Home | Databases | WorldLII | Search | Feedback National Court of Papua New Guinea

Negliw No. 57 Ltd v Tiare No. 26 Ltd [2019] PGNC 472; N8364 (11 February 2019)

N8364

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS 734 OF 2017

BETWEEN:
NEGLIW No. 57 LIMITED
First Plaintiff

AND:
HEVA JONES RARUA
Second Plaintiff

AND:
TIARE No. 26 LIMITED
First Defendant

AND:
TIARE No. 27 LIMITED
Second Defendant

AND:
CURTAIN BROS (PNG) PROPERTIES LIMITED
Third Defendant

AND:
BALLIMORE No. 39 LIMITED
Fourth Defendant

AND:
ALEX TONGAYU, as Registrar of Companies
Fifth Defendant

Waigani: Hartshorn J.
2019: 11^th February

PRACTICE AND PROCEDURE - Application to dismiss proceeding for being time barred – defendants alleged plaintiffs’ action is founded on fraud and its cause of action is in fraud and alleged fraudulent act was either in 1998 or 2003 – whether proceeding is an abuse of process - second plaintiff contends proceeding should not be dismissed as there are serious conflicts as to facts, necessitating that this proceeding should be allowed to proceed to trial -clear case of a proceeding being statute or time barred - no reasonable cause of action disclosed in the statement of claim - defendants have properly made out their claim for the proceeding to be dismissed - Order 12 Rule 40 National Court Rules, s. 16(1)(a) Frauds and Limitations Act

Cases Cited:
Papua New Guinea Cases

Kerry Lerro v. Stagg & Ors (2006) N3050
Takori v. Yagari & Ors (2008) SC905
Mt Hagen Urban Local Level Government v. Sek No. 15 (2009) SC1007
Oil Search Ltd v. Mineral Resource Development Corporation Ltd (2010) SC1022
Siu v. Wasime Land Group Incorporated (2011) SC1107
Pololi v. Wyborn (2013) N5253
Mamun Investment Ltd v. Onda Koim (2015) SC1409

Overseas Cases

Derry v. Peek (1888) LR 14 App Cas 337
Hubbuck & Sons, Ltd v. Wilkinson, Heywood & Clarke, Ltd [1898] UKLawRpKQB 176; [1899] 1 Q.B. 86
Magill v. Magill [2006] HCA 51

Counsel

Mr. Heva Jones Rarua, the Second Plaintiff in Person
Mr. M.M. Varitimos QC and Mr. P. Tabuchi, for the First, Second, Third and Fourth Defendants

11^th February, 2019

1. HARTSHORN J. This is a decision on a contested application to dismiss this proceeding made pursuant to Order 12 Rule 40 National Court Rules and alternatively, for the statement of claim to be struck out pursuant to Order 8 Rule 27 National Court Rules.

2. I allowed the application to proceed in the absence of representation of the plaintiffs, apart from the second plaintiff appearing in person, as I was satisfied that the lawyers for the plaintiffs’ had been served with the requisite documents and had been notified of the time and date of the hearing of the notice of motion.

Background

3. The plaintiffs’ filed an originating summons in which they sought orders amongst others, concerning the shareholding of Negliw No. 57 Ltd in Tiare No. 26 Ltd.

4. This court ordered that this proceeding continue on pleadings and that the plaintiffs’ file and serve a statement of claim. A statement of claim has been filed. It seeks the same relief as was sought in the originating summons but there are differences in some of the defendants named.

5. In the statement of claim it is pleaded amongst others, that certain shares were illegally transferred by a Ms. Colleen McCarthy, an employee of the first, second, third and fourth defendants (defendants). Further, purported particulars of fraud are set out. In those particulars the date that Ms. McCarthy submitted a form 13 authorising the share transfer is 28^th June 2003.

This application

6. The defendants submit that this proceeding should be dismissed as amongst others:

a) the plaintiffs’ action is founded on fraud and its cause of action is in fraud;

b) the alleged fraudulent act was either in 1998 or 2003. This proceeding was commenced on 28^th August 2017, more than six years after the plaintiff’s cause of action accrued, and so is statute barred;

c) this proceeding is an abuse of process.

7. The second plaintiff submits that the proceeding should not be dismissed as there are serious conflicts as to facts, necessitating that this proceeding should be allowed to proceed to trial.

Law

Order 12 Rule 40 National Court Rules

8. In regard to Order 12 Rule 40 National Court Rules upon which the defendants rely, there are numerous authorities in respect of the principles to be considered. I make reference to the following cases: Kerry Lerro v. Stagg &Ors (2006) N3050, Takoriv.Yagari & Ors (2008) SC905, Mt Hagen Urban Local Level Government v. Sek No. 15 (2009) SC1007 and Siu v. Wasime Land Group Incorporated (2011) SC1107. The Court in Mount Hagen v. Sek (supra) in paragraphs 27 to 30 conveniently sets out the requirements of Order 12 Rule 40 (1) (a), (b) and (c) as follows:

“27. The terms “vexatious”, “frivolous”, “abuse of the process of the Court” and “reasonable cause of action” under O.12 r.40 of the National Court Rules have been judicially considered, defined and expounded in a number of decisions in both the National and Supreme Courts. These cases include Ronny Wabia v. BP Exploration Co. Limited & 2 Others [1998] PNGLR 8 (N1697); PNG Forest Products Pty Ltd and Another v. The State and Genia [1992] PNGLR 85; Gabriel Apio Irafawe v. Yauwe Riyong (1996) N1915; Eliakim Laki and 167 Others v. Maurice Alulaku and Others (2002) N2001; Kiee Toap v. The Independent State of Papua New Guinea & Another (2004) N2766; Kerry Lerro trading as Hulu Hara Investments Limited v. Philip Stagg, Valentine Kambori& The State (2006) N3050; Philip Takori & Others v. Simon Yagari & 2 Others (2008) SC 905. These cases say the same thing.

28. The law with regard to an application for dismissal of proceedings based on O.12 r.40 is settled in our jurisdiction. We note that the principles are succinctly set out in Kerry Lerro’s case (supra) and which has more recently been approved and applied by the Supreme Court in Philip Takori’s case (supra).

29. The phrase ‘disclosing a reasonable cause of action’ consists of two parts; cause of action and form of action. A cause of action is defined as a legal right or form of action known to law whereby a plaintiff in a statement of claim must plead all necessary facts and legal elements or ingredients to establish or prove his claim. The principles stated by these cases can be summarized as follows:

(i) A plaintiff or claimant should not be driven from the judgment seat in a summary manner and that the Court should be cautious and slow in exercising its discretionary power.

(ii) The Court has an inherent jurisdiction to protect and safeguard its processes from abuse.

(iii) The purpose of O.12 r.40, is to give the Court power to terminate actions or claims which are plainly frivolous or vexatious or untenable.

(iv) A frivolous claim is one that is characterized as a claim that is plainly and obviously untenable, that cannot possibly succeed and bound to fail if it proceeds to trial.

(v) A vexatious claim is one that is said to be a sham and cannot succeed where it seeks to merely harass the opposing party and put that party to unnecessary trouble and expense in defending or proving the claim.

30. In an application under O.12 r.40 of the NCR, the Court may dismiss a proceeding or action where it is satisfied that the pleading in the statement of claim is seriously wanting where a necessary fact or legal element has not been pleaded.”

9.Further, notwithstanding all of the various judicial pronouncements since, the position is succinctly summarised in Hubbuck & Sons, Ltd v. Wilkinson, Heywood & Clarke, Ltd [1898] UKLawRpKQB 176; [1899] 1 Q.B. 86. At 90-91 the Court of Appeal said:

“The second and more summary procedure is only appropriate to cases which are plain and obvious, so that any master or judge can say at once that the statement of claim as it stands, is insufficient, even if proved, to entitle the plaintiff to what he asks.”

Frauds and Limitations Act

10.Section 16 (1) and (3) Frauds and Limitations Act are as follows:

“(1) 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.

(2) ........

(3) Subject to Subsection (4), an action upon a specialty shall not be brought after the expiration of twelve years commencing on the date when the cause of action accrued.”

11. Sections 17 and 18 Frauds and Limitations Act are not relevant in this instance.

Consideration

12. I consider whether this proceeding is statute barred first.

13. The defendant submits that the plaintiffs’ claim is statute barred. This is because their claim alleges fraud, is founded on tort and has been brought after the expiration of six years from when the alleged cause of action accrued, contrary to s. 16(1)(a) Frauds and Limitations Act.

14. In the statement of claim are purported particulars of fraud of and concerning the alleged illegal transfer of the subject shares. The majority of the relief sought is concerned with the alleged illegal transfer of shares.

15. The plaintiff’s cause of action is that the subject shares were illegally transferred by fraud. Fraud or deceit is a tort: Derry v. Peek (1888) LR 14 App Cas 337; Magill v. Magill [2006] HCA 51 and Pololi v. Wyborn (2013) N5253.

16. Pursuant to s. 16(1)(a) Frauds and Limitations Act, a cause of action based upon tort, which includes fraud, must be brought within six years of the date that the cause of action accrued. That date is when the cause of action accrued and not from the date that the alleged fraud is discovered: Mamum Investment Ltd v. Koim (2015) SC1409 at [22].

17. In considering this application, I am mindful of the Supreme Court decision in Oil Search Ltd v. Mineral Resource Development Corporation Ltd (2010) SC1022. In that case it was held amongst others, that the determination of whether an action is time barred entails a finding on three matters: identification of the cause of action, identification of the date on when the cause of action accrued and a categorisation of the cause of action.

18. As to the cause of action in this instance, as mentioned, it is in fraud, concerning the alleged illegal transfer of the subject shares. The date that the cause of action accrued in the statement of claim is in 2003. The defendants submit that it is in 1998. It is therefore at least in 2003.

19. I mention in regard to the submission of the second plaintiff that this proceeding should be allowed to proceed to trial because there is a serious conflict as to the facts, the date of 2003 is what is alleged and contained in the plaintiffs’ statement of claim.

20. From the above, I am satisfied that s. 16(1)(a) Frauds and Limitations Act applies and that this is a clear case of a proceeding being statute or time barred. Consequently, no reasonable cause of action is disclosed in the statement of claim. I am of the view that the defendants have properly made out their claim for the proceeding to be dismissed.

21. Given this it is not necessary to consider the submissions of the second plaintiff and counsel.

Orders

22. It is ordered that:

a) This proceeding is dismissed;

b) The plaintiffs shall pay the costs of the first, second, third and fourth defendants of and incidental to this proceeding to be taxed if not agreed otherwise;

c) Time is abridged.

__________________________________________________________________
Tuva & Associate Lawyers: Lawyers for the Plaintiffs
Young & Williams Lawyers: Lawyers for the First, Second, Third and Fourth Defendants