[1999] PNGLR 31

PAPUA NEW GUINEA

[national court of justice]

TIN SIEW TAN

V

THOMAS JOHN PELIS; AND
PELTON INVESTMENTS PTY LIMITED

waigani: kapi dcj
15 September 1998; 19 March 1999

statute of fraud and limitations - Section 18 Statute of Frauds and Limitations Act 1988 – Whether claim is equitable relief – Whether principles of res judicata is applicable.

Facts

The plaintiff and the first defendant entered into an agreement to be involved in construction of town houses in Port Moresby. A Mr Fong made the connection between the first defendant and the plaintiff. It was agreed between them that the second defendant would contribute his land while the plaintiff would organize finance for construction of the houses. They agreed to pursue this business through a company in which the plaintiff would hold 50% shares while the first defendant and Mr Fong would hold 25% share each.

Held

1.	The property was transferred to second defendant with the intention that the share holding would be changed to reflect the business agreement.

2.	The cause of action is based on equity and therefore Section 16 of the Statute of Frauds and Limitations Act Ch 330 is not applicable.

3.	The cause of action in the present proceedings is based on equity and has not been subject of previous proceedings. The principles of res judicata are not applicable.

Papua New Guinea cases cited

Thomas Pelis & Pelton Investments Pty Ltd v Tin Siew Tan & TST Holdings (Unreported Judgement of the National Court dated 17th March 1995, N1307).

Counsels

J Aisa, for applicants/defendants.
J Gawi, for the respondent/plaintiff.

19 March 1999

kapi dcj. On the 9 December 1997, the plaintiff filed a writ of summons against the defendants seeking the following orders:

"1.	A declaration that upon the first defendant effecting a transfer of the property to the second defendant the said defendant as transferee held the said property in trust for the parties, namely, the plaintiff as to 50%; Mr Peter Fong as to 25%; and the first defendant as to 25%, and that the said defendant did not thereby acquire the beneficial interest over the said property.

2.	In the alternative, a declaration that as for the plaintiff, he is entitled to 50% share in the property, or the income derived from same; and as for Peter Fong, he is entitled to 25% shares in the property or the income derived from same and as for the first defendant, he is entitled to the balance, being 25% share in the said property or the income derived from same.

3.	And that in the event that legal title to the said property vests in the second defendant, an Order that the second defendant effect a transfer of the said property and cause the same to be registered in the name of the parties, namely, Tin Siew Tan, Peter Fong and Thomas John Pelis be registered as tenants-in-common as to 50%, 25% and 25% respectively. In the alternative, the said property be sold by public auction or tender and that the proceeds be paid into court for distribution in the order and proportion above mentioned.

4.	An Order that the first and the second defendant’s account to the plaintiff for the moneys being rent received for the period commencing November 1, 1988, to the date of the Orders herein and that the said accounts be audited by Christopher M. Smith, of Smith, Chartered Accountants of Port Moresby.

5.	Further or in the alternative, the defendants account to the plaintiff for all moneys advanced by him in the conduct of the business including any associated or incidental expenses by the plaintiff or his associates, firms or companies."

The defendants filed a motion on the 10 February 1998 seeking to dismiss the whole action. The motion has come before me for determination. It is necessary to set out the history of this matter before considering the merits of the application. 

The plaintiff, the first defendant and a Mr Fong agreed to become involved in the construction of town houses in Port Moresby. Mr Fong made the connections between the plaintiff and the first defendant. The arrangement was that the second defendant would contribute his land located at Boroko, Section 9 Allotment 4 and the plaintiff would organise the finance for the construction of the houses. They decided they should pursue this business venture through a company in which the plaintiff would hold 50% shares and Mr Fong and the first defendant to hold 25% each. 

It was further agreed between the parties that they would pursue their business venture by acquiring the second defendant company which was owned by the first defendant and Mr Tonove. The second defendant as such was not a party to this business venture. Mr Tonove the shareholder and director was not aware and not a party to the business venture.

It was further agreed and understood by all the parties that the property on which the town houses would be built should be transferred to the second defendant on the understanding that Mr Tonove would be removed as a shareholder and Director from the company and that the plaintiff, Mr Fong and the first defendant would be registered as the shareholders with the percentages as agreed.

Subsequently, the plaintiff arranged finance and the town houses were constructed on property owned by the first defendant. The property was later transferred to the second defendant as agreed. The property was subsequently transferred to TST Holdings Pty Ltd. This became the subject of litigation (WS 67 of 1993). The National Court declared the title acquired by TST Holdings null and void and ordered that the title should revert back to the second defendant (see Thomas Pelis & Pelton Investments Pty Ltd v Tin Siew Tan & TST Holdings (Unreported Judgement of the National Court dated 17th March 1995, N1307). 

The decision was subsequently appealed but the appeal was dismissed for want of prosecution (see SCA 21 of 1995). A further Supreme Court Review was sought on the matter but this was also dismissed (see SCR 35 of 1996).

In the mean time, the register of the second defendant through which the business venture was pursued showed three shares one each allotted to the plaintiff, first defendant and Mr Fong. The register did not reflect the business agreement in terms of share holdings.

Two separate applications were made to rectify the register of the company under s 163 (1) of the Companies Act. OS 206 of 1995 was brought to rectify the register to reflect that the plaintiff has 50% shares and 25% each to the first defendant and Mr Fong as agreed. OS 244 of 1995 was brought to remove the names of the plaintiff and Mr Fong and to restore Mr Tonove on the register of the defendant company. I heard these two applications together and I subsequently removed the names of the plaintiff and Mr Fong and restored the name of Mr Tonove to the register of the second defendant (see Unreported Judgement of the National Court dated 15th March 1996, N1409). This decision was not appealed to the Supreme Court.

The practical result of this was that the property which is the subject of the business venture and all the litigation is now to be registered in the name of the second defendant which is now exclusively owned by the first defendant and Mr Tonove. The business agreement reached between the parties has not resulted in the joint ownership of the property as intended by the parties. The property is now owned by the second defendant in which the first defendant and Mr Tonove are the only shareholders.

Against this background, the plaintiff has instituted this present action. The defendants filed notice of motion to dismiss the action. The motion raises three grounds:

1.	The cause of action is statute barred under the Statute of Frauds and Limitations Act 1988.

2.	The entire cause of action including the particulars upon which the claim is based has been decided in previous proceedings and pleads the principles of res judicata.

3.	The plaintiff should be restrained from bringing any further proceedings. This is a consequential order that may be made in the event that ground (2) is upheld. 

Counsel for the defendants abandoned paragraph 3 of the motion.

Statute of Frauds and Limitations Act

Counsel for the defendants puts his submissions in this respect in the following terms:

"The paragraph 5 (a) the Plaintiff asserts claims which are more than 10 years old having expended between 1986 and November 1987 and are therefore statute barred under Section 16 of Statute of Fraud and Limitations Act. The plaintiff failed to particularise the dates on which the moneys he claims were used. It must be dismissed."

Counsel for the plaintiff on the other hand submits:

"It is submitted that the plaintiff is not barred under the Frauds and Limitations Act 1988. Section 18 of the Act provides that the limitations stipulated under Section 16 of the Act does not apply to bar any action for an equitable remedy. Even if Section 16 was applicable, which it is not, it is now only three years since 1996, which the decision in OS 244/95 and OS 206/95 was delivered whereas Section 16 requires an action to be brought within 6 years from the date the cause of action arose. In our case, the cause of action arose on the date your Honour delivered the judgment and not in 1986 as contended by the defendants."

Section 16 limits the time in which various causes of action may be instituted. Section 18 provides as follows:

"Section 16 does not apply to any claim for specific performance of a contract or for an injunction or for other equitable relief."

The question to be determined is whether the cause of action in the present case can be classified as an equitable relief. Counsel for the defendants appears to treat the present cause of action as claims for moneys expanded by the plaintiff as pleaded in paragraph 5 of the statement of claim. With respect, counsel for the defendants has misconceived the nature of the cause of action in the present case. Clause 5 simply pleads some of the facts upon which the cause of action is based. The nature of the plaintiff’s claim may be determined from the claim set out at the end of the pleading paragraphs 1 to 7. The claims are pleaded in the alternative. It is not necessary for me to deal with all the claims as such. That is a matter to be determined at the trial. For the purposes of the application before me, it is only necessary to determine whether the cause of action is an equitable relief. I have found the submissions of counsel for the plaintiff helpful. 

The law in this regard is set out in Lewin On Trusts, 16th Edition, 1964, Sweet & Maxwell at pages 129-130:

"When real or personal property is purchased in the name of a stranger, a resulting trust will be presumed in favour of the person who is proved to have paid purchase money in the character of purchaser. The clear result of all the cases, without a single exception, is that the trust of a legal estate, whether freehold or copyhold, or leasehold; whether taken in the names of the purchasers and others jointly, or in the name of others without that of the purchaser; whether in one name or several, whether jointly or successive, results to the man who advances the purchase money; and it goes on a strict analogy to the rule of the common law, that where a feoffment is made without consideration, the use results to the feoffer."

At page 130 to 131:

"The general rule applies to personality, as if a man takes a bond or purchases an annuity in the name of a stranger, or if he effects a policy of assurance, expressed to be for the benefit of a stranger, the equitable ownership results to the person from whom the consideration moved unless there is an express trust for the stranger…

The general rule applies where two purchasers supply the price on a purchase in the name of stranger, and there is a resulting trust for the two who supplied the money."

In Underhill on Law of Trusts and Trustees, 12th Edition, Buttterworths (1970) page 189:

"Art. 26 - Analysis of Constructive Trusts

1)	Constructive trusts are either resulting trusts (in which the equitable interest springs back or results to a settlor or his representatives) or non-resulting trusts.

2)	Resulting trusts arise in the following cases, namely;

(a)	where property is given to a trustee, upon express trusts which do not wholly dispose of the beneficial interest;

(b)	when a trust is declared which the law will not permit to be carried out;

(c)	when a purchase has been made in the name of some other person than the real purchaser, or personal property has been transferred to a stranger in blood without consideration, and there is no evidence that such persons were intended to take beneficially."

I agree with counsel for the plaintiff that the property was transferred to the second defendant with the intention that the share holding would be changed to reflect the business agreement. It was not intended that the second defendant should benefit in the manner it has occurred in the present case. It is only necessary to determine whether this is a claim in equity for the purposes of s 18 of the Act. I am satisfied that the cause of action is based on equity and therefore s 16 of the Act is not applicable.

In the event that I am wrong on the application of s 16 of the Act, I should consider whether the action is statute barred under s 16 of the Act. I consider that the cause of action in this matter arose at the time of my decision in 1996 when I rectified the company register and removed the plaintiff from the register of the second defendant company. The action is therefore not statute barred.

Consequently, I would dismiss the submission based on limitation of action.

Res Judicata

Counsel for the defendants submits that the subject matter in the present proceedings was the subject of National Court decision dated 17th March 1995, N1307 (WS 67 of 1993). The decision was appealed and the Supreme Court dismissed the appeal for want of prosecution (see SCA 21 of 1995).

Counsel further submits that the subject matter of the action was also dealt with in the applications to rectify the company register in proceedings OS 20 of 1995 and OS 244 of 1995.

He submits therefore that the same matters cannot be dealt with again under the principles of res judicata.

I find that the cause of action in the present proceedings is based on equity (as I have found) and have not been the subject of previous proceedings. In particular, in OS 206 of 1995 and OS 244 of 1995 I reached the conclusion that if the plaintiff has any cause of action, that is a different matter and should be left to be determined in another proceedings. I agree with submissions of counsel for the plaintiff that the subject matter of the present proceedings is a different cause of action. The principles of res judicata are not applicable.

I am not convinced that the present proceedings are frivolous and vexatious or an abuse of the process of the court.

In the result I would dismiss the motion.

Order

Application is dismissed with costs to the plaintiff.

Lawyer for the plaintiff: John K Gawi.
Lawyers for the defendants: J F Aisa & Associates