N11016

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 12 OF 2024 (IECMS/COMM)

BETWEEN:
MINERAL RESOURCES DEVELOPMENT COMPANY LIMITED
Plaintiff

V

KUMUL PETROLEUM HOLDINGS LTD KPHL
First Defendant

AND
KUMUL PETROLEUM (KROTON) LIMITED
Second Defendant

AND
KROTON LAITEPO EQUITIES LIMITED
Third Defendant

Waigani: Anis J
2024: 22nd August, 30th September

MOTION TO DISMISS – Order 12 Rule 40(1)(c) – National Court Rules – Dismissal premised on time bar – Section 16(1)(a) – Frauds and Limitations Act 1988 – whether claim time-barred – consideration - ruling

Cases Cited:
Mineral Resources Development Company Limited v. Kumul Petroluem Holdings Limited and 2 ors (2024) N10897
Kitogara Holdings Ltd & Others v. NCDIC [1988-89] PNGLR 346

Counsel:
J Renwick SC with counsel assisting G Geroro, for the Plaintiff
I Molloy with counsel assisting J Holingu, for the First and Second Defendants
M Kambao, for the Third Defendant
M Joseph [for an interested party]

DECISION

30th September 2024

1.	ANIS J:  I heard the third defendant’s notice of motion (NoM) filed 24 July 2024, on 22 August 2024.  The NoM sought to dismiss the proceeding on the basis that the proceeding was time barred under s.16(1) of the Frauds and Limitations Act (F&LA).  

2.	The only party opposing the NoM was the plaintiff.  I heard and reserved my decision to a date to be advised.

3.	Parties have been notified so I will rule on it now.

BACKGROUND

4.	The plaintiff sues the defendants where it seeks various declaratory orders.  Its primary action alleges breach of various provisions of legislations including the Oil and Gas Act (O&G Act) and the Kroton Equity Benefit Structure, or alternatively, unjust enrichment and or constructive trust.  Thus, it claims, amongst others, orders from the Court to order money to the tune of K22.7 million, which is preferential dividend that is due to the Hides PDL 7 Landowners but had been paid to the third defendant, to be paid following the mandatory process as stipulated under the O&G Act.

MOTION

5.	The NoM seeks various relief.  However, at the hearing, third defendant discarded relief 2, thus, the only main relief sought is as follows:

1.	Pursuant to Section 155(4) and Section 16 of the Frauds and Limitations Act, the entire proceeding be dismissed with costs for being time barred.

ISSUE

6.	The main issue of course is whether the cause of action as pleaded is time barred?

SECTION 16(1)(a)

7.	Section 16(1)(a) of the F&LA reads:

16.  LIMITATION OF ACTIONS IN CONTRACT, TORT, ETC.

(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

8.	The third defendant’s main argument is this.  It asserts that the plaintiff’s cause of action is one for breach of contract.  It refers to the Umbrella Benefit Sharing Agreement (UBSA) which was signed on 20 May 2009 between the State, the landowners of the PNG-LNG Project (the Project) and the relevant Provincial and local level governments of the Project area.  The Project is by far the largest private investment in Papua New Guinea.  

9.	The third defendant asserts that time should be computed on or about 20 May 2009, which would mean that the present cause of action is out of time.

10.	The plaintiff argues that the third defendant’s claim is misconceived and baseless.  The plaintiff also raised a preliminary issue on competency of the NoM.  It claims that no specific subsection was relied upon by the third defendant when it referred to s.16 of the F&LA.  As such, it submits that the NoM is incompetent and must be dismissed.

11.	In regard to the preliminary issue, I note the submissions of the parties.

12.	The NoM reads in part: 

On …… the Third Defendant will MOVE THE COURT for orders pursuant to Order 12 Rule 40(1)(c) …… of the National Court Rules … 

1.	Pursuant to Section 155(4) and Section 16 of the Frauds and Limitations Act, the entire proceeding be dismissed with costs for being time barred.

13.	The plaintiff complains that the third defendant failed to plead in the NoM which sub-section in s.16 it would rely on to alleged time-bar.  But regardless, I first note that the plaintiff has addressed the relevant sub-sections in its submission.  I also take into consideration that the argument by the plaintiff does not concern invoking jurisdiction of the Court.  It, rather, makes assertion on whether the ground for dismissal was sufficiently pleaded in the NoM.  Grounds for seeking a dismissal, in my view, may be further clarified in the submissions or the pleadings and thus need need not be expressly or wholly pleaded into a notice of motion.  I therefore decline the preliminary issue and will proceed to address the NoM and the relevant submissions on point.

14.	The defence of time bar is raised in para. 31 of the third defendant’s defence, which is as follows:

31.  The Plaintiff’s claim, if sustainable (which the Third Defendant says is not) would have arisen at the time of the last day of the exercise of the commercial option to acquire the said equity of 4.27%/25.75% which fell on 31st December, 2016, and the Plaintiff is now time barred pursuant to Section 16(1)(a) of the Frauds and Limitations Act 1988.

15.	Is the claim based or premised on breach of contract as alleged, and if so, whether the claim is therefore time barred?  The third defendant’s submissions, with respect, is made without regard to the pleadings in the Statement of Claim (SoC) filed 20 March 2024.  The plaintiff is seeking declaratory relief premised on breach of statutes, and alternatively, premised on unjust enrichment and or constructive trust.  And the claim is premised on an event that had occurred on 22 August 2022, as alleged and pleaded at paras. 34 to 41 of the SoC.  In summary, the plaintiff claims that in breach of the Kroton Equity Benefit Structure and statutes, the first and second defendants, on 22 August 2022, paid the K22.7 million to the third defendant as the Preferential Dividend due to the Hides PDL 7 Landowners.  The plaintiff alleges, amongst others, that pursuant to s.176(1)(2) and (3) of the O&G Act, the third defendant was not entitled to receive the K22.7 million.  It claims that the said payment made was wrongful, unlawful and or illegal.  Thus, it claims that on 20 December 2023, it issued a letter of demand to the first and second defendants, demanding the repayment of the money as per the requirements under the various legislation including the Kroton Equity Benefit Structure.  It alleges that its demand was not met so it filed this proceeding seeking various declaratory relief.

16.	I also take into account this consideration.  I note that I have already determined whether the claim was meritorious or abuse of Court process recently in Mineral Resources Development Company Limited v. Kumul Petroluem Holdings Limited and 2 ors (2024) N10897.  The main arguments raised by the third defendant herein appears to constitute a rehearsal of the arguments that had been raised in the earlier hearing by the first and second defendants.  The correct process, if the third defendant is aggrieved by the Court’s earlier decision, should be to appeal or file a review to the Supreme Court.  See s.17, Supreme Court Act Chapter No. 37, Kitogara Holdings Ltd & Others v. NCDIC [1988-89] PNGLR 346. 

17.	I would also refer to my full reasonings in Mineral Resources Development Company Limited v. Kumul Petroluem Holdings Limited and 2 ors (supra) where I had refused to dismiss the proceeding.  This is a case where it should be properly trialed with all issues, some of which may be preliminary or concern jurisdiction.  Dismissing the case now will be unfair and prejudicial to the rights and interests of the plaintiff.

SUMMARY

18.	In summary, the NoM will be dismissed.

COST

19.	I will order cost to follow the event, that is, on a party/party basis to be taxed if not agreed.

ORDERS OF THE COURT

20.	I make the following orders:

1.	The third defendant’s notice of motion filed 24 July 2024 is dismissed.

2.	The third defendant to pay the plaintiff’s cost of the application on a party/party basis to be taxed if not agreed.

3.	Time for entry of these orders is abridged to the date and time of settlement by the Registrar of the National Court which shall take place forthwith.

The Court orders accordingly

________________________________________________________________

Geroro:	Lawyers for the Plaintiff
Holingu:	Lawyers for the First and Second Defendants
Strategic Legals Firm:	Lawyers for the Third Defendant