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Muroa v Nonggorr [2021] PGNC 541; N9365 (25 November 2021)

N9365

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 254 OF 2020

BETWEEN:
GEORGE M S MUROA
Plaintiff

AND:
JOHN NONGGORR
First Defendant

AND:
NONGGORR SERVICES LIMITED
Second Defendant

Waigani: Yagi J
2021: 09^th & 25^th November

PRACTICE AND PROCEDURE – application to dismiss proceeding – non-disclosure of a reasonable cause of action - National Court Rules, Order 12 Rule 40(1) – alleged breach of a partnership agreement.

Cases cited:

Nil

Legislations:

Frauds and Limitations Act 1988
National Court Rules

Counsel:

Plaintiff in Person
Mr N. Pilamb, for the First & Second Defendants

DECISION

25^th November, 2021

1. YAGI, J: This is a ruling on an application by the defendants for the proceedings to be dismissed. The application is made pursuant to notice of motion filed on 30 July 2021.

2. The defendants seek an order that the proceedings be dismissed or struck out on the grounds that:

1. The claim is time barred by virtue of s. 16 of the Frauds and Limitations Act 1988 (Limitations Act) and therefore discloses no reasonable cause of action.
   
2. In the alternative, the statement of claim offends Order 8 Rules 8. 9 and 30 of the National Court Rules (NCR) and therefore tantamount to a frivolous or vexatious claim or is otherwise an abuse of court process pursuant to Order 12 Rule 40(1)(a), (b) and (c) of the NCR.
   
3. In the further alternative, the statement of claim offends Order 8 Rules 27(1)(a), (b) and (c) of the NCR on the basis that the claim is time barred under the Limitation Act, and has the tendency to cause prejudice, embarrassment, or delay and or otherwise is an abuse of the court process.
   

3. The defendants rely on an affidavit by John Nonggorr sworn on 28 July and filed on 30 July 2021 in support of the application.

4. It is useful and for convenience I set out at the outset the relevant provisions of the Limitations Act and the NCR invoked by the defendant:

Limitations Act

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

(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) An action for an account shall not be brought in respect of any matter which arose more than six years before the commencement of the action.

(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.

(4) Nothing contained in Subsection (3) shall be construed as affecting any action for which a period of limitation is specified by any other Act, and that subsection shall be read and construed accordingly.

(5) An action shall not be brought upon any judgment after the expiration of twelve years commencing on the date when the judgement became enforceable.

(6) No arrears of interest in respect of any judgment debt shall be recovered after the expiration of six years commencing on the date when the interest became due.

(7) Subject to Subsection (8), an action to recover any penalty or forfeiture, or sum by way of penalty or forfeiture, recoverable by virtue of any enactment shall not be brought after the expiration of two years commencing on the date when the cause of action accrued.

(8) For the purpose of Subsection (7) the word "penalty" does not include a fine to which any person is liable on conviction of a criminal offence.
[Emphasis and underlying added]

National Court Rules

Order 12 Rule 40(1)

40. Frivolity, etc. (13/5)

(1) Where in any proceedings it appears to the Court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings —

(a) no reasonable cause of action is disclosed; or

(b) the proceedings are frivolous or vexatious; or

(c) the proceedings are an abuse of the process of the Court,

the Court may order that the proceedings be stayed or dismissed generally or in relation to any claim for relief in the proceedings.

(2) The Court may receive evidence on the hearing of an application for an order under Sub-rule (1).

Order 8 Rules 8. 9, 27 and 30

8. Facts, not evidence. (15/7)

(1) A pleading of a party shall contain only a statement in a summary form of the material facts on which he relies, but, subject to these Rules, not the evidence by which those facts are to be proved.

(2) Sub-rule (1) has effect subject to this Division and to Order 4 Division 2 (originating process) and to Division 2 (particulars).

9. Brevity. (15/8)

A pleading shall be as brief as the name of the case admits.

27. Embarrassment, etc. (15/26) (1)

Where a pleading —

(a) discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading; or

(b) has a tendency to cause prejudice, embarrassment or delay in the proceedings; or

(c) is otherwise an abuse of the process of the Court,

the Court may at any stage of the proceedings, on terms or otherwise, order that the whole or any part of the pleading be struck out.

30. Fraud, etc. (16/2)

A party pleading shall give particulars of any fraud, misrepresentation, breach of trust, wilful default or undue influence on which he relies.

5. The plaintiff did not file, nor did he rely on any affidavit in response to the application.

Submission by the defendants

6. Counsel for the defendants relied upon an extract of argument dated 09 November 2021 which was handed up to the Court during the hearing.

7. The defendants argue that the claim as pleaded in the statement of claim by the plaintiff is a cause of action for breach of a purported partnership agreement and hence the time limit for instituting such an action is 6 years as provided by s. 16 of the Limitation Act. In this case, the alleged breach of the agreement as pleaded accrued on 31 June 2009. The plaintiff’s claim having been filed on 19 October 2020 is outside of the 6-year period and therefore is time-barred which should be dismissed under Order 12 Rule 40(1)(a) of the NCR as having disclosed no reasonable cause of action.

8. In the alternative, counsel submits the pleading of claims is unclear, convoluted, and confusing because it comprised of multiple claims in terms of fraudulent conduct and specific performance in equity and therefore offends Order 8 Rules 8, 9 and 30 of the NCR which the Court has power to dismiss.

Submission by the plaintiff

9. The plaintiff submits that the claim as pleaded in the statement of claim is not founded on contract. Rather, the claim is for specific performance. On that basis the claim is not barred by the time prescription under s. 16 of the Limitation Act. The plaintiff says because the claim is for specific performance, it falls under s. 18 of the Limitation Act and therefore the time limit under s. 16 does not apply.

10. It is further argued that the claim is not vexatious or frivolous nor is it an abuse of the court process as submitted by the defendants.

11. Accordingly, the plaintiff submits the defendant’s application be dismissed and the substantive claim be allowed to proceed to trial.

Considerations and conclusion

12. There are several issues raised in the application, and to my mind, the following are key issues for determination as to whether:

(a) the plaintiff’s claim is for breach of contract
(b) the plaintiff’s claim is for specific performance
(c) the plaintiff’s claim is vexatious or frivolous
(d) the plaintiff’s claim is an abuse of the court process
(e) the pleadings in the statement of claim are convoluted and confusing

13. Issues (a) and (b) overlap and will be considered together. The same applies to issues (c) and (d) whilst issue (e) may be dealt with separately.

Issues (a) and (b) – whether the claim is for breach of contract or specific performance

14. In order to determine the issues, one has to carefully and closely consider the pleadings in the statement of claim. The statement of claim endorsed on the writ of summons comprised 7 pages and contains 52 paragraphs. The pleadings maybe summarised as follows. Paragraphs 1 – 6 pleads the identity of the parties. Paragraphs 8 – 10 pleads the background relationship of the parties. In general paragraphs 11 – 51 is an attempt to plead the facts and circumstances giving rise to the cause of action. Paragraphs 11 – 16 pleaded the initial proposal for a partnership arrangement between three partners including the plaintiff and the first defendant in terms of distribution of equity shareholdings. Paragraphs 17 and 18 plead that the failure or omission by the first defendant to reduce the verbal understanding into writing constitute deceitful conduct. Paragraphs 19 – 21 pleaded matters relating to continuity in the provision of service despite lack of a written partnership agreement. Paragraph 22 plead the relief for specific performance in equity. Paragraphs 23 – 42 pleaded matters relating to temporary or interim arrangements in the alleged partnership particularly use of office, expense/fee sharing and percentage share in equity, and other forms of renumeration packages. Paragraph 43 – 51 pleads deceitful conduct for the failure to keep records, false promises in setting up of law practice, equity share distribution, etc in the partnership. Paragraph 52 provides the particulars of loss and damage.

15. In my view, the entire pleading consists of a claim based on an alleged breach of a partnership agreement in a law practice. The plaintiff alleges that there was an agreement between first respondent and himself where the plaintiff was made a partner in the law practice. The benefits in the partnership, among others, included a 15% shares in equity, annual profit sharing, renumeration packages such as salary and wages, allowances, accommodation, school fee entitlements, superannuation and annual leave. Paragraph 51 of the statement of claim makes it abundantly clear that the defendants are liable to the plaintiff for “breach of contract in equity”.

15. A claim for specific performance is an equitable remedy in the law of contract. To succeed in such a claim, the plaintiff must establish that there is a valid, binding and enforceable contract or agreement. This will require a clear, precise, and succinct pleading as to terms and conditions governing the contractual relationship and the rights and obligations of the parties created under the agreement, and more particularly that a right to specific performance as a remedy is clearly expressed. Because it is an equitable remedy, the Court is required to exercise its discretion whether specific performance should be granted. In this regard, one of the important considerations is whether damages in monetary terms would not be adequate remedy. Specific performance is most common type of equitable remedy in cases relating to contracts involving sale and purchase of land or real property.

15. In this case, having regard to the pleading in the statement of claim, I am satisfied that the plaintiff is suing for loss or damage suffered or incurred as a direct consequence of alleged breach of a partnership agreement.

16. I therefore reject the submission by the plaintiff that the claim is for specific performance. I accept the submission by the defendants that the claim is based an alleged breach of a contract or partnership agreement.

17. Paragraph 46 of the statement of claim appear to suggest that the alleged breach occurred in June 2009. In that regard the plaintiffs right to sue for the alleged breach accrued in June 2009. Therefore, the plaintiff’s right to bring the action lapsed in or about June 2015 by virtue of s. 16 of the Limitation Act. The present proceeding was filed on 19 October 2020, which is 5 years late.

18. Accordingly, I find that the claim by the plaintiff is time barred and consequently tantamount to a non-disclosure of a reasonable cause of action pursuant to Order 12 Rule 40(1)(a) of the NCR.

19. Given the findings, in my view, it is unnecessary to consider the balance of the issues.

20. The formal orders will be that:

1. The entire proceeding is forthwith dismissed pursuant to Order 12 Rule 40(1)(a) of the National Court Rules.
   
2. The plaintiff shall pay the defendants’ cost on party-party basis, to be taxed, if not agreed.
   

Orders accordingly.
__________________________________________________________________
Muroa & Associates Lawyers: Lawyer for the Plaintiff
Mel & Hennry Lawyers: Lawyer for the Defendants