Unreported National Court Decisions
N1747
PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]
WS 101 OF 1998
BETWEEN:
TST PTY LTD (PROVISIONAL LIQUIDATOR APPOINTED)
FIRST PLAINTIFF
AND:
TIN SIEW TAN
SECOND PLAINTIFF
AND:
THOMAS JOHN PELIS
FIRST DEFENDANT
AND:
PELTON INVESTMENTS PTY LTD
SECOND DEFENDANT
Waigani
Kapi DCJ
26-27 May 1998
31 July 1998
JUDGEMENTS – Setting aside for fraud – Relevant principles – the new facts alleged in the statement of claim ought to have been litigated in the previous proceedings.
Counsel
C Coady for the plaintiffs
J Aisa for the defendants
31 July 1998
KAPI DCJ: The plaintiffs filed a writ of summons on 10th February 1998 seeking to set aside the orders made by Salika J on 17th March 1995 in the proceedings WS 67 of 1993. The full details of this cause of action (WS 67 of 1993) are contained in the reasons for decision in Thomas John Pelis & Pelton Investments Pty Ltd v Tin Siew Tan & TST Holdings Pty Ltd (Unreported judgement of the National Court dated 17th March 1995). Mr Tin Siew Tan and TST Holdings Pty Ltd filed an appeal against this decision (SCA 21 of 1995). This appeal was dismissed for want of prosecution (see Tin Siew Tan & TST Holdings Pty Ltd v Pelton Investments Pty Ltd & Thomas John Pelis, Unreported judgement of the Supreme Court dated 10th July 1996). Mr Tin Siew Tan and TST Holdings Pty Ltd subsequently filed a judicial review pursuant to s 155 (2) (b) of the Constitution (SCR 35 of 1996). This judicial review was dismissed by the Supreme Court (see Unreported judgement of the Supreme Court dated 27th November 1997, SC534).
In the present action the plaintiffs seek to set aside the orders made by Salika J. on the basis that they were obtained by fraud.
On 5th February 1998 the plaintiffs filed a motion seeking to stay the execution of the orders made by Salika J pending the determination of the action in this matter. This motion is contested by the defendants.
On 10th February 1998 the defendants filed a motion seeking several orders. The matter which has come before me for hearing is the order sought in paragraph 3 of the motion which seeks to dismiss the whole of this action (WS 101 of 1998) on the basis that it does not disclose a cause of action in law. The parties agreed that I should deal with this motion before dealing with the first motion.
There are two provisions under the National Court Rules which deal with dismissal of a cause of action. Under O 8 r 27 (1) (a) a defendant may make an application to strike out a statement of claim on the basis that it does not disclose a cause of action in law. Counsel for the defendants submits that the statement of claim does not disclose a cause of action and therefore the statement of claim should be struck out. On the other hand, counsel for the plaintiff submits that the statement of claim pleads the essential elements of the cause of action in law and therefore the motion to strike out should be dismissed.
Under this rule (O 8 r 27 (2) parties may call evidence on the hearing of the motion. However, both counsel based their submissions on the formal pleadings of facts and whether or not the matters pleaded give rise to a cause of action in law. 
As a matter of law, where a judgement is obtained by fraud, the aggrieved party is entitled to set aside such a judgement in a new cause of action (Flower v Lloyd (1877) 6 Ch. D. 297; Jonesco v Beard [1930] AC 301). The question is whether the statement of claim pleads the material facts which gives rise to a cause of action in law. The law is clear that a statement of claim must clearly plead the material facts on which a claim of fraud is based. The statement of claim in this case pleads the material facts for an action based on fraud. Clause 8 of the statement of claim pleads the three particulars of fraud. I find that the statement of claim has correctly pleaded the cause of action.
Under O 12 r 40 the Court may dismiss a proceedings if it appears to the Court that no reasonable cause of action is disclosed. The Court may receive evidence on the hearing of the application under this rule. Both parties have filed affidavits in support of their respective claims. 
Counsel for the plaintiffs submits that there is evidence which discloses generally a cause of action which should go to trial and not summarily dismissed at this stage. He submits that since the judgement, new evidence has come to light which shows that there was fraud on the part of the first defendant.
On the other hand, counsel for the defendants submits that the matters on which the plaintiffs rely were issues which were contested in the trial (WS 67 of 1993) at which he had the opportunity to prove but elected not to give evidence. Counsel submits that for this reason, this cause of action is unlikely to succeed and therefore the proceedings should be dismissed at this stage.
The essence of an action based on fraud is very well settled in common law and the position is summarised in the judgement of the Court of Appeal of New South Wales in Wentworth Rogers (N0 5) (1986) 6 NSWLR 534. The relevant passage is set out in the opinion of Kirby P. His Honour sets out six points about the essence of an action based on fraud. In so far as it is relevant to the present case, His Honour stated:
“Secondly, it must be shown, by the party asserting that a judgement was procured by fraud, that there has been a new discovery of something material, in the sense that fresh facts have been found which, by themselves or in combination with previously known facts, would provide a reason for setting aside the judgement: see Lord L.C. in Boswell v Coakes (NO 2) (1894) 6 R 167 at 170, 174; 86 LT 365 at 366, 368; Cabassi v Villa (1940) 64 CLR 130 at 147; McDonald v McDonald (1965) 113 CLR 529 at 533; Everette v Ribbands (11946) 175 LT 143 at 145, 146; Birch v Birch [1902] P 130 at 136; Ronald v Harper [1913] VLR 311 at 318. This rule has an ancient lineage: see, eg, Shedden v Patrick (1854) 1 Macq 535 at 615, 622. Halsburys Laws of England, 4th ed, vol 26, par 560 at 285. It is based upon a number of grounds. There is a public interest in finality of litigation. Parties ought not, by proceeding to impugn a judgement, to be permitted to litigate matters which were the subject of the earlier proceedings which gave rise to the judgement. Especially should they not be so permitted, if they move on nothing more than the evidence upon which they have previously failed. If they have evidence of fraud which may taint a judgement of the courts, they should not collude in such a consequence by refraining from raising their objection at the trial, thereby keeping the complaint in reserve. It is their responsibility to ensure that the taint of fraud is avoided and the integrity of the court’s process preserved...
Fourthly, although perjury by the successful party or a witness or witnesses may, if later discovered, warrant the setting aside of a judgement on the ground that it was procured by fraud, and although there may be exceptional case where such proof of perjury could suffice, without more, to warrant relief of this kind, the mere allegation, or even the proof, of perjury will not normally be sufficient to attract such drastic and exceptional relief as the setting aside of a judgement: Cabassi v Vila (at 147, 148); Baker v Wadsworth 918980 67 LJQB 301; Everette v Ribbands (at 145, 16). The other requirements must be fulfilled. In hard fought litigation, it is not at all uncommon for there to be a conflict of testimony which has to be resolved by a judge or a jury. In many cases of contradictory evidence, one party must be mistaken. He or she may even be deceiving the court. The unsuccessful party in the litigation will often consider that failure in the litigation has been procured by false evidence on the part of the opponent and the witness called by the opponent. If every case in which such an opinion was held gave rise to proceedings of this kind, the courts would be even more burdened with the review of first instance decisions than they are. For this reason, and in defence of finality of judgement, a more stringent requirement than alleged perjury alone is required...
In summary, he or she must establish that the case is based on newly discovered facts; that the facts are material and such as to make it reasonably probable that the case will succeed; that they go beyond mere allegations of perjury on the part of witnesses at the trial; and that the opposing party who took advantage of the judgement is shown, by admissible evidence, to have been responsible for the fraud in such a way as to render it inequitable that such party should take the benefit of the judgement.”
This passage was quoted and approved by the Supreme Court in Aircair v Co-ordinated Air Services [1988-89] PNGLR at 558-559.
The three particulars of fraud set out in the statement of claim relate to (1) when the first plaintiff took possession of the management of the property (2) that the first plaintiff collected the rentals from the property and paid them into another bank account (3) that the first plaintiff failed to pay the rental moneys towards offsetting the mortgage payments with the ANZ Bank.
These were issues which were clearly pleaded and hotly litigated in the trial before Salika J (WS 67 of 1993). The evidence was clearly given to show that Tin Siew Tan was the day to day manager of the said property and he was the one who made an arrangement with Tamarua Real Estate to manage the property. That he had the first hand information about the collection of the rentals and the mortgage payments. 
However, Tin Siew Tan failed to give evidence at the trial leaving these matters to be decided on the evidence given by the other parties. At least he could have instructed his lawyer to cross examine the witnesses on these issues. The evidence shows that he was kept informed of the management of the property and when the other directors made inquiries they were referred to him for any information on the property. He did not contest these issues in the trial. He made no attempt to put the proper facts before the trial judge. He gave no explanation whatsoever why he did not give evidence. The decision not to give evidence at the trial was fatal. He cannot now have another bite at the cherry. The fact that the first defendant may be guilty of perjury of itself is not enough to find a proper cause of action based on fraud. For this reason the cause of action is unlikely to succeed. 
I therefore dismiss this cause of action.
In view of the decision I have reached, it is not necessary to deal with the motion to stay the execution of the orders made by Salika J.
Lawyers for the Plaintiffs: Henaos
Lawyers for the Defendants: JF Aisa & Associates