N8053

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

		WS 1629 of 2016

		BETWEEN:
MEMKITTS INVESTMENTS LIMITED
Plaintiff

AND:
PAUL DEPO AIKAL
First Defendant

AND:
PDA MAINTENANCE& TRADING LIMITED
Second Defendant

Waigani: Hartshorn J
2019: 15th August

Application to dismiss this proceeding

Cases Cited:
Papua New Guinea Cases

Kerry Lerro v. Stagg & Ors (2006) N3050
Takori v. Yagari & Ors (2008) SC905
Mt Hagen Urban Local Level Government v. Sek No. 15 (2009) SC1007
Oil Search Ltd v. Mineral Resource Development Corporation Ltd (2010) SC1022
Siu v. Wasime Land Group Incorporated (2011) SC1107
Pololi v. Wyborn (2013) N5253
Mamum Investment Ltd v. Koim (2015) SC1409

Overseas Cases

Derry v. Peek (1888) LR 14 App Cas 337
Hubbuck& Sons, Ltd v. Wilkinson, Heywood & Clarke, Ltd [1899] 1 Q.B. 86
Magill v. Magill [2006] HCA 51
OBG Ltd v. Allan [2007] UKHL 21; [2008] 1AC1

Counsel:

Mr. C. Kaki, for the Plaintiff
Mr. S. Mark, for the Defendants

15th August, 2019

1. HARTSHORN J:This is a decision on a contested application to dismiss this proceeding for being frivolous, vexatious and failing to disclose a reasonable cause of action, for being statute barred and for being subject to the doctrine of res judicata.

2. The defendants rely upon Order 12 Rule 40(1)(a), (b) and (c) National Court Rules and s. 16(1)(a) Frauds and Limitations Act 1988.

Background

3. The plaintiff commenced this proceeding claiming amongst others, that the defendants have breached a lease agreement for the lease and purchase of a Kenworth Truck and have breached a management agreement for the management of the plaintiff. The plaintiff claims special damages in excess of K24 million, the release of the Kenworth Truck and other damages.

Law

Order 12 Rule 40National Court Rules

4. In regard to Order 12 Rule 40 National Court Rules upon which the defendants rely, there are numerous authorities in respect of the principles to be considered. I make reference to the following cases: Kerry Lerro v. Stagg &Ors (2006) N3050, Takori v.Yagari & Ors (2008) SC905, Mt Hagen Urban Local Level Government v. Sek No. 15 (2009) SC1007 and Siu v. Wasime Land Group Incorporated (2011) SC1107. The Court in Mount Hagen v. Sek (supra) in paragraphs 27 to 30 conveniently sets out the requirements of Order 12 Rule 40 (1) (a), (b) and (c) as follows: 

“27.	The terms “vexatious”, “frivolous”, “abuse of the process of the Court” and “reasonable cause of action” under O.12 r.40 of the National Court Rules have been judicially considered, defined and expounded in a number of decisions in both the National and Supreme Courts. These cases include Ronny Wabia v. BP Exploration Co. Limited & 2 Others [1998] PNGLR 8 (N1697); PNG Forest Products Pty Ltd and Another v. The State and Genia [1992] PNGLR 85; Gabriel Apio Irafawe v. Yauwe Riyong (1996) N1915; Eliakim Laki and 167 Others v. Maurice Alulaku and Others (2002) N2001; Kiee Toap v. The Independent State of Papua New Guinea & Another (2004) N2766; Kerry Lerro trading as Hulu Hara Investments Limited v. Philip Stagg, Valentine Kambori& The State (2006) N3050; Philip Takori& Others v. Simon Yagari& 2 Others (2008) SC 905. These cases say the same thing. 
28.	The law with regard to an application for dismissal of proceedings based on O.12 r.40 is settled in our jurisdiction. We note that the principles are succinctly set out in Kerry Lerro’s case (supra) and which has more recently been approved and applied by the Supreme Court in Philip Takori’s case (supra). 
29.	The phrase ‘disclosing a reasonable cause of action’ consists of two parts; cause of action and form of action. A cause of action is defined as a legal right or form of action known to law whereby a plaintiff in a statement of claim must plead all necessary facts and legal elements or ingredients to establish or prove his claim.  The principles stated by these cases can be summarized as follows:
(i)	A plaintiff or claimant should not be driven from the judgment seat in a summary manner and that the Court should be cautious and slow in exercising its discretionary power.
(ii)The Court has an inherent jurisdiction to protect and safeguard its processes from abuse.
(iii)The purpose of O.12 r.40, is to give the Court power to terminate actions or claims which are plainly frivolous or vexatious or untenable.
(iv)A frivolous claim is one that is characterized as a claim that is plainly and obviously untenable, that cannot possibly succeed and bound to fail if it proceeds to trial.
(v)	A vexatious claim is one that is said to be a sham and cannot succeed where it seeks to merely harass the opposing party and put that party to unnecessary trouble and expense in defending or proving the claim.
30.	In an application under O.12 r.40 of the NCR, the Court may dismiss a proceeding or action where it is satisfied that the pleading in the statement of claim is seriously wanting where a necessary fact or legal element has not been pleaded.”
5.Further, notwithstanding all of the various judicial pronouncements since, the position is succinctly summarised in Hubbuck & Sons, Ltd v. Wilkinson, Heywood & Clarke, Ltd [1899] 1 Q.B. 86. At 90-91 the Court of Appeal said:
“The second and more summary procedure is only appropriate to cases which are plain and obvious, so that any master or judge can say at once that the statement of claim as it stands, is insufficient, even if proved, to entitle the plaintiff to what he asks.”
Frauds and Limitations Act
6. Section 16 (1) Frauds and Limitations Act is as follows: 
“(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.
Consideration
7. I consider whether this proceeding is statute barred first.
8. The defendants submit that the plaintiff’s claim is statute barred. This is because its claim alleges fraud and conversion and the breach of two agreements. The plaintiff’s claim has been brought after the expiration of six years from when the alleged causes of action accrued,contrary to s. 16(1)(a) Frauds and Limitations Act.
9. In the statement of claim are purported particulars of the breach of the lease/purchase agreement, of the management agreement, of conversion and of fraudulent acts.
10. The plaintiff’s causes of action are that the two agreements were breached, that the defendants converted the plaintiff’s property and that the defendants’ dealings amounted to fraud. The two agreements are simple contracts. Conversion and fraud or deceit are torts. For conversion: OBG Ltd v. Allan [2007] UKHL 21; [2008] 1AC1; for fraud or deceit: Derry v. Peek (1888) LR 14 App Cas 337;Magill v. Magill [2006] HCA 51 and Pololi v. Wyborn(2013) N5253.
11. Pursuant to s. 16(1)(a) Frauds and Limitations Act, a cause of action based upon simple contract or upon tort, must be brought within six years of the date that the cause of action accrued. That date is when the cause of action accrued and not from the date that the act giving rise to the cause of action is discovered: Mamum Investment Ltd v. Koim (2015) SC1409 at [22].
12. In considering this application, I am mindful of the Supreme Court decision in Oil Search Ltd v. Mineral Resource Development Corporation Ltd (2010) SC1022. In that case it was held amongst others, that the determination of whether an action is time barred entails a finding on three matters: identification of the cause of action, identification of the date on when the cause of action accrued and a categorisation of the cause of action.
13. As to the causes of action in this instance, as mentioned, they are in fraud, conversion and breach of contract concerning the alleged breaches of the two agreements, the conversion of the plaintiff’s property and fraudulent dealings. The date that the cause of actions accrued in the statement of claim is in or about 1999. 
14. From the above, I am satisfied that s. 16(1)(a) Frauds and Limitations Act applies and that this is a clear case of a proceeding being statute or time barred. Consequently, no reasonable cause of action is disclosed in the statement of claim. I am of the view that the defendants have properly made out their claim for the proceeding to be dismissed. 
15. Given this it is not necessary to consider the other submissions of counsel.
Orders
16. It is ordered that:
a)	This proceeding is dismissed;
b)	The plaintiff shall pay the costs of the first, second, and third defendants of and incidental to this proceeding to be taxed if not agreed otherwise;
c)	Time is abridged.
__________________________________________________________________
Niuage Lawyers: Lawyers for the Plaintiff
Kipoi Lawyers:  Lawyers for the Defendants