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Kewa v Finance Corporation Ltd (trading as FINCORP) [2021] PGNC 627; N9726 (15 June 2021)

N9726

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 73 OF 2021

BETWEEN:
JOSEPHINE KEWA
Plaintiff

AND:
FINANCE CORPORATION LIMITED t/as FINCORP
Defendant

Waigani: Tamade AJ
2022: 14 & 15^th June

CONTRACT LAW – Privity of Contracts – principle – only a party who is privy to a contract can sue on the contract.

FAIRNESS OF TRANSACTIONS ACT 1993 – Section 11 (1) – limitation of proceedings - no action shall lie later than three years after the date of the transaction.

FRAUDS & LIMITATIONS ACT 1988 – Section 16(1)(a) – time limitations of actions in contract or tort – an action founded on contract or tort shall not be brought after the expiration of six years commencing on the date on which the cause of action accrued.

NATIONAL COURT RULES – Order 8 rule 32 (1) – negligence – breach of statutory duty – in proceedings on a claim for damages in tort – a party pleading negligence (whether contributory or otherwise) or breach of statutory duty shall give particulars of the matter pleaded – plaintiff had failed the requirement under order 8 rule 32(1) – to give proper particulars of claim.

Cases Cited:

The following cases are cited in the judgement:

Christian Life Centre v Associated Mission Churches of Papua New Guinea [2002] PGNC 83; N2261
Hiwi v Rimua [2015] PGSC 60; SC1460
Powi v Niugini Building Supplies Ltd [2016] PGSC 22; SC1501

Legislation:

Frauds and Limitations Act 1988
Fairness of Transactions Act 1993

Counsel:

Mr Pokup Kepiniu, for the Plaintiff
Mr Peter Siminji, for the Defendant

15^th June, 2021

1. TAMATE, AJ: The Court heard on 14 June 2022 an application to dismiss these proceedings for disclosing no reasonable cause of action, being frivolous and vexatious and for being an abuse of the process of the Court by the Defendant and also heard the Plaintiff’s application seeking leave to amend the Statement of Claim filed in these proceedings. This is the Court’s ruling in this regard.

2. The Plaintiff is a customer of the Defendant and took out various loans with the Defendant from 2012 and 2017. In 2015, the Plaintiff and her daughter approached the bank seeking a loan for the setting up of a bakery and the Defendant issued a loan to the Plaintiff’s daughter who put up security by mortgaging her land and the loan was given to the Plaintiff’s daughter. The Defendants state that the Plaintiff and her daughter have defaulted in these loans and the Defendant has exercised its right pursuant to those loan agreements to file two separate court proceedings to possess the land the subject of the mortgages to settle the Plaintiff’s debt and her daughter’s debt.

3. There were then negotiations between the parties as to settlement of these debts from the Plaintiff and her daughter and the Defendant then instructed the Sherriff’s office to halt the execution of the Writs of Possession over the subject properties pending the outcome of any such negotiations.

4. The Plaintiff then filed these proceedings claiming that the Defendant has breached these loan agreements with the Plaintiff and has also claimed that the loan agreement of 2015 and 2017 was contrary to the Fairness of Transactions Act. The Plaintiff claims for negligence against the Defendant for the manner in which the Defendant is alleged to have treated these loans with the Plaintiff and claims loss arising as a result. There is also an issue of whether the properties the subject of the mortgage was to be either insured by the Plaintiff or the Defendant pursuant to the loan agreements as the Plaintiff claims that one of these properties which housed tenants and which the Plaintiff receives income from was destroyed in a fire resulting in the Plaintiff’s inability to settle her debt with the Defendant.

5. The Defendant’s application on dismissal is on several grounds and I have set them out as the pertinent issues for determination emanating from the source of the causes of actions in these instances being loan agreements as the Defendant’s submissions in identifying these issues are broader and overlapping when they can be best summarised as follows:

1. Whether, the loan agreement entered into in 2015 with the Plaintiff’s daughter Ms Jacinta Kewa lacks standing as the Plaintiff is not privy to that loan agreement and whether the agreement with Jacinta Kewa entered into in 2015 is time barred pursuant to section 11(1) of the Fairness of Transactions Act?
   
2. Whether the claims as to a breach of the loan agreements entered into in 2012, between the Plaintiff and the Defendant is time barred pursuant to section 16(1)(a) of the Frauds and Limitations Act?
   

100. Whether the claim on the 2017 loan agreement between the parties discloses a reasonable cause of action and whether it is time barred pursuant to section 11 (1) of the Fairness of Transactions Act?
     

6. I now address the first issue in this matter.

4. Whether the loan agreement entered into in 2015 with the Plaintiff’s daughter Ms Jacinta Kewa lacks standing as the Plaintiff is not privy to that loan agreement and whether the agreement with Jacinta Kewa entered into in 2015 is time barred pursuant to section 11(1) of the Fairness of Transactions Act?
   

7. The Statement of Claim by the Plaintiff pleads a claim on a loan agreement entered into with Jacinta Kewa who is the Plaintiff’s daughter in 2015. In the Affidavit of Mr Peni Vogusang filed on 6 May 2022, Mr Vogusang states that, he is the Asset Manager (Consumer) of the Defendant and amongst his evidence as to the Plaintiff’s claims state that in 2015, the Defendant entered into a loan agreement with Jacinta Kewa, the Plaintiff’s daughter and Ms Jacinta Kewa surrendered her property as security for the Defendant to have interest as mortgagee.

8. The law as to privity of contract is clear that only a party who is privy to a contract can sue on the contract. The Court upheld this important principle of law on privity of contracts in the case Christian Life Centre v Associated Mission Churches of Papua New Guinea [2002] PGNC 83; N2261 (9 August 2002) and quoted this:

It is a fundamental principle of common law, that no person can sue or be sued on a contract unless he or she is a party to it: Dunlop Pneumatic Tyre Co. Lt. –v- Selfridge & Co. Ltd. [1915] UKHL 1; [1915] A.C. 847.

9. I am satisfied from the evidence that the loan agreement is between Jacinta Kewa and the Defendant entered into on 27 May 2015. The Plaintiff is not privy to this loan agreement though it is open to conclude that she with her daughter may have benefited from this loan.

10. It is not necessary to consider, whether a claim under this agreement is out of time under the Fairness of Transactions Act as the Plaintiff is not privy to this agreement.

11. The claim on the loan agreement with Jacinta Kewa entered in 2015 is therefore dismissed.

2. Whether the claims as to a breach of the loan agreements entered into in 2012 between the Plaintiff and the Defendant is time barred pursuant to section 16(1)(a) of the Frauds and Limitations Act?
   

12. Section 16(1)(a) of the Frauds and Limitations Act states that:

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.

13. The Plaintiff has alleged that the Defendant failed to pay her the sum of K290 000 under the 2012 loan and this was instead paid to her husband. A cause of action for breach of contract occurs at the alleged time of the breach. This can be seen in the case of Powi v Niugini Building Supplies Ltd [2016] PGSC 22; SC1501 (29 April 2016) and also the case of Hiwi v Rimua [2015] PGSC 60; SC1460 (28 October 2015).

14. In this case the cause of action for the breach occurred on or around December of 2012 as stated in the Affidavit of Mr Vogusang when the payment of K490 000 was paid to the Plaintiff and her husband.

15. I find that the alleged breach of the loan agreement entered into in 2012 between the Plaintiff and the Defendant exceeds six years and therefore is time-barred. This aspect of the claim based on the 2012 loan agreement between the parties is dismissed.

2. Whether the claim on the 2017 loan agreement between the parties discloses a reasonable cause of action and whether it is time-barred pursuant to section 11 (1) of the Fairness of Transactions Act?
   

16. Section 11(1) of the Fairness of Transactions Act states that:

LIMITATION OF PROCEEDINGS.

(1) Any proceedings under this Act shall, subject to Subsection (2), be commenced soon after the party aggrieved by the transaction to which they relate suffers the disadvantage or becomes aware of the matters which amount to or constitute the unfairness, as the case may be, but no action shall lie later than three years after the date of the transaction.

17. The Plaintiff and the Defendant entered into a loan agreement on 16 May 2017 as deposed to in the Affidavit of Mr Vogusang. Three years from the date of the agreement would lapse on or about May of 2021. These proceedings were filed on 2 December 2021.

18. The Plaintiff’s pleadings as to this aspect of the claim based on the 2017 loan agreement as can be seen starting from paragraph 23 of the Statement of Claim. The Plaintiff pleads an unfairness of this agreement in paragraph 32 and that she suffered loss as a result. I find that this aspect of the claim is statute-barred pursuant to section 11(1) of the Fairness of Transactions Act and is dismissed.

19. In addressing the Plaintiff’s application for amendment to the Statement of Claim, no amendment to a Statement of Claim can cure the deficiency in the pleadings where the causes of actions are time-barred.

20. As to claims of negligence alleged by the Plaintiff on the 2017 loan agreement between the parties, the Defendant states that these claims lack particularity and fall short of the requirement of Order 8 Rule 32(1) of the National Court Rules, that the Plaintiff has failed to plead specific particulars of the claim. I find that by reading paragraphs 31 of the Statement of Claim, the Plaintiff essentially alleges that the Defendant should not have given her the loan at all knowing about her previous record of loan repayments and that she was not given an opportunity to seek the counsel of a lawyer before signing the loan agreement. The allegations of negligence tie in with the claim under the Fairness of Transactions Act and therefore no amendment to the pleadings will cure this deficiency as the cause of action is time-barred.

21. In summary, the Plaintiffs claims on the 2012, 2015 and 2017 loan agreements between the Plaintiff, her daughter Ms Jacinta Kewa and the Defendant are dismissed in their entirety for being statute-barred. It, therefore, follows that these proceedings are dismissed for being time-barred.

22. It is submitted by Mr Kepiniu that they have given notice to the Plaintiffs requesting them to confirm out-of-court settlement with the Defendant and there is evidence of forewarning the Plaintiff in the Defendant seeking solicitor-client costs in the event the Plaintiff fails to take heed of the warning where the Defendant has warned that it will apply for a dismissal of the proceedings, the Defendant will seek costs on a solicitor-client basis. An award of costs on a higher scale is a discretionary matter and I am satisfied that the Defendant has given the forewarning letter to the Plaintiff’s lawyers. Costs shall be awarded on a solicitor-client basis.

23. I, therefore, make the following orders:

1. These proceedings are dismissed in its’ entirety.
2. The Plaintiff shall meet the Defendant’s costs of these proceedings on a solicitor-client basis.
   

Orders accordingly.
________________________________________________________________
Posman Kua Aisi Lawyers: Lawyers for the Plaintiff
Siminji Lawyers: Lawyers for the Defendant