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TST Holdings Pty Ltd (In Provisional Liquidation) v Pelis [2000] PNGLR 186 (7 September 2000)

[2000] PNGLR 186

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

TST HOLDINGS PTY LIMITED (IN PROVISIONAL LIQUIDATION); AND
TIN SIEW TAN

V

THOMAS JOHN PELIS; AND
PELTON INVESTMENTS PTY LIMITED

WAIGANI: SHEEHAN J
10 August 1999; 7 September 2000

Facts

The first plaintiff (TST Holdings) and the second plaintiff (M. Tin) seek to set aside the judgement of the National Court against them in WS 67 of 1993 given on 17 March 1995, in favour of Thomas John Pelis (Mr. Pelis) and the second defendant Pelton Investments Pty Ltd (Pelton Investments) on the grounds that the judgement was obtained by fraud.

Held

1. The judgement in WS 67 of 1993 was obtained by fraud and the standard of proof being obtained is recorded here to emphasis the conclusiveness of the plaintiffs’ case in this Court and the absence of credibility in that of the defence.
   
2. The first defendant was aware of vital facts regarding collection of rentals at the time of the trial of WS 67 of 1993 and concealed them. Equally he was aware of the significance of these facts before the Court in this action.
   
3. The first defendant’s manner of giving evidence in the earlier action was one of embarrassment, evasion and denial. Only when faced with the incontrovertible evidence of the Westpac account and the clear evidence of his own payment into that account of Pelton Investments rentals that he felt compelled to acknowledge the truth of the plaintiffs’ assertions.
   

Counsel

M Cooke, QC & J Varitimos, for the first and second plaintiffs.
J Aisa, for first and second defendants

10 August 1999

SHEEHAN J. This matter arises from dispute between the parties over the purchasing, financing and a development of a property at Section 9 Lot 4 Boroko. The issues in these have been the subject of extensive litigation in both the National and Supreme Courts and indeed the present action to set aside was itself the subject of a Supreme Court appeal.

This property was initially purchased by Mr. Pelis in 1985 under a scheme enabling Public Servants to acquire house properties from the State. The following year the development of the property was undertaken by construction of eight rental units. This was achieved by Mr. Pelis joining with Mr. Tin and a Mr. Fong in a development company, Pelton Investment Pty Limited which purchased the property from Mr. Pelis and was then mortgaged to the ANZ Bank to secure the finance for construction. The share holding in the company was divided 50% to Mr. Tin and 25% each to Mr. Pelis and Mr. Fong. These share proportions were to reflect the major contribution to financing by Mr. Tin who paid off the State’s agreement for sale and purchase with Mr. Pelis, and on the transfer of the property to Pelton Investments, arranged the bank financing.

But the venture was not successful. Because mortgage commitments were not met, the ANZ Bank called in its security selling the property to recover its loans. Mr. Tin (who with TST Holdings was also a guarantor of the bank loan) was the successful bidder on the mortgage sale of the property.

Mr. Pelis aggrieved at this commenced proceeding against Mr. Tin and TST Holdings alleging fraud. He complained that Mr. Tin had breached his duty to account for rental received by him in respect to the property, resulting in the bank foreclosure.

Mr. Pelis succeeded at trial, obtaining judgement for himself and Pelton Investment with orders the title to the property transferred upon the mortgage sale be returned to Pelton Investments and an order for damages and interest in sum of K1, 475, 808.22.

After subsequent appeals and a review application were dismissed by the Supreme Court, TST Holdings against which company, judgement had also been obtained as a guarantor of the Pelton Investments bank mortgage, went into provisional liquidation. During the course of that liquidation, the Liquidator and Mr. Tin learnt of further bank accounts operated by Mr. Pelis in respect of Pelton Investment funds and commenced these proceedings. The plaintiffs in this action contend that the evidence given by Mr. Pelis in the trial of WS 67 of 1993 in support of the case pleaded by him in the statement of claim and supported by submissions of counsel, was false and known to be false by him at that time. Accordingly the judgement of the Court which accepted that evidence was a judgement obtained by fraud.

The defendant has denied these claims, maintaining that his evidence given at trial was true that he had in fact acknowledged the fact of other bank accounts before the learned trial judge, and accordingly Plaintiff’s cannot now succeed.

In the determination of this claim it is necessary and appropriate that the Court examine the statement of claim in WS 67 of 1993 to establish the cause of action pleaded; to consider the evidence given and submissions made in support of that cause of action, and the judgement of the Court to establish just what reasons were significant in the Court deciding as it did.

Mr. Pelis’s statement of claim in those proceedings, WS 67 of 1993 is recorded in full to show all causes of action pleaded. Brackets and emphasis have been added to indicate pleadings in respect of rental. (Mr. Pelis).

"1. The first plaintiff at the material times was and is Managing Director of the second plaintiff from about November 1989 and was owner of the property described in the Leasehold Title Volume 18 Folio 9485 situated at Section 9 Allotment 4 Boroko, National Capital District

2. The first plaintiff had acquired the title of the said property through a Government Housing Sales Scheme known as Morgan Scheme on or about the 9 May 1985. The property was then valued at K15, 000.00
   
3. The second plaintiff is a company incorporated under the Companies Act (Ch 146) and is capable of suing and being sued in its own Corporate name and style and had its registered office at Allotment 2 Section 143, Tokarara, National Capital District.
   
4. The first defendant (Mr. Tin) was the Managing Director of the second plaintiff from about October 1987 to November 1989. He held 50% of the shares in the second plaintiff. He was at all the material times a director, shareholder and owner to the second defendant.
   
5. The second defendant (TST Holdings) is a company incorporated under the Companies Act and is capable of suing and being sued under its corporate name and style.
   
6. On or about October 1987 by implied terms the first plaintiff a Mr. Peter Fong and first defendant all agreed to become Directors of the second plaintiff.
   
7. By the way of a general meeting of the second plaintiff it was resolved that the first plaintiff’s property described in 1 above be transferred and registered under the name of the second plaintiff and that the first plaintiffs house located on the property be demolished and two houses (flats) containing 8 units be erected on the property for the purpose of commercial renting of and on behalf of the second defendant
   
8. It was further resolved at that meeting that the first defendant be the Managing Director of the second plaintiff of a Mortgage over the property in order to construct the town houses.
   
9. It was further resolved that a bank loan be taken out under the name of the second plaintiff and that signatories to the bank account held in ANZ Bank at Waigani Branch be in the name of the three directors with any two to sign for a cheque or for any withdrawals of funds for the construction of the town houses and of the general management of the second plaintiff.
   
10. It was further agreed at that meeting that when the town hoses were completed all proceeds of takings made from the rents would be paid into the account of the second plaintiff held at the same ANZ bank Waigani towards discharge of the bank Mortgage.
    
11. On or about the 13 November 1986 and thereafter the first defendant negotiated a Mortgage loan of K530, 000.00 and a further K50, 000.00 with the ANZ Bank Waigani for the three directors of the second plaintiff, the first defendant and the second defendant.
    
12. The construction of the town houses was started by B&T Engineering but was completed by another Construction Company between August and September 1989
    
13. It was agreed that when all the 8 units were fully furnished the rent for each unit be K450 per week K1, 95 per month. The first tenant moved in or about November 1987.
    
14. The first defendant appointed Tamarua Real Estate as Managing Agents for the second plaintiff who had responsibility to collect and pay rentals on behalf of the second plaintiff.
    
15. The first defendant was responsible for collecting the monthly payments, which were to be banked at the second plaintiff’s bank account at the ANZ Bank, Waigani.
    
16. Between November 1987 and November 1989 the first defendant was the sole person who collected rental cheques for the 8 units from Tamarua Real Estate on behalf of the second plaintiff.
    
17. On or about 24 February 1988, the first plaintiff caused to make inquiries at the Office of Tamarua Real Estate regarding copies of documents relating to the collection of rents on behalf of the second plaintiff. The Tamarua Real Estate advised him to contact his Managing Director the first defendant to obtain necessary information and documents he required.
    
18. The first plaintiff inquired with the first defendant in respect of the monies from Tamarua Real Estate. The first defendant became annoyed saying that he had provided the finance for the construction of the said town house and therefore was not accountable to him to provide the information on rent collection that he took from Tamarua Real Estate.
    
19. Further the first defendant requested by the first plaintiff and Mr. Fong another Director to attend to Director’s meetings regarding management and rents collected by the first defendant for second plaintiff but the first defendant did not respond to notice of meetings issued nor did he attend any meetings of the Directors at all.
    
20. On or about November 1989 the first plaintiff caused to make inquiries at the ANZ Bank, Waigani Branch into the status of the loan so far and to ascertain whether the first defendant had made any payments for the rents collected from the second plaintiff.
    
21. The first plaintiff discovered that the loan account had gone from initial loan of K580, 000 to K600, 000 with interest accruing. The first plaintiff further discovered that the first defendant had paid no monies at all for the reduction of the original loan taken out by mortgage. And by 22 November 1989, it had gone up to K728, 712.25. The first defendant only paid K28, 000 for the second plaintiff.
    
22. On or about November, 1989 the first defendant was dismissed as a Director for failing to attend the three (3) consecutive meetings and for not briefing the first plaintiff and the Director Mr. Gong on the loan repayments and ANZ Bank, Waigani Branch on behalf of the second plaintiff from the rents collected for the 8 units.
    
23. The first plaintiff and Mr. Fong decided that the first plaintiff should take over the management and collect returns to ensure that the payments were made to the said Bank with the view to reduce the loan.
    
24. The first plaintiff had taken over from November 1989. By the time it was almost impossible to discharge loan and interest which accrued from the non-payments made by the first defendant in the previous twenty-six (26) months from the rent taking. The first plaintiff tried to reduce the loan for six (6) months but each time the bank interest was increasing higher and higher.
    
25. The ANZ Bank at Waigani then took over the property and advertised it for sale by public tender after the notice was served on the first plaintiff and the first and second defendants.
    
26. The first defendant who is the Director of the second defendant and who were both guarantors to the original mortgage loan of K530,000 and further K50,000 bid to purchase the property on tender.
    
27. The first and second defendants paid ANZ Bank, Waigani the sum of K750,000 which was the amount of loan that was outstanding and owing by the first and second plaintiff, and for which the first and second defendants were still guarantors and had the demised premises transferred by said bank to the second defendant. The property was registered under the name of the second defendant.
    
28. Between November 1987 to November 1989 and at material times the first defendant by collecting monthly rents on behalf of the first and second plaintiffs had failed to deposit the said rents into the second plaintiff’s bank account held at ANZ Bank at Waigani. The first defendant had therefore breached an implied term of oral agreement that all rents collected by the first defendant must be paid into ANZ Bank, Waigani on behalf of the second plaintiff and for its account.
    
29. The first defendant was still shareholder holding fifty percent (50%) shares in the second plaintiff and the payment of K750,000 paid in ANZ Bank was in accordance with the memorandum of mortgage entered executed by both the first and second plaintiff, and the first and second defendant and the ANZ Bank and therefore the property in question should not have been transferred to the second defendant.
    
30. By paying the sum of K750,000 to ANZ Bank by the first and second defendants as guarantors they had therefore discharged the original mortgage loan taken out under security of the second plaintiff. The property was therefore still vested with the second plaintiff. Any further sales to the first defendant or to the second defendant should have been negotiated by the first defendant and first plaintiff with one Mr. Gong. The sale of the demised premises to the second defendant amounts to a breach of implied term of oral agreement that first and second defendants were guarantors.
    
31. The first defendant had therefore intended and did commit serious breaches of the terms of contract either expressly or by implication amounting to misrepresentation and fraud.
    

(a) that he had manifestly misrepresented and indirectly defrauded the first and second plaintiff by agreeing to become a director of the second plaintiff and executing the articles and memorandum of association.

(b) that by taking the (50 %) share he had by way of misrepresentation and fraud intended to possess the demised premises of the first plaintiff and the second plaintiff and to convert it to his own use and to the use of the second defendant.

(c) That the first defendant had by way of fraud and misrepresentation promised the first and second plaintiffs that he was providing the finance when in fact in the memorandum of mortgage the loan of K580, 000 taken out with ANZ Bank, Waigani was made solely in the names of first and second plaintiff.

(d) That the first defendant by way of misrepresentation and fraud agreed with the first and second plaintiffs that the first defendant and second defendant were guarantors of second plaintiff in the mortgage loan of K580,000 plus bank interest taken out under the name of the second defendants.

(e) That the first defendant by misrepresentation and fraud agreed with the first and second defendant as guarantors to the K580,000 taken out by memorandum of mortgage would be paid by himself and the second defendant from the rent monies collected by the first defendant for second plaintiff or in the event that the loan is not discharged.

(f) That the first defendant by way of misrepresentation and fraud had not deposited the monies from rents collected on behalf of the first and second plaintiffs in the second plaintiff’s bank account at ANZ Bank, Waigani Branch for a period of twenty two (22) months.

(g) That the first and second defendants had misrepresented to the first and second plaintiffs that as guarantors they would discharge the mortgage loan of K750,000. Instead the said loan of K750,000 was not paid and a new memorandum of mortgage was obtained under the second defendant for the same amount in order to purchase the demised premises.

(h) That the first and second defendants had misrepresented to the first and second plaintiffs that as guarantors they would discharge the mortgage loan of K750,000. Instead the said loan of K750,000 was not paid and a new memorandum of mortgage was obtained under the second defendant for the same amount in order to purchase the demised premises.

(i) The first defendant had by fraud and misrepresentation to the plaintiffs applied again under the name of the second defendant to buy the demised premises on tender from ANZ Bank, Waigani.

(j) That the first defendant by misrepresentation and fraud had registered caveat against the demised premises alleging that he held fifty percent (50%) of the shares and further that he had contributed K200,000 towards the financing of the town house under the name of second plaintiff, when the said first defendant paid no monies or for the second plaintiff.

(k) That the first defendant had by way of fraud misrepresented the first and second plaintiffs to transfer the demised premises from the second plaintiff to the second defendant by executing the contract of sale and transfer documents with the ANZ Bank, Waigani.

(l) That the first defendant by misrepresentation to the Register of Titles had fraudulently transferred the Title of the property registered under the name of the second plaintiff and had it registered under the name of the second defendant.

32. That the first plaintiff and second plaintiff therefore had suffered substantial damages in the following:
    

(a) Loss of property in a State Lease Volume 18 Folio 9485 situated at Section 9, Allotment 4, Boroko originally registered under first plaintiff’s own name.

(b) The loss of original house owned by first plaintiff, which was demolished in order to erect a new townhouse consisting of 8 units for the second plaintiff.

(c) The loss of property registered under the name of second plaintiff originally built at the value of K580,000 in 1987 and which value together with the land would value now at more than one million kina (K1,000,000) in 1993.

(d) The first and second plaintiff have lost substantial amount of money by being deprived of by the first defendant for monies coming in rent from 1987 – 1993.

(e) Loss of viable and commercial property containing a two house and 8 units, which should not have been lost had the first defendant paid rents collected and banked them under the second plaintiff’s account with ANZ Bank, Waigani.

(f) Economic loss since 1987 and the loss of future economic loss, because the plaintiff was not able to operate its business with loss of its rents income, which were collected by the first defendant.

(g) Loss of monies from 1987 to now and future loss of salaries because of repossession by ANZ Bank, Waigani by the defraud of the first defendant in the lack of proper management and accountability of the second plaintiff’s rent monies, the first plaintiff had been deprived of regular salaries from 1987 to 1993.

In evidence before the learned trial judge Salika, J. Mr. Pelis confirmed the contentions therein set out. As to how the flat rentals were to be collected, he told the Court:

"Q. How was money to be collected?

1. Since Tin Tan was doing everything we took it for granted that he would collect the money. Since he was collecting payments we accepted it. Rents were to be paid into Pelton Investments account.
   
17. When were first rentals made?
1. First tenants moved in about October 1987.
   
17. How much was rent?
1. K450 a week per unit. K1,950 per month per unit. 8 units for K450 per week would be K15,800.
   
17. Did he deposit any rentals to Pelton account?
1. No.
   
17. Did you check the bank?
1. Yes I did get a bank statement. I found that the figures were all in the red .... In October of 1989 when I inquired about the financial affairs of Pelton Investments the loans were not repaid.
   
17. Any deposits made at all?
1. Only 2 deposits made after K14,300 deposited into the loan account.
   
17. In 1989 did you check both accounts?
1. Yes.
   
17. Any payments made?
1. No.
   
17. Did you as director inquire about rental payments?
1. Yes I did but everytime I called him he was not there and when I left messages he never called.
   
17. Did you take over as manager?
1. November 1989.
   
17. Did you reduce the loan?
1. Yes the monies were then transferred from cheque account to loan account. Interest kept escalating the principal loan was never reduced. Witness shown Post courier – public notice.
   
17. Why were you or Pelton not able to repay the loan?
1. I was a Public Servant then and I was not really involved in the company. Tin Tan was given management and take care of loan at the time. I was never involved.
   
17. Why was the loan not repaid?
1. I do not know.
   
17. Why was Pelton not getting money?
1. Pelton could not make repayments because rents weren’t going into Pelton Investment cheque account where in turn the monies would be taken out.
   
17. When did Mr. Tan stop?
1. In 1989 when I took over management of property.
   

In written submissions his Counsel stated as follows:

"the court is requested to ask as to why for about 18 months or more the first defendant had not paid any rent monies to the bank accounts of Pelton Investment Pty Limited to reduce the loan when in fact the (defendant) was solely responsible in collecting rents. It is our submission that the Tin Tan had hidden motive to allow the loan and interest to escalate, to a point of K728,712.25. This hidden motive was that because the two directors Pelis and Fong did not have the capacity and capabilities to discharge the loan whereas Tin Tan was capable do so he could eventually own the demised premises. Mr. Tin Tan had not taken steps to advise Pelis and Fong on the status of the outstanding loan and why it was not being reduced. He was in fact evasive and avoiding them and refused to attend any more of the directors meetings despite numerous requests and notices. Only K28,6000.00 was deposited from November 1987 to about May or June 1989. Why was Tin Tan doing this? Where did all the rent monies go to?"

In his judgement Salika, J. found facts as follows:

"Mr. Pelis gave further evidence that since Mr. Tin Tan was doing everything for Pelton he was to collect the rentals. Tenants were to pay K450.00 per week per unit. He said Tim Tan had organized with Tamarua Real Estate but did not bank it in the Pelton accounts. He said as a result of non-payment of the rentals into Pelton accounts Pelton was not able to reduce the loan. In late 1989 Mr. Pelis took over the management of Pelton. He tried to reduce the loan but the interest on the loan kept escalating and the principal loan was never reduced....

The first part of paragraph 28 of the claim has been made out by virtue of my finding in relation to paragraph 16. I concluded that the first defendant had collected the rentals from Tamarua Real Estates. Evidence in relation to the second part of paragraph 28 from Mr. Pelis and Mr. Fong was that not all the monies were deposited into Pelton account to reduce its loan. Whether or not there was an oral agreement for Mr. Tin Tan to pay the rentals to ANZ Bank Waigani on behalf of Pelton Investments is not vital. What is vital in my view is that Mr. Tin Tan had the obligation and the duty as Managing Director of Pelton Investment to pay the rental to the bank on behalf of Pelton Investment to reduce the loan. I find that paragraph 28 has been made out ... .

In relation to paragraph 32 the plaintiffs alleges that there was fraud and misrepresentation by Mr. Tin Tan in that while he was the Managing Director and shareholder of Pelton Investment he collected rental payments from Tamarua Real Estate but that he never paid the rental monies to the Pelton Investment account held at the ANZ Bank Waigani. There is no direct evidence of fraud and misrepresentation in most of the allegation except the allegations contained in paragraph 31(j). The only thing I say there is that as I have found that he collected rentals and he did not deposit the rentals into the Pelton account. The only reasonable conclusion I come up with is that he misappropriated Pelton monies ...

In summary I have found that Mr. Tin Tan did collect the rentals from Tamarua Real Estate and that he had failed to pay the rental monies to the Pelton Investments account so as to reduce its loan. I find that as a result of the non-payment by Mr. Tin Tan, the loan account of Pelton escalated. There is no evidence of fraud on the part of Mr. Tin Tan as to income. However I find that there was a fraudulent misrepresentation by Mr.Tin Tan when he took out a caveat restricting the sale of the property by Mr. Pelis."

In the result, the learned trial Judge found for Mr. Pelis and Pelton Investments and made the orders sought. Those orders are set out in this action where the plaintiff TST Holdings and Mr. Tin in their statement of claim say:

"5. On or about 30th June 1993 the first defendant Mr. Pelis and the second defendant Pelton Investments commenced an action in the National Court against the second plaintiff Mr. Tin and the first plaintiff TST Holdings, by causing Writ of Summons No. 67 of 1993 to be issued.

(a) In WS No 67 of 1993 the first defendant Mr. Pelis was the first plaintiff, the second defendant Pelton Investments was the second plaintiff Mr. Tin was the first defendant; and the first plaintiff TST Holdings was the second defendant.

(b) In action WS No. 67 of 1993 the plaintiffs sought the following orders;

(A) "A" declaration that the Sale and Transfer of the Title of the demised premises registered under the name of the second plaintiff from ANZ Bank, Waigani by way of mortgage sale to the first and second defendants was by way of misrepresentation and fraud, and was therefore illegal, null and void initio and of no effect.

(B) An Order of the Title of the said premises be reverted to the first and second plaintiffs, or alternatively the present value of the property for K1,537.500.00.

(C) An order that monies obtained by way of rent payments for the 8 units of the second plaintiff from September 1987 to November 1989 be paid to the first and second plaintiffs being the sum of K377,600.00.

(D) An order that monies obtained by way of rent for the first and second plaintiff between 30th April 1990 to 30th June 1993 be paid to the first and second plaintiffs being the sum of K592,800.00.

(E) An order that monies obtained by the first defendant by way of mortgage loan on behalf of the first and second plaintiffs with ANZ Bank, Waigani be paid to the first and second plaintiffs being K580,000.00.

(F) An order that the first defendant pays to the first plaintiff K6,000.00 for original house total K3,093.00.

(G) Damages as contained in the particulars of claim be assessed and paid to the first plaintiff.

(H) Eight percent (8%) interest as per statutes be allowed

(I) The costs of these proceedings.

(J) Any other orders as the court deems fit."

The said Judgment in favour of the defendants was obtained by fraud.

Particulars

The first defendant Mr. Pelis, on his own behalf and on behalf of the second defendant Pelton Investments, testified or submitted in the trial before His Honour Justice Salika:

(i) that he took over management of the subject property in or about October 1989 or November 1989, whereas in true fact the first defendant Mr. Pelis took over management of the subject property in or about September 1988 alternatively not later than in or about January 1989;

(ii) that there was no bank account into which rental from the property was paid other than at ANZ Bank as disclosed to the Court whereas in truth Mr. Pelis opened in the name of Pelton Investments a bank account at Westpac Bank Boroko into which he paid rental receipts of K110,000.00 approximately and utilized those funds for his own purposes and did not pay them to the ANZ Bank property loan account;

(iii) that Mr. Tin had received rentals from the property in 1988 and 1989 and failed to pay the same to the ANZ Bank loan account;

which testimony and submissions the first and second defendants knew to be false when it was given by the first defendant Mr. Pelis in the trial of action WS No. 67 of 1993, and which testimony was accepted by His Honour the trial judge Justice Salika, and the acceptance of which caused the trial judge to give judgment in favour of the plaintiffs in action WS No. 67 of 1993 who are the defendants in this action.

The plaintiffs’ evidence before the Court was based on that of Mr. David Wardly the Provisional Liquidator appointed by the Court for TST Holdings. His investigations into the finances of that company and subsequent disclosure of a Westpac Bank account opened by Mr. Pelis on 30 December 1988 are set out in his affidavit and annexures. The essence of his findings are set out in paragraphs 6, 7,8 of his affidavit of 5 February, 1998 as follows:-

"6 My investigation has shown that contrary to the evidence of Mr. Pelis in the National Court proceedings WS No. 67 of 1993 that he took over management of the Pelton Investments property at Allotment 4 Section 9 Boroko in late 1988. Mr. Tin Tan was dismissed by Mr. Pelis as a Director of Pelton Investment in September 1988 and it would appear that Mr. Tin Tan had no involvement with the collection of rentals for the Pelton Investments property from that time onwards. I have not been able to trace the sum of K24,459.95 being the net rentals recovered by Tamarua Real Estate for the period of June to December 1988 but it is apparent that Mr. Pelis who made inquiries in respect to the same in 1989 is well aware and stated on at least two occasions that he was satisfied that Mr. Tin Tan and TST Holdings had not collected that money.

"7. My investigations show that the commencement of 1989 that Mr. Tom Pelis collected all of the rentals from the property at Allotment 4 Section 9 Boroko and paid K109, 087.57 into the Pelton Investments account at the Westpac Bank PNG Limited. On inspection the transcript in the National Court proceedings WS 67 of 1993 it is apparent that Mr. Pelis did not disclose to the Court the existence of the Westpac Bank account and did not disclose to the Court that he collected and deposited the rental monies for Pelton Investments into the account. The statement by Mr. Pelis in the National Court proceedings WS 67 of 1993 that he did not take over management of the Pelton property until October 1989 is clearly wrong on the basis of the above material and my investigations.

8. I have been shown an assessment of the building costs of the project at Allotment 4 Section 9 Boroko by Craigie Kingston & Partners which verifies that the costs could not have been less than K580.00. I am informed by Mr. Tin Tan and verily believe that Mr. Tan paid architectural fees of K40,000.00 paid K15,000.00 to Tom Pelis for the purchase of the land, K120,000.00 for furniture fittings and white goods for each of the8 units, paid K30,000.00 for the perimeter."
   

When this evidence was put to Mr. Pelis he at first denied the realities of Mr. Wardly findings but in the end accepted the truth of them though he professed to be mystified as to what significance the fact of his collection of rentals from, at least November/December 1988 and payment into an undisclosed bank account could have had on his claim in WS 67/93.

I am satisfied beyond doubt that the plaintiffs have established that the judgement in WS 67/93 was obtained by fraud and that standard of proof being obtained is recorded here to emphasis the conclusiveness of the plaintiff’s case in this Court and the absence of credibility in that of the defence.

The plaintiffs’ whole case in WS 67/93 rested on the alleged fraudulent behaviour of Mr. Tin as being the person solely responsible for collection of Pelton Investments rentals during 1987 – 1989 and his supposed failure to account for them. That contention was fraudulent. Mr. Pelis was well aware that such was not the case. He had himself collected rentals of over K100,000.00 (not less than K108,000.00) for at least a year before the November 1989 date that he told the Court in WS 67/93 was when he assumed responsibility. It was he, Mr. Pelis who failed to account for those rentals. Had these facts been before the Court in WS 67/93 it would have been open to that Court to conclude that rather than Mr. Tin being responsible for the ANZ Banking foreclosing, it was Mr. Pelis himself. Such a conclusion on the ultimate responsibility for the Bank foreclosing is not necessary for this action. The major issue is whether the decision in WS 67/93 was obtained by fraud of Mr. Pelis. That has clearly been established.

I am satisfied – again beyond reasonable doubt – that Mr. Pelis was aware of those vital facts regarding collection of rentals at the time of the trial of WS 67/93 and concealed them. Equally he was aware of the significance of these facts before the Court in this action.

His manner of giving evidence was one of embarrassment, evasion and denial. Only when faced with the incontrovertible evidence of the Westpac account and the clear evidence of his own payment into that account of Pelton Investment rentals that he compelled to acknowledge the truth of the plaintiffs’ assertions.

Accordingly the judgement of this Court is that the judgement in favour of the plaintiffs in WS 67/93 was obtained by fraud and is wholly set aside. The plaintiffs will have their costs of this action.

Lawyers for the first and second plaintiffs: Henaos Lawyers.
Lawyers for the first and second defendants: JF Aisa & Associates.