N6604
	PAPUA NEW GUINEA	
         [IN THE NATIONAL COURT OF JUSTICE]
			
WS NO.793 OF 2014

BETWEEN:

DR KENNETH NGANGAN as ACTING SECRETARY OF THE DEPARTMENT OF FINANCE
First Plaintiff/First Cross-defendant

AND:

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Second Plaintiff/Second Cross-defendant

AND:

ALBERT POTUKU
First Defendant/First Cross-claimant

AND:

NOVA LIMITED
Second Defendant/Second Cross-claimant

Waigani:  Kariko, J
2015: 20th February& 20thMarch

PRACTICE & PROCEDURE – application to dismiss proceedings– effect of dismissal of proceeding on earlier judgment on liability – whether fresh claim may be filed - whether statute-barred – res judicata – issue estoppel – abuse of process 

Cases cited:
HamiYawari v Anderson Agiru (2008) N3983
Joshua Giru v Willie Edo (2007) N5032
Julius Pololi v Bryan James Wyborn (2013) N5253
National Housing Corporation v Asakusa (2012) SC1165

Counsel:

Ms D Doiwa, for the Plaintiffs/Cross-Defendants
MrB Lai, for the Defendants/Cross-Claimants

RULING

20th March, 2015

1.   KARIKO J: The defendants/cross-claimants (both referred to as “Nova Ltd”) have applied pursuant to a notice of motion filed on 23rd December 2014 for the plaintiffs’ claims to be dismissed as they are barred by the doctrines of res judicata and issue estoppel, or in the alternative for being an abuse of process.

Brief background

2.     From the affidavit material filed by the parties, I set out a brief background to this case. This proceeding filed by the plaintiffs/cross-defendants (both referred to as “the State”) relates to the engagement of Nova Ltd pursuant to a consultancy agreement to provide financial advice/services regarding a housing scheme for the Department of Finance in 1997. The State alleges that in breach of the agreement and in breach of a fiduciary duty owed to the State, Nova Ltd defrauded the State by misappropriating monies intended for the acquisition of properties for the housing scheme and also that it instead acquired properties for itself damages. In general terms, the State seeks orders that Nova Ltd:

•	accounts for income derived from the various properties;
•	accounts for the monies advanced to it by the State;
•	pay special and general damages, interest and costs.  

3.    It is not disputed that the same claims were filed in proceeding WS No. 967 of 2005. The parties were the same except that the first plaintiff in that case was the then Secretary for Finance, Thaddeus Kambanei.

4.   On 2nd August 2006, Nova Ltd’s defence was struck out and judgment entered against it and in favour of the State (“the Liability Order”). The Court granted all the relief claimed by the State except for the claim for damages which was ordered to go on trial.

5.   The State did not take steps to pursue the claim for damages and on 11th May 2012 the proceeding was summarily dismissed for want of prosecution (“the Dismissal Order”). 

6.   The State did not seek to have the Dismissal Order set aside or appeal against it. Instead it filed the present proceeding on 16th July 2014.

Submissions

7.   Mr Lai for Nova Ltd asked the Court to accept as undisputed facts, the following:

(1)	 The same claims were previously filed by the State in proceeding referenced WS No. 793 of 2005 against Nova. 

(2)	That proceeding was dismissed on 11th May 2012. 

(3)	The State neither applied to have the Dismissal Order set aside nor did it appeal against that decision. 

(4)	Instead the current proceedings were issued a little over two years later.

8.   Mr Lai strongly submitted that the facts establish the doctrines of res judicata and issue estoppels which are bars to the proceeding. Alternatively, Mr Lai argued that the delay in re-filing this action is an abuse of process.

9.   The State through Ms Doiwa argued that the Dismissal Order was not a result of the matter being tried on the merits and therefore res judicata and issue estoppel do not apply. She also submitted that the State is entitled to institute fresh action pursuant to Order 12 Rule 7 of the National Court Rules.

10.   After adjourning to consider the ruling, the Court re-called the parties and invited further submissions on:

(1)	the effect of the Dismissal Order on the Liability Order; and 
(2)	whether the claims (both the plaintiff’s claim and the defendants’ counter-claim)are statute-barred pursuant to the Frauds & Limitations Act 1988 (the Frauds Act).

Issues

11.   I consider the following issues necessary for my determination:

(1)	How does the Dismissal Order affect the Liability Order?

(2)	Are the plaintiffs entitled to re-file the same claim after its dismissal?

(3)	Are the proceedings (including the cross-claim) statute-barred?

(4)	If not statute-barred, do the doctrines of res judicata or issue estoppels apply?

(5)	Are the proceedings an abuse of process?

Effect of the Dismissal Order

12.   The Liability Order granted the State most but not all of the relief it claimed. The orders include the specific relief that had been sought and states that the only remaining claim for trial is “assessment of damages”. The question then arises: Did the Dismissal Order in effect dismiss the entire proceeding or did it only dismiss that part of the proceeding yet to be tried, namely the assessment of damages? 

13.    I assume that the judge dealing with the summary determination did not note nor was he made aware of the Liability Order because the proper order that should have issued was the summary determination of the claim that was outstanding, namely the claim for damages. Liability and the other specific relief claimed were ordered in favour of the plaintiff 6 years earlier. However the Dismissal Order is clear in its terms and that is it dismissed the whole proceeding, and in effect cancelled the earlier Liability Order. The parties are in agreement on this point.

Re-filing claim

14.   The plaintiffs have re-filed their claim relying on Order 12 Rule 7 of the National Court Ruleswhich reads: 

“7. Dismissal. (40/8)

(1)	Where under these Rules the Court makes an order for the dismissal of 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.”

15.    I accept that this Rule permits the re-filing of a claim previously dismissed pursuant to the Rules, but it is my view that this right is subject to any defence or bar including statutory time-limit, res judicata, issue estoppel, and abuse of process.

Time limitation re: plaintiff’s claim

16.   Section 16(1) of the Frauds and Limitations Act 1988, which states:

Subject to Sections 17 and 18,an action—

(a)	that is founded on simple contract or on tort; or
(b)	to enforce a recognisance; or
(c)	to enforce an award, where the submission is not by an instrument under seal; or
(d)	to recover any sum recoverable by virtue of any enactment, other than a penalty or forfeiture or sum by way of penalty or forfeiture,
shall not be brought after the expiration of six years commencing on the date on which the cause of action accrued.

17.    On reading the pleadings, I am satisfied that the State bases its claims on contract and tort (namely, negligence and fraud; see Julius Pololi v Bryan James Wyborn (2013) N5253 at [30]) and that Nova Ltd bases its cross-claim on breach of contract. The pleadings suggest the causes of action accrued in 2005. Clearly then the cause of action accrued more than 6 years before this action or proceeding was filed. 

18.    Both Counsel submitted that this action is saved by the previous action WS No. 793 of 2005 which was filed within the 6 years time limitation. That submission is misconceived. The term “action” is obviously a reference to a “court action”. In other words, a court proceeding or a legal suit. While WS No. 793 of 2005 and this proceeding WS No. 793 of 2014 may involve the same claims, same cause of action involving the same parties, they are both distinct and separate actions. The earlier proceeding was determined by the Dismissal Order of 11th March 2012. When the present action was filed on 16th July 2014, nearly 9 years had passed since the plaintiffs’ cause of action accrued. That means that the claims pursued by the State in the current action are statute-barred. 

Time limitation re: defendants’ cross-claim

19.    While it is not in dispute that the cause of action relevant to the cross-claim also arose in 2005, the defendants have argued that the cross-claim is not statute-barred relying on sections 18 and 20 of the Frauds Act, which provisions read:

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.

20. Provisions as to set-off or counterclaim.
For the purposes of this Act, any claim by way of set-off or counterclaim shall be deemed to be a separate action and to have started on the same date as the action in which the set-off or counterclaim is pleaded.

20.    The defendants argue that since the relief they seek is a declaration, that is an equitable relief and therefore by virtue of section 18, the 6 years time limitation set down by section 16 does not apply. While the relief sought is termed as a “declaration”, the defendants are claiming that the plaintiffs are liable for breach of contract and damages arising from the breach. That is clearly pleaded in the Cross-claim at [24] and that is not equitable relief. The Cross-claim also states that the cause of action arose in 2005.

21.    As I have already ruled that this action is a distinct and separate proceeding to the earlier case WS No. 793 of 2005, the application of section 20 would mean that the date the Cross-claim is deemed to have started would be the date of the present action, and that is 16th July 2014. 

22.    The cross-claim too is therefore statute-barred.

Res judicata/Issue estoppel

23.   The doctrine of  res judicata does not allow a claim based on a cause of action that has already been determined by a final judgement while the rule of issue estoppel does not permit re-argument of questions of fact or law already determined by the Court; HamiYawari v Anderson Agiru (2008) N3983.

24.   In the case of Joshua Giru v Willie Edo (2007) N5032, the Court was asked to consider whether a second judicial review proceeding filed by the plaintiff was res judicata or an abuse of process. That case concerned the appointment of the Provincial Administrator for West New Britain Province. Edo who had been acting as Provincial Administrator for a number of years challenged Giru’s substantive appointment to the position. The National Court determined the judicial review in favour of Edo. Giru appealed the decision to the Supreme Court but that appeal was dismissed for want of prosecution. Giru filed new proceedings in the National Court seeking judicial review of the earlier decision. 

25.    His HonourCannings, J said this on the issue of res judicata:

“I explained that res judicata can be a defence to a claim, when the following conditions apply:

1.	The cause of action (ie the basis of the remedies being sought) in one court case is the same as that relied on in an earlier case. (It does not matter whether the earlier case was decided in the same court or by the same Judge.)

2.	The earlier case was between the same parties or their “privies”. (A privy is someone so closely connected to one of the earlier parties that they have the same interests that are sought to be enforced in the later case.)

3.	In the earlier case the court made a final determination of the issues between those same parties or their privies.

In the present case, I consider that condition No 2 is satisfied but not Nos 1 or 3. ……. As to condition No 3, Kandakasi J made a final determination of the issues in the sense that he granted the application for judicial review and quashed MrGiru’s appointment. However, I am persuaded by Mr Maguire’s submission that the determination was not the result of a trial on the merits and therefore this aspect of res judicata was not present.”
(My underlining)

26.    In relation to abuse of process, his Honour at [31] pointed out that usually when res judicata applies, there is abuse of process but that if the defence of res judicata is rejected the Court may still find abuse of process. His Honour went on to say at [36]:

“…..if a person goes to court and has their case finalised and then goes back to court with the same grievance, such a multiplicity of proceedings will be – in the absence of a good explanation – an abuse of process. As I explained in Kiee Toap v The State (2004) N2766, the idiom “having a second bite at the cherry” means ‘to make a second attempt, having failed the first time’. …. It is a phrase often used by judges to describe the conduct of parties who go to court, do not get what they want, and then go back to court and try again. Having a second bite is frowned upon. It is demonstrative of an abuse of process.”(My underlining)

27.  The Supreme Court (Cannings, Manuhu &Kassman JJ) in National Housing Corporation v Asakusa (2012) SC1165 stated the following as pre-requisites for applying the principle of issue estoppel:

“(a)		the issue raised in the current proceedings is the same issue as that raised in the prior proceedings;

(b)	the issue was finally determined in the prior proceedings; and

(c)	the parties in the current proceedings are the same as those in the prior proceedings or, if they are not the same, the party against whom the estoppel is sought to be applied was a privy of a party to the prior proceedings and reasonably expected to be aware of the prior proceedings and entitled to be joined but failed without explanation to do so.” (My underlining)

28.    I am of the view that the doctrines of res judicata and issue estoppels do not apply to the present action because the dismissal of the earlier proceeding WS No. 1340 of 2008 was not a final determination of the substantive issues and not the result of a trial on the merits.

29.    After the earlier case was summarily dismissed, the State (who according to the relevant court file was represented on the day) could have applied to have the Dismissal Order set aside or indeed it could have appealed that decision. The State chose neither of those options and waited for two years before mounting the present proceeding. It has not provided reasons why it did not apply to have the Dismissal Order set aside or why it did not appeal that decision, and nor has it given any explanation for the rather inordinate delay before re-filing.

30.    As stressed in the case of Joshua Giru v Willie Edo (supra) there must be finality in litigation, and the Court in protecting its process from abuse, will guard against multiplicity of proceedings commenced by unsuccessful litigants. To my mind, this applies even where a claim has been previously dismissed for want of prosecution. The already long Court lists should not be further clogged up by claims re-filed by litigants who earlier allowed their claims to be summarily dismissed through their lack of diligence. 

31.   In the circumstances, I consider this fresh proceeding to be an abuse of process.

Orders

31.   To sum up, I would order the dismissal of the proceedings for being statute-barred and an abuse of process. As the dismissal includes the cross-claim, the parties shall respectively bear their own costs.
_____________________________________________________
Makap Lawyers:    Lawyer for the plaintiffs/cross-defendants
B S Lai Lawyers:  Lawyer for the defendants/cross-claimants