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National Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
WS No. 1994 OF 2005
BETWEEN
COECON LIMITED
(Receiver and Manager Appointed)
Plaintiff
V
WESTPAC BANK LIMITED
Defendant
Waigani: Sawong, J.
2 012: 05th July, 07th September
PRACTICE AND PROCEDURE – application for leave to file cross claim - whether leave should be granted to the defendant to file cross-claim – applicant relies on Order 1 rule 15 to make application - rule has general discretionary powers and do not relate directly to applications for cross claims - applicants affidavit in support is hearsay and application is incompetent – application also time barred – application refused
Case Cited:
Oil Search Limited v. Mineral Resources Development Corporation Limited (2010) SC 1022
Papua New Guinea Institute of Medical Research v. Papua New Guinea Banking Corporation [1999] PNGLR 85
Poia v ANZ banking Group (PNG) (2001) N2049
Counsel:
P. Wright, for the Plaintiff
A. Chillion, for the Defendant
7 September, 2012
1. SAWONG, J: Introduction: By a Notice Of Motion filed 21st November 2011 the Defendant seeks leave to file a cross claim against one, Timothy Peter Neville and Coecon Limited (receiver and manager appointed) pursuant to Order 1 rule 15 and Order 12 rule 1 of the National Court Rules.
2. It relies on the affidavit of Mr Asher Chillion sworn and filed on the 21st November, 2011.
3. The plaintiff opposes the application and relies on the affidavit of David Wardley sworn 22nd March 2006 and filed 24th March, 2006, the affidavit of Philip John Wright sworn 23rd September 2010 and filed 1st October 2010 and a further affidavit of Philip John Wright sworn and filed 8th December 2011.
Preliminary Issues
4. I should deal with the preliminary issue raised by the plaintiffs. Mr Wright of counsel urges the court not accept or rely on the affidavit of Mr Chillion in that it is hearsay. He submitted that the affidavit should have been deposed to by a representative of the defendant who had knowledge of the facts to depose. He submitted that Mr. Chillion as counsel was only acting on instructions and does not have personal knowledge of the matters he deposes in his affidavit.
5. In respect of this argument, I accept the submission from the plaintiff. Mr. Chillion's affidavit contains hearsay material in its entirety and therefore I reject that affidavit and do not rely on it.
Background
6. The relevant background of these proceedings are contained in paragraph 4 of the first affidavit of Mr. Wright, paragraph 7 of the second affidavit of Mr. Wright and paragraphs 3 and 4 of the affidavit of Mr. David Wardley. The chronology of the proceedings is contained in paragraph 3 of the second affidavit of Mr. Wright. I summarize from all these and set out below the background to these proceedings.
7. On 18th October 2000, David Wardley of KPMG chartered accountants was appointed receiver and manager of Coecon Limited by PNGBC Limited. From the date of appointment of the receiver, by virtue of section 264 of the Companies Act 1997, the directors of Coecon Limited (Receiver and Manager appointed) ceased to have power to act for the plaintiff company. A Mr. Timothy Peter Neville is and was a director of Coecon Limited (Receiver and Manager appointed) prior to the appointment of the receiver and he ceased to have powers to act on behalf of the plaintiff from the date of the appointment of the receiver.
8. From 25th of October 2000, the defendant knew of the appointment of the receiver to the plaintiff as there were public notices taken out in both the Post Courier and the National newspapers on the 25th, 26th and 27th of October 2000. Furthermore, the Receiver did write to the Managing Director of the defendant on the 12th of February 2001 of his appointment. There had been correspondences written by the Receiver to the Manager of the defendant in Kavieng on at least two (2) occasions of the appointment of the receiver.
9. On 14th February 2001 the defendant allowed to be opened and operated at its Kavieng branch an Account No. 1357704 in the name of the plaintiff.
10. Despite the defendant having knowledge and notice of the Receivership of the plaintiff, it nevertheless allowed one Timothy Neville purportedly acting as the director of Coecon Limited to complete and sign a Westpac Bank Account Opening Form for Account No. 1357704 for himself to operate such account along with other signatories, none of which involved the Receiver.
11. Between February 2003 and November 2003 large sums of monies were deposited into the said account and were subsequently transferred by telegraphic transfer to the Westpac Bank Account at Waigani. The deposits and withdrawals from the various accounts were done without the authority or consent of the Receiver. It appears that the deposits and withdrawals were done with the authority of one Timothy Peter Neville. It is against that background that the present application has been made.
Issue
12. The issue to determine is whether leave should be granted to the defendant to file a cross-claim.
13. The applicant relies on Order 1, Rule 15 and Order 12, Rule 1 of the National Court Rules to make this application. It is therefore necessary to consider these provisions.
14. Order 1, Rules 15 reads:
"15 Extension and Abridgement
(1) The Court may, on terms, by order extends or abridge anytime fixed by the rules or by any judgment or by order.
(2) The Court may extend time under sub rule (1) as well after as before the time expires whether or not an application for the extension is made before the time expires.
(3) The period within which a person is required by this rules or by any order to served, filed or amend any pleading maybe extended by consent without an order for extension."
15. Without having to discuss these provisions in any great detail, it is clear that these are general discretionary powers given to the court to help deal with matters before it. These rules are general in that they do not relate directly to applications for cross claims. Sub Rule (1) and (2) give the Court general power to extend the time either before or after the time stipulated expires or before it expires. Such an application for extension of time must be by way of Notice of Motion and supported by an affidavit.
16. The next provision relied on is Order 12 rule 1. It reads:
"1. General relief
The court may, at any stage of any proceedings, on the application of any party, direct the entry of such judgment or make such order as a nature of the case requires, notwithstanding that the applicant does not make a claim for relief extending to the judgment or order in any originating process."
17. Again this provision is a general provision. It does not specifically refer to an application for leave to file a cross claim.
18. Rule 11 of the Motions Amendment Rules provides that all motions must contain a concise reference to the court's jurisdiction to grant the orders being sought. Motions not containing such references are not to be accepted for filing or even if accepted by registry staff through inadvertence or carelessness, the court may strike out the motion for incompetence. The point I wish to raise here is that the defendant has not pleaded precisely the relevant provisions for leave to file cross claims. Instead it has sought leave under general provisions that I have referred to. It could not be said by any stretch of imaginations that the rules relied on by the defendants are a concise jurisdictional basis. The proper jurisdictional basis would have been under order 8 of the National Court Rules. In any event, counsels did not address this issue and therefore I say nothing further on this aspect.
Submissions
19. I have considered carefully the submissions that have been made by each of the counsel. I propose to do my ruling based on not all of the submissions. The plaintiff has raised number of grounds in its' submissions as to why leave should not be granted. First, is that the proposed cross claim maybe time barred pursuant to section 16 (1)(a) of the Frauds & Limitations Act 1988.
20. Secondly, it was submitted that there has been undue delay in making the application and that no reasons have been given for the delay.
21. Thirdly, it was argued that in the interest of justice it would not be just to grant the relief sought.
22. Mr Chillion has not addressed these aspects in his submissions. He merely submits that the plaintiff would not be prejudiced by the cross claim.
23. From these submissions a number of issues have arisen. These issues are:
Time Limitation
24. Section 16 (1)(a) of the Fraud Limitation Act 1988 reads:
"subject to section 17 and 18, an action that is founded...on tort shall not be brought after the expiration of six (6) years commencing on the date on which the cause of action accrued."
25. This provision has been considered by the Supreme Court and the National Court in a number of cases; see Oil Search Limited v. Mineral Resources Development Corporation Limited (2010) SC 1022, Papua New Guinea Institute of Medical Research v. Papua New Guinea Banking Corporation [1999] PNGLR 85, Poia v. ANZ banking Group (PNG) (2001) N2049. The principles that emerge from these cases is that when the court is considering a time limitation defense, there are three factors to be considered by the court in determining and making a finding on whether the action is time barred. These considerations are:
(a) Identification of the cause of action.
(b) Identification of the date on which the cause of action accrued.
(c) Categorization of the cause of action.
I now apply these principles to the matter before me.
26. What is the cause of action? The answer to this question is not very precise in that as I have already ruled that the affidavit of Mr Chillion is not accepted, there is no evidence as to what is the cause of action to be raised in the cross claim. However from the submissions by counsels it is clear to my mind that the proposed cause of action to be set out in the cross claim is to be founded on negligence which is based on tort.
27. From the pleadings, in particular the statement of claim in the writ of summons, the amended statement of claim and the defense, the proposed cause of action against Tim Neville at the latest would have accrued on or about November 2003 when an amount totaling K3,174,718.38 had been withdrawn by Tim Neville. (See paragraph 10 of the affidavit of Phillip John Wright). From November 2003 to November 2011 when the notice of motion was filed, a period of 8 years has lapsed. I find that the proposed cause of action would have accrued from November 2003.
Six years from November 2003 would have lapsed in November or early December 2009. That would have been the period by which time the proposed cross claim ought to have been made in court. However, it was filed in November 2011. Thus, it was outside the time limit prescribed under Section 16(1)(a) of the Act.
28. From the foregoing it is obvious that the cause of action is based on negligence which is based on torts.
29. Section 16 (1)(a) of the Fraud & Limitation Act provides that an action founded on torts cannot be brought after 6 years from the date on which the cause of action accrued. It is clear as I have set out above that the defendants cross claim based as it does on negligence against Tim Neville accrued at least on or about November 2003. From November 2003 to the filing of the present application, a period of 8 years has lapsed. Accordingly, it's cross claim would be time barred.
30. As to the issue of delay, I accept the submissions put by the plaintiffs. In addition to the reasons given above that is that the defendant's proposed action is time barred, a significant period of time has lapse since the defendant had filed its' defence. A perusal of the chronology of events relating to filing of pleadings demonstrates that between 13th of April 2006 – 21st of November 2011 when this motion was filed, a total period of 5 years, 7 months and 8 days have lapsed before the defendant decided to seek leave to file what would be it's second cross claim in this proceedings.
31. In my opinion the defendant had since November 2003 to bring a cross claim against Timothy Peter Neville which it failed to do. Furthermore in its' defense and cross claim filed on the 13th of April 2006, the defendant had the opportunity to plead the allegations contain in its' draft cross claim but it neglected or failed to do so. Even when the defendant filed its' defence to the plaintiff's further amended statement of claim on the 22nd July 2011 it waited for further 3 months and 29 days until filing this application on 21st of November 2011.
32. Accordingly I accept the submission from the plaintiff that there has been a significant and chronic delay on the part of the defendant in bringing this application and or seeking to bring it's proposed cross claim against Timothy Peter Neville.
33. It is well establish in this jurisdiction that where there has been a delay in filing a defence or cross claim out of time the applicant must explain to the court amongst other things, why the applicant did not file its' defence or cross claim in time. In other words, the applicant must give reasonable explanations as to why time was allowed to lapse. In the present case as the affidavit of Mr Chillion has not been accepted and therefore there is no explanation for the delay. The mere reason that he raised in his submission that the plaintiff will not be prejudiced by the delay is not a sufficient reason to justify granting leave.
34. For the reasons I have given, I refuse the defendant's application with costs.
_____________________________---______________
Posman Kua Aisi Lawyers: Lawyer for the Plaintiff
Allens Arthurs Robinson Lawyers: Lawyers for the Defendant
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