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Supreme Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]
SCA No. 145 of 2018
BETWEEN:
STRAN INVESTMENT LIMITED trading as STRAN TRAVEL
Appellant
AND:
DR. MICHAEL TAPO as SECRETARY NATIONAL DEPARTMENT OF EDUCATION
First Respondent
AND:
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Second Respondent
Waigani: Batari J, Hartshorn J and Anis J
2019: 29 October & 11 November
NOTICE OF APPEAL – substantive appeal - section 14(1)(b) - Supreme Court Act Chapter No. 37 - appeal against decision dismissing proceeding for want of section 5 notice - Claims By and Against the State Act 1996 – whether section 5 notice was duly served – sections 7, 8, 9, 10, 11 and 16 - Frauds and Limitations Act 1988 - whether there was acknowledgment of debt – whether right of action has accrued afresh – whether the claim was time barred
Cases cited:
Brian Josiah v. Steven Raphael (2018) SC1665
Terry Shelly v Yawe Riyond (2017) SC1567
Legislation:
Supreme Courts Act Chapter No. 37
Claims By and Against the State Act 1996
Frauds and Limitations Act 1988
Counsel:
Mr R J Lains, for the Appellant
Ms M Elisha, for the First and Second Respondents
11th November, 2019
1. BY THE COURT: This was a hearing of an appeal under section 14(1)(b) of the Supreme Courts Act Chapter No. 37, that is, on questions of mixed fact and law. It was heard on 29 October 2019.
Background
2. The appellant’s claim in the National Court (trial Court), which was subsequently dismissed, claimed a total sum of K1, 449, 407.75 as outstanding bills in relation to its hire car rental service. It claimed that the first defendant had rented its fleet of vehicles from the period 1 November 2007 to 30 October 2008, when rolling out its program called the Rehabilitation of Educational Schools and Institutions (RESI) throughout the country. It said on 17 April 2009, the first defendant made a part-payment of K123, 849.00.As a result, the total bill was reduced (from K1, 573, 256.75) to K1, 449, 407.75.
3. On 17 August 2018, the respondents filed a notice of motion before the trial Court seeking to dismiss the proceeding. The respondents sought dismissal on the basis that the appellant had failed to give notice of its intention to sue the State under section 5 (section 5 notice) of the Claims By and Against the State Act 1996 (CBASA). The trial Court heard and granted the respondents’ notice of motion and dismissed the proceeding on 4 September 2018, on the basis that the appellant had failed to give its section 5 notice within the required 6 months period before it commenced its proceeding before the National Court. We note that although there had been discussions before the trial Court on whether the claim was time barred, namely, whether the appellant filed its proceeding within the 6 year time limitation period as required under section 16(1) of the Frauds and Limitations Act 1988 (F&LA), the trial Court did not expressly state that as one of the reasons for dismissing the proceeding.
4. The appellant’s appeal stems from the above final decision of the trial Court.
Notice of Appeal
5. The appellant states 3 grounds of appeal in its Notice of Appeal (NoA). The NoA may be located at page 5 of the Appeal Book (AB). The 3 grounds are,
3.1 The learned trial judge erred in law and in fact in granting respondents/defendants application to dismiss the proceedings;
3.2 The learned trial Judge failed to comprehend and accept that appellant/plaintiff’s cause of action accrued on or after 8th October 2014 by virtue of the acknowledgment letter from one Mr, Joseph Logha who was the a/First Assistant Secretary with Policy, Planning, Research and Communication Division with Department of Education pursuant to Section 7 of the Frauds and Limitations Act 1988.
3.3 The learned trial judge erred in law and in fact in dismissing the entire proceedings for failure by appellant/plaintiff to give Section 5 Notice when appellant has given its notice of intention to defend to sue the State on the Attorney General on 27th November 2014 which is within 47 days from the date of which the cause of action accrued or of the occurrence out of which the claim arose. The date was 8th October 2014.
Substantive Argument
6. We prefer to address the main argument under grounds 3.2 and 3.3 of the NoA, and subject to our findings, consider the remaining ground. In brief, the issue arising from grounds 3.2 and 3.3 is this: Whether the trial Court erred in mixed fact and law when it did not regard the appellant’s letter dated 27 November 2014 to the Attorney General, as a valid section 5 notice. The trial Court in fact found the appellant’s argument on the subject matter misconceived and more or less misleading. We refer to line 30 at page 32 of the AB. The trial Court said,
However, Mr Lains for the plaintiff has now made an argument that the plaintiff is more or less relying on an acknowledgment by the Department of Education sometime in 2014 and therefore, he claims that the claim should be kept alive.
I find the argument misconceived and more or less misleading. The Court now will...... grant the application for dismissal for lack of section 5 notice.
Submissions
7. The appellant submits as follows. It says it gave its section 5 notice to the State on 27 November 2014. We note that this had also been pleaded at paragraph 4 of the appellant’s statement of claim. The appellant had also produced evidence of that before the trial Court. The letter of 27 November 2014 is located at page 68 of the AB. The appellant says it served the letter of 27 November 2014 after it had received a Minute dated 8 October 2014 from the office of the first respondent. The Minute is located at page 122 of the AB, and we note that this evidence had been before the trial Court. The appellant submits that the Minute contains evidence of admissions or acknowledgment of its debt by the first respondent. It submits that it was based on the said Minute that it sent its section 5 notice as per its letter of 27 November 2014. The appellant submits that the 6 months period should not run from the date when the contract was concluded in October of 2009, but rather, it should run from the day when it received the Minute from the State which was on 8 October 2014. The appellant submits that its computation of time is correct if section 5 of the CBASA is read together with section 7(1) of the Frauds and Limitations Act 1988 (F&LA).The appellant submits that if time had been computed on that basis, the trial Court would not have dismissed the claim for failure to issue a section 5 notice under the CBASA. It submits that instead of that, the trial Court computed time based on when the contract ended which was in 2009 and which was where, the appellant submits, the trial Court erred.
8. The respondents submit in response as follows. They say that the trial Court did not err in law or mixed fact and law. The respondents submit that the hire car contract alleged had been entered for about a year from 2007 to 2008. They submit that the first respondent made a part-payment of K123, 849 on 17 April 2009. They submit that pursuant to section 5(2)(b) of the CBASA, the cause of action would have commenced when the appellant became aware of the breach of contract, which would have accrued or begun in 2009. Therefore, they submit that the trial Court was correct in dismissing the claim on the basis of want of a section 5 notice. Counsel for the respondents did not make any submissions in regard to section 7 of the F&LA.
Law
9. Section 5(1) and (2)(b) of the CBASA states, and we set them out in part,
(1) No action to enforce any claim against the State lies against the State unless notice in writing of intention to make a claim is given in accordance with this Section by the claimant to—
(a) the Departmental Head of the Department responsible for justice matters; or
(b) the Solicitor-General.
(2) A notice under this Section shall be given—
(a) within a period of six months after the occurrence out of which the claim arose; or
(b) where the claim is for breach of a contract, within a period of six months after the claimant became aware of the alleged breach; or
10. We next refer to sections 7, 8, 9, 10, 11 and 16(1) of the F&LA, which states,
(1) Subject to Subsection (2) and Sections 8, 9 and 10—
(a) where—
(i) a right of action has accrued to recover a debt or other liquidated pecuniary claim; or
(ii) a claim is made to, or to any share or part in, the personal estate of a deceased person; and
(b) the person—
(i) liable in respect of that debt or other liquidated pecuniary claim; or
(ii) accountable in respect of that personal estate,
acknowledges or makes a part payment in respect thereof,
the right to the debt or other liquidated pecuniary claim, or the claim to, or to a share or part in, the personal estate of the deceased person, is deemed to have accrued on, and not before, the date of the acknowledgement or the date of the last payment, as the case may be.
......
An acknowledgement or part-payment under Section 7—
(a) may be made by the agent of the person—
(i) liable in respect of the debt or other liquidated pecuniary claim; or
(ii) accountable in respect of the personal estate; and
(b) shall be made to the person, or to the agent of the person—
(i) whose claim is being acknowledged; or
(ii) in respect of whose claim the payment is being made,
as the case may be.
An acknowledgement under Section 7 or 8 shall be in writing signed by the person making the acknowledgement.
(1) Subject to Subsection (2), an acknowledgement of a debt or other liquidated pecuniary claim binds the person making the acknowledgement and his successors, but does not bind any other person.
(2) Notwithstanding Subsection (1), where—
(a) an acknowledgement is made after the expiration of a period of limitation specified for the bringing of an action to recover a debt or other liquidated pecuniary claim; and
(b) the liability devolves on a successor on the determination of—
(i) a preceding estate; or
(ii) an interest in property under a settlement; and
(c) the determination takes effect before the date of the acknowledgement,
that acknowledgement shall not bind the successor.
(1) Subject to Subsection (2), a part-payment made in respect of a debt or other liquidated pecuniary claim binds all persons liable in respect of that debt or liquidated pecuniary claim.
(2) Notwithstanding Subsection (1), a part-payment made after the expiration of a period of limitation specified for the bringing of an action to recover a debt or other liquidated pecuniary claim—
(a) shall not bind any person other than the person making the part-payment and his successors; and
(b) shall not bind any successor on whom the liability devolves on the determination of—
(i) a preceding estate; or
(ii) an interest in property under a settlement,
taking effect before the date of the part-payment.
......
(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.
Crucial Evidence
11. We note that the trial Court had before it, amongst other things, two crucial pieces of evidence. The first was the copy of the Minute dated 8 October 2014 sent by the first respondent to the appellant where the respondents acknowledged the outstanding debt which they had owed to the appellant. It is located at page 122 of the AB. And the second was the appellant’s letter dated 27 November 2014 to the Attorney General giving the section 5 notice. It is located at page 68 of the AB.
12. The Minute of 8 October 2014 reads in part,
POLICY, PLANNING & RESEARCH DIVISION
Minute
DATE: 08/10/2014
FILE: PB2-1-2-1
TO: MANAGING DIRECTOR
STRAN TRAVEL
PO BOX 4577
BOROKO
NCD
SUBJECT: OUTSTANDING HIRE CAR PAYMENTS K1.4 MILLION
We write to advice you of the above subject matter.
Attached is a copy of my minute to Secretary in regard to urgent settlement of outstanding payments to your company and other service providers to NODE.
We apologies for the delays caused in the settlement but assure your company that this outstanding will be settled by the Department before the end of this year.
In the meantime, please bear with us while we organise payments.
Thank you for your understanding.
JOSEPH LOGHA
a/First Assistant Secretary
Policy. Planning, Research and Communication Division.
Cc: Secretary - NDOE
13. In regard to the section 5 notice letter, it reads in part,
26th November 2014
The Attorney General
Attorney General’s Office
PO Box 591
WAIGANI
National Capital District
......
RE: Section 5 notice for debt of K1,449,407.50 owed by Department of Education for Vehicle Hire.
We refer to the above matter and advise that Stran Travel is a Subsidiary Company of Stran Investment Limited. The subsidiary company deals with Vehicle Hire amongst others.
Department of Education hired various vehicles (particulars of vehicles as shown in the invoices) from our company in between 1st November 2007 and 30th October 2008 for their use. We invoiced the Department of Education in the aggregate sum of K1, 449, 409.75 for the vehicle hires. The Department paid K123, 849.00 on the 17th April 2009. Thus K1 449, 407.50 is the outstanding from the aggregate sum.
We have asked the Department of Education to settle the outstanding debt since but to no avail despite their continuous acknowledgment of owing the debt in the sun of K1, 449, 409.50. Recently in October 2014, a named Senior Officer of Department of Education acknowledged owing the outstanding debt and undertook to pay by close of Accounts for this Financial Year (2014).
The delay in settling the outstanding debt has affected our business’ cash flow, which is apparently crucial for the survival of a business-like ours. In the circumstances, we are compelled to issue this Section 5 Notice under the Claims By and Against the State Act 1995.
Note that we have the right to issue proceedings with or without your reply to this Notice. Hence, we will seek legal redress without further delay if Department of Education does not settle this outstanding debt within close of Account for this financial year (2014).
Yours faithfully
14. It is important for us to state here that the copy of the letter of 26 November 2014 that is in the AB contains an acknowledgment of receipt stamp of the Department of Attorney General. It also bears a hand-written acknowledgment of receipt note from one Ms Betty Makis who signs off on the letter as Executive Assistant. And the time is stated as 1:35pm and it is dated 27 November 2014.
Consideration
15. Did the appellant give a section 5 notice within 6 months from the time the cause of action arose? This was a debt recovery action and not a claim for breach of contract. In this case, section 5(2)(a) of the F&LA was the relevant provision. The appellant was required to give the section 5 notice within a period of six months after the occurrence out of which the claim arose. In the pleading that was before the trial Court, the appellant had stated that it had given its section 5 notice on 27 November 2014. This is contained at paragraph 4 of the statement of claim, that is, at page 37 of the AB. The appellant had provided evidence to that effect before the trial Court, and we note that we have covered some of that above.
16. To assist us make a determination, we firstly refer to the case of Terry Shelly v. Yawe Riyond (2017) SC1567. In relation to section 7 of the F&LA, the Supreme Court stated,
19. The agreement in April 1994 provided for the making of advances. If the statement of claim is to be read as alleging a series of advances, only in respect of some of these has a time of advance been alleged. Further and as we pointed out to counsel during the course of submissions, there have been later acknowledgements and part payments on the appellants’ own pleaded case. An acknowledgment occurred at the time of the alleged compromise in December 2007 and there were part payments in 2008 and 2009. The effect of ss 7, 10 and 11 of the Statute of Frauds and Limitations Act 1988 was that Mr Riyong’s right to sue for the debt is deemed to have accrued on and not before the date of acknowledgement or the date of the last payment as the case may be. Referring to an English equivalent, Lawton J described its effect in this colorful but accurate way in Busch v Stevens [1963] 1 QB 1 at 6: “the right [of action] shall be given a notional birthday and on that day, like the phoenix of fable, it rises again in renewed use – and also like the phoenix, it is still itself”.
17. We refer next to the Supreme Court case of Brian Josiah v. Steven Raphael (2018) SC1665. In regard to section 7 of the F&LA, the Supreme Court noted at paragraph 14 and 15,
14. It is fundamentally important to note that ss. 7, 8 and 9 of the Limitations Act relates to a claim that is founded on “debt or other liquidated pecuniary claim”. On the other hand, s. 16 of the same Act relates to claims that are founded on “simple contract or tort”. Sections 7, 8 and 9 fall under PART 11 and s. 16 falls under Part III of the Act. A closer examination of the scheme of the legislation show that Part II seeks to make provision for the evidence and means of proof of claims based on “debt or other liquidated pecuniary claim”.
15. It is therefore obvious, in our view, that there is a clear distinction in terms of the nature and causes of action under Part II and Part III. This view is fortified by the fact that s. 16 is not expressly made subject to ss. 7, 8 and 9 of the Act.
18. We have considered sections 7, 8, 9, 10 and 11of the F&LA. With respect, we share the same views as those expressed by the Supreme Court in Terry Shelly v. Yawe Riyond (Supra). We regard section 7to be express. It begins with the heading Fresh accrual of action on acknowledgement or part-payment. So, where a cause of action arises for one to claim money or other liquidated pecuniary claim, the cause of action may not be deemed to arise at its original date of accrual (i.e., the date when the said right begins to exist) if the defendant either acknowledges in writing the money that is owed or if the defendant makes a part-payment of the money. At the occurrence of one of the two cases (i.e., whether it be acknowledgement of debt or part-payment), the original date of accrual shall change and be deemed to start on the date of the acknowledgment or on the date of the last payment, as the case may be.
19. In the matter that is before us, we note that there was acknowledgment of the debt by the respondents and we refer to their Minute letter which is dated 8 October 2014. The cause of action would have begun on that day, that is, 8 October 2014. Computation of time whether it be to determine if the action was time barred under section 16 the F&LA or if was commenced within the requirements under section 5 of the CBASA, should start as at that date, that is, 8 October 2014. The appellant in this case, filed its writ of summons and statement of claim on 4 June 2015. The appellant therefore was, in our view, well within the time limits as set-out under section 16(1) of the F&LA. The appellant was also required to give a section 5 notice before it commenced its action. This is the critical part because the trial Court had based its reason solely on want of section 5 notice when it dismissed the proceeding. In this case, section 5(2)(a) of the F&LA was the relevant provision. The appellant was required to give the section 5 notice within a period of six months after the occurrence out of which the claim arose. In the present case, and as we have explained, the cause of action has recommenced or started afresh on 8 November 2014. In the pleading, the appellant stated that it had given its section 5 notice on 27 November 2014. Again, the appellant had provided evidence to that effect before the trial Court and it has also done the same before this Court.
20. We will uphold the appellant’s submission. In our view, counsel rightfully drew our attention to sections 7, 8, 9, 10, 11and 16(1) of the F&LA. We also note that the appellant’s pleading in the lower Court and its evidence, support its submission on points of mixed fact and law, namely, that its cause of action was not time barred and also that it had given due notice under section 5 of the CBASA before it commenced its action against the respondents in the National Court.
21. We find in the present case that the trial Court did not consider fully the submissions of the appellant in terms of the law and the relevant facts that had been adduced in evidence before it. We note that it would have assisted had the trial Court taken time to consider fully the arguments and evidence that had been filed instead of approaching the matter in the manner as it had done before arriving at its decision, which with respect, was a very brief ex-tempore ruling. In the end, the trial Court concluded that the appellant’s argument was misconceived and more or less misleading. We, however, and quite to the contrary, find the appellant’s argument on the law and its supportive evidence on the issue, not misconceived or misleading at all, but rather substantiated.
Summary
22. We therefore find that the trial Court erred in mixed fact and law. We find that the trial Court did not consider at all or if it had, it did not give due regard to, the Minute dated 8 October 2014 together with sections 7, 8, 9, 10, 11 and 16 of the F&LA. Had that been done, the trial Court would have found that the appellant’s section 5 notice of 27 November 2014 was given within time under the CBASA, and also that the appellant’s cause of action was not time-barred.
23. Our findings in relation to grounds 3.2 and 3.3 are sufficient for us to uphold the appeal. We therefore see no need to proceed further to address the remaining ground of appeal.
Relief
24. We refer to page 6 of the AB. The appellant seeks the following relief,
(a) Uphold the Appeal and quash the National Court orders and decision dated 4th September 2018.
(b) The National Court proceedings prefixed WS No. 730 of 2015 – Stran Investment Limited trading as Stran Travel be reinstated before Civil Court Mediation Track at the lower court.
(c) Pursuant to Section 16(c) of the Supreme Court Act 1975, enter default judgment against the respondents/defendants for assessment of damages through mediation.
(d) Costs of this Appeal and National Court proceeding against the Respondents.
(e) Such other Orders the Court deems fit.
25. We will of course uphold the appeal as is sought under relief (a) of the NoA. We are also inclined to grant costs of the appeal to the appellant. In regard to costs of the National Court proceedings, we note that the substantive proceeding has not been determined so we are not inclined to, except for the appellant’s costs for defending the respondents’ notice of motion to dismiss the National Court proceeding which we will grant, grant the full costs of the National Court proceedings.
26. We decline to grant relief (b) and (c). We find the relief sought to be misconceived. This Court is seized with this appeal which is against the trial Court’s decision that granted the respondents’ notice of motion to dismiss the proceeding. The appellant has now succeeded in the appeal, meaning and in our view, that the matter shall be referred back before another judge of the National Court Civil Track to progress the matter to a full hearing or otherwise. Default judgment arguments had not been raised before the trial Court where the appeal has stemmed from. Therefore, the relief is not properly before us to consider and grant. We also decline and give the same in relation to the appellant’s request to have the matter referred for mediation. And we will add these: Mediation may be considered by the parties in the Court below which has the power to grant this relief. Further, mediation may be most desired if there is consensus for that reached by the parties. We note that no such consensus was brought to our attention by the parties at the appeal hearing.
Orders
27. We make the following orders:
(i) cost of the appeal; and also
(ii) its National Court costs in defending the application to dismiss the proceeding.
on a party/party basis to be taxed of not agreed.
__________________________________________________________________Unages Lawyers : Lawyers for the Appellant
Office of the Solicitor General: Lawyers for the Respondents
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