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Fugo Transport Ltd v Carpenter Automotive & Transport Ltd [2022] PGNC 369; N9780 (22 July 2022)

N9780

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 266 OF 2020

BETWEEN:
FUGO TRANSPORT LIMITED
Plaintiff

AND:
CARPENTER AUTOMOTIVE & TRANSPORT LIMITED trading as BOROKO MOTORS
Defendant

Goroka: Mugugia, AJ
2022: 19^th , 22^nd July

LIMITATION OF ACTIONS – Defendant’s application to dismiss the proceedings for being statute-barred and an abuse of process – Whether the Plaintiff’s cause of action is statute-barred - Frauds and Limitations Act, Section 16(1)(a) – National Court Rules, Order 12 Rule 40(1)(c).

Case Cited:

Oil Search Ltd. v. Mineral Resources Development Corporation Ltd (2010) SC1022.

Counsels:

I. David, for the Plaintiff
A. Roden-Paru, for the Defendant

RULING

22 July, 2022
1. MUGUGIA, AJ: This is my ruling on the Defendant’s application to dismiss the proceedings for being statute-barred and an abuse of process. The application is made pursuant to Order 12, Rule 40(1)(c) and (d) of the National Court Rules, and Section 16(1)(a) of the Frauds and Limitations Act 1988. The Defendant seeks dismissal of the proceedings with costs on an indemnity basis. The supporting affidavit is the Affidavit in Support of Sheila Sukwianomb sworn on 31 May 2022, and filed on 2 May 2022. The Plaintiff relied on a total of five affidavits and opposed the application.

PLAINTIFF’S CLAIM

2. The Plaintiff’s claim is set out in its Amended Writ of Summons filed on 13 April 2022. The Plaintiff is a licensed retailer of new and used cars which specialises in providing cartage services to business houses and private individuals throughout the highlands provinces. In May 2012, customer demand for cartage services increased. The Plaintiff needed more trucks to carry on its cartage services so it obtained a quotation for six (6) new Kenworth trucks and trailers from the Boroko Motors branch in Goroka. The Plaintiff had an existing loan with the Westpac Bank Limited (Bank). It applied to the Bank for an additional loan. The loan was approved on 8 February 2013. The Bank released the cheque to the Defendant’s head office in Port Moresby for the 6 Kenworth Trucks including trailers. The trucks and trailers were to be picked up on 4 March 2013. The Plaintiff alleged that the Defendant was negligent in that it failed to deliver all the 6 Kenworth trucks at once on 4 March 2013 when the payment for all the 6 Kenworth trucks had been made to the Defendant at once on 25 February 2013. The Plaintiff also alleged that the Defendant delayed full delivery of all the 6 Kenworth trucks over a period of six months from 4 March 2013 to 7 September 2013 without good reason. As a result of the Defendant’s delay, the Plaintiff did not meet the cartage demand placed by the companies and business houses it was engaged with, it made a loss of K256,000.00, and defaulted in repaying its loan.

3. The Plaintiff seeks general damages for past loss of business, general damages for loss of assets, general damages for loss of savings in the IBD Account, general damages for future loss of business, general damages for loss of business reputation, inconvenience, exemplary damages, special damages at K31,933.57, interest at the rate of 8% per annum per statute and costs.

DEFENDANT’S DEFENCE

4. In its Amended Defence filed on 10 May 2022, the Defendant admits that on or about 4 March 2013, the Plaintiff picked up the first Kenworth truck. Among other defences raised, it raised these defences:

(i) The Plaintiff is under receivership and cannot sue without the consent or approval of the appointed receiver. It lacks capacity to bring this action.

(ii) Any cause of action arising out of this claim (which is denied) against the Defendant is statute-barred and in breach of Section 16 of the Frauds and Limitations Act, as more than six (6) years have lapsed since the cause of action arose. The Plaintiff’s claims are statute-barred.

(iii) The Plaintiff has failed to plead any cause of action, or any reasonable cause of action. The Plaintiff’s claim is frivolous and vexatious as it seeks redress from a third party (Carpenter Automotive & Transport Limited) which is not privy to the contractual agreement properly and mutually executed by the Plaintiff and the Bank.

PLAINTIFF’S REPLY

5. The Plaintiff filed a Reply to the Defendant’s Defence on 24 May 2022. The Plaintiff says that the receivership ceased on 6 May 2015. At the time of filing the writ of summons, the Plaintiff was not in liquidation and there was no need for the Plaintiff to obtain consent. The Plaintiff denies that the proceedings is statute-barred under Section 16 of the Frauds and Limitations Act. Its cause of action accrued on 9 April 2014 when the Plaintiff was put into liquidation due to the Defendant’s negligence. The 6 years time limit under Section 16 of the Frauds and Limitations Act lapsed on 9 April 2020. The writ was filed on 19 March 2020 which was before the expiry date of 9 April 2020. The writ was filed within the 6 years time limit. The Plaintiff says that the Defendant breached Order 8, Rules 28 and 29(1) of the National Court Rules.

ISSUE

6. What is before me is an application for summary dismissal of the proceedings for allegedly being statute-barred. The issue that arises for me to determine is whether the proceedings are statute-barred pursuant to Section 16(1)(a) of the Frauds and Limitations Act, and therefore should be dismissed pursuant to Order 12, Rule 40(1)(c) and (d) of the National Court Rules. I am only concerned with the issue of whether or not the proceedings are statute-barred.

PARTIES’ SUBMISSIONS

Defendant’s Submissions

7. The cause of action accrued on 4 March 2013 when the Kenworth trucks were to be delivered. The Writ of Summons was filed on 11 May 2020. The proceedings are an abuse of process because the proceedings was not filed within time.

8. The Defendant relied on the Supreme Court authority of Oil Search Ltd. v. Mineral Resources Development Corporation Ltd. (2010) SC1022, which, it submits, provides the three (3) tests to apply when it comes to an application to dismiss a proceeding for being statute-barred. In this case, it was held among others that the determination of whether an action is time barred entails a finding on three matters which are:

i. identification of the cause of action;
ii. identification of the date on when the cause of action accrued; and
iii. categorisation of the cause of action.

9. Order 12, Rule 40 of the National Court Rules provides for summary dismissal of proceeding. Reference was made to the cases of Anderson Agiru v. The Electoral Commission and the Independent State of Papua New Guinea (2002) SC687, Michael Newall Wilson v. Clement Kuburam (2016) SC1489, Michael Kuman v. Digicel (PNG) Ltd. (2019) SC1851, and Gulf Provincial Government v. Baimuru Trading Pty. Ltd. (1998) N1794. Relevant excerpts from these cases on frivolity and vexatious proceedings were set out in the Defendant’s extract of submissions.

Plaintiff’s Submissions

10. Its cause of action is based on negligence. The particulars of negligence are pleaded in the amended writ of summons, and this cause of action is valid. The negligence is because on five (5) occasions, the Defendant, without any reasonable cause, failed to deliver the 6 Kenworth trucks. The failure continued for 6 months. Its cause of action accrued on 9 April 2014. It suffered actual damage as a result of it being out on receivership. Its cause of action is not time barred because time is running.

11.The Defendant’s application is an abuse of process and is misconceived because the Frauds and Limitations Act, and the defence of the action being statute-barred are not properly pleaded in the amended defence. The Defendant has breached Order 8, Rules 28 and 29(1) of the National Court Rules. Specific particulars including dates were not pleaded. The Defendant’s application is an abuse of process because the claim was filed within time (5 years, 11 months).

CONSIDERATION

12. Section 16(1)(a) of the Frauds and Limitations Act states:

“Subject to Sections 17 and 18, an action

(a) that is founded on simple contract or on tort...

shall not be brought after the expiration of six years commencing on the date on which the cause of action accrued.”

13. To determine the issue of whether the proceedings are statute-barred, I am guided by the decision of the Supreme Court in Oil Search Ltd. v. Mineral Resources Development Corporation Ltd. (2010) SC1022. The Supreme Court said that a finding on an application for dismissal of proceeding for being time-barred depends on three matters which are:

(a) Identification of a cause of action;

(b) Identification of the date on which the cause of action accrued; and

(c) Categorisation of the cause of action.

Identification of a cause of action - What is the Plaintiff’s cause of action?

14. In the present case, the Plaintiff alleged negligence against the Defendant. The Defendant, through Counsel, submitted at the hearing that the pleading is not clear on the cause of action. What is established is that there is a breach of contract for failing to deliver the vehicles, and then the loss of business was a result of the Plaintiff company going into default with the Bank. The cause of action is breach of contract. The breach of contract gave rise to subsequent causes of action including negligence. Because of the breach of contract, it gave rise to all the other consequential damages which the Plaintiff is claiming. The Defendant’s supporting affidavit sets out the evidence on the cause of action.

15. I have considered the Plaintiff’s amended writ of summons filed on 13 April 2022. The Plaintiff has pleaded a cause of action based on the tort of negligence in its amended statement of claim.

16. I find that the Plaintiff’s cause of action against the Defendant is negligence.

Identification of the date on which the cause of action accrued - When did the Plaintiff’s cause of action accrue?

17. The Plaintiff pleads in its statement of claim that the cause of action accrued on 9 April 2014 when Westpac Bank Limited put the Plaintiff into receivership and appointed Mr Andrew Pini of Guinn PKF Chartered Accountants as the Plaintiff’s Receiver and Manager. Evidence of this is in John Ekepa’s affidavit filed on 4 July 2022.

18. The Defendant’s submission is that if any cause of action for breach of contract or tort against the Defendant arose, it would have arisen on 4 March 2013, at which time the Defendant ought to have delivered all 6 of the Kenworth trucks to the Plaintiff.

19. I have found that the Plaintiff’s cause of action against the Defendant is negligence. The date on which the cause of action accrued is the date when the negligent act was committed. The negligent act here is the failure by the Defendant to deliver all the 6 Kenworth trucks to the Plaintiff on 4 March 2013. This was when the negligent act of the Defendant was committed. I find that the cause of action accrued on 4 March 2013.

Categorisation of the cause of action.

20. The Plaintiff’s lawyer maintained that his client’s claim is one of negligence. The Defendant submitted that the categorisation of the cause of action is simple contract. I am of the view that the category that the Plaintiff’s cause of action falls under is a tort.
Are the proceedings statute-barred pursuant to Section 16(1)(a) of the Frauds and Limitations Act, and an abuse of process, and therefore should be dismissed pursuant to Order 12, Rule 40(1)(c) of the National Court Rules?

21. The Plaintiff contended that its cause of action accrued on 9 April 2014. The 6 years time limit lapsed on 9 April 2020. The writ was filed within the 6 years time limit on 19 March
2020, before the expiry date of 9 April 2020. The Defendant contended that the Plaintiff commenced this proceeding on 11 May 2020, which is 7 years, and 2 months after the purported accrual date of the cause of action for breach of contract which accrued on 4 March 2013.

22. Section 16(1)(a) of the Frauds and Limitations Act applies to an action founded on simple contract or tort. A claim in negligence is a tort covered by Section 16(1)(a) of the Limitations Act for which the period of limitation is 6 years. An action that is founded on tort must be brought within 6 years from the date that the cause of action accrues pursuant to Section 16(1)(a) of the Frauds and Limitations Act.
23. I find that the Plaintiff’s cause of action accrued on 4 March 2013. The 6 years time limit lapsed on 4 March 2019. This proceeding was commenced on 11 May 2020 after the 6 years time limit. I am satisfied that the proceeding is statute-barred pursuant to Section 16(1)(a) of the Frauds and Limitations Act.

24. The statutory defence that the action is statute-barred is clearly pleaded in the Defendant’s amended defence. This is a clear case where the Plaintiff’s claim is time-barred. The Defendant seeks dismissal of the proceedings pursuant to Order 12, Rule 40(1)(c) of the National Court Rules. I find that the proceedings are an abuse of the process of the Court (Order 12, Rule 40(1)(c)) as it is statute-barred.

25. Based on the reasons given above, and in the exercise of my discretion, I will dismiss the entire proceedings.

COSTS

26. The Defendant sought dismissal of the proceedings with costs on an indemnity basis, as it had forewarned the Plaintiff of filing this application to dismiss the proceedings if the action was not withdrawn. Costs will be ordered against the Plaintiff on an indemnity basis, which shall, if not agreed, be taxed.

FORMAL ORDERS:

27. The formal orders of the Court are:

1. The Defendant’s application to dismiss the proceedings for being statute-barred and an abuse of process is granted.

2. The entire proceedings are dismissed.

3. The Plaintiff shall pay the Defendant’s costs of and incidental to this application on an indemnity basis, which shall, if not agreed, be taxed.

4. Time for entry of these orders is abridged to the date and time of settlement of these

orders by the Registrar which shall take place forthwith.

Ruling and Orders accordingly.
________________________________________________________________
I. David: Lawyer for the Plaintiff
A. Roden-Paru: Lawyer for the Defendant