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National Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
WS NO. 734 OF 2019
BETWEEN:
MASKET IANGALIO
Plaintiff
V
PETER KUMARA
Defendant
Waigani: Anis J
2021: 1st & 7th June
NOTICE OF MOTION - 2 motions – one seeking summary judgment and the other seeking dismissal of proceeding – applications heard together – preliminary issue – whether claim statute barred – s. 16(1)(a) and s. 18 – Frauds and Limitations Act 1988 - whether the claim is properly formulated where it would or should warrant or attract judgment or summary judgment – Order 12 Rule 38(1) – National Court Rules - whether the pleadings vague or so bad that they cannot be cured by amendment – whether defence a general defence - Order 8 Rule 28 – National Court Rules – exercise of discretion
Cases Cited:
Bluewater International Limited v. Roy Mumu (2019) SC1798
Christopher Smith v. Ruma Construction Ltd (2000) N1982
John Hiwi v. Rendle Rimua (2015) SC1460
Mamun Investment Ltd v Nixon Koi (2015) SC1409
MVIL v. Nominees Niugini Ltd (2014) SC1338
Rumbam Engineers & 1 Or v. Hiri 152 Ltd and Ors (2020) N8447
Counsel:
D. Kamen, for the Plaintiff
J. Sesega, for the Defendant
RULING
7th June, 2021
1. ANIS J: I heard 2 notices of motion on 1 June 2021. One was by the plaintiff seeking summary judgment on the basis that defendant’s defence be struck out. The other was by the defendant seeking to dismiss the proceeding.
2. Both motions were contested and were heard together. I reserved my ruling to a date to be advised. Parties have been notified so I will rule on them now.
BACKGROUND
3. The plaintiff alleges that his claim is one for specific performance which is based on an oral commercial contract that he has with the defendant. The plaintiff alleges that sometime in 1998, he, and as he pleads “out of good will and with the understanding that the defendant would pay the Plaintiff,” transferred 2 of his businesses to the defendant to own and operate. The first business was a company called Professional Armoured Services Limited (PASL or the company), and the second was a service station called Hohola Service Station (service station).
4. A material term of the agreement, the plaintiff claims, is that the parties have agreed that the defendant would later pay him K350,000 for the ownership of the company and K300,000 for operating (or owning) the service station. The plaintiff also says that he gave away, at the material time, 10 of his vehicles to the defendant to use in the operations of these businesses, which were valued at K248,500. He is not making a claim for the values of the vehicles but only for the monies which he says were or are due under the said oral contract. He also seeks various damages including interests and costs.
5. The defendant denies these claims.
PRELIMINARY ISSUES
6. Three (3) preliminary issues were raised in regard to the 2 motions. The first was this. I had queried the defendant’s amended notice of motion (filed on 17 May 2021) and had indicated that perhaps the correct way should have been for the defendant to file a fresh notice of motion, and that in the fresh notice of motion, he should seek to withdraw the earlier notice of motion, as has been the practice. The plaintiff supported the Court’s query in that regard and in so doing, objected to the use of defendant’s amended notice of motion. The second preliminary issue raised was this. The plaintiff objected to the use of a supportive affidavit of the defendant that was filed on 4 May 2021 which he intends to rely on in his amended notice of motion.
7. I heard submissions from both counsel on these matters. I made a ruling where I overruled the objections and allowed the amended notice of motion and affidavit of the defendant. I would refer to the transcript of the proceeding of 1 June 2021 for my full reasonings. In the said ruling, I also ordered that I hear the 2 motions together.
3rd PRELIMINARY ISSUE
8. The material relief sought in the plaintiff’s notice of motion (filed on 12 May 2021) are relief 1 and 2. He seeks summary judgment and for the defendant’s defence to be struck out. The rules relied upon are Order 12 Rules 1 and 38 and Order 8 Rule 28, of the National Court Rules. As for the defendant, he seeks to dismiss the proceeding in his amended notice of motion, that is, pursuant to Order 8 Rules 27(1)(a) & 29(1), Order 10 Rule 9A (15)(2)(d) & (e), and Order 12 Rule 40(1)(a) & (b) of the National Court Rules.
9. I raised a preliminary issue (i.e., the 3rd preliminary issue) with counsel for the plaintiff regarding time-bar. This was after I had noticed that time bar was pleaded as a defence by the defendant in response to the pleadings in the Statement of Claim (SoC). I referred counsel to paragraph 7 of the statement of claim (SoC) where it states and I quote, Sometimes back in 1998, out of good will and with the understanding that the Defendant would pay the Plaintiff, the Plaintiff transferred the two businesses to the Defendant. The Court’s query was in view of s. 16(1)(a) of the Frauds and Limitations Act 1988 (FLA) which states, and I quote in part:
(1) Subject to Sections 17 and 18, an action—
(a) that is founded on simple contract or on tort; or
.......
shall not be brought after the expiration of six years commencing on the date on which the cause of action accrued.
10. In response, the plaintiff’s counsel submits that the plaintiff is seeking specific performance based on the oral contract; that the cause of action is not for breach of contract but rather, for enforcement of the contract. Counsel referred the Court to relief 1 in the SoC, which states, An order for specific performance ordering the Defendant to pay the Plaintiff the sum of K650,000.00 as agreed between the parties. Counsel submits that given that, and in light of s. 18 of the FLA, s. 16 does not apply. Section 18 states, and I quote in part:
Section 16 does not apply to any claim for specific performance of a contract or for an injunction or for other equitable relief.
11. The defendant supported the Court’s query on time-bar. Counsel submits that the relief, specific performance, cannot stand on its own because it is reliant on a purported oral contract which is pleaded, and which is denied by the defendant.
12. I think the easiest way to address this issue is to draw my attention to the Supreme Court’s decisions in the cases, John Hiwi v. Rendle Rimua (2015) SC1460 and Mamun Investment Ltd v Nixon Koi (2015) SC1409. The Supreme Court in John Hiwi, in agreement with Mamun Investment, stated at paragraphs 23, 24 and 25:
23. We agree with the approach recently taken by the Supreme Court (Sakora J, David J and Hartshorn 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.
24. The rationale is that equitable remedies are discretionary in nature and that in deciding whether to grant such relief the court is bound to take into account, according to the doctrine of laches, any undue delay by the plaintiff in commencing the proceedings (Louis Medaing v Ramu Nico Management (MCC) Ltd (2011) SC1144, Fred Angoman v IPBC of PNG (2011) N4363, Letina Rau v Albert Kone (2014) N5804).
25. Here, the appellant was not seeking purely equitable relief so the action did not fall within Section 18. It was caught by Section 16(1)(a). Her Honour did not err by not upholding the appellant’s Section 18 argument.
13. I adopt these herein as my own. And in so doing, I note the following significant facts. The plaintiff herein pleads breach of contract or agreement in paragraphs 14 to 18 in the SoC. And he also seeks other substantive relief in the SoC. They include general damages, special damages, and exemplary damages. These factors, and in light of what was stated in John Hiwi v. Rendle Rimua (supra), means that the claim is captured by s. 16(1)(a) of the FLA, which is that in a case of a simple contract, the time limit for commencing an action for its breach, is 6 years from the time the cause of action arose. It is pleaded in the SoC that the parties had purportedly entered into the oral contract in 1998. If we compute time from there, to the date of filing this proceeding, it would be about 20 years. This is well over 6 years from the time the purported oral contract was entered into. And any breach of its terms and conditions, whether it be within 1998, or soon after, or several years later, would be well outside the 6-year time limitation period that is prescribed under s. 16(1)(a). In regard to the pleading of a breach of contract in the SoC, there is complete denial by the defendant on, not just the breach but, the existence of such an oral contract between the parties. This is not a case where the contract is undisputed, that is, where its terms and conditions are express or certain where the plaintiff could simply seek its enforcement in Court. In fact, it is far from that based on the pleadings as they are.
14. I therefore find that the claim is time-barred as it is captured by s.16(1)(a) of the FLA. I reject the plaintiff’s submission that the claim falls under s. 18 of the FLA. Also, for the same reason, I find that if this case were to go for trial, it would be a futile exercise because of the time bar situation that the plaintiff has or would be faced with, thus making it a frivolous and vexatious exercise. With that finding of frivolity, I also uphold the submissions of the defendant in that regard, which is sought in his notice of motion, that is, for the dismissal of the proceeding.
MAIN ISSUE
15. But let me also address the main issue which was raised by the plaintiff in his notice of motion. He claims summary judgment should be entered pursuant to order 12 Rule 38 on the basis that the defendant has pleaded a general denial which is disallowed by the National Court Rules, namely, Order 8 Rule 28.
16. The defendant, on the other hand, denies this claim. He submits that his pleading is consistent with the National Court Rules and the case law.
17. I have considered the arguments and the case authorities cited, by both parties.
18. I make this observation. Even if I were to uphold the plaintiff’s submission, I note that it does not automatically mean that I am bound to enter summary or default judgment. This is evident in the case law as shown over the years. See cases: Rumbam Engineers & 1 Or v. Hiri 152 Ltd and Ors (2020) N8447, Bluewater International Limited v. Roy Mumu (2019) SC1798, and MVIL v. Nominees Niugini Ltd (2014) SC1338.
19. In Rumbam Engineers & 1 Or v. Hiri 152 Ltd and Ors (supra), the plaintiff applied for summary judgment on the basis that the defendants failed to file any defence. In refusing the application for summary judgment, I stated at page 7 of my decision:
17. In my view, the reasons I give above are sufficient to decline the relief, particularly on the basis that (i), the cause of action may not be valid, and (ii), the pleading or the ASoC appears ambiguous. Therefore, it would be unjust and wrong in law if I am to simply ignore these considerations and sign summary judgment.
20. In Bluewater International Limited v. Roy Mumu (supra) SC1798, the Supreme Court, in an appeal against the trial Judge’s refusal to enter default judgment based on want of filing a defence, stated at page 70:
70. It should be clear from the foregoing that, no default judgment can be signed if the pleadings are insufficient. If notwithstanding such insufficiency, a default judgment is signed it has the risk of being revisited and set aside. All Judges should be on guard and ensure that they do not allow applications for default judgment without first checking and ensuring that the pleadings are sufficient in disclosing a cause of action known to law and that there is sufficient foundation either for entry of judgment for a liquidated claim or for an assessment of a plaintiff’s damages. Before that, all lawyers have a professional duty to the Court as officers of the Court to exercise the same care and refrain from bringing applications on pleadings that fail to clearly plead a cause of action known to law and with sufficient particulars to enable assessment of damages possible. Failures to adhere to this should result in an order for costs on a full indemnity basis.
21. And this. Justice Makail, sitting as a single judge of the Supreme Court in MVIL v. Nominees Niugini Ltd (supra), stated:
But, I accept Mr Anderson’s submission that the failure to file a defence does not automatically entitle the respondent to default judgment. Apart from the default, the Court must consider whether the pleadings are vague or sufficient and clear, that is whether the statement of claim discloses a reasonable cause of action: Urban Giru (supra) and Agnes Kunton (supra). The Court is bound to consider the pleadings on its own volition and satisfy itself whether the statement of claim discloses a cause of action before it may enter default judgment.
22. I must say that the claim and allegations that have been made by the plaintiff in his SoC appears peculiar for a commercial deal. The plaintiff had wanted to sell two of his businesses in 1998, and the process that he had chosen to achieve these, according to his pleadings, was an oral agreement without the basic or standard formalities. Even then, and when I consider the SoC, the pleadings therein concerning these transactions or dealings are vague. The plaintiff does not plead the material facts in regard to the time and dates of the purported agreement. He does not plead the particulars of (i), the parties’ intention to create legal relations, (ii), offer, (iii), acceptance and (iv), consideration, in regard to the sale of the 2 businesses. Proper details of the 2 businesses have not been pleaded. The pleadings appear to demonstrate a somewhat casual or very informal type alleged arrangement. And because the allegations are entirely based on allegations of an oral contract, the plaintiff, in my view, had the duty and obligation to thoroughly plead the material facts to support his claim. In my view, he has failed in that regard.
23. I turn to the relief the plaintiff seeks in his notice of motion. Under relief 1, he seeks summary judgment pursuant to Order 12 Rule 38 of the National Court Rules. That being the case, the pre-requisites that are required before a Court may grant such a relief is not, in my view, dependent first on a defence being struck out. Rather, the Court must be satisfied that:
(a) there is evidence of the facts on which the claim or part is based; and
(b) there is evidence given by the plaintiff or by some responsible person that, in the belief of the person giving the evidence, the defendant has no defence to the claim or part, or no defence except as to the amount of any damages claimed.
24. See case: Christopher Smith v. Ruma Construction Ltd (2000) N1982.
25. The plaintiff relies on 1 main affidavit, which is that of Elab Nalea which was filed on 12 May 2021. He happens to be a lawyer in the employ of Kamen Lawyers, which is the law firm that acts for the plaintiff. The plaintiff had attempted to rely on another affidavit, which was his own affidavit that was filed on 26 May 2021. However, counsel for the defendant objected to its use on the basis that it was never served on them. I upheld the objection after counsel for the plaintiff conceded to that fact, that is, of want of service of the affidavit. So, in the end, the plaintiff does not have any evidence of the facts on which the claim is based on, and there is no evidence of a responsible person of the plaintiff who has given evidence to say that in his or her belief, the defendant has no valid defence. I would reject Mr Nalea’s evidence as evidence coming from such a person. Mr Nalea is a lawyer and his involvement in the matter is because he is employed by his firm which acts for the plaintiff. He cannot or does not have first-hand knowledge of the alleged facts as claimed by the plaintiff, to be in any position to depose an affidavit on behalf of the plaintiff. Even if I may be wrong, Mr Nalea makes no such material depositions in his affidavit. All he states therein appears as submissions. He claims therein that the defendant’s defence is general and that it is in defiance or contrary to the requirements under Order 8 Rule 38. The reference by counsel to Order 8 Rule 38 in his affidavit appears to be incorrect. The correct rule counsel perhaps meant was Order 8 Rule 28 of the National Court Rules, which states that A party shall not plead the general issue.
26. So, I would have, if not for the preliminary findings, dismissed the plaintiff’s notice of motion for the reasons as state herein. The notice of motion has no relevant supportive affidavit. And also, I would not have been satisfied that the plaintiff has met the requirements for the grant of summary judgment under Order 12 Rule 38(1) of the National Court Rules.
SUMMARY
27. In summary, I will uphold the defendant’s notice of motion generally, and in so doing, dismiss the proceeding, that is, on the basis that the claim is statute barred under s. 16(1)(a) of the Frauds and Limitations Act 1988. I also dismiss it on the basis that the claim is frivolous.
28. For these reasons, it is not necessary for me to consider the other arguments raised particularly by the defendant in his notice of motion.
COST
29. An order for cost in this situation is discretionary. I see no exceptional reason where I could order cost differently than to follow the event. I will order the plaintiff to pay the defendant’s cost of the proceeding on a party/party basis which may be taxed if not agreed.
ORDERS OF THE COURT:
30. I make the following orders:
The Court orders accordingly
________________________________________________________________
Kamen Lawyers: Lawyers for the Plaintiff
Twivey Lawyers: Lawyers for the Defendant
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