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Supreme Court of Papua New Guinea |
PAPUA NEW GUINEA
[ IN THE SUPREME COURT OF JUSTICE ]
SCA NO. 59 OF 2016
BETWEEN:
BRIAN JOSIAH on behalf of himself and 81 Other members of the AIR TRANSPORT WING PAPUA NEW GUINEA DEFENCE FORCE whose names are as
inscribed hereto
Appellants
AND:
STEVEN RAPHAEL - ACTING SECRETARY FOR THE DEPARTMENT OF DEFENCE
First Respondent
AND:
COL JOE KEWA - CHIEF OF PERSONNEL, PAPUA NEW GUINEA DEFENCE FORCE
Second Respondent
AND:
COMMODORE PETER ILAU – COMMANDER, PAPUA NEW GUINEA DEFENCE FORCE
Third Respondent
AND:
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Fourth Respondent
Waigani: Kirriwom J, Yagi J & Geita J
2017: 28th & 31st August
2018: 30th April
APPEALS – appeal against final judgment resulting in dismissal of proceedings – class action against the State by serving members of the PNG Defence Force – claim for unpaid overseas training incidental allowance due between period 1977 and 1994 – proceedings filed in June 2003.
APPEALS – whether the claims are time barred under s. 16(1) of the Frauds and Limitation Act 1988 – whether the notice of claim under s. 5 of the Claims By and Against the State Act 1996 was given by the appellants – whether the doctrine of equitable estoppel should be invoked – whether the claim by the appellants are vexatious and an abuse of process – no identifiable error of law, fact or both evident in the decision of the National Court – appeal dismissed.
Cases Cited:
Papua New Guinea Cases
Daniel Hewali v. Papua New Guinea Police Force & The State (2002) N2233
Joe Kerowa v Motor Vehicles Insurance Limited (2010) SC1100
Kiee Toap v The Independent State of Papua New Guinea (2004) N2731
Paul Kumba v. Motor Vehicles Insurance (PNG) Trust (2001) N2132
PNG Forest Products Pty Ltd and Another v The State and Genia [1992] PNGLR 85
Paul Tohian, Minister for Police and the State v. Tau Liu (1998) SC566
Rawson Construction Ltd & Ors v The State (2004) SC777
Sao Gabi & State v Kasup Nate & Others (2006) N4020
Overseas Cases
Wylie v Wake [2000] EWCA Civ 349
Legislations:
Claims By and Against the State Act 1996
Frauds & Limitations Act 1988
Counsel:
L. Kari, for the Appellants
R. Raka & S. Sirigoi, for the Respondents
DECISION
30th April, 2018
2. The appellants appeal against the whole judgment and orders of the National Court.
Background Facts
3. The appellants totaling 82 are or were serving members of the Papua New Guinea Defence Force (PNGDF) attached to the Air Transport Wing. Each of them held different ranks and attended various training overseas at different times, length of periods, locations and institutions. They claim that, at all material times, they are entitled to be paid incidental allowances whilst undertaking their training overseas. They therefore claim varying amounts as unpaid allowances, the aggregate total being over K4.6 million. The claims arose between the periods 1977 – 1994.
4. In October 2003 the appellants obtained judgment against the respondents in default of filing a defence to the claims. The judgment was set aside by the Supreme Court on appeal by the respondents. In allowing the appeal the Supreme Court remitted the matter back to the National Court and further granted leave to the respondents to file their defence within 7 days. The orders of the Supreme Court were made on 01 March 2005. On 08 March 2005 the State filed in the National Court a defence to the claims by the appellants. In the defence the State pleaded, amongst others, that the appellants’ claims are statute barred under s. 16 of the Limitations Act and also that the appellants failed to comply with s. 5 of the Claims Act in giving requisite notice of their claims to the State.
5. In or about July 2015 the respondents filed an application by way of notice of motion seeking orders, amongst others, to dismiss the proceedings instituted by the appellants.
6. The application was heard by the primary Judge in October 2015 and a decision dismissing the entire proceedings including the claims by the appellants was made on 07 April 2016.
7. The proceedings was dismissed for 2 principal reasons:
(1) The appellants failed to give to the State a notice of their claims prior to filing their claims in the proceedings as required by s. 5 of the Claims Act; and
(2) The claims by the appellants are time barred pursuant to s. 16(1)(a) of the Limitations Act.
Grounds of Appeal
8. The appellants’ grounds of appeal are as follows:
(a) The Learned Trial Judge erred in law and in fact in holding that the Proceedings were statute barred when in fact the Proceedings were not statute barred because the Plaintiffs’ cause of action accrued in 2001 when payments were made for similar claims and the Department of Defence revisited the claims and acknowledged the indebtedness wherein requested the Finance Department to settle the claim(s).
(b) The Learned Trial Judge erred in law and in fact in relying on the strict requirements of strict statutory condition precedent hence disregarding equity, justice and fairness, when Defendants admitted the liability by their conducts by making part-payments of the claims.
(c) The Learned Trial Judge erred in law and in fact in holding that the Section 5 Notice under Claims By and Against the State Act was not served on the State when Plaintiffs had served it on 30th April 2003 and the State had not conclusively proved that the notice was not given as the records of transactions on correspondence received covered period after the 30th April 2003.
(d) The trial judge erred in law and in fact in not holding that with the instructing Department admitting liability and were willing to pay the Solicitor General had no instructions from the Department to act otherwise.
(e) His Honour erred in law and in fact in holding that the conduct of the Solicitor General and the State amounted to the State waiving its legal rights.
(f) The learned trial judge erred in law in holding that the claim was vexatious and an abuse of process as this was a claim pursued on behalf of Plaintiffs who were serving members and had gone through the process of payment but for the Court case.”
9. At the hearing the appellants’ counsel withdrew ground (e) after failing to secure leave to amend that particular ground in the notice of appeal. That left only grounds (a), (b), (c), (d) and (f) for the appellants to argue in the appeal. Ground (a) relate to the issue of time bar under s. 16(1) (a) of the Limitations Act. Grounds (b) and (d) pertain to the principles of equity and fairness. Ground (c) touches on the issue of notice of claim under s. 5 of the Claims Act. Ground (f) relate to whether the claims are vexatious and tantamount to an abuse of court process.
Issues
10. It is therefore clear, in our view, that the remaining grounds of appeal present the following 4 issues for consideration:
(a) Whether the claims by the appellants are time barred under s. 16(1) of the Limitations Act.
(b) Whether the appellants failed to give notice of their claims pursuant to s. 5 of the Claims Act.
(c) Whether the learned primary Judge erred in law in failing to give due recognition of the principles of equity and fairness.
(d) Whether the claims are vexatious and an abuse of court process
Issue 1 - Whether the claims by the appellants are time barred
11. Counsel for the appellants whilst conceding that the claims arose more than 6 years prior to the commencement of the action in the National Court, nevertheless, submitted that the employing agency (Department of Defence) through its commanding officers revisited the claims and agreed that the claims be paid. Counsel argued that the agreement to pay is evidenced in writing by various senior Defence Force officers and the Secretary for Defence which include a letter dated 28 June 2001 by Major Ron Hosea (AB, page 31), letter dated 2 January 2002 by Major Warokoi (AB, page 45), letter dated 15 April 2002 by Secretary for Defence Mr. Fredrick Punangi (AB, page 34), Department of Finance Internal Memorandum dated 6 May 2002 (AB, page 36), letter dated 6 June 2002 by Colonel Wiri (AB, page 47). All these letters were addressed to the Secretary for Finance acknowledging “indebtedness” and all that remains to be done is for the State, through the Department of Finance, to pay the claims. Counsel further argued these evidences tantamount to or constitute “acknowledgement” within the meaning of ss. 7, 8 and 9 of the Limitations Act and therefore, for the purposes of the Limitations Act, the cause of action is deemed to have accrued as from that time, that is, in 2001. The proceedings being instituted in June 2003 is therefore within a period of 6 years pursuant to s. 16 of the Limitations Act. On that basis it is submitted the learned primary Judge erred in law and fact in holding that the claims by the appellants were statute barred.
12. We start our deliberation on this issue by considering ss. 7, 8 and 9 of the Limitations Act. It is therefore necessary that these provisions be reproduced in their entirety. They are stated as follows:
“7. Fresh accrual of action on acknowledgement or part-payment.
(1) Subject to Subsection (2) and Sections 8, 9 and 10—
(a) where—
(i) a right of action has accrued to recover a debt or other liquidated pecuniary claim; or
(ii) a claim is made to, or to any share or part in, the personal estate of a deceased person; and
(b) the person—
(i) liable in respect of that debt or other liquidated pecuniary claim; or
(ii) accountable in respect of that personal estate,
acknowledges or makes a part payment in respect thereof,
the right to the debt or other liquidated pecuniary claim, or the claim to, or to a share or part in, the personal estate of the deceased person, is deemed to have accrued on, and not before, the date of the acknowledgement or the date of the last payment, as the case may be.
(2) Notwithstanding Subsection (1), where in respect of any rent or any interest that is due, a person, at any time, makes a part-payment, that part-payment—
(a) shall not extend the period for claiming the remainder then due; and
(b) shall, if it is a payment in respect of interest, be treated as a payment in respect of the principal debt.
8. Acknowledgement of part-payment by agent.
An acknowledgement or part-payment under Section 7—
(a) may be made by the agent of the person—
(i) liable in respect of the debt or other liquidated pecuniary claim; or
(ii) accountable in respect of the personal estate; and
(b) shall be made to the person, or to the agent of the person—
(i) whose claim is being acknowledged; or
(ii) in respect of whose claim the payment is being made,
as the case may be.
9. Acknowledgement to be in writing.
An acknowledgement under Section 7 or 8 shall be in writing signed by the person making the acknowledgement.” [Our emphasis added]
13. And s. 16(1) of the Limitation Act states:
“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.
(2) An action for an account shall not be brought in respect of any matter which arose more than six years before the commencement of the action.
(3) Subject to Subsection (4), an action upon a specialty shall not be brought after the expiration of twelve years commencing on the date when the cause of action accrued.
(4) Nothing contained in Subsection (3) shall be construed as affecting any action for which a period of limitation is specified by any other Act, and that subsection shall be read and construed accordingly.
(5) An action shall not be brought upon any judgment after the expiration of twelve years commencing on the date when the judgement became enforceable.
(6) No arrears of interest in respect of any judgment debt shall be recovered after the expiration of six years commencing on the date when the interest became due.
(7) Subject to Subsection (8), an action to recover any penalty or forfeiture, or sum by way of penalty or forfeiture, recoverable by virtue of any enactment shall not be brought after the expiration of two years commencing on the date when the cause of action accrued.
(8) For the purpose of Subsection (7) the word "penalty" does not include a fine to which any person is liable on conviction of a criminal offence.”
14. It is fundamentally important to note that ss. 7, 8 and 9 of the Limitations Act relates to a claim that is founded on “debt or other liquidated pecuniary claim”. On the other hand, s. 16 of the same Act relates to claims that are founded on “simple contract or tort”. Sections 7, 8 and 9 fall under PART 11 and s. 16 falls under Part III of the Act. A closer examination of the scheme of the legislation show that Part II seeks to make provision for the evidence and means of proof of claims based on “debt or other liquidated pecuniary claim”.
15. It is therefore obvious, in our view, that there is a clear distinction in terms of the nature and causes of action under Part II and Part III. This view is fortified by the fact that s. 16 is not expressly made subject to ss. 7, 8 and 9 of the Act.
16. Counsel for the appellants has not advanced fresh arguments nor referred to us authorities in support of his clients’ arguments. We are therefore not persuaded that his submissions are tenable in law.
17. We agree with the finding of the learned primary Judge that the cause of action by the appellants arose at the time when the appellants attended the training courses overseas. The primary Judge found that the majority of the appellants completed their training courses in the 1970s and a few in the 1980s and the rest of the group in 1994. The appellants have not challenged the finding of the trial Judge in that regard in this appeal. To the contrary, the appellants, through their counsel, conceded to the finding that their claims are time barred pursuant to s. 16(1)(a) of the Limitations Act.
18. The learned primary Judge determined the issue rejecting the submission by the appellants and found that the claims by the Appellants arose as from the time when the appellants became aware that their entitlements were due which was at the time of their training. His Honour stated at paragraphs 16 and 17 of the judgment:
“16. Mr. Kari for the plaintiffs responded that while his client’s did not dispute the claims are more than 6 years since they arose, the plaintiffs’ cause of action accrued in 2001 when payments were made for similar claims by other soldiers and when at the same time, the Department of Defence “revisited” the claims and “acknowledged the indebtedness” by letter dated 28th June 2001 to the Department of Finance requesting for settlement of outstanding claims including incidental allowances for overseas training.
17. I do not accept Mr. Kari’s submissions. His clients admit that their claims arose more than 6 years before the court proceedings were filed. The cause of action accrued when the plaintiffs became aware the entitlements were due but not paid, and that was at the time of their training. As the various training completed well before the time-limit stipulated in Section 16(1)(a) of the Frauds Act, the plaintiffs claims are clearly statute-barred.”
19. We are satisfied the learned primary Judge committed no error of law or fact. We find no merit in the submission and therefore dismiss the appellants’ submission accordingly.
Issue 2 - Whether the appellants failed to give notice of their claims
20. The appellants’ counsel, whilst conceding that there is no concrete evidence proving that notice was in fact given, submitted that it is for the State to prove conclusively that notice was not given. It is submitted it was incumbent on the State to produce source documents as evidence which include such documents as the register of documents and correspondences received and the computer data entries made during the relevant period. In this case, as submitted by counsel, there was no such evidentiary proof, and therefore, the Court should infer and find that s. 5 notice under the Claims Act was in fact given on 30 April 2003 as pleaded in paragraph 21 in the amended statement of claim.
21. The respondent submits the onus was on the appellants to prove to the contrary by some form of evidence and in this case there was no proof and the primary Judge was correct in his finding that there was no evidence of a notice under s. 5 being given to the State.
22. The primary Judge addressed this issue at paragraphs 9 – 13 of the judgment. His Honour found that no s. 5 notice was given to the State prior to the commencement of the proceedings in the National Court. The finding was reached on the basis that credible evidence was provided on behalf of the State through the records maintained by the Office of Solicitor General. The records provided showed that no notice was given and the appellants were unable to provide any evidence to the contrary except placed reliance entirely on the averment in the pleading. As to the onus of proving the fact, his Honour said the onus lies with the appellants to provide sufficient evidence to satisfy the Court on the balance of probabilities.
23. Section 5 of the Claims Act makes it a mandatory legal obligation or condition precedent on a plaintiff commencing a claim against the State to give notice of his intention to make a claim against the State and a failure to comply with that obligation is fatal: Paul Tohian, Minister for Police and the State v. Tau Liu (1998) SC566 and Daniel Hewali v. Papua New Guinea Police Force & The State (2002) N2233. Therefore it follows that commencement of court proceedings against the State pre-supposes that due compliance with s. 5 was achieved. Where the State disputes that the requisite notice was not given and has provided some evidence in support of its assertion it is incumbent on the plaintiff to provide some evidence to satisfy the Court on the balance of probabilities. In this case, the appellants failed to provide any evidence at all. In any event the learned trial Judge further observed that even if the such notice was in fact given, (notice which was alleged by the appellants to have been served on 30 April 2003), the notice was outside the 6 months period as required by the Claims Act. We are satisfied with the reasons given by the learned primary Judge and we find no error in his Honour’s judgment on this issue.
Issue 3 - Whether the learned primary Judge erred in law in failing to give due recognition to the principles of equity and fairness
24. The appellants again, through their counsel, conceded that the principles of common law and equity cannot override the statutory provisions, nevertheless submitted that by virtue of the conduct of the State’s lawyers, officers, servants or agents, the State is estopped from relying on the statutory rights under s. 16 of the Limitation Act and s. 5 of the Claims Act. The circumstances of conduct are enumerated in paragraph 46 of the written submissions and include the following:
25. The appellants have not demonstrated to us a strong case supported by any case law authority to persuade us that the well established principle in this jurisdiction that equity must give way to the statute law should be reviewed. This is the very principle that the learned primary Judge applied in deciding the issue against the appellants. The primary Judge relied upon and applied the ‘ratio decidendi’ in a Supreme Court decision in Rawson Construction Ltd & Ors v The State (2004) SC777. In that case the appellant was pursuing a claim for a substantial amount against the State for contract works entered into with the Department of Works. After a series of failed negotiations the appellant issued a letter of demand including a purported notice under s. 5 of the Claims Act. This was made over three and half years later. The Solicitor General refused to entertain the claim on the basis, firstly, that it was given outside the 6 months period and, secondly, there was lack of particularity in the claim. The appellant then, after some time, filed an application in the National Court seeking orders to extend time to give notice of intention to make the claim to the State. The National Court heard and dismissed the application primarily on the basis that there was substantial delay and the potential prejudice the State may suffer. The appellant appealed to the Supreme Court and at the same time sought to adduce fresh evidence of similar claims being entertained and paid by the State. The main contention in the appeal was on the issue of prejudice. It was argued that the fresh evidence, if allowed, would demonstrate that the State, through the Solicitor General, applied double standards in allowing other similar claims whilst rejecting the appellant’s claim. It appeared that judgments were allowed to be entered and damages paid in those other similar claims despite the fact that the claims were made outside the 6 months notice period and further no s. 5 Notice were served on the State. It was therefore strongly contended by the appellant that the fresh evidence, if admitted, would significantly diminish any prejudice to the State. The Supreme Court dismissed both the application to adduce fresh evidence and the substantive appeal as being without merit. As regards the issue of allowing the other similar claims to be paid despite the breaches of the law the Supreme Court said:
The law is trite that, no claim can validly proceed against the State without meeting the notice requirements. Many judgments of both this and the National Court clearly show that, the requirement for notice is a condition precedent, without which there can be no claim: see Paul Tohian, Minister for Police and the State v. Tau Liu and Daniel Hewali v. Papua New Guinea Police Force & The State. The reason for this was as explained by Kandakasi J., in the later case as follows:
“That reason is simply that, both the MVIT and the State are themselves not necessarily responsible for that which gives rise to a claim against them. They instead become responsible or liable by reason of the law. In the case of the MVIT it is because of the MVIT Act and in the case of the State, it based on the principles of common law in some cases and in other cases based on statute. In most cases, they do not have any personal involvement and knowledge of matters giving rise to a cause of action against them. Of course, common law does not override any statutory law. Instead, under our hierarchy of laws as set out in s.9 of the Constitution, the principles of common law are subject to any relevant Act of Parliament.”
It therefore follows in our view that, if indeed the Solicitor General allowed those other claims without meeting the condition precedent in s. 5 of the Claims By and Against the State1996, they would be nothing short of illegal claims. Thus, if we admitted the evidence in question, they will not advance the Appellants’ claim in any respect. The law cannot simply permit one illegal claim to proceed merely because another illegal claim proceeded. After all, one wrong or illegal act does not justify or correct another. (Emphasis added)
26. We fully agree with the above statement of the law made by the Supreme Court in Rawson Construction Ltd case (supra). This entrenched principle is drawn from the latin maxim “aequitas sequitur legem”, which meaning has invariably been given adages such as "equity will not allow a remedy that is contrary to law” or “equity had come not to destroy the law, but to fulfil it” or “equity has no clash with law neither it overrides the provisions of law, nor it is the enemy of law. It adopts and follows the basic rules of law.”
27. In Sao Gabi & State v Kasup Nate & Others (2006) N4020, a case where the Attorney General challenged by way of judicial review the National Lands Commission decisions in making exorbitant and illegal awards in land compensation claims to various land groups, Injia DCJ (as he then was), allowed the review, quashed the illegal awards and remitted for a rehearing. Amongst others, the issue of equitable estoppel was raised by the land groups. His Honour addressed the issue at paragraphs 55 – 57 of the judgment as follows:
“55. The plaintiffs submit the equitable doctrine of estoppel cannot be used to validate or sanction an illegal act, illegal action, illegal deed, illegal contract or transaction. A number of cases are cited including Rawson Construction Ltd & Ors v. The State (2004) SC 777.
56. Various cases are cited to support the principle that no one can gain from an illegal act. This is consistent with the equitable principle that he who seeks equity must come with clean hands: Rawson Construction Ltd & Ors v The State SC 777; John Kanekane & Ors v Patilius Gamato (2004) N2512 and Jamie Muhammed Abdullah v Dr. Igbal Yaseer (2001) N2195.
57. In my view, the law is very well settled in this jurisdiction that the equitable doctrine of estoppel cannot override clear mandate of statutory law. Equity cannot override statutory law. Equity simply follows the law. For this reasons, whilst it is true that the State had settled a number of NLC awards made without jurisdiction; a Court of law cannot ignore clear breaches of the law once the breach is brought to its attention. For this reason, I dismiss the respondent’s arguments on estoppel.”
28. In Joe Kerowa v Motor Vehicles Insurance Limited (2010) SC1100 the Supreme Court decided the appeal on a very similar point that is now argued by the appellants in the appeal before this Court. That case concerns the failure by the appellant to give the requisite notice under s. 54 (6) of the Motor Vehicles (Third Party Insurance) Act. The appellant appealed against the decision of the National Court dismissing his claim in the proceeding for failure to give the requisite notice. The Supreme Court, after referring to a National Court decision in Paul Kumba v. Motor Vehicles Insurance (PNG) Trust (2001) N2132 and a decision of the English and Wales Court of Appeal in Wylie v. Wake [2000] EWCA Civ 349 held that the requirement of s. 54(6) of the Motor Vehicles (Third Party Insurance) Act is a condition precedent to liability and therefore the principles of equitable estoppel cannot be invoked in respect of a statutory condition precedent. In this case we are dealing with s. 5 of the Claims Act, which the Courts have held to be a condition precedent to a right to commencing a proceeding against the State. In our opinion the same reasoning and principle will apply.
29. We therefore reject the submission by the appellants. We find the learned trial Judge made no error in his judgment when deciding the issue.
Issue 4 - Whether the claims are vexatious and an abuse of court process
30. The appellants have framed their argument couched under s. 5 notice issue which we have earlier considered. Counsel for the appellants submits (through written submissions) that in this case the issue of s. 5 notice was never a foregone conclusion because the State had not conclusively proven that such notice was not served and therefore, so it is argued, taking into account the fact that there is substantial merit in the claims, the primary Judge erred in dismissing the proceeding without observing the well established principle that dismissal of a proceeding should result only in cases “where the cause of action is obviously and almost incontestably bad” as decided in PNG Forest Products Pty Ltd and Another v The State and Genia [1992] PNGLR 85 and long line of case authorities that followed including Kiee Toap v The Independent State of Papua New Guinea (2004) N2731.
31. In our view, the merit of this submission is dependent on whether the learned primary Judge erred in his determination of the issue on whether the s. 5 Notice was given to the State. As we have already found that no error had been made, therefore, this particular issue becomes purely academic. There is no utility in giving any further consideration to it. In other words, it is unnecessary.
Summary and Conclusion
32. We have determined all issues in the appeal against the appellants. It therefore follows that the appeal must fail, and, we so do order a dismissal of the appeal with cost.
Orders
33. The formal orders will be as follows:
__________________________________________________________________
PNG Legal Services: Lawyer for the Appellants
Posman Kua Aisi: Lawyer for the Respondents
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