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

Fullerborne Extension Business Group Inc v Papua New Guinea Forest Authority [2022] PGNC 267; N9725 (14 June 2022)

N9725

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 20, 14 and 4 OF 2020 (IECMS- CC1)

BETWEEN:

FULLERBORNE EXTENSION BUSINESS GROUP INC, EXTENDED MENGEN BUSINESS GROUP INC AND ANIA SAWMILL BUSINESS GROUP INC

Plaintiffs

AND:

PAPUA NEW GUINEA FOREST AUTHORITY

First Defendant

AND:

DIARI VELE

As the Secretary for the Department of Treasury

Second Defendant

AND:

DR KEN NGANGAN

As the Secretary for the Department of Finance

Third Defendant

AND:

THE INDEPENDENT STATE OF PAPUA NEW GUINEA

In her capacity as the Acting Registrar of Companies

Fourth Defendant

Waigani: Tamade AJ

2022: 10^th & 14^th June

FRAUDS & LIMITATIONS – 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 – defendants are prejudiced in defending claims that originated more than 50 years ago.

PRACTICE AND PROCEDURE – dismissal of proceedings on ground that they are time-barred – determined in interlocutory proceedings.

NATIONAL COURT RULES – Order 12 Rule 40 – Frivolity – no reasonable cause of action is disclosed – the proceedings are frivolous or vexatious – the proceedings are an abuse of the process of the Court – plaintiffs’ statement of claim does not disclose a reasonable cause of action – proceedings be dismissed.

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

Cases Cited:

The following cases are cited in the judgment:

Christian Life Centre v Associated Mission Churches of Papua New Guinea [2002] PGNC 83; N2261
Hiwi v Rimua [2015] PGSC 60; SC1460
Oil Search Ltd v Mineral Resources Development Corporation Ltd [2010] PGSC 12; SC1022
Siu v Wasime Land Group Incorporated [2011] PGSC 4; SC1107

Legislation:

Frauds and Limitation Act 1988

Counsel:

Mr. Jeffery. S Abone, for the Plaintiff
Mr. Samiet, for the First Defendant in WS 20 of 2020 and Mr. Isaac (with leave of Court) for First Defendant in WS 4 of 2020
Mr. Kevin Kipongi, for Second, Third and Fourth Defendants

14^th June, 2022

1. TAMADE, AJ: This is a ruling on the First Defendant’s application to dismiss proceedings WS 20 of 2020. I ruled that all three proceedings shall be heard together in the course of matters as to my mind, any application to dismiss one proceeding will affect all three proceedings as they all arose from the same set of facts and all the defendants are the same defendants in all these three matters.
   
2. The First Defendant, therefore, claims that:
   
   1. Pursuant to section 16 (1)(a) of the Frauds and Limitations Act 1988, the entire proceedings be dismissed for being time-barred.
   2. Alternatively, pursuant to Order 12 Rule 1 of the National Court Rules section 155(4) of the Constitution, the entire proceedings be dismissed for want of standing.
   100. Alternatively, pursuant to Order 12 Rule 40(1) (a), (b) and (c) of the National Court Rules, the proceedings be dismissed for disclosing no reasonable cause of action, being frivolous, vexatious and an abuse of the Court process.
        
3. The Plaintiffs claims as pleaded in the respective Statement of Claims allege that they are incorporated business groups, and they represent landowners from the Fullerborne Timber Area, Extended Mengen Timber Area and Ania Kapiura Timber Area in the West New Britain Province.
   
4. For the Fullerborne Timber Area, the Plaintiffs claim that they had entered into an agreement known as the Fullerborne Timber Rights Purchase Agreement with the Territory of Papua New Guinea (then) on the 22 March 1967 for the State to fall, cut, remove, and harvest their timber for a period of 40 years from 22 March 1967 to 22 March 2007. The Plaintiffs claim that one of the terms of the agreement included that the Department of Treasury was to invest some of the Plaintiff’s funds as a loan to be invested and to be paid back at a certain interest rate to the Plaintiffs. The Plaintiffs are therefore claiming that the Defendants have failed to pay them as per the Timber Rights Purchase Agreement and that the Defendants are indebted to them in the sum of K32 714 885.91 with the balance of the claim to be assessed.
   
5. For the Extended Mengen Landowner Groups, they allege that their Timber Rights Purchasing Agreement was entered into on 20 November 1968 which ran for 40 years to 20 November 2008. These Plaintiffs claim a total sum of K23 967 909.49 with the balance of the claim to be assessed.
   
6. The Plaintiffs who form the Ania Kapiura Landowner Group claim that their Timber Rights Purchasing Agreement was entered into on 24 March 1969 and existed for 40 years until 24 March 2009. These Plaintiffs claim a total sum of K21 960 996.46 as well as the balance of the claim to be assessed.
   
7. It is important to set out in this ruling that the terms of these Timber Rights Purchasing Agreements are identical and the land the subject of these agreements is in the West New Britain Province.
   
8. The Plaintiffs in WS 20 of 2020 have filed the Writ of Summons on 8 May 2020- 13 years after the end of the subject agreement, WS 14 of 2020 was filed on 26 May 2020- 12 years after the end of the subject agreement and WS 4 of 2020 was filed on 31 March 2020- 11 years after the end of the subject agreement.
   
9. The Plaintiffs allege that they have corresponded with the Defendants to settle their claims and as there was no favourable response, they issued section 5 Notices pursuant to the Claims By and Against the State Act in 2019 and filed these proceedings subsequently in 2020.
   

Are these proceedings time-barred?

10. Section 16 of the Frauds and Limitations Act is in the following terms:
    
    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.

11. The First Defendant has submitted that these proceedings are statute-barred as the cause of action would have occurred at the time the agreements were said to have been breached.
    
12. The First Defendant relies on the case of Oil Search Ltd v Mineral Resources Development Corporation Ltd [2010] PGSC 12; SC1022 (30 April 2010) where the Supreme Court said that:
    

(1) A proper determination of whether an action involving alleged breach of contractual obligations is time-barred entails a finding on three matters:

(a) identification of the cause of action;

(b) identification of the date on which the cause of action accrued;

(c) categorisation of the cause of action according to whether it is "founded on a simple contract" or "an action upon a speciality".

13. The Supreme Court in Hiwi v Rimua [2015] PGSC 60; SC1460 (28 October 2015) upheld the same principle that a Plaintiff’s cause of action for the purposes of being time-barred would accrue from the time of the date of the first alleged breach of contract. Another important consideration the Court stated in the Hiwi v Rimua case is that:

‘The respondents were not prohibited, by their failure to file a defence, from submitting that the proceedings should be dismissed as being time-barred. No error was committed by the National Court in hearing and determining the respondents' motion before hearing the appellant's motion for default judgment. The question of the order in which competing motions are heard is a matter of discretion for the primary Judge and here the discretion was exercised carefully and properly.’

14. Mr. Abone of the Plaintiffs have strenuously argued that this is a matter that should proceed to trial for all issues to be determined properly including any defences raised by the Defendants and any issues as to time limitations and or a challenge to the competency of these proceedings as he submits, they are matters substantive in nature. Mr Abone relies on Order 4 Rule 49 of the National Court Rules.
    
15. I refuse the submissions by Mr Abone as a party is entitled to file an interlocutory application seeking dismissal of proceedings on any available grounds be it on statutory time limitations and or competency of the proceedings etc. A court has the duty to control proceedings before it and to make such orders pursuant to its powers under Order 12 Rule 1 of the National Court Rules and under its inherent powers in the interest of justice. Order 4 Rule 49(9) operates to preclude interlocutory applications seeking reliefs pleaded in the originating documents.
    
16. Mr Abone also responded that his clients must be given natural justice and that he had filed an application that was short served, an application which he submits is in response to this application for dismissal. I had ruled earlier before Mr Samiet moved his application refusing Mr Abone’s application for adjournment as the only application returning before me at 1:30 pm that day was the First Defendant’s application for dismissal which was duly served and ready for hearing. Mr Abone on the other hand had attempted to have the matter adjourned however as the application for dismissal was the application returning before the Court, I proceeded to stand the application down to 1:30 pm as a contested matter and heard all parties.
    
17. Mr Abone insisted that he has yet to get instructions from his clients on the application to dismiss however the matters raised in the application to dismiss are matters as to law, the application was served well within time to Mr Abone, he had the opportunity to seek instructions and he was also heard on the application, natural justice was accorded to Mr Abone and his clients.
    
18. The State has supported the application by the First Defendant and echoes the concerns by the First Defendants that these claims go back more than 50 years, and the Defendants are prejudiced in terms of the paper trail and or records regarding these claims. The Defendants state that they cannot defend a claim that they have no records over to sufficiently verify the veracity of the claims.
    
19. I find that the cause of actions in these proceedings for breach of contracts for unpaid funds under these agreements would at the latest be from the last date of the date of these contracts. This is on 22 March 2007, 20 November 2008 and 24 March 2009. Though the Plaintiffs plead in their Statement of Claim that they have given section 5 notice to Claim against the State sometime in 2019, section 5 notice under the Claims By and Against the State Act is a pre-condition for any claim as Against the State. A section 5 notice does not create a cause of action, it is only a pre-condition to instituting a claim as against the State. I find that the cause of actions in all three of these claims against all the Defendants are statute-barred and is contrary to section 16 (1)(a) of the Frauds and Limitations Act as it is outside of the six-year time limitation. The Defendants are therefore greatly prejudiced in defending claims that originate more than 50 years ago.
    

Do the Plaintiffs have the capacity to sue in these proceedings?

20. The First Defendant has raised the issue that the Plaintiffs have no locus standi to bring these proceedings as they are not parties to the Timber Rights Purchasing Agreements and that the matters concern interest in customary land in which the Plaintiffs are not the people who signed these agreements as they were purported to be signed by landowners and not the Plaintiff entities.
    
21. The Plaintiffs are incorporated business groups pursuant to the Business Groups Act. In the Timber Rights Purchasing Agreements, a copy attached to the Affidavit of Stanis Julius sworn on 7 July 2021, the alleged agreement was entered with customary landowners and the Colonial Administration in the Territory of New Guinea well before Independence.
    
22. The pleadings in all three matters before the Court refer to the exact facts wherein landowners of West New Britain more than fifty years ago entered into these agreements. The authenticity of these agreements, whether the parties to these agreements in that colonial era had an equal footing at the time of those agreements and other issues arising only leaves a reader puzzled let alone a Defendant who has no trace of records of the old colonial era in being handicapped to defend themselves.
    
23. 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.

24. I find that, the Plaintiffs as registered incorporated business groups are not privy to the said contracts and therefore have no standing to sue in these proceedings.
    
25. I also find that as the alleged interest in these agreements occurred over customary land, the Supreme Court case of Siu v Wasime Land Group Incorporated [2011] PGSC 4; SC1107 (28 April 2011) is the authority that the National Court does not have jurisdiction over matters involving financial benefits emanating from and or associated from the use of customary land.
    
26. A claim that has aged well over the years puts a Defendant at a very unfair advantage to defend it. It is on all the reasons stated in these decisions that the claim is plainly statute-barred, the Plaintiffs lack standing and the Court lacks jurisdiction therefore these proceedings shall be dismissed forthwith.
    
27. I, therefore, make the following orders:
    
    1. Proceedings WS 20, WS 14 and WS 4 of 2020 are dismissed in their entirety on the reasons given in this decision for being statute-barred, for the Plaintiffs not having any standing to bring these proceedings and that the National Court has no jurisdiction in these proceedings as the Plaintiffs’ claim concern financial benefits arising from the use of customary land.
       
    2. The Plaintiffs shall meet the costs of all the Defendants to be taxed if not agreed.
       

Orders accordingly.
______________________________________________________________
Parkil Lawyers: Lawyers for the Plaintiffs

Holingu Lawyer: Lawyers for the First Defendant in WS 20 of 2020
Office of the Solicitor General: Lawyers for the Second, Third and Fourth Defendants