N3204

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS 839 OF 2006

BETWEEN:

SIMON PURAITUK, DIRECTOR, 
PAPUA NEW GUINEA NATIONAL 
MUSEUM & ARTS GALLERY
First Plaintiff

AND:

THE BOARD OF TRUSTEES OF THE 
PAPUA NEW GUINEA NATIONAL 
MUSEUM & ARTS GALLERY
Second Plaintiff

AND:

THE INDEPENDENT STATE 
OF PAPUA NEW GUINEA
Third Plaintiff

AND:

ALFRED HAGEN, 
DIRECTOR, AERO ARCHAEOLOGY LIMITED
First Defendant

AND:

AERO ARCHAEOLOGY LIMITED
Second Defendant

AND:

BISMARK SHIPPING LIMITED
Third Defendant

Waigani: Davani .J
2007: 31 July
14 September

PRACTICE AND PROCEDURE – Declarations – an equitable relief – limitations period – does not apply to equitable reliefs - s.16, s.18 of Frauds and Limitations.

PRACTICE AND PROCEDURE – Pleadings – issues of law including statutory, legal and equitable claims and defences – all available issues of law should arise and be pleaded on pleadings – Court to exercise discretion.

Cases Cited:

Papua New Guinea Cases
The Administration v Blasius Tirupia (re Vunapaladig and Japalik land)    [1971-72] PNGLR 229;
Massive v Okuk and Kendarop [1985] PNGLR 263, SC 301;
NCDIC v Bogibada Holdings Pty Ltd [1987] PNGLR 135, N601; 
 Paul John v Gerd Lindhardt and Servicom Pty Limited (1999) N1938; 
Manufacturers Council of Papua New Guinea Inc. v. Commissioner-General (2003) N2441.

Overseas Cases
Bruce v Oldhams Press Ltd [1936] 3 ALL ER 287; 
London Passenger Transport Board v Moscrop [1942] 1 ALL ER 97;
Inwards v Baker [1965] 2 QB 29; [1965] 1 ALL ER 446; 
ER Ives Investment Ltd v High [1967] 2 QB 379;
Crabb v Arun District Council [1975] 3 ALL ER 866;

Counsel:

D. Koeget, for the plaintiffs
V. Narokobi, for first and second defendants

DECISION

14 September, 2007

1. DAVANI .J: Before me is notice of motion filed on 10 May, 2007 by Narokobi Lawyers for and on behalf of the first and second defendants, seeking the following orders;

1.	That the entire proceedings be dismissed as being statute-barred pursuant s. 16 (1) (a) of the Fraud and Limitations Act 1988 (‘Frauds Act’);

2.	Alternatively, that the proceedings be dismissed pursuant to the doctrine of promissory estoppel;

3.	Following granting of either of the above orders, the defendants are at liberty to export the "Swamp Ghost" and thereafter, plaintiffs, its servants and agents are to inform all State agencies to allow the Swamp Ghost’s export;

4.	Costs and other orders.

2.     The application is opposed by the plaintiffs. Both counsel rely on several affidavits which I will refer to throughout.

Background

3.     The subject matter of these proceedings is a war relic, aircraft, described as a Boeing B-17E no. N.41-2446 otherwise known popularly as the "Swamp Ghost". This war relic is a second World War US Air Force flying fortress. It was salvaged from the Agiambo swamp in the Oro province and transported to Lae where it is awaiting transportation to the United States of America.

4.     The Swamp Ghost crash landed in the Agiambo swamp on 23 February, 1942 when it ran out of fuel after a bombing operation on a Japanese installation in Rabaul.

6.     It lay in the Agiambo swamp for 64 years and was re-discovered by a Royal Australian Airforce Helicopter crew in 1972. Since then war veterans, aeroplane enthusiastics, historians and philanthropists have shown interest to salvage and restore the aircraft for display purposes. In 1999, the PNG National Museum and Arts Gallery entered into a Memorandum of Agreement (MOA) with a Californian based aircraft registration company known as Military Aircraft Restoration Corporation (‘MARC’) permitting it to salvage and remove the Swamp Ghost to the United States of America (‘USA’) to be restored for display purposes in the USA. This agreement was executed by Mr Soroi Eoe on behalf of the PNG National Museum and Arts Gallery, the first plaintiff in these proceedings. This Memorandum of Agreement is before the court attached to the affidavit of Camillus Narokobi, sworn on 17 November, 2006. 

7.     On 2 November, 2001, MARC entered into a Memorandum of Assignment with Aero Archaeology Ltd, a company based in Pennsylvania, USA. In that Memorandum of Assignment, the MARC assigned all its rights and obligations it had in the Swamp Ghost over to Aero Archaeology Ltd (‘AAL’). This Memorandum of Assignment was consented to by the PNG National Museum & Art Gallery. 

8.     On l0 November, 2005, the first plaintiff issued an Export Permit No. 05/007 to Mr. Alfred Hagen, the Director of AAL granting AAL approval to export the Swamp Ghost. 

9.     On 16 June 2006, AAL and a team of engineers, salvaged the Swamp Ghost, dismantled it and transported it to Lae, where the aircraft parts are stored in a container in the third defendants premises, awaiting export to the USA.

10.     On 24 May, 2006, the Public Accounts Committee (PAC) made interim findings and held, amongst others, that the PNG National Museum & Art Gallery, immediately cease all dealings with foreign salvagers until a political decision is made concerning the export of "war surplus." (see pg. 12 of annex. ‘C’ to Simon Puraituk’s affidavit sworn and filed on 13.11.06).

11.     By letter of 23 May, 2006, the first plaintiff requested Mr. Alfred Hagen of Aero Archaeology Ltd and the Director General of the PNG Internal Revenue Commission to halt the export of the Swamp Ghost, pending deliberations and decision by the National Government on the fate of the Swamp Ghost.

12.     By originating summons filed on 13 November, 2006, the plaintiff as the Director of Papua New Guinea National Museum and Art Gallery and the Board of Trustees of the PNG National Museum and Art Gallery, applied to the Court for Declarations that;

-	The Board of Trustees of the PNG National Museum and Art Gallery do not have powers or authority to enter into a contract with Aero Archeology Limited, the second defendant, with respect to the sale of the Swamp Ghost;

-	That the said Board of Trustees do not have power or authority to sell or dispose of State property which includes the Swamp Ghost;

-	That the Memorandum of Agreement of 1999 executed between the Board of Trustees and the Military Aircraft Restoration Corporation is null and void and unenforceable in law;

-	That consent given to the Memorandum of Assignment in 2001 executed between the Military Aircraft Restoration Corporation and Aero Archeology Limited by Mr Soroi Eoe, then director of the Board of Trustees of PNG National Museum and Art Gallery, is null and void and unenforceable in law;

-	The Memorandum of Agreement of 1999 executed between the Board of Trustees of the PNG National Museum and Arts Gallery and Military Aircraft Restoration Corporation and consent given to the Memorandum of Assignment to 2001 executed between Military Aircraft Restoration Corporation and 	Aero Archeology Limited, by Mr Soroi Eoe the then Director of the Board of Trustees of PNG National Museum and Arts Gallery was in contravention with the procedures and processes under the Public Finance Management Act 1995.

- 	the Memorandum of Agreement 1999 executed between the Board of Trustees of PNG National Museum and Arts Gallery and Military Aircraft Restoration Corporation and the consent given to the Memorandum of Assignment of 2001 executed between Military Aircraft Restoration Corporation and Aero Archeology Limited by Mr. Soroi Eoe the then Director of the Board of Trustees of PNG National Museum and Arts Gallery, does not bind the State. 

13.     On 15 November, 2006, Narokobi Lawyers filed Notice of Intention to Defend these proceedings, for and on behalf of the first and second defendants.

14.     On 20 November, 2006, Narokobi Lawyers filed Notice of Motion seeking orders that these proceedings be dismissed for failure to disclose a reasonable cause of action or alternatively, that security for costs be paid failing which proceedings will be dismissed. Other orders were also sought.

15.     I do not know if that motion was moved, however, on 10 May, 2007, Narokobi Lawyers filed the motion which is now before me.

Application to dismiss and other orders sought

16.     As stated above, the defendants seek to have the proceedings dismissed for being statute barred and in the alternative, dismissed, based on the doctrine of promissory estoppel and if granted, that the defendants will then export the Swamp Ghost.

17.     The issues posed before the court are the following;

1.	Whether the proceedings can be dismissed either under s. 16 (1) (a) of the Frauds and Limitations Act 1988 (‘Frauds Act’)), or alternatively 

2.	Whether the proceedings can be dismissed based on the doctrine of promissory estoppel.

18.     I deal first with the first issue.

i.	Is this claim statute barred? – Mr Narokobi submits that it is. He relies on s. 16 (1) of the Frauds Act. This provision reads;

"16.	Limitation of actions in contract, tort, etc.

(1)	Subject to Sections 17 and 18, an action—

(a)	that is founded on simple contract or on tort; or
…
shall not be brought after the expiration of six years commencing on the date on which the cause of action accrued."

19.     Is this a claim founded on simple contract or on tort? The originating summons filed on 13 November, 2006 by Gubon Lawyers seeks orders in the nature of declarations. This is an application by way of originating summons which questions the legality of the actions of the first, second and third defendants when they entered into the various Memorandum of Agreements executed in 1999 and 2001. The originating summons also pleads non-compliance by the parties with procedure under the Public Finance Management Act of 1995. 

20.     As to whether the Frauds Act applies to process where declaratory reliefs are sought, is answered by s. 18 of the Frauds Act. It states;

"18.	Claims for specific performance, etc.

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

21.     A declaratory relief is an equitable remedy or relief. This is confirmed by the common law and by decisions in this jurisdiction. I refer to NCDIC v Bogibada Holdings Pty Ltd [1987] PNGLR 135, N601, decision by Kapi DCJ delivered on 24 July, 1987 where he said and confirmed the position at common law that a declaratory relief is an equitable remedy. Again, in Manufacturers Council of Papua New Guinea Inc. v. Commissioner-General (2003) N2441, a case where injunctive and Declaratory orders were sought by the plaintiff in an originating summons and where there the court noted that injunctive and Declaratory reliefs sought were equitable remedies and that parties seeking them must fulfil the equitable conditions entitling them to those reliefs. In SCR 2 of 1985; Massive v Okuk and Kendarop [1985] PNGLR 263 SC 301, the Supreme Court consisting of Kidu CJ, Pratt .J, Bredmeyer .J, Amet .J and Woods .J also discussed the nature of Declaratory reliefs. The Court held that a declaration is an equitable remedy and is discretionary in nature. 

22.     Therefore, s. 16 of the Frauds Act does not apply to this claim because s. 18 specifically excludes claims for equitable relief. Mr Narokobi’s submissions under this part will fail. 

23.     This then takes me to the second issue. 

24.     ii.	Are the plaintiffs estopped from being bringing these proceedings pursuant to the doctrine of Promissory estoppel? - Mr Narokobi submits the following in support of his submissions. These are;

1.	A period of over six years has lapsed and the plaintiff has throughout that period, represented to the defendants and to the public that the MOA and the assignment are legal for all intents and purposes;

2.	That the first and second defendants have expanded a sum of approximately US$1.3 million since commencement of the agreement to salvage the Swamp Ghost and submits that the defendants continue to incur and suffer damages;

3.	That if the plaintiffs were to succeed at trial in seeking the Declaratory orders that it seeks, that the matter will not end there, that the defendants will then sue the State to recover losses they have suffered as a result of the alleged misrepresentation to the first and second defendants by the State;

4.	That the plaintiffs have executed the export permit to allow the export of the Swamp Ghost.

25.     The doctrine of estoppel and promissory estoppel was discussed at length in the decision of the Court of Appeal in Crabb v Arun District Council [1975] 3 ALL ER 866, decided on 23 July, 1975 where Lord Denning MR said at 871;

"…Short of an actual promise, if he by his words or conduct, so behaves as to lead another to believe that he will not insist on his strict legal rights – knowing or intending that the other will act on that belief – and he does so act, that again will raise an equity in favour of the other, and it is for a court of equity to say in what way the equity may be satisfied...".

26.     In support of that proposition, Lord Denning referred to English authorities such as Inwards v Baker [1965] 2 QB 29; [1965] 1 ALL ER 446 and ER Ives Investment Ltd v High [1967] 2 QB 379. The pre-Independence full court referred to Inwards v Baker (supra) in The Administration v Blasius Tirupia (re Vunapaladig and Japalik land) [1971-72] PNGLR 229 at 243. In the case of The Administration v Blasius Tirupia (supra), the full court accepted that an equitable defence of Promissory estoppel as successfully pleaded in Inwards v Baker (supra) would have been available had the facts supported such a Defence.

27.     In the last leg of Mr Narokobi’s submissions, he raises application of the Goods Act. Mr Narokobi submits that under s. 44 of the Goods Act, only an unpaid seller has the right to stop the goods and retain possession of them until he has received payment for them. He submits that where payment has been made, no right exists for the seller to stop the shipment. He submits that the plaintiffs do not have any right in law to stop the shipment of the Swamp Ghost to the first and second defendants. 

28.     But the issue arises as to whether Mr Narokobi can rely on these equitable and legal defences to dismiss the claim when they are not pleaded. Additionally, Mr Koeget for the plaintiff submits that according to the Memorandum of Assignment, if the National Museum does not give its consent by May 1, 2001, that the assignment shall be null and void and the note shall stand cancelled. (see Clause 2 under the part "Assignment" referred to in Assignment of Memorandum of Agreement attached as annexure ‘B’ to Camilus Narokobi’s affidavit sworn on 17.11.06 and filed on 20.11.06). 

29.     Mr Koeget submits that the assignment is null and void because it was executed in December 2001, seven (7) months after the date the National Museum was to have given its consent i.e May, 2001. But this is not pleaded in the Originating Summons. Why should this and matters raised by Mr Narokobi be pleaded? The position at law is that a court should not grant a relief that has no foundation in the pleadings i.e a Statement of Claim or Defence, even if there is evidence of it or agreement (see Bruce v Oldhams Press Ltd [1936] 3 ALL ER 287; Paul John v Gerd Lindhardt and Servicom Pty Limited (1999) N1938; London Passenger Transport Board v Moscrop [1942] 1 ALL ER 97). And matters requiring specific pleading are referred to in O. 8 r. 14 of the National Court Rules, which are matters raised by Mr Narokobi in relation to the Statute of Limitation, the Goods Act and claims in Equity. Claims for monies paid and services not received must also be pleaded, matters raised by Mr Narokobi (O. 8 r. 13 of NCR).

30.     This then takes me to the issue of whether the originating summons is the proper process by which to seek the remedies that the plaintiffs seek. The plaintiffs have not made submissions on this although I did raise it in court. However, there was general agreement by both counsel that if there are substantial matters in dispute, that the more appropriate mode of proceedings is the Writ of Summons and Statement of Claim. In this case, it is apparent from the nature of the evidence before me that there are issues as to the legality or validity of the Memorandum of Agreement and Assignment of Rights. There are also issues raised by the plaintiffs on non-compliance by the defendants of provisions in the Public Finance Management Act. The defendants also raise apparent Defences which would have been properly put before the court by way of a Defence if proceedings had been commenced by way of Writ of Summons and Statement of Claim, and which I refer to above. 

31.     I have heard submissions also that the defendants will make a claim for damages later, if the plaintiff succeeds in its actions. The courts would be deciding the whole dispute between the parties in a piecemeal manner if the proceedings were allowed to remain. In other words, I am saying that the parties would obtain certain orders and questions of fact and law will be decided by this court but that will not resolve the whole dispute between the plaintiffs and the defendants. If the Originating Summons were to proceed to hearing, the parties are clearly not in a position to successfully raise and rely on the various principles on which they rely. To proceed on the present proceedings, will not only escalate costs to parties but also encourage multiplicity of proceedings before the court. In my view, this practice should be discouraged in this jurisdiction. All parties should be encouraged to bring all matters in dispute in the one action to avoid multiplicity of proceedings. An appropriate method of resolving all the issues is by Writ of Summons and Statement of Claim. This allows for proper pleading of all facts and issues of law for determination by the court. 

32.     I would be doing injustice to the parties if I were to rule only on the motion before me and not to rule also on the status of the proceedings before the court. I say this appreciating that the war relic is dismantled and in a shipping container sitting on a wharf in Lae, and daily storage costs being incurred. But counsel for both parties are responsible for this present state of affairs and are answerable to their clients. Which means that both parties must pay their own costs. 

33.     It is proper that these proceedings be converted to a Writ of Summons and Statement of Claim. In the exercise of my discretion, I make the following orders;

1.	The defendants Notice of Motion filed on 20 November, 2006 is dismissed;

2.	The Originating Summons filed on 13 December, 2006 is converted to pleadings;

3.	The plaintiffs shall file a Statement of Claim within the next 30 days;

4.	Thereafter, the pleadings shall take their normal course, by the defendants filing their Defence and Cross-Claim (if any) under the prescribed time period as stipulated by the National Court Rules and for pleadings to continue thereafter;

5.	Each party shall pay their own costs of this application and the proceedings;

6.	Time is abridged to time of settlement, to take place forthwith.

__________________________________

Gubon Lawyers: Lawyer for the plaintiffs
Narokobi Lawyers: Lawyer for the defendants