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National Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
WS NO. 779 OF 2018 (COMM)
BETWEEN:
KUSO MAILA ANDA LIMITED
Plaintiff
V
UNITED PACIFIC CORPORATION LIMITED
Defendant
Waigani: Anis J
2022: 05 & 15 August
NOTICE OF MOTION – application to dismiss proceeding – main argument on time bar – whether claims time barred – s 16((1) a) and or (d) – Frauds and Limitations Act 1988 - identification of causes of action – causes of action founded in contract, tort - breach of statute, and seeking sum recoverable by virtue of any enactment – Gaming Control Act 2007 – s 163(4) - considerations – 6 year time limitation applicable - when did the cause of action accrued and whether accrual was recurrent – computing time - exercise of discretion
Cases Cited:
Oil Search Ltd v. Mineral Resource Development Corporation Ltd (2010) SC1022
Soakofa Trading and 1 Or v Bank South Pacific Ltd (2021) SC2068
Konze Kara v. Public Curator of Papua New Guinea & Anor (2010) N4055
Counsel:
J Kondop, for the Plaintiff
N Pilamb for the Defendant
DECISION
15th August, 2022
1. ANIS J: I heard and reserved on the defendant’ notice of motion (application) which sought to dismiss the proceeding, on 5 August 2022. The application was filed on 10 June 2022, and it was contested by the plaintiff.
BACKGROUND
2. The claim is pleaded in the plaintiff’s Further Amended Writ of Summons and Statement of Claim (filed on 7 July 2021) (ASoC). In summary, the plaintiff refers to a completed agreement which it had entered with the defendant on 12 October 2007 (2007 agreement/ the agreement). The plaintiff back then in 2007 held a Gaming Machine Permit and traded as Wabag Entertainment Centre. The defendant, on the other hand, held a Gaming Machine operator’s License. Under the 2007 agreement, the defendant supplied pocker machines to the plaintiff to operate. The contract had a fixed term of 5 years. And so, after the agreement was signed, the parties operated their businesses as per its terms and conditions, for 5 years. Their business operations were also governed by legislation, namely, the Gaming Control Act 2007 (Gaming Act/ the Act).
3. The agreement later expired after reaching its 5-year tenure, on 12 October 2012. And that was the end of business dealings between the parties, or so the defendant had thought.
4. On 27 June 2018, more than 5 years later, the plaintiff commenced this proceeding. In the ASoC, the plaintiff claims, and I refer to paras 7 and 8, 2 purported contraventions of the provisions of the Gaming Act. Under both allegations as pleaded, the plaintiff says the defendant contravened s 163(4) of the Gaming Act. Section 163(4) stipulates the distribution percentages of gross profits made in operations of pocker machines per month. The plaintiff claims that instead of earning its full 20% gross profit from the earnings that it was legally entitled to receive per month under s 163(4), the defendant, pursuant to the 2007 agreement, had been deducting rebates per month which were equivalent to 4% of its gross profit entitlement of 20%. It alleges that the said deductions continued per month for the duration of the agreement or for 60 months.
5. As a result, it says the defendant had breached s 163(4) and had committed an offence under s 163(7). It therefore claims that because of the defendant’s illegal actions, that it suffered shortfalls to its earnings which it was legally entitled to receive under s 163(4) of the Gaming Act, during the tenure of the 2007 agreement. It therefore seeks reimbursements for these extra 4% rebate payments or shortfalls from the defendant.
PRELIMINARY MATTER
6. The plaintiff raised a preliminary matter. It handed up to the Court what appeared to be a draft unsealed consent Notice to Set Down for Trial document (draft consent notice). It submits that because the parties signed the draft consent notice, the defendant cannot or is barred from filing any interlocutory matter, and that the only way forward now is for the parties to set the matter down for hearing and proceed to trial.
7. I reject this argument. The draft purported notice, as handed up, has not been filed and therefore is not properly before me. Regardless, it is misconceived to say that since the parties have signed the draft consent notice, that it prevents them from raising matters of concern or filing further interlocutory applications. Orde 10 Rule 4 of the National Court Rules (NCR) states the process for filing a Notice to Set Down for Trial. Once it is filed, Order 10 Rule 7 stipulates that the Registrar shall list the matter before the Listings Court to be heard. And with that, the Listings Rules and in particular, Order 10 Rule 9A of the NCR shall apply. Order 10 Rule 9A has various provisions for directions hearing and interlocutory processes that parties may invoke.
NOTICE OF MOTION
8. Moving on, I now address the application. There was no issue on the cited sources which included Order 12 Rule 40(1)(a), (b), and (c) of the NCR, so I will move on from there.
MAIN CONTENTION
9. The main ground for requesting dismissal of the proceeding in the application is time-bar. The defendant says the proceeding is time-barred under s 16(1)(a) and or (d) of the Frauds and Limitations Act 1988 (FLA). Section 16(1)(a) and (d) reads:
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,
......
(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.
10. The defendant’s main reference in regard to the time bar argument is the 2007 agreement. The defendant submits that time should be computed from the date of signing of the agreement. It also submits that time should be computed from 2008, which was the first alleged breach, to the date of filing of the latest amended originating process, which is the ASoC, and not till the date of filing of the original originating process. The defendant submits that the term “an action” under s 16(1) means or refers to the ASoC which is the current pleading and not the original writ of summons and statement of claim (original writ) which had been amended. That is why, it submits, that for purposes of computation of time, that time should accrue from 2007 or 2008 to the date of filing of the ASoC which was in 2021, and if so computed, the action would be time barred under s 16(1) of the FLA.
11. The plaintiff denies the claim. In response, it submits that the cause of action is not time barred. It submits that the cause of action accrued on 12 October 2012, that is, after or when the 2007 agreement had ended. It also submits that the breaches on the provisions of s 163(4) were recurrent from 2007 till 2012. It submits that time should therefore start to run from 12 October 2012 to the date of filing the original writ on 27 June 2018. It also denies that computation of time should be assessed based on dates from 2007 or 2008 till the date of the recently filed ASoC on 7 July 2021. It submits, amongst others, that the defendant’s submission in this regard is misconceived as the correct crystalized or end date should be the date when the original Writ was filed which was 27 June 2018. It submits in summary that if time is computed in that manner, which it says is the correct manner, the proceeding would be regarded as filed within 6 years thus would not be time bared as stipulated by 16(1) of the FLA.
12. Before addressing the main issues, I uphold the plaintiff’s submission that the end-time, for the present matter, shall be computed to the date of filing of the original writ. The original writ was filed on 27 June 2018. It is not correct, in the present matter, to say that the relevant end-date should be based on the date of filing of the ASoC which was 7 July 2021. The ASoC has amended an earlier amended writ of summons and statement of claim which in turn had amended the original writ. In general, once a claim is filed or lodged, that should be the date when the claim is formally before the Court. If there is an amendment made to the claim, or the originating process, it is made whilst the claim is already filed and is properly before the Court. Order 4 Rule 2(1)(a) states, ......Proceedings shall be commenced by writ of summons— ......where a claim is made by the plaintiff for any relief or remedy for any tort;. An exception to this, I note, is in a situation where a party amends an originating process and pleads or includes a new or separate cause of action. When that happens, the time (end-date), for purposes of computing the limitation period for the new claim or cause of action if the question of limitation arises, may be the date of filing the amended originating process.
13. Further, if a claim is struck out for example, and is refiled or recommenced afresh, then time (end-date) will crystalize, for purposes of computation of time, from the date of filing of the new originating process.
ISSUES
14. The main issues, in my view, are as follows, (i), what are the causes of action? (ii), when did time start to accrue and end, and (iii), whether the accrual was recurrent.
15. The issues herein are consistent with the Supreme Court’s decision in Oil Search Ltd v. Mineral Resource Development Corporation Ltd (2010) SC1022. The Court held, amongst others, that to determine whether an action is time barred requires a finding on three matters, namely, (i), identification of the cause of action, (ii), identification of the date on when the cause of action accrued, and (iii), a categorization of the cause of action.
CAUSES OF ACTION
16. I refer to the ASoC. Counsel for the plaintiff, with respect, did not clearly assist the Court in identifying the cause or causes of action. As for the defendant, Counsel submits that the causes of action may be founded in contract, tort, and or on recovery that is based on enactment. In any of these cases, counsel submits, they would be subject to the time limitation of 6 years, that is, pursuant to s16(1)(a) and (d) of the FLA.
17. The plaintiff is seeking reimbursement of K208,681 which he claims is still owed to it, that is, based on what it claims were illegal deductions made by the defendant based on clauses 6.2 and 6.5 of the 2007 agreement which it pleads contravened s 163(4) of the Gaming Act. Clauses 6.2 and 6.5 read:
6.2 The operator shall by the fifteenth day of the month following after receiving the final results from Central Monitoring, pay out of the accounts and distribute the profits to the site owner or his nominated account or representative the amount as referred to in section 163 of the Act after deduction of short banking for the period, monitoring fees as specified in item 8 of the schedule, rebates, as specified in item 7 of the schedule and any prepaid fees and incurred costs paid on behalf of the site.
......
6.5 For the purpose of this Agreement and the operator committing to invest and supply the site with the number of gaming machines as specified in item 2 of the schedule, the site owner agrees and offers
18. Section 163(4), (7) and (8) read:
(4) The holder of a gaming machine operator's licence or permit, as the case may be, shall, by the fifteenth day of the month following, make payments of the gross profits—
(a) derived from operating gaming machines during the previous month; or
(b) deemed pursuant to Subsection (5) to have been so derived,
as follows:—
(c) 55% of the gross profits as betting tax in accordance with Section 164;
(d) 10% of the gross profits into the "Community Benefit Fund Account" operated in accordance with Subsection (6); and
(e) 5 % of the gross profits to the Board; and
(f) 10 % of the gross profits to be retained by him if he is the holder of the gaming machine operator's licence, or, if he is not the holder of the operator's licence but is the gaming machine permit holder, then he shall pay that amount to the relevant holder of the gaming machine operator's licence; and
(g) 20% of the gross profits to be retained by him if he is the gaming machine permit holder, or, if he is not the permit holder but is the holder of the gaming operator's licence, then he shall pay that amount to the relevant permit holder.
......
(7) A person, who varies the percentage of profits payable to a permit holder under Subsection (4), is guilty of an offence.
Penalty: A fine not exceeding K50,000.00 or imprisonment for a term not exceeding five years, or both.
(8) A person who—
(a) requests or demands a share any profits from the operation of a gaming machine; or
(b) requests or demands payment or part payment by way of commission or allowance from or upon any profits from the operation of a gaming machine;
(c) shares any profits from the operation of a gaming machine; or
(d) makes any payment or part payment by way of commission or allowance from or upon any profits from the operation of a gaming machine,
otherwise than as provided by this section, is guilty of an offence.
Penalty: A fine not exceeding K50,000.00 or imprisonment for a term not exceeding five years, or both.
19. In perusing the pleadings in the ASoC, I will say this. The cause of action is founded or based upon a contract, that is, the 2007 agreement. I observe from the pleadings that the plaintiff refers the completed 2007 agreement to claims breaches of s 163(4) purportedly committed by the defendant. The plaintiff accuses the defendant and claims that it was the defendant that had inserted clauses 6.2 and 6.5(ii) into the 2007 agreement. It claims that in so doing, the defendant had, during the 5-year tenure of the 2007 agreement, deducted 4% of its 20% gross profit share per month, for a total of 60 months of the business operation. It says it was legally entitled to receive the full 20% under s 163(4) of the Gaming Act. Consequently, and as pleaded under paragraph 12 and 13 (a) in the ASoC, and I quote:
As a consequence of the Defendant’s refusal to reimburse the Plaintiff of K208,681.00 as set out above, the Plaintiff was denied the right to the use and enjoyment of its benefit from its funds and as a direct consequence of the above, suffered damages and losses.
......
AND THE PLAINTIFF CLAIMS:
(a) Reimbursement of K208,681.00 illegally deducted at 4% monthly gross sales or at 16% (sic) of the Plaintiff’s monthly gross profit for the 60 months of operation.
(Underlining mine)
20. The ASoC, I observe, appear to plead causes of action that may be founded under a simple contract, the tort, breach of statute and a claim to recover any sum recoverable by virtue of any enactment. Their applicable limitation period is 6 years, that is, pursuant to s 16(1)(a) and (d) of the FLA. I note that the defendant has correctly referred to the said provision in its application. I will now address each of them.
BREACH OF STATUTE?
21. In regard to allege the tort, breach of statute, I observe that it was not properly addressed at all in the submissions of the plaintiff. This is in addition to the fact that the tort is not expressly pleaded as a cause of action in the ASoC. Further and perhaps most importantly, is the fact that the ASoC does not plead any relief for the said tort if it is to be assumed as a cause of action. In the ASoC, the plaintiff simply requests for the refund or return of its shortfalls which it claims were legally owed to it under s. 163(4) of the Gaming Act. To me, these are proofs that no such cause of action (i.e., tort, breach of statute) is intended.
22. I therefore do not find the tort, breach of statute relevant or as a cause of action herein that should require scrutiny re time-bar.
CONTRACT & RECOVERY BASED ON ENACTMENT
23. Let me consider the causes of action, contract and to recover any sum recoverable by virtue of any enactment (the claims).
24. The claims are related. As stated, the plaintiff is not suing for breach of contract. Rather, it refers to the 2007 agreement so or which is why the claim may be regarded generally as founded on a simple contract. But in real terms, and in my view, the plaintiff is seeking reimbursements of monies under an enactment, which is the Gaming Act, arguing that monies that had been deducted pursuant to the terms of the 2007 agreement were done contrary to the mandatory provisions of the Act. The contentious provisions are clauses 6.2, 6.5(ii) and s163(4) of the agreement and the Gaming Act respectively. In the ASoC, the plaintiff lists (i), individual gross profit for each month from January of 2008 to October of 2012, (ii), alleged short fall of profit for each month from January 2008 to October 2012, and (iii), pleads sums that it claims it is entitled to, based on its calculations.
25. The cause of action, to recover any sum recoverable by virtue of any enactment, is subject to the limitation period of 6 years. I have to consider when the cause of action arose, and secondly, whether the accrual was or is recurrent.
26. The profits that were required to be paid per month under s 163(4), in my view, cannot be considered to accrue like for example a fixed interest rate over a period of time. Rather, these were alleged shortfalls or gross profits that were calculated per month over a period of time that were based on each separate month’s takings from the poker machines. Each alleged debt or profit therefore would be required to be proven or assessed separately. I say this because the plaintiff’s action is premised on the Gaming Act. The Act (s 163(4) expressly states that the payment of gross profit on the takings shall be made for the previous month, on the month following. Each gross profit per month is calculated and paid out, thus, the takings vary from month to month. There is no express provision under the Act that permits the gross profits for the previous month or months, to accrue over a period of time. Section 163 is premised in mandatory terms that the gross profit per month for the previous month must be paid or there will be substantial penalties to pay. The Gaming Act makes the deductions per month under s 163(4) compulsory or mandatory. If a payment for a previous month is not received in the forwarding month (i.e., on the 15 day), it may become a debt that is due and owing, as well it shall amount to an offence under s 163 (7) and (8) which is enforceable by the National Gaming Control Board under the Act.
27. With that in mind, I ask myself whether all the alleged shortfalls as pleaded in the ASoC can be sought in that manner or otherwise, that is, given the 6 years limitation period.
28. I would answer in the negative. In my view, only those claims or alleged shortfalls/profits that are sought which were due within 6 years to the date of filing the original writ on 27 June 2018, may be permitted as filed within the limitation period. In the present matter, if we compute time back, the commencement or accrued date to compute the 6-year limitation period, shall be 27 June 2012. Consequently, all the purported monthly profit claims made in the ASoC before or preceding 27 June 2012, are time-barred. The Supreme Court in Soakofa Trading and 1 Or v Bank South Pacific Ltd (2021) SC2068 may provide some assistance. It stated at para 19:
19. In the case of a tort actionable per se, the cause of action accrues when the wrongful act is committed: Konze Kara v. Public Curator of Papua New Guinea & Anor (2010) N4055. An example of a tort actionable per se is defamation: see Loani Henao v. David Coyle (1999) N1918.
29. The Supreme Court has noted with approval the National Court decision re Konze Kara v. Public Curator of Papua New Guinea & Anor (2010) N4055. The said case, which was premised on tort, may be applied similarly in the present case. I therefore find the purported particulars of losses per month as pleaded in the ASoC, from January of 2008 to June of 2012, to be time barred. These purported deductions or shortfalls were purportedly incurred or due before the commencement of the 6 years limitation period.
30. I also find that the purported losses as pleaded in the ASoC for the months of July 2012 to October 2012 (which is a total of 4 months) to be within time or within the 6-year limitation period where the plaintiff may allege and pursue against the defendant. The 6-year period is computed from 27 June 2012 to 27 June 2018, the latter being the date of filing of the original writ.
SUMMARY
31. In summary, I partially grant the application.
REMARK
32. The defendant has also asked if the Court should consider other issues in the exercise of its inherent power to dismiss the matter. Although the Court does have that power, I uphold the plaintiff’s submission that the only matter for consideration was that as expressly pleaded in the application, namely, the time-bar issue.
33. Although I observe that there may be other issues that may require attention such as whether the ASoC discloses a reasonable cause of action, or whether the maxim peri delicto may apply to this case, I will not address them in this application. The parties may be at liberty to raise them at an appropriate time. To discuss or raise other matters where the plaintiff has not been properly informed or notified of, would be unfair and may amount to breach of the plaintiff’s right to be heard. I therefore refuse the defendant’s request in this regard.
COST
34. An award of cost is discretionary. In this case, the defendant has asked that cost be awarded on a solicitor/client basis. In support, counsel referred to evidence of notification to the plaintiff of its intention to seek cost based on the said cost-scale.
35. In considering, I note that the application was not wholly but partially successful. As such, I am minded to order cost to follow the event, but on a party/party basis instead of solicitor/client basis, which may be taxed if not agreed.
ORDERS OF THE COURT:
36. I make the following orders:
The Court orders accordingly
________________________________________________________________
Manase & Co Lawyers: Lawyers for the Plaintiff
Mel & Henry Lawyers: Lawyer for the Defendant
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