Public Trustee v Tofilau [1999] WSSC 9 (21 July 1999)

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PASI POLOA TOFILAU
formerly of Nono’a, Saleimoa and lately of Vaitele, Builder
Defendant

This is an action brought by the plaintiff against the defendant to recover moneys due under a loan agreement dated 24^th June 1992. The plaintiff, who is the Public Trustee, made a loan of $15,000.00 to the defendant, a builder. The term of the loan, as provided in the loan agreement (Exhibit D1), was "6 years from (24^th June 1992)". Some interest was charged under the loan agreement and some monthly instalments were paid during the period from 10^th July 1992 to 6^th January 1993.

The main question raised by this litigation is whether the plaintiff’s claim is statute-barred, i.e. whether the time within which an action such as this may be brought runs from the date [as contended for by the defendant] when the plaintiff had the right to institute Court proceedings for the recovery of the whole loan balance then outstanding, viz. when the defendant had failed to make payments for two (2) consecutive months, i.e. on 24^th March 1993 (see clause 6 of Exhibit D1 and paragraph 6 of the statement of claim and paragraph 1 of the statement of defence), or from the date [as contended for by the plaintiff] of the expiration of the term of the loan agreement, viz. 24^th June 1998.

If time runs from the date when the plaintiff had the right to institute Court proceedings, the defendant must succeed. If it runs from the date of the expiration of the term of the loan agreement, the plaintiff must succeed.

The effect of the Limitation Act 1975 is that the action must be brought within the period of six years from the time when the cause of action accrued.

(d) Actions to recover any sum recoverable by virtue of any enactment, other than a penalty or forfeiture or sum by way of penalty or forfeiture."

I am satisfied that the cause of action here accrued on 24^th June 1998, the date of expiration of the term of the loan agreement, and that the plaintiff’s claim is not statute-barred. I reach these conclusions for the following reasons.

The English case of In re McHenry [1894] UKLawRpCh 123; (1894) 3 Ch 290 is authority for the proposition that, in an action for money lent, if a time is specified for repayment or any condition for repayment other than mere demand is imposed, the statute of limitations runs from the expiration of the time specified or upon the happening of the condition. In that case the time specified for repayment of the loan was "on the 30^th November 1882", which was later extended to "February 1883". Lindley L.J., with whom Davey L.J. agreed, was satisfied that "the cause of action accrued" in "February 1883", which was the specified (and extended) date for repayment.

In the earlier decision of the Court of Exchequer in England in Hernaman v Smith [1855] EngR 149; (1855) 10 Exch 659, Parke B. said (at p.665):

"A cause of action means all those things necessary to give a right of action, whether they be done by the plaintiff or a third person".

In the instant case one of the "things necessary to give a right of action" is the effluxion of time until 24^th June 1998 (the date for repayment of the loan) unless, in the meantime, the plaintiff has exercised his right (under clause 6 of Exhibit D1) to "institute Court proceedings immediately" - something the plaintiff did not do.

"Cause of action has been held from the earliest time to mean every fact which is material to be proved to entitle the plaintiff to succeed - every fact which the defendant would have a right to traverse".

In the matter to be determined here a fact which is clearly material to be proved so as to entitle the plaintiff to succeed is the fact that the term of the loan has expired and that the date for the repayment of the loan has arrived. Until that date has arrived, all the relevant facts are not in place and time would not begin to run against the plaintiff. Until that date has arrived, the defendant could not be said to have failed to fulfil his promise with the result that the plaintiff’s cause of action accrued.

Because the contract of loan herein is to be construed in a way which allows me to conclude that there was a fixed and determinable date on which the loan became repayable (viz. 24^th June 1998), I reach the conclusion that time runs from that date rather than from the date of the loan or some date in between.

In ascertaining the meaning of the phrase "cause of action accrued" some assistance is to be found in the judgments of Lord Esher MR in Read v Brown [1888] UKLawRpKQB 186; (1888) 22 QBD 128 where his Lordship said (at p.131):

"(The phrase ‘cause of action’ is defined as meaning that there exists) every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the court. It does not comprise every piece of evidence which is necessary to prove each fact, but every fact which is necessary to be proved."

The plaintiff, to have a cause of action here, needs to prove that the loan period has expired and that the loan moneys are due and payable in order to support his claim that he is entitled to the judgment of the court.

Lord Esher’s definition was accepted by Kelly J in the Federal Court of Australia in the case of Golski v Kirk [1987] FCA 200; (1987) 14 FCR 143 at p.145. His Honour also referred to the manner in which Diplock LJ. had defined "a cause of action" in Letang v Cooper [1964] EWCA Civ 5; (1965) 1 QB 232 at pp.242-3 as:

"..... simply a factual situation the existence of which entitles one person to obtain from the court a remedy against another person."

Lord Esher’s definition was also accepted by the Full Court of the Federal Court of Australia in the recent case of Torrens Aloha v Citibank [1997] FCA 77; (1997) 144 ALR 89 per Sackville J at p.101; see also Do Carmo v Ford Excavations [1984] HCA 17; (1984) 154 CLR 234 per Wilson J at p.245.

The plaintiff here was not entitled to obtain "a remedy against" the defendant (and to sue) until the loan had become due and payable, i.e. on 24^th June 1998, and therefore his cause of action did not accrue until then. Applying the Limitation Act, the plaintiff’s claim would not be statute-barred until 6 years from 24^th June 1998.

It was argued by Mr Enari, on behalf of the defendant, that the cause of action accrued on or about 24^th March 1993, when the defendant had failed to make payments for two (2) consecutive months and when the plaintiff was entitled (and had the right), pursuant to clause 6 of Exhibit D1, to institute Court proceedings against the defendant for the whole loan balance then outstanding. I am not persuaded by that argument. Clause 6 of the loan agreement was no doubt intended to give, and did give, the plaintiff a legal right or entitlement, but, unless it was exercised, it remained simply as a legal right or entitlement. I cannot see that that legal right or entitlement, unexercised, can give a new, separate and independent cause of action so that the statute begins to run from the date the legal right or entitlement arose. The debt is one debt only. Clause 6 did not create a new debt. It only prescribed what should flow in the event of the plaintiff, as lender, exercising that legal right or entitlement and, in particular, it specified how much should be recoverable in such proceedings.

In my judgment, therefore, the defendant’s argument is flawed. The plaintiff’s action must be brought, as it was, within six years after the cause of action accrued (on 24^th June 1998), unless the plaintiff had exercised his legal right or entitlement under clause 6 of the loan agreement (in which event the cause of action is deemed to have accrued at the time of instituting the Court proceedings).

I now turn to the second ground of defence arising from the defendant’s denial that the amount of indebtedness (the argument under the Limitation Act aside) was $33,852.69 as at 7^th April 1999 or $35,637.49 as at 30^th June 1999. The only witness called to give evidence at this civil trial was Malaki Tuiulupona, the chief finance and investment officer in the Public Trust Office. Under cross-examination the witness agreed that interest was applied by the Public Trustee at a compound rate.

I see no warrant for the application of interest at a compound rate. The defendant was, in my view, entitled [subject to him being at risk of the plaintiff, as lender, instituting (against him) Court proceedings "immediately for the recovery of the whole loan balance .... outstanding" upon his failure to make payments "for two (2) consecutive months"] to sit back, as it were, and wait until the whole of the outstanding loan moneys (principal and simple interest) were due and payable, as from "6 years from [24^th June 1992]", viz. as from 24^th June 1998.

I calculate the sum payable to the plaintiff (including simple interest) in accordance with the appendix to these reasons for judgment.

I consider that the plaintiff is entitled to judgment against the defendant for the sum of $26,296.50.

As I have held that the plaintiff’s action is not statute-barred and as the plaintiff is entitled to moneys due under the loan agreement pursuant to the law of contract, it is unnecessary for me to decide whether the plaintiff would be entitled, in the alternative, to equitable relief for unjust enrichment.

Date

24^th June – Loan
July
August
September
October
November

1993

January

Interest chargeable

Interest ¼ of 12% = 3% on $14,100.00 as at
Interest ¼ of 12% = 3% on $13,200.00 as at

Interest ¼ of 15% = 3.75% on $12,900 as at

Principal and interest till end of June 1999: = $12,900.00
+ $ 423.00 + $ 396.00 + $483.75 x 26 = $12,577.50
$26,296.50

Credit

$300.00
$300.00
$300.00
$300.00
$300.00

$600.00

1992
September
December

1993
March
June
September
December

1994
March
June
September
December

1995
March
June
September
December

1996
March
June
September
December

1997
March
June
September
December

1998
March
June
September
December

1999
March
June

Balance

$15,000.00
$14.700.00
$14,400.00
$14,100.00
$13,800.00
$13,500.00

$12,900.00

$423.00
$396.00

$483.75
$483.75
$483.75
$483.75

$483.75
$483.75

Supreme Court of Samoa

Public Trustee v Tofilau [1999] WSSC 9 (21 July 1999)