N8251
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS No. 1781 of 2019 (COMM)

BETWEEN:
MASO SAMAI
Plaintiff

AND:
GOODMAN FIELDER trading as ASSOCIATED MILLS LIMITED Company Number 1-5461
Defendant

Waigani: Anis J
2020: 9th & 12th March

NOTICE OF MOTION – dismissal of proceeding – section 16(1)(a) – Frauds and Limitations Act 1988 – when did the cause of action accrue – whether action time-barred – whether action in equity and subject to section 18 of the Frauds and Limitations Act 1988

Cases Cited:

John Hiwi v. Rendle Rimua (2015) SC1460

Counsel:

J Poponawa, for the Plaintiff/Respondent
J Mesa, for the Defendant/Applicant

RULING
12thMarch, 2019

1.   	ANIS J: 	The defendant applied to dismiss the proceeding on 9 March 2020.  The application was contested.  I heard and reserved my ruling to a date to be advised.

2.     	Parties have been notified so I will rule on it now.

BACKGROUND

3.    	The substantive claim is based on a contract.  On 5 July 2000, the defendant engaged the plaintiff to collect waste bread from its premises at a rate of K25 per collection.  The contract was initially set for a year but had continued until it was alleged to have been terminated on 6 February 2019.  The plaintiff alleges that based on the contract, the defendant still owes what he claims were underpayments.  In total, the plaintiff claims, amongst others, a sum of K1, 584, 000.

NOTICE OF MOTION

4.    	The main relief sought in the notice of motion (application) is this, and I quote, The entire proceeding be dismissed for being time-barred pursuant to s.16(1)(a) of the Frauds and Limitations Act 1988.  

5.     	The application is supported by Mr. Mesa’s affidavit which was filed on 17 February 2020.  The plaintiff, on the other hand, relies on his affidavit which was filed on 26 February 2020.  

ISSUE

6.   	The main contested issues, in my view, are on points of law, namely, (i), when did the cause of action accrue, and whether the claim is time-barred in that it was not filed within 6 years as required by section 16(1)(a) of the Frauds and Limitations Act 1988 (FLA), and (ii), whether the cause of action is in fact based on equity, and as such, whether section 18 of the FLA is applicable herein.

SECTIONS 16(1)(a) and 18

7.     	Sections 16(1)(a) and 18 of the FLA state, and I quote:

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.
……
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.

CONTENTIONS

8.    	So, I ask myself this.  When did the cause of action accrue in this case?  I note that I had suggested/inquired with counsel for the defendant at the hearing whether the cause of action may have accrued from the date of termination which was in February of 2019.  Counsel maintained that the cause of action for this case should accrue from the date of the first allege breach of contract.  I note that counsel for the plaintiff did not make submissions on this except to raise a counter-argument.  That is, the plaintiff submits that the cause of action is equitable in nature and therefore falls within the ambit of section 18 and not section 16(1)(a) of the FLA.  As such, the plaintiff submits that his claim is not time-barred.

EQUITABLE RELIEF ARGUMENT

9.    	Let me deal first with the latter argument made by the plaintiff.  With respect, I find that argument baseless.  It is made, in my view, contrary to the plaintiff’s own pleading.  The contract of service (contract) was signed on 5 July 2000.  This fact is not disputed.  Also not disputed is the original contract rate.  It was set at K25 per pick-up or per collection.  But this is where the allegation of contract arises, that is, the plaintiff implies in the pleading that there was an agreement or understanding there, that the rate would be increased at a rate of K10 yearly or after the first year.  The relevant pleading in my view may be found at paragraph 14 of the plaintiff’s statement of claim.  It reads, and I quote in part, The rubbish pick up rate was to have increased for K10.00 annually taking into account the increases in fuel cost and associated overhead incurred as this is the rate that is consistent with the 3 periods whereby it was reviewed and is evidenced in writing.

10.      	And I note that the plaintiff has used the K10 purported increase rate to add and calculate the alleged underpayment.  To me, the said contention alleges breach of contract, that is, to assert existence of an additional term in the contract (i.e., the purported increase rate of K10) and then allege its breach or failure on the part of the defendant, and to seek payment for the said breach, which is the alleged underpayment.

11.   	I therefore dismiss the plaintiff’s argument that the claim is for equitable relief and that section 18 of the FLA shall apply.  I must add that there is no pleading of equity or equitable relief in the statement of claim.  That in itself is also sufficient and I also dismiss the argument on that basis.

ACCRUAL – CAUSE OF ACTION

12.    	I come back to the question that I have asked above, that is, when did the cause of action accrue in this case?  To answer that, let me refer to the case law for guidance.  The case on point in my view is the case of John Hiwi v. Rendle Rimua (2015) SC1460.  The Supreme Court stated at paragraph 18 of its judgment, and I quote in part:

18.	The limitation period commenced “on the date on which the cause of action accrued”. It is settled law that a cause of action in breach of contract accrues on the date of the breach, not on the date of the contract (Otto Benal Magiten v Kopina Raka (2002) N2179, Michael Nunulrea v PNG Harbours Ltd (2005) N2790, Midland Bank v Hett, Stubbs & Kemp [1978] 3 All ER 571). In this case the statement of claim pleaded that the defendants had breached each of the three agreements “for the last 19 years”. As the action was commenced in November 2009, the pleading was that the defendants first breached the agreements, by failing to make payments to the landowners in accordance with the agreements, in November 1990. That is when the “cause of action accrued” for the purposes of Section 16(1)(a). The proceedings should therefore have been commenced by November 1996. The proceedings were not commenced until November 2009, which exceeded the limitation period by 13 years.

13.   	The said decision is binding on this Court.

14.      I note that I have already found above that the claim is in contract.  And as stated, the original contract was signed on 5 July 2000.  In my view, the cause of action would have arisen at the end of the first term of the contract, that is, as of or on 6 July 2001.  That said, I also note from the evidence filed and the pleadings, that the parties may have agreed on 3 separate occasions to increase the collection rate.  The final imposed rate alleged was K66 per collection, which was alleged to have been agreed upon in 2008.  So even if I may be wrong with the first accrued date, and we were to assume that the cause of action had arose on 6 July 2009, which would have been a year after the final increase to the rate at K66 per collection, that would still be, if computed under section 16(1)(a) of the FLA, well outside of the 6 year period.  Let me summarize as follows.  The writ of summons and statement of claim was filed on 23 December 2019.  If time is computed from 5 July 2001, the cause of action would be time-barred on 6 July 2007, and the plaintiff would be out of time by about 12 years.  If time is computed from 5 July 2009, the cause of action would be time-barred on 6 July 2015, and the plaintiff would be out of time by about 4 years.

SUMMARY

15.   	In summary, I uphold Mr. Mesa’s submission, particularly on law, to be correct.  I find that the plaintiff’s cause of action shall accrue on the date of the allege breach and not the date of termination.  As such, I find the cause of action to be time-barred or perhaps more precisely, statute barred, that is, under section 16(1)(a) of the FLA.  I will grant the relief sought in the application and dismiss this proceeding.

COST

16.   	Awarding cost in this instance is discretionary.  I will award cost to follow the event on a party/party basis which may be taxed if not agreed.

THE ORDERS OF THE COURT

17.   	I will make the following orders:

1.	The proceeding herein is dismissed.

2.	The plaintiff shall pay the defendant’s cost of the proceeding on a party/party basis which may be taxed if not agreed.

3.	Time for entry of these orders is abridged to the date of settlement by the Registrar which shall take place forthwith,

The Court orders accordingly.

_______________________________________________________________
Jopo Lawyers: 	Lawyers for the Plaintiff
Corrs Chambers Westgarth Lawyers: 	Lawyers for the Defendant