of the parties on this. I also take into account the pleadings in the leave application in support of the ground.

17. I consider this ground or claim raised therein to be without merit and misconceived. A copy of the trial Judge’s decision is marked as Annexure P to the supporting affidavit of Divina Camo filed 11 January 2023 (Mr Camo’s affidavit). I note that no finding was necessary therein because and as it was revealed in the Court’s decision, the existence of the first and second agreements were not in issue. His Honour also knew of their distinct differences which was highlighted in his decision.

18. I am therefore not minded to allow leave for this first ground.

19. I turn to the second alleged error of fact. The appellant claims that the trial Judge erred in fact when he found that the appellant’s default notice dated 6 July 2016, which was issued under clause 1 of the second agreement and served on the respondent, was premised on the first agreement.

20. I note the submissions of the parties on this. I also take into account the supportive pleadings for this ground as pleaded in the leave application.

21. I, however, consider this ground to be without merit and misconceived. The appellant’s understanding of the 2 agreements appears misconceived. The second agreement was of course premised or tied and had to be read together with the first agreement as considered by the trial Judge. Buka Fabricators must default in the first instance under the first agreement before a default notice may be drafted and forwarded to the respondent to settle under the terms of the second agreement. And that was what was stated by the trial Judge in his decision. There is nothing there that I see that suggests a possible factual error that could have been committed by the trial Judge to convince me that there is an arguable case made out under this ground. The ground also appears to suggest errors of mixed fact and law.

22. I am not minded to grant leave for this ground to see it proceed further.

23. I now address the third ground. The appellant claims that the trial Judge erred in fact in finding that the primary proceeding was a duplicate, that is, WS 567 and WS 545.

24. I note the submissions made by the parties on this. I also note the pleadings in the leave application that support this ground.

25. I consider this ground to be without merit for 2 reasons. First, the ground raises questions of mixed fact and law. Thus, seeking leave to raise this ground is misconceived and I will dismiss it for this reason. The second reason is this. The causes of actions and pleadings in WS 567 and WS 545 were premised on the same set of facts. Both proceedings, regardless of the fact that the appellant had sued the parties (Buka Fabricators and the respondent) separately, rely on the same background and set of facts. Further, I also note that despite the fact that the appellant had obtained default judgment in WS 567 earlier, the pleadings in WS 545 were drafted in a manner as if no judgment had ever been obtained against Buka Fabricators premised on the facts that had been relied on; what had transpired in WS 567 was not pleaded in WS 545. I also note that the default judgment order in WS 567 plus interest and costs continued to exist and were binding but appeared to have been deliberately left out in WS 545.

26. As such, I see no basis to grant leave for this ground.

27. The fourth ground of appeal on a fact is this. The appellant claims that the trial Judge erred when he found that the default judgment was obtained in WS 567 on 19 April 2018 for K137,674.75 instead of finding that default judgment (in WS 567) was obtained on 18 May 2017 for K151,742.23.

28. I note the parties’ submissions herein and the supportive pleadings in the leave application that address this ground.

29. In my view, I consider this ground to be misconceived, inconsequential and also mischievous. Upon perusing the decision of the trial Judge, I note that this fact is not disputed. Let me elaborate. On 19 April 2018, in WS 567, default judgment was entered in favour of the appellant for the sum of K137,674.75. That happens to be the date when Court (upon the appellant’s own application to vary the original default judgment which was erroneously entered earlier) made these orders, that is, where it reduced the default judgment sum from K151,742.23 to K137,674.75. These facts were in evidence and were not disputed by the parties where it would have required a new or separate finding by the trial Judge. I cannot see any valid suggestions of inaccurate statements or findings committed by the trial Judge under this ground that should require further consideration by the full Court. In fact, what is pleaded or alleged as error of fact herein appears as an accurate reflection of what the trial Judge had stated in the decision.

30. I therefore decline leave for this ground.

31. I now address the fifth and final error of fact alleged in the leave application. The appellant alleges the trial Judge erred in fact when he found that Buka Fabricators had paid it K137,674.75 on 19 July 2017 but had failed to pay it the interest of K187,951.16.

32. I note the parties’ submissions herein and the supportive pleadings in the leave application that address this ground.

33. In my view, I consider this ground to be also without merit and misconceived. First, having perused the decision, I observe that that was what the trial Judge had stated in his decision. The trial Judge had noted that the K137,674.75 default judgment debt which had been obtained in WS 567 was settled by Buka Fabricators. It is not disputed that the respondent did not directly owe any money or debt to the appellant. However, the respondent had to pay the K137,674.75 judgment debt on behalf to Buka Fabricators to the appellant, premised on the second agreement. So, if the judgment debt was settled, as was the case herein, that would be regarded or deemed as Buka Fabricators having paid its debt that it directly owed to the appellant is it not? The judgment debt was paid by Buka Fabricators through the respondent premised on the pre-arranged contract which was the second agreement. Therefore, to suggest under this ground that the trial Judge erred because he stated incorrectly that the judgment debt was paid by Buka Fabricators instead of by the respondent, does not appear to constitute valid ground of fact that should require further consideration. Such a claim appears inconsequential and frivolous.

34. In regard to the interest, the sum quoted by the trial Judge, that is, K187,951.16, was the correct sum that remained outstanding. Similarly, the interest component of the debt was not disputed, and it had accrued over time as ordered by the Court. And again, these had formed part of the judgment debt which was directly owed by Buka Fabricators to the appellant. The respondent’s obligation was premised on the second agreement, and I would adopt what I have stated above herein. These said, I however note that that was not the premise upon which his Honour dismissed WS 545. The dismissal was premised on abuse of process and time-bar grounds. The Court found, and I will paraphrase, that instead of the appellant suing both parties over the same debt that had been incurred premised on the same set of facts, the appellant sued the parties at different dates and time. Consequently, the trial Judge found WS 545 to be time-barred under s.16(1)(a) of the Frauds and Limitations Act.

35. I also note generally that the appellant, premised on these 5 errors of facts as pleaded in the leave application, appears to attempt to restrict or avoid any discussion, validation, or reference to the first agreement and what had transpired in WS 567. My remark on that is this. The second agreement is expressly subject to the first agreement and cannot be separated, read, or pleaded in isolation from it. And I note that it was the appellant who had, on its own volition, decided to run its cause of action in the manner has it had done by filing separate proceedings. But that does not mean that it was the correct manner of proceeding, and the trial Judge was not obliged to see the facts in the manner as the appellant would like him to. Rather, the trial Judge was at liberty to make his own assessment on what the facts or the undisputed facts actually were before coming up with his own findings.

36. As such, I see no arguable case demonstrated herein, and so I will refuse leave for this ground.

SUMMARY

37. In summary, the leave application will fail.

COST

38. I will order cost to follow the event, that is, on a party/party basis to be taxed if not agreed.

ORDERS OF THE COURT

39. I make the following orders:

1. The Appellant’s Application for Leave to Appeal filed 11 January 2023 is refused.
   
2. The Appellant shall pay the Respondent’s costs of the application on a party/party basis to be taxed if not agreed.
   

The Court orders accordingly

________________________________________________________________
Huon: Lawyers for the Appellant
Pacific Legal Group: Lawyers for the Respondent