N9606

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

    OS 462 OF 2016 (COMM)

		BETWEEN:
RACHEL KAREN KOVE 
(formerly Po’o)
Plaintiff

AND:
TAU PO’O
First Defendant

AND:
DAVID GUINN 
asTrustee of the Property 
of Tau Po’o an Insolvent
Second Defendant

Waigani: Hartshorn J, 
       2019: 14th November

 Trial

Cases Cited:
Bank South Pacific v. Leahy (2002) N2263
Oil Search Ltd v. Mineral Resources Development Corporation Ltd (2010) SC1022
John Hiwi v. Rendle Rimua (2015) SC1460

Counsel:

Mr. B. Lai, for the Plaintiff
Mr. S. Gor, for the Second Defendant

14th November, 2019

1. HARTSHORN J: This is a decision on a contested claim by the plaintiff for amongst others, the specific performance of an agreement entered into by former spouses pursuant to which the first defendant former husband agreed to transfer the matrimonial home to the plaintiff former wife.

Background

2. The plaintiff and first defendant were married. The plaintiff filed proceeding MC 15/02 against the first defendant for divorce (divorce proceeding). The parties entered into a Financial Settlement Agreement dated 4th September 2002 (Agreement) which resulted in the settlement of the divorce proceeding and subsequent orders for Decree Nisi and Absolute.

3. Pursuant to clause 3.1Agreement the first defendant agreed to transfer a property at Gerehu, the matrimonial home, to the plaintiff within 30 days of the date of the Agreement. At that time the registered proprietor of the matrimonial home was the National Housing Commission. The first defendant agreed under the Agreement to pay all costs and the amount outstanding necessary to secure the ownership of the matrimonial home to him. The matrimonial home was transferred into the first defendant’s name in 2008 about six years later, however the first defendant did not transfer the matrimonial home to the plaintiff. The first defendant continues to be the registered proprietor of the matrimonial home. The first defendant was adjudged insolvent on 11th May 2015 and the second defendant was appointed the trustee of the property of the first defendant on 30th March 2016. 

4. The plaintiff seeks declaratory orders to the effect that the Agreement is lawful, binding and enforceable by the plaintiff against the first and second defendants, that the matrimonial home is no longer the first defendant’s property as he assigned or agreed to assign it to the plaintiff and the first defendant’s insolvency has no effect on the plaintiff’s right to enforce the Agreement. Orders are also sought to the effect that the second defendant’s powers as trustee of the first defendant’s property do not extend to the matrimonial home, that the first defendant’s insolvency does not affect the plaintiff’s right to seek specific performance of the Agreement and for the second defendant as trustee of the property of the first defendant to transfer the matrimonial home to the plaintiff. Injunctive relief is also sought.
Submissions
5. The plaintiff submits that the relief sought should be granted as amongst others:
a)	the matrimonial home was absolutely assigned to the plaintiff under the 	Agreement. Therefore, it was not the property of the first defendant when he was declared insolvent;
b)	the Agreement may be enforced against both defendants;
c)	the plaintiff has the legal right to the matrimonial home and the defendants are obligated to transfer ownership of it to her;
d)	the plaintiff’s claim is not statute barred by virtue of section 18 Frauds and Limitations Act (Frauds Act) as equitable relief, specific performance and injunctions are sought.

6. The second defendant submits that the relief sought by the plaintiff should not be granted as amongst others:
a)	the Agreement was sanctioned by the National Court on 5th December 2002. From that date it became an order of this Court. Section 16(5) Frauds Act provides that an action shall not be brought upon any judgment after the expiration of 12 years. This proceeding was commenced on 29th July 2016, a period of 13 years and seven months since the court order and so offends s. 16(5) Frauds Act;
b)	if the Agreement does not become a judgment, then it is a specialty and so 	offends s. 16(3) Frauds Act;
c)	the first defendant was to transfer the matrimonial home ‘within 30 days’. It is not disputed that the matrimonial home was not transferred to the plaintiff at any time. Section 2(1)(a) Frauds Act provides that, “no interest in land can be created or disposed of except in writing signed by the person creating or disposing of the interest.” The first defendant has not complied with this requirement;
d)	the relief sought by the plaintiff is not equitable relief, there is no contract of sale between the plaintiff and the first defendant so there is no contract of 	sale to specifically perform and the injunctive relief sought is consequential. 	Consequently s.18 Frauds Act does not apply;
e)	even if the plaintiff’s claim is based in equity, there has been unreasonable delay in bringing this claim and no reasonable explanation for the delay has 	been proffered.
Consideration
7. The first issue for consideration is whether s. 18 Frauds Act applies in this instance. 
8. Section 18 Frauds Act is as follows:
“18. Claims for specific performance, etc.
Section 16 does not apply to any claim for specific performance of a contract or for an injunction or for other equitable relief.”

9. In John Hiwi v. Rendle Rimua (2015) SC1460 (Cannings J, Kariko J, Bona J), it was held that amongst others that:
“Actions only fall within Section 18 if the relief being sought is confined to specific performance, injunction or other equitable relief. Here, though the appellant sought specific performance of the three agreements, he also sought payment of K74.5 million (presumably as a debt) and damages for breach of contract and general damages, so the action did not fall within Section 18. It was caught by Section 16(1)(a).”

10. At [23] the Court said:
“23.      We agree with the approach recently taken by the Supreme Court (Sakora J, Hartshorn J, Poole J) in Mamun Investment Ltd v Nixon Koi (2015) SC1409 that only where the relief sought by a plaintiff is confined to specific performance of a contract or an injunction or other equitable relief can an action fall within Section 18. It is, however, not sufficient for a plaintiff to seek specific performance or an injunction or some other equitable relief if such remedies are sought in addition to non-equitable remedies. It is only where the plaintiff seeks purely equitable relief that the action will fall within Section 18.”

11. In this instance, are non-equitable remedies being sought with equitable relief being sought in addition? The primary relief sought by the plaintiff is declaratory relief seeking declarations as to how the Agreement should be interpreted and the consequences of such interpretation. The plaintiff is not primarily seeking equitable relief such as for instance, an account of profits, recission or rectification. The plaintiff is also not seeking specific performance but merely a finding that the insolvency of the first defendant does not affect the plaintiff’s right to seek specific performance.

12. As the plaintiff is not seeking equitable relief primarily, but is seeking declarations as to the interpretation and consequences of the Agreement, s. 18 Frauds Act does not apply: Hiwi v. Rimua (supra); Mamun Investment v. Koim (supra). To the extent that injunctive relief is sought and specific performance, although as mentioned specific performance is not specifically sought, that relief sought is consequential.

13. As s. 18 Frauds Act does not apply, s. 16 Frauds Act does apply. It is not in dispute that the Agreement was sanctioned in its entirety as part of the Decree Nisi ordered on 5th December 2002. The second defendant submits that the Agreement became an order of the Court on 5th December 2002 and is a judgment for the purposes of s. 16(5) Frauds Act. The plaintiff makes the submission that if 12 years from the date of the judgment of the Court being the date of the Decree Nisi is calculated, that date is 5th December 2014. The plaintiff submits that its claim is not statute barred however, as s. 18 Frauds Act applies and so s.16 does not apply.

14. After considering the above submissions and to my mind, it was the judgment of the court on 5th December 2002 that it be ordered that the Agreement was sanctioned, as part of the Decree Nisi. Consequently, it is a judgment of the Court and falls within the wording of s. 16(5) Frauds Act. As 16(5) applies the Agreement which is a judgment of the court cannot be enforced as this proceeding was commenced more than 12 years after the date when the judgment became enforceable.

15. Further and similarly, if the Agreement is not a judgment of the court, then it can be considered to be a specialty: Bank South Pacific v. Leahy (2002) N2263 and Oil Search Ltd v. Mineral Resources Development Corporation Ltd (2010) SC1022. Section 16(3) Frauds Act operates to preclude an action being brought more than 12 years after the date when the cause of action accrued, which is so in this instance.

16. As s. 16(5) and/or s. 16(3) Frauds Act operate to preclude the plaintiff’s action, this proceeding should be dismissed. Given this it is not necessary to consider the other submissions of counsel.

Orders

17. The Court orders that:

a)	This proceeding is dismissed;

b)	The plaintiff shall pay the costs of the second defendant of and incidental to this proceeding;

c)	Time is abridged.
__________________________________________________________________
B.S Lai Lawyers: Lawyers for the Plaintiff                                            
Fiocco& Nutley: Lawyers for the Second Defendant