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Post PNG Ltd v Hubert [2004] PGNC 110; N2656 (11 June 2004)

N2656

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 1021 OF 2002

BETWEEN:

POST PNG LIMITED
Plaintiff

AND:

PETER HUBERT
First Defendant

AND:

THOMAS HAWINA
Second Defendant

AND:

DEBORAH HUBERT
Third Defendant

KOKOPO: LENALIA, J
2004: 16 & 11 April, June

CIVIL LAW – PRACTICE AND PROCEDURE – Pleadings – Allegations of Fraud – Particulars of Fraud – Evidence in fraud - Strict adherence to requirement of pleadings – National Court Rules O.8 r30.

EVIDENCE IN FRAUDULENT ALLEGATIONS – Burden of Proof – Standard of proof in allegations of fraud – "Balance of probabilities" – Extent to which – Where fraud is alleged – Clear cogent and strict proof required – Requirement of National Court Rules, O. 8 r.30.

PRACTICE & PROCEDURE – Estoppel – Res judicata – Non applicability of – No final order on determination of rights – Judgment entered.

Facts.

The Plaintiff sued the three Defendants to recover the sum of money claimed in the Writ of Summons which monies came into the possession of the First Defendant whilst in the employ of the Plaintiff. The First Defendant was then based in Keravat when he made out valueless money orders through a scheme commonly known as "Salim Moni Kwik" (SMK). The monies were advanced and drawn in various amounts the equivalent of the sum claimed in the Writ of Summons (K21, 400.00). The First Defendant made out those various money orders about nine of them and sent them to the two Defendants and for himself. The Second Defendant is the father–in law of the First Defendant while the Third Defendant is married to Peter Hubert (First Defendant).

Cases cited:
Lysenko – National Airlines Commission trading as AIR NIUGINI [1988-89] PNGLR 69
William Maki -v- Michael Pundia & PNG Motors [1993] PNGLR 337
Vian Guatal -v- The Independent State of Papua New Guinea [1981] PNGLR 230

Other Cases cited:
Derry -v- Peek (1889) 14 A.C. 337
Neat Holdings Pty Limited -v- Karijan Holdings Pty Limited (1992) 110 ALJ R 449
Huntley -v- Gaskell [1905] UKLawRpCh 122; (1905) 2 Ch. 656
Novion -v- Freeman (1889) 15 App. Cas. 1.
New Brunswick Ry. Co. –v- British and French Trust Corporation Ltd [1939] A.C.1
Kok Hoong -v- Leong Cheong Kweng Mines Ltd. [1964] A.C. 993 (P.C.).

Counsel:
K. Pato, for the Plaintiff
2nd & 3rd Defendants in person

11 June 2004

LENALIA, J.: Between September 22nd 2000 and March 2001, the First Defendant was an employee of the Plaintiff Company, POST PNG Limited. Around about that time he was based in Keravat, East New Britain Province. The evidence presented to Court for and on behalf of the Plaintiff was by Affidavit and the three Defendants’ former Lawyers NAMALIU & DAVID Lawyers were served with such Notice. The evidence came from various persons whom I shall refer to a little later, show that before coming to East New Britain, the First Defendant worked at the Post Office in Lae and due to his personal problems, was transferred to Rabaul, then to Keravat where he committed the frauds alleged against him.

The Second Defendant is the father in law of the First Defendant because the latter is married to the daughter of the Second Defendant who is the Third Defendant. When the First Defendant was in Keravat, he effected nine (9) valueless money orders by electronic and telegraphic transfers through the scheme commonly known and referred to as ‘SALIM MONI KWIK’ from the Post Office at Keravat to the two Defendants who were at Kavieng in the New Ireland Province. One of the nine transactions was made from the Kokopo Post Office.

The General Manager of the Plaintiff Company, Mr. Herman Kogiau responsible for its Retail Services throughout the country says that, the First Defendant was based in Lae but was transferred to Rabaul then eventually to Keravat Post Offices due to personal problems. The First Defendant cleverly made out and sent valueless money orders in the names of the Second and Third Defendants and for himself.

The evidence both for the Plaintiff and the defence case show that between the periods mentioned above, the following transactions were made:

Particulars.

Date SMK No.. From Collecting PO Payee Name Amount

22.09.2000 067870 Kerevat PO Kavieng ThomasHanina K5,000.00
28.9.2000 067973 Kerevat PO Kavieng T. Hanina K4,200.00
25.11.2000 067987 Kerevat Kavieng Peter Hubert K4,700.00
4.12.2000 067914 Kerevat Kavieng T. Hanina K2,000.00
7.12.2000 067989 Kerevat Kavieng P. Hubert K 500.00
2.1.2001 093554 Kokopo Kavieng P. Hubert K1,500.00
8.1.2001 067991 Kerevat Kavieng D. Hubert K1,000.00
10.2.2001 067995 Kerevat Kavieng T. Hanina K1,500.00
20.3.2001 108801 Kokopo Kavieng T. Hanina K1,000.00
K21,400.00

As can be seen from the above transactions that, the First Defendant effected transfers of substantial sums of money which the Court notes that they could not have been accumulated within such a short period of time between 22nd of September 2000 and 20th of March 2001. Mr. Kongiau’s evidence show that, Peter Hubert’s (First Defendant) annual salary was only K7, 427.00. His fortnightly income was K285.00

The Retail Services Manager of the Post Office at Kokopo, Mr. Haro Haro describes the manner of how Peter Hubert manipulated the telegraphic transfer system thereby causing those illegal money transfers to himself his father in law and his wife. Peter Hubert used a separate "SMK" Receipt Book and wrote out money orders which were not actually received by the Keravat Post Office from any actual customers, nor did Peter paid into the Post Office any monies by himself.

By maintaining a different receipt book, the First Defendant manipulated the system by making out the nine valueless money orders to Thomas Havina and Deborah Hubert (Second and Third Defendants). Evidence on oath by the last two Defendants admits receipt of the monies alleged against them.

The Plaintiff’s evidence show that the fraudulent scheme was not detected immediately until an audit was conducted by the Postal Investigation and Audit Unit which investigation uncovered the deficiencies which eventually led to the discovery of the fraud.

The First Defendant did not appear for the hearing despite advanced notice of the hearing date served on him. In his case, the trial was conducted ex-parte. Only the Second and Third Defendants appeared for the trial. The First Defendant’s former lawyers filed a Notice of Ceasing to Act on 17th of March, 2004. The Second and Third Defendants appeared for the trial as scheduled.

Before the defence case commenced, the Second Defendant raised the defence of " res judicata". On their earlier appearances on 19th of March, 2004 the same issue was put up by the Second Defendant. The Court vacated the trial date and directed the parties to file evidence on the defence raised by the two Defendants. In fact the Second Defendant verbally applied for removal of the proceedings out of this Court on the basis that the case before the District Court in Kavieng had been dismissed.

The Plaintiff’s lawyer filed an affidavit on 15th of April, 2004 saying that in fact there was no trial conducted prior to the matter being dismissed in the District Court at Kavieng. Mr. Pato of counsel for the Plaintiff fully discussed the law on the issue of res judicata in his submissions. I shall refer to the defence of res judicata a little latter.

The defence evidence is very clear. Both the Second and the Third Defendants admitted on oath that they each and severally received sums alleged against them in the Statement of Claim but that, they had each received such monies ignorantly sent to each one of them by the First Defendant. They each admitted that they received the money at the Kavieng Post Office. The Second Defendant further admitted that, when he received the monies from the fraudulent deals, he used such money to buy an auctioned second – hand PTB. Vehicle, a Toyota Landcruiser, Reg.No.NAB. 169. The defence evidence show that the total costs of that vehicle amounted to some K9,000.00.

Law:

I deal with the issue of res judicata first. The doctrine of res judicata recognizes the practice that a final judgment of a competent Court disposes once and for all of the matters decided’ between the parties so that they ought not to be raised again either between the same parties or their privies, (Cross on EVIDENCE 2nd Australian Edition Ch.13). To raise the issue of estoppel, there must have been a final judgment between the same parties who litigated in the same "capacity and the issues before the Court must be the same as that alleged to have been the subject of adjudication in the previous proceedings": Blair – v – Curran [1939] HCA 23; (1939) 62 CLR 464.

As counsel has rightly put in his submissions, the District Court in Kavieng did not make any final determinations of the rights of parties in these proceedings. Had there been a final judgment against the three Defendants, the Plaintiff would truly be said to be ‘estopped’ from pursuing this cause. So in the circumstances of res judicata, the subsequent action is barred where the plaintiff had commenced earlier proceedings against a defendant for that same cause and has recovered damages or has lost after determination of all issues on the merits of that claim: Derrick – v – Williams [1939] 2 All E.R. 559, see Menapo Tulia & Others – v – Eke Lama & Others (Unreported) N1824.

Obviously, the Second and Third Defendants were given time to file their evidence in relation to the issue of res judicata. Failing those directions, the two defendants did not file any evidence and as understood from submissions by counsel for the Plaintiff, the reasons why the proceedings in Kavieng were dismissed was because, the lawyer for the Plaintiff did not appear at the trial despite another agent lawyer’s appearance in Kavieng.

The proceedings before this Court relates to allegations of fraud. The Plaintiff has specifically plead fraud in the Statement of Claim. The statement of defence by the Second Defendant does not specifically plead the defence raised by the two defendants. From the evidence and on the basis the foregoing discussion, the fact that a case has been dismissed without determination of the rights of the parties in dispute in relation to law and facts, does not mean that, that is the end of the matter.

The Second and Third Defendants cannot even put up the defence that, they received the monies ignorantly. They each received the money. Out of the monies received by the Second Defendant, a vehicle was bought. One must be suspicious why did the Second Defendant received five of the nine money orders. The first money order made on 22.9.00 on Rec. No. 067970 was for K5,000. The second order was made within one week on 28th September of the same month and year for another large sum of K4,2000.00.

The Second Defendant himself being a policeman should have been more responsible than he was in when receiving over the price of the vehicle he bought through the auction. I find that both the Second and Third Defendants cannot raise the issue of receiving the money in "good faith" as the Second and Third Defendants were in the same house must have some reasonable suspicion about so large sums of money they received within the short space of time.

The District Court is empowered under section 144 of the District Courts Act Ch. No. 40 to dismiss a complaint in a case where a complainant does not appear but no where in the Act does it provide that a case has been dismissed, the plaintiff cannot pursue his claim. The above provision says:

"Where, at the time and place specified in a summons, the defendant attends in obedience to the summons served on him for that purpose, but the complainant does not appear by himself or by his legal representative, the Court shall-

(a) dismiss the complaint and hear and determine the defendant’s set-off; if he has given notice of set-off; or

(b) if it thinks proper, adjourn the hearing or further hearing of the complaint and set-off to some other day on such terms as it thinks fit.

That is not the end of the matter. Where there is procedural lack s.46 of the District Court Regulation says that a deficiency in the District Court Practice, the Court may have regard to the relevant analogous practice and procedure in the National Court. That section says:

"Supplying deficiencies in Regulation, etc.

Where in this Regulation, there is no provision, or no sufficient provision, for or in respect of any matter or thing, then the Court may supply the deficiency, or allow it to be supplied, in such manner as may be just and proper, and for that purpose regard may be had to any relevant or analogous practice, procedure or form in use by, or for the purposes of, the National Court".

On that basis, I apply O.12 r.7 (1)(2) to the circumstances of the instant case which provide as follows:

"Dismissal.

(1) Where under these Rules the Court makes an order for the dismissal of the proceedings or for the dismissal of proceedings so far as concerns the whole or any part of any claim for relief, the order for dismissal shall not, subject to any terms or conditions on which the order for dismissal is made, prevent the plaintiff or claimant from bringing fresh proceedings or claiming the same relief in fresh proceedings. [emphasis added]

(2) Where –

• (a) the Court makes an order for dismissal of proceedings so far as concerns the whole or any part of any claim for relief by any party; and
• (b) the Court orders that party to pay costs; and
• (c) before payment of the costs, that party brings against a party to whom the costs are payable further proceedings on the same or substantially the same cause of action as that on which that claim for relief was founded.
  

the Court may stay the further proceedings until those costs are paid".

There is no reason why, this Court cannot apply the procedural rules of this Court provided for under O.12. r.7 (1) and (2) to the circumstances of these proceedings meaning simply that the Plaintiff in the instant case has a right to pursue their claim as they have done.

There must be some authoritative statement to ensure that, where a party brings an action in the District Court and that action is dismissed for want of prosecution in a civil case pursuant to s. 144 of the District Court Act, the claim can be commenced again so long as the parties are the same parties and the amount claimed for is the same as first claimed for.

This notion makes sense because the doctrine of "res judicata" presupposes that there have been two opposing parties and that there is or there are definite issues between them and that there is a tribunal competent to decide the issues between them and that within the borders of its competency, that tribunal has done so. So that once the issue between the parties has been litigated and decided, it might not to be raised again between the same parties. This doctrine does not however bound those who have not been parties to that claim.

The case law on the issue of estoppel by res judicata is not so many, however the doctrine is clear that unless a final decision has been made in relation to the rights of the parties, the defence of res judicata cannot be raised. I have noted from the evidence before me that the parties in these proceedings are the same as those on the District Court. According to the parties, the cause of action is the same one that was registered at the Kavieng District Court. I find from all the evidence that there was no trial on the merits and therefore the Second Defendant cannot avail himself of the defence of res judicata: see Lysenko – v – National Airlines Commission trading as Air Niugini [1988-89] PNGLR 69.

It has been said that, a plaintiff is forever precluded from disputing what has been necessarily decided and by the common law principle on discussion, that party is said to be estopped ‘per rem judicatam’ and the reason for that is that the cause of action has now in law disappeared and which a party can appeal from: Huntly – v – Gaskell [1905] UKLawRpCh 122; [1905] 2 Ch. 656. If an action does not proceed to judgment, because for instance, if the judge disqualifies himself or herself or because, the matter was dismissed for want of prosecution, there is no res judicata: Pople – v – Evans [1969] 2 Ch 255.

The Court must therefore rule that there was no final judgment entered against the three Defendants and thus it must now proceed to discuss the law in relation to fraud.

Fraud is defined in the Osborne’s Concise Law Dictionary as "the obtaining of a material advantage by unfair or wrongful means". Fraud involves moral obliquity. Common law authorities which I shall refer to shortly say that fraud must be proved to sustain the common law action of deceit. Fraud can then be proved by showing that a false representation has been made knowingly, and without belief in its truth and recklessly careless whether it be true or false.

To obtain damages for deceit, it must be proved that the defendant intended that the plaintiff should act on the fraudulent misrepresentation, and that he then acted on it and suffered damages in consequences and thus an action for deceit lies at the suit of the person who was misled. The classic definition of fraud was made by Lord Herschell in Derry – v – Peek [1889] 14 A.C. 337. An earlier reporting of that case can be found in the [1886-90] All E.R. Rep. 1. After a review of authorities His Lordship said at 374:

"First, in order to sustain an action of deceit, there must be proof of fraud and nothing short of that will suffice. Secondly, fraud is proved when it is shown that a false representation has been made (i) knowingly, or (ii) without belief in its truth, or (iii) recklessly, careless whether it be true or false. Although I have treated the second and third as distinct cases, I think the third is but an instance of the second, for one who makes a statement under such circumstances can have no real belief in the truth of what he states. ...."

The First Defendant actually committed the nine acts of frauds. Evidence has been put to show that, the action by the First Defendant was fraudulent. Peter Hubert could have been also charged under the Criminal Code. Not only that the case before me can be civilly prosecuted but under ss. 175 and 176 of the Criminal Code the First Defendant could be prosecuted criminally for sending false money orders. The Plaintiff chose to proceed civilly and that is their right to decide the mode of proceedings. The evidence shows that, all the money orders effected by the First Defendant were done fraudulently.

The standard of proof to prove fraud in a civil case is "proof on the balance of probabilities". Of the standard of proof on fraud, the Australian High Court in Neat Holdings Pty Limited – v – Karajan Holdings Pty Limited (1992) 110 ALJR 445, said at 449:

"The ordinary standard of proof required of a party who bears the onus in civil litigation in this country is proof on the balance of probabilities. That remains so even where the matter to be proved involves criminal Conduct or fraud. On the other hand the strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what is sought to prove. Thus, authoritative statements have often been made to the effect that clear or cogent or strict prove is necessary ‘ where so serious a matter as fraud is to be found’. Statements to that effect should not however be understood as directed to the standard of proof. Rather they should be understood as merely reflecting a conventional perception that members of our society do not ordinarily engage in fraudulent or criminal conduct and a judicial approach that a court should ot lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct. As Dixion J commented in Briginshaw v. Briginshaw [1938] HCA 34; (1938) 60 CLR 336 at 362:-

"The seriousness of the allegation made, the inherent unlikelihood of an occurrence to a given description or the gravity of the consequences flowing form a particular finding are considerations which must affect the answer to the question whether the issue has been proved....’(emphasis added)."

In this jurisdiction fraud has been said to be a very serious allegation. Woods J said in William Maki v Michael Pundia & PNG Motors [1993] PNGLR 338 at 339:

"An allegation of fraud is a very serious allegation and the Court shall require strict adherence to requirements for pleadings in such cases. Courts have never allowed general allegations of fraud. Courts have required that a person pleading fraud should set out the facts, matters and circumstances relied on to show that the party charge had been activated by a fraudulent intention. The fact alleged to be fraudulent must be stated fully and precisely with all particulars’......".

On examination of all the evidence before me, more particularly from Mr. Herman Kogiau (refer to his Annexure "C", "D", "E", "F", "G", "H" and "I), I am satisfied that the First Defendant acted fraudulently in the manner in which he carried out the nine illegal valueless money orders and which monies were received either by himself or the Second and Third Defendants.

It is the requirement of Order 8. r 30 of the National Court Rules that where a party pleads fraud, he or she is required to give particulars of what they allege and rely on. The Plaintiff’s evidence in the claim before me is very elaborate and I find they have proven their case on the balance of probabilities. I find for the Plaintiff in the sum of K21, 400. Judgment entered accordingly with interest pursuant to the Judicial Proceedings (Interest on Debts and Damages) Act. The Court also orders costs of and incidental to these proceedings. The Court further orders that the above amount be paid within 6 months from the day of pronouncement of this order
___________________________________________________
Lawyer for the Plaintiff: K. Pato
2nd & 3rd Defendants in person