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Godinet v Chan Mow & Co Ltd [2007] WSSC 65 (16 August 2007)

IN THE SUPREME COURT OF SAMOA
HELD AT APIA

BETWEEN:

JACINTA LEE HANG GODINET
Plaintiff

AND:

CHAN MOW & CO LTD
First Defendant

AND:

DRAKE & CO
Second Defendant

Counsel: O Woodroffe for plaintiff
JJ Brunt for first defendant
R Drake for second defendant

Judgment: 16 August 2007

JUDGMENT OF SAPOLU CJ

To try and facilitate understanding of the complexities involved in these proceedings, this judgment will be set out in six PARTS. PART A will be the introduction; PART B relates to the limitation issue; PART C relates to the plaintiff’s causes of action and related matters; PART D deals with the locus standi issue, PART E is the discussion of the defendants strike out motions; and PART F states the conclusion.

PART A

Introduction

These proceedings are concerned with two motions, one by each of the first defendant and the second defendant, to strike out the plaintiff’s statement of claim as it is an abuse of process. The statement of claim referred to here is the plaintiff’s second amended statement of claim.

The grounds which are common to the two motions are: (a) the plaintiff’s claim is time barred pursuant to ss. 6, 9(2), and 10(2) of the Limitation Act 1975, and (b) the plaintiff has no locus standi to bring her claim. The first defendant as a further ground of its strike out motion also alleges that the plaintiff’s claim is time barred pursuant to s.48 of the Administration Act 1975.

Counsel for the first defendant also pointed out that the plaintiff had not sought leave to file her first or second amended statement of claim. This is correct even though it has been uncommon for defendants to raise this issue in relation to amended statements of claim filed by plaintiffs. Given what has been raised by counsel for the first defendant in these proceedings, I am of the view that to control a plaintiff from continuing to make amendments to his or her statement of claim thus frustrating a strike out motion by a defendant or placing a defendant in a state of uncertainty as to the case he or she has to meet, the requirement of leave to file an amendment statement of claim will from now onwards be strictly enforced. But counsel for defendants should raise the issue if they have any objection to the filing of an amended statement of claim.

In this case, the first amended statement of claim was filed and served in October 2005 and the second amended statement of claim was filed in June 2006 and presumably served around that time. This is the first time objection has been raised. Perhaps I should also point out that there was no objection from counsel for the second defendant. In the circumstances, I decided to accept the second amended statement of claim for the purposes of these proceedings.

I should also point out that at the commencement of these proceedings, counsel for the plaintiff indicated that she wanted to file a third amended statement of claim. This was opposed by counsel for the defendants who were not prepared for such a new amended statement of claim as they had come to Court for the hearing of their strike out motions in relation to the plaintiff’s second amended statement of claim. Furthermore, there is no motion for leave to file a third amended statement of claim in the Court file for this matter even though the written submissions of counsel for the plaintiff suggest that such a motion has been filed. Perhaps such a motion has been filed but it was not before me. In the circumstances, I decided to proceed with the hearing of the defendants strike out motions and not to accept the plaintiff’s third amended statement of claim as it would necessarily have led to a further adjournment of these proceedings. Moreover, counsel for the defendants had not come to Court for the purpose of any leave application to file another amended statement of claim. Depending on the outcome of these proceedings, counsel for the plaintiff may at a later date seek leave to file a third amended statement of claim. Whether such leave will be granted is another matter.

PART B

Limitation provisions relied upon in the strike out motions

I will refer now to the limitation provisions relied upon in the defendants strike out motions. The first limitation provision relied upon in the strike out motions is s.6 of the Limitation Act 1975. Section 6 which contains eight sub-sections provides limitation periods for actions in contract and tort and in certain other actions. Even though it was not entirely clear which sub-sections of s.6 that counsel for the defendants were relying on, it would appear that s.6(3) and s.6(8) may be relevant. Section 6 (3) provides:

"An action upon a deed shall not be brought after the expiration of 12 years from the date on which the cause of action accrued. Provided that this subsection shall not affect any action for which a shorter period of limitation is prescribed by any other provision of this Act."

With respect, it was not clearly demonstrated how s. 6 (3) applies to these proceedings.

Section 6(8) provides:

"This section shall not apply to any claim for specific performance of a contract or for an injunction or for other equitable relief".

The next provision of the Act upon which counsel for the defendants relied was s.9(2) which provides:

"No action shall be brought by any other person to recover any land after the expiration of 12 years from the date on which the right of action accrued to him or to some other person through whom he claims."

This provision specifies the limitation period for an action by a person to recover land as opposed to an action by the Government to recover land for which the limitation period is 60 years as provided in s.9(1). The last provision of the Act relied upon by counsel for the defendants is s.10(2) which provides:

"Where any person brings an action to recover any land of a deceased person, whether under a will or intestacy, and the deceased person was on the date of his death in possession of the land or, in the case of a rent-charge created by will or taking effect upon his death, in possession of the land charged, and was the last person entitled to the land to be in possession thereof, the right of action shall be deemed to have accrued on the date of his death."

The following comments need to be made about s.10(2). Firstly, s.10(2) does not provide a limitation period; it only explains when a particular cause of action to recover land starts to accrue. Secondly, it was not clarified which action or actions to recover land is s.10(2) applicable to. Does it apply only to an action to recover land for which a limitation period of 12 years is provided under s.9(2) or does it also apply to an action to recover trust property comprising of land under s.19. Thirdly, s.10(2) refers to an action to recover land of a deceased person under a will or intestacy where the deceased person was in possession of the land at the time of his death and was "the last person entitled to the land to be in possession thereof".

It would appear from the material placed by counsel for the plaintiff and the defendants before the Court that the land in question is situated at Saleufi in Apia and was jointly owned by Mr Lee Hang, the late father of the plaintiff, and the late Mr Chan Mow, the founder of the first defendant company, as tenants in common in equal shores. Mr Lee Hang pre-deceased Mr Chan Mow by several years. One of the attributes of a tenancy in common is that each tenant in common is entitled to possession of the whole land which is the subject of the tenancy in common even though each of them is entitled to only a distinct share of the land. So both Mr Lee Hang and Mr Chan Mow, as tenants in common in equal shares, were entitled to the land and to possession of the land. What is not clear for the purposes of s.10 (2) is whether Mr Lee Hang "was the last person entitled to the land to be in possession thereof". Obviously, Mr Lee Hang was not "the last person entitled to the land" because when he died Mr Chan Mow as the surviving tenant in common in equal share was still entitled to the land. It is also not clear whether Mr Chan Mow who survived Mr Lee Hang by several years was in possession of the land at any time after Mr Lee Hang died. If Chan Mow was in possession of the land at any time after Mr Lee Hang had died, then Mr Lee Hang was not "the last person entitled to the land to be in possession thereof." It is therefore doubtful whether s.10(2) applies in these proceedings.

Counsel for the first defendant in his written submissions also refers to s.26 of the Act. Section 26 as far as relevant provides:

"Where, in the case of any action for which a period of limitation is prescribed by this Act, either:

(a) The action is based upon the fraud of the defendant or his agent or of any person through whom he claims or his agent: or
(b) The right of action is concealed by the fraud of any such person as aforesaid: or
(c) ....;

the period of limitation shall not begin to run until the plaintiff has discovered the fraud ....or could with reasonable diligence have discovered it.

PROVIDED THAT nothing in this section shall enable any action to be brought to recover, or enforce any charge against, or set aside any transaction affecting, any property which:

(d) In the case of fraud, has been purchased for valuable consideration by a person who was not a party to the fraud and did not at the time of the purchase know or have reason to believe that any fraud had been committed, or
(e) ...."

It would appear from s.26 that in an action based on fraud the limitation period would ordinarily begin to run from the time the fraud was discovered or could with reasonable diligence have been discovered. It would also appear that s.26 would not apply to enable any action to be brought to recover any property from a purchaser for valuable consideration who was not a party to the fraud and did not at the time of the purchase know or have reason to believe that any fraud had been committed.

The last limitation provision relied upon by counsel for the first defendant is s.48 of the Administration Act 1975 which provides:

"Application for relief under this Part of the Act shall be made by way of motion in accordance with the rules of the Court and shall be made within 12 months after the grant of probate in Samoa.

"Provided that the Court may on special grounds give leave to make an application for relief at any time after the expiration of the said period."

In my respectful view, s.48 of the Administration Act 1975 does not apply to the present proceedings. In the first place, s.48 states that it applies to applications for relief "under this Part of this Act." This means Part IV of the Act which relates to relief sought in family protection proceedings as explained in s.47. The proceedings by the plaintiff are not for family protection relief. Secondly, the time limit provided in s.12 is "12 months after the grant of probate." The deceased, Mr Lee Hang, apparently died intestate, that is to say, without a will. So there could not have been a grant of probate. What was granted by the Court in respect of the deceased’s estate were letters of administration.

Relevant approach and principles to a motion to strike-out on limitation grounds

In the case of Johns v Johns and Holloway [2004] NZCA 42 which was concerned, inter alia, with an application to strike out causes of action in a statement of claim on limitation grounds pursuant to the Limitation Act 1950 (NZ), Tipping J in delivering the judgment of the New Zealand Court of Appeal stated at para [2]:

"As the case is one involving strike out, the facts upon which the Court must act are those alleged in the plaintiff’s pleadings, which must for present purposes be taken as capable of proof. Causes of action or aspects thereof should only be struck out before trial on the basis that they are statute or otherwise barred, if the defendant can establish that proposition conclusively. If there is any real doubt about the matter, the case should be allowed to go to trial where all issues of fact and law can be fully explored. This is no more than the ordinary strike out principle applied in the context of a strike out application which is based on limitation grounds."

It is clear from the passage I have cited from Johns v Johns and Holloway [2004] NZCA 42 that it is for the defendant to establish conclusively that a cause of action based on the facts alleged by the plaintiff in his pleadings is time barred. If there is a real doubt about the matter then the cause of action should not be struck out but allowed to go to trial where all the issues of fact and law can be fully explored. It is therefore necessary in a motion to strike out on limitation grounds to identify which cause or causes of action are to be struck out. This is to be done by reference to the causes of action pleaded in the statement of claim. It is not specific enough to say that the statement of claim or the claim should be struck out where several causes of action have been pleaded.

It is also crucial to a motion to strike out on limitation grounds to identify when the cause of action accrued as the limitation period only begins to run from the time a cause of action accrues. This is not always an easy task because a limitation statute does not define when a cause of action accrues. The question of when a cause of action accrues is a matter of law to be determined on pleaded facts. As stated in Trustees Executors v Murray [2007] NZSC 27 at para [46]:

"Of course the Limitation Act itself does not define when a cause of action accrues. It is not a matter of statutory construction. It is a question of when as a mater of law the cause of action accrues for the purpose of the Limitation Act."

In my opinion, there is another procedure for seeking to strike out a claim or cause of action as time barred. Where it is not clear on the face of the plaintiff’s pleadings that a cause of action is time barred but the defendant considers that he has a good limitation defence, the defendant may plead the limitation defence and apply for the trial of the defence as a preliminary issue. At the trial the defendant can adduce evidence to show that the cause of action is time barred. The plaintiff, on the other hand, can also adduce evidence of an acknowledgement or concealed fraud or any matter which may show that his cause of action is not time barred. The evidence may be in affidavit form. I say this because there are cases where it is not clear on the plaintiff’s pleadings when the cause of action accrued but the defendant considers he has a good limitation defence. In such cases, it may be a waste of time and money to leave the issue of limitation for consideration at the full trial of the plaintiff’s claim. Similar ideas are to be found in Ronex Properties Ltd v John Laing Construction Ltd [1982] 3 A11 ER 961 per Stephenson LJ at 968; Matai Industries Ltd v Jensen [1988] NZHC 205; [1989] 1 NZLR 525 per Tipping J at 532.

In the present proceedings, the first defendant is saying that the plaintiff’s causes of action accrued more than 20 years ago and are therefore time barred. It is not apparent from the plaintiff’s pleadings when her causes of action started to accrue. However, the usual approach in strike out proceedings on limitation grounds is for the defendant’s strike out motion to be considered on the basis of the plaintiff’s pleadings without any evidence. In my opinion, there should be another procedure which in an appropriate case can be adopted to avoid possible waste of time and money. This procedure is that if it is not apparent from the plaintiff’s pleadings that a cause of action is time barred but the defendant considers that he has a good limitation defence, the defendant may plead the defence and seek its trial as a preliminary issue. In that trial the defendant can adduce evidence to show that the cause of action is time barred and the plaintiff can also adduce evidence to show that his cause of action is not time barred. The evidence may be in affidavit form to expedite matters. This might have been the appropriate procedure for the defendants to follow in these proceedings given the way the plaintiff’s causes of action have been pleaded.

There is another significant limitation issue raised in the submissions of counsel for the plaintiff that I wish to refer to. It is submitted by counsel for the plaintiff in her written submissions that s.6(8) of the Limitation Act 1975 which states that s.6 has no application to a claim for equitable relief makes no allowance for the principle of limitation by analogy and nor would the principle apply in these proceedings. If what is meant by this submission is that limitation by analogy does not apply in Samoa then, with respect, I do not agree with counsel for the plaintiff.

It is well established in other jurisdictions such as England, Australia and New Zealand that the Courts may apply the statute of limitation by analogy to a claim for equitable relief for which no limitation period is provided in the statute. This equitable principle of limitation by analogy has been preserved by statutory provision, like s.4 (a) of the Limitation Act 1950 (NZ), in those jurisdictions but that does not mean that the existence of the principle is dependent on the statute. Simply because there is no provision in our in Limitation Act 1975 like s.4 (a) of the New Zealand Act does not mean that the principle does not exist in Samoa. Article 111 of the Constitution preserves the application of the English common law and equity for the time being to Samoa in so far as they are not excluded by any law in Samoa. The principle of limitation by analogy was developed by the Courts of Equity in England and exists in equity.

The classic statement of the equitable principle of limitation by analogy is provided in the English case of Knox v Gye [1872] UKLawRpHL 16; (1872) LR 5 HL 656 where Lord Westbury said at p.674:

"[Where] the remedy in Equity is correspondent to the remedy at Law, and the latter is subject to a limit in point of time by the Statute of Limitations, a Court of Equity acts by analogy to the statute and imposes on the remedy it affords the same limitation. This is the meaning of the common phrase, that a Court of Equity acts by analogy to the Statute of Limitations, the meaning being that where the suit in Equity corresponds with an action at Law which is included in the words of the Statute, a Court of Equity adopts the enactment of the Statute as its own rule of procedures. But if any proceeding in Equity be included within the words of the Statute, there a Court of Equity, like a Court of Law, acts in obedience to the statute."

In Spry, Equitable Remedies 5th ed it is stated at p.419:

"[A] statute of limitation may be raised by analogy in defence to a claim that is brought in the exclusive jurisdiction of a Court of Equity such as in proceedings for the enforcement of a trust, rather than in its auxiliary or concurrent jurisdictions. Here there is no question of merely recognising and giving effect to an abrogating of a right at law or of acting in obedience to a statute that relates to rights at law. Hence it must be seen first whether there is a special statutory provision that affects directly, whether expressly on by implication, the particular equitable right that is in question. But if there is no such provision, the Court may decide that the material equitable right is so similar to legal rights to which a limitation period is applicable that the limitation period should be applied to it also. In this latter case the limitation period is said to be applied by analogy, and the principles that govern cases of this kind are that if there is a sufficiently close similarity between the exclusive equitable right in question and legal rights to which the statutory provision applies a Court of Equity will ordinarily act upon it by analogy but that it will so act only if there is nothing in the particular circumstances of the case that renders it unjust to do so. What is regarded by Courts of Equity as a sufficiently close similarity for this purpose involves a question of degree, and reference must be made to the relevant authorities. The basis of these principles is that, in the absence of special circumstances rendering this position unjust, the relevant equitable rules should accord with comparable legal rules."

In a paper entitled "Constructive Trusts" by R P Austin which appears in Essays in Equity (1985) at p.196 PD Finn (ed), the learned author said at p.204:

"Early statutes of limitation were restricted to actions at law, but equity developed a doctrine of analogy, according to which it would apply the common law limitation period to an analogous proceeding in equity in order to prevent plaintiffs at law from avoiding the statute by disguising their claims as equitable."

I have referred to only three authorities on the principle of limitation by analogy which may apply to equitable claims for which no limitation period is provided in a statute of limitation. But there are a number of English, Australian and New Zealand cases in which the principle has been discussed and applied. However, the principle was not relied upon by counsel for the defendants in their strike out motions. So it is not necessary to consider whether any of the plaintiff’s equitable causes action is time barred by analogy.

PART C

The plaintiff’s causes of action

As the defendants are seeking to strike out the plaintiff’s second amended statement of claim on limitation grounds and not on the ground that it discloses no reasonable cause of action, I will proceed on the basis that the plaintiff’s claim discloses reasonable causes of action. I will also have to assume that the facts pleaded by the plaintiff in her claim are capable of proof.

There are five causes of action pleaded by the plaintiff in her claim. The first cause of action is one of fraud alleged against the first defendant. In essence, it is alleged that the first defendant on its own and through the second defendant who were acting as solicitors for the first defendant used the administrator of the Lee Hang estate to obtain letters of administration in respect of the estate without the consent or informed consent of the other beneficiaries of the estate in order to fraudulently effect the sale of Lee Hang’s half share in the disputed land to the first defendant. This is strongly denied by the managing director of the first defendant company in the affidavit he has filed in these proceedings. However, this is not the stage for arguments on the facts. As earlier mentioned, I have to proceed for the purposes of these strike out proceedings on the basis that the facts pleaded by the plaintiff in support of her claim are capable of proof. Remedies by way of declaratory relief, constructive trust, and damages are sought pursuant to this cause of action.

It would appear from the way the plaintiff’s first cause of action is pleaded that the kind of fraud which is alleged is actual fraud. This is fraud in equity’s concurrent jurisdiction with the common law. It would also appear that the remedies sought are equitable remedies assuming that the damages claimed are equitable damages.

The second cause of action is also one of fraud alleged against the second defendant. It is alleged that the second defendant when acting as solicitors for the administrator of the Lee Hang estate for the purpose of applying for letters of administration for the estate was also acting as solicitors for the first defendant at the same time. It is then alleged that the second defendant was acting in a conflict of interest situation presumably because the second defendant subsequently acted as solicitors in the sale of Lee Hang’s half share in the disputed land from the administrator to the first defendant. The kind of fraud alleged here would seem to be constructive fraud which comes under equity’s exclusive jurisdiction. It is then further alleged that the second defendant assisted the first defendant by fraudulently using the administrator to transfer Lee Hang’s half share in the disputed land to the first defendant. This seems to suggest actual fraud which is fraud in equity’s concurrent jurisdiction.

Remedies by way of declaratory relief, rescission, indemnity and damages are sought pursuant to the second cause of action. All these remedies appear to be equitable remedies assuming that the damages sought are equitable damages.

The third cause of action is conspiracy to defraud alleged against both the first and second defendants. A number of particulars have been pleaded to explain and support this cause of action. Essentially what is alleged is that the first defendant and the second defendant pursuant to an agreement between themselves set up the appointment of the plaintiff’s youngest sibling to be the administrator of the Lee Hang estate in order to facilitate or make possible the sale of the half share of Lee Hang in the disputed land to the first defendant. This cause of action suggests elements of actual and constructive fraud. The remedies sought are by way of declaratory relief, rescission, indemnity, constructive trust and damages which all appear to be equitable remedies.

The fourth cause of action is one of equitable fraud alleged against both the first and second defendants. Essentially what is alleged here is that the first and second defendants conspired to defraud the plaintiff for their own personal benefit by using the administrator for the purpose of conveying Lee Hang’s half share in the disputed land to the first defendant. It would seem that this cause of action is essentially the same as the third cause of action. The remedies sought in relation to this cause of action are by way of declaratory relief, rescission, indemnity, constructive trust and damages.

The final and fifth cause of action is one of tortious conspiracy alleged against both the first and second defendants. This is a common law cause of action. Ordinarily, the tort of conspiracy relates to unlawful interference with economic relations. It is therefore classified as an economic tort. However, it was not argued that this tort does not apply to the circumstances of this case because the strike out motions were not directed at the question of whether the plaintiff’s claim discloses reasonable causes of action. I will therefore assume for present purposes that all causes of action including the fifth cause of action are reasonable and maintainable in law. Remedies by way of declaratory orders, rescission, indemnity, constructive trust are also sought in relation to this cause of action. Apart from damages which has been traditionally regarded as a common law remedy, it is doubtful whether the other remedies sought which are equitable in nature are suitable to an action in the tort of conspiracy.

I will come back in the course of my judgment to the question of whether it has been established conclusively that the plaintiff’s causes of action are time barred. But as the real basis of all the causes of action appears to be actual fraud, I need to refer to the law which is applicable to pleading and proving an allegation of fraud which is, of course, a very serious allegation.

Pleading and proving fraud

For the purpose of pleading and proving actual fraud, I said in Ah Far v Ah Far [2005] WSSC 1:

"Actual fraud or conscious dishonesty is the species of fraud in respect of which the common law and equity exercise concurrent jurisdiction. It is trite law that he who alleges fraud must prove it. It is the plaintiffs who are alleging actual fraud and therefore they bear the onus of proving fraud. The required standard of proof is the civil standard of proof but to a higher probability that is commensurate with the fact to be proved. In Hornal v Neuberger Products Ltd [1957] 1 QB 247 which was a case of fraudulent misrepresentation, Denning LJ said at p.258:

"The more serious the allegation the higher the degree of probability that is required; but it need not, in a civil case, reach the very high standard required by the criminal law."

In Ah Far v Ah Far I also referred to Three Rivers District Council v Bank of England [2001] UKHL 16; [2001] 2 All ER 513 where Lord Hobhouse when dealing with the question of fraud stated at p.569:

"The law quite rightly requires that questions of dishonesty be approached more rigorously than other questions of fault. The burden of proof remains the civil burden – the balance of probabilities – but the assessment of the evidence has to take account of the seriousness of the allegations, and, if that be the case, any unlikelihood that the person accused of dishonesty would have acted in that way."

At pp.569-570 of Three Rivers, Lord Hobhouse went on to state:

"At the pleading stage the party making the allegation of dishonesty has to be prepared to particularise it and, if he is unable to do so, his allegation will be struck out. The allegation must be made upon the basis of evidence which will be admissible at the trial."

At p.578 of Three Rivers, Lord Millet said:

"It is well established that fraud or dishonesty....must be distinctly alleged and as distinctly proved; that it must be distinctly particularised; and that it is not sufficiently particularised if the facts pleaded are consistent with innocence... This means that a plaintiff who alleges dishonesty must plead the facts, matters and circumstances relied on to show that the defendant was dishonest."

Lord Millet then went on at p.578 to explain the principles behind the pleading requirement for an allegation of fraud by saying:

"It is important to appreciate that there are two principles in play. The first is a matter of pleading. The function of pleading is to give the party opposite sufficient notice of the case which is being made against him. If the pleader means ‘dishonestly’ or ‘fraudulently’, it may not be enough to say ‘wilfully’ or recklessly’. Such language is equivocal....

"The second principle which is quite distinct, is that an allegation of fraud or dishonesty must be sufficiently particularised, and that particulars of fact which are consistent with honesty are not sufficient. This is only partly a matter of pleading. It is also a matter of substance. As I have said, the defendant is entitled to know the case he has to meet. But since dishonesty is usually a matter of inference from primary facts, this involves knowing not only that he is alleged to have acted dishonestly, but also the primary facts which will be relied upon at trial to justify the inference.

"At trial the Court will not normally allow proof of primary facts which have not been pleaded, and will not do so in a case of fraud. It is not open to the Court to infer dishonesty from facts which have not been pleaded, or from facts which have been pleaded but are consistent with honesty. There must be some fact which tilts the balance and justifies an inference of dishonesty, and this fact must pleaded and proved."

Earlier in the case of Paragon Finance Plc v DB Thakerar & Co (A Firm) [1998] EWCA 1249, Millet LJ said:

"It is well established that fraud must be distinctly pleaded and as distinctly proved, and if the facts are consistent with innocence it is not open to the Court to find fraud. An allegation that the defendant ‘knew or ought to have known’ is not a clear and unequivocal allegation of actual knowledge and will not support a finding of fraud even if the Court is satisfied that there was actual knowledge. An allegation that the defendant had actual knowledge of the existence of a fraud perpetrated by others and failed to disclose the fact to the victim is consistent with an inadvertent failure to make disclosure and is not a charge of fraud. It will not support a finding of fraud even if the Court is satisfied that the failure to disclose was deliberate and dishonest. Where it is expressly alleged that such failure was negligent and in breach of a contractual obligation of disclosure, but not that it was deliberate and dishonest, there is no room for treating it as an allegation of fraud."

Submissions by counsel for plaintiff

The written submissions by counsel for the plaintiff in opposition to the defendants strike out motions relate to the plaintiff’s causes of action in its second amended statement of claim and the causes of action proposed to be introduced through her third amended statement of claim. As earlier pointed out, I am not concerned with the plaintiff’s motion for leave to file a third amended statement of claim in these proceedings. Consequently, I am not concerned with a third amended statement of claim in these proceedings. Those matters are put aside for present purposes.

The essence of the plaintiff’s claim against the second defendant as alleged in counsel’s written submissions is this. The plaintiff, as a beneficiary of the Lee Hang estate, claims against the second defendant in equity for alleged dishonest assistance in a breach of trust. The breach of trust which counsel for the plaintiff has in mind is the alleged breach of trust by the administrator of the Lee Hang estate. It is claimed that the second defendant dishonestly assisted the administrator in a breach of trust. As a consequence, the plaintiff as a beneficiary of the Lee Hang estate has suffered loss. A claim for dishonest assistance in a breach of trust is an equitable claim. Liability is of an accessory or secondary nature. Prior to the leading case in this area of Royal Brunei Airlines v Tan [1995] UKPC 4, this kind of claim used to be described as "knowing assistance." The ingredients of a claim or cause of action for dishonest assistance in a breach of trust are set out in the judgment of Lord Nicholls of Birkenhead in Royal Brunei Airlines v Tan [1995] UKPC 4. His Lordship said:

"Drawing the threads together their Lordships overall conclusion is that dishonesty is a necessary ingredient of accessary liability. It is also a sufficient ingredient. A liability in equity to make good resulting loss attaches to a person who dishonestly procures or assists in a breach of trust or fiduciary obligation. It is not necessary that, in addition the trustee or fiduciary was acting dishonestly, although this will usually be so where the third party who is assisting him is acting dishonestly. ‘Knowingly’ is better avoided as a defining ingredient of the principle, and in the context of this principle the Baden scale of knowledge is best forgotten."

Relating that statement of principle to the facts alleged by the plaintiff, the plaintiff would be a beneficiary of the Lee Hang estate. The administrator of the Lee Hang estate would be the trustee. His action in selling the half share of Lee Hang deceased in the disputed land (the trust property) to the first defendant is alleged to be a breach of trust. It is then alleged that the second defendant dishonestly assisted the administrator in that breach of trust. Put in this way, the true basis of the plaintiff’s claim and facts alleged in support will be more clear.

It is then submitted by counsel for the plaintiff that the relevant provision of the Limitation Act 1975 is s.19 (1) (a) which provides no limitation period for an action for dishonest assistance in a breach of trust to which a trustee was a party, regardless of whether the trustee was honest or dishonest. Section 19 (1) (a) provides:

"No period of limitation prescribed by this Act shall apply to an action by a beneficiary under a trust being an action:

"(a) In respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy."

In respect of the first defendant, it appears from the plaintiff’s pleadings that not only was the first defendant the recipient or purchaser of the disputed land from the administrator of the Lee Hang estate but the first defendant also dishonestly assisted in the alleged breach of trust by the administrator. If this is correct, then it will appear from the plaintiff’s pleadings that the cause of action for dishonest assistance in a breach of trust is also open against the first defendant and not just against he second defendant. It also appears from the written submissions by counsel for the plaintiff that one of the causes of action intended against the first defendant is one of knowing receipt which is an equitable claim. However it was not argued for the first defendant that an equitable cause of action for knowing receipt is time barred. Undoubtedly, this must be because it is not possible to find in the plaintiff’s pleadings the words "knowing receipt". In any event, the strike out motion is not directed at the question of whether the plaintiff’s claim discloses a reasonable cause of action. The defendants also did not seek further and better particulars in respect of the pleadings.

In my view, the position taken by counsel for the plaintiff is clearly arguable provided the facts as pleaded are capable of proof. The present difficulty is that the pleadings are rather indistinct in certain parts. When the pleadings have been clarified, it should be clear that at the heart of all the causes of action lies a possible cause of action for dishonest assistance in a breach of trust against the second defendant.

PART D

Locus standi

It was submitted by counsel for the defendants that the plaintiff as a beneficiary of an estate has no locus standi to bring proceedings against the defendants. The appropriate person to bring the proceedings should be the administrator of the estate. I am not able to accept this submission. The plaintiff’s claim against the first and second defendants alleges breach of trust against the administrator. It would be unrealistic to expect the administrator to initiate proceedings which include allegations of breach of trust against himself. That would be acting against one’s own self.

There are many cases in other jurisdictions like England which show that a beneficiary of a trust has locus standi to bring an action in equity against a third party for dishonest assistance in a breach of trust by a trustee regardless of whether the trustee was honest or dishonest. In the leading authority of Royal Brunei Airlines v Tan [1995] UKPC 4, Lord Nicholls of Birkenhead said:

"Stated in the simplest terms, a trust is a relationship which exists when one person holds property on behalf of another. If, for his own purpose, a third party deliberately interferes in that relationship by assisting the trustee in depriving the beneficiary of the property held for him by the trustee, the beneficiary should be able to look for recompense to the third party as well as the trustee. Affording the beneficiary a remedy against the third party serves the dual purpose of making good the beneficiary’s loss should the trustee lack financial means and imposing a liability which will discourage others from behaving in a similar fashion.

"The rationale is not far to seek. Beneficiaries are entitled to expect that those who become trustees will fulfil their obligations. They are also entitled to expect, and this is only a short step further, that those who become trustees will be permitted to fulfil their obligations without deliberate intervention from third parties. They are entitled to expect that third parties will refrain from intentionally intruding in the trustee beneficiary relationship and thereby hindering a beneficiary from receiving his entitlement in accordance with the terms of the trust instrument. There is here a close analogy with breach of contract. A person who knowingly procures a breach of contract, or knowingly interferes with the due performance of a contract, is liable to the innocent party."

I would also recommend that counsel refer to the judgment of Lord Millet in Twinsectra Ltd v Yardley & Others [2002] UKHL 12 where liability for knowing receipt of trust property and for knowing (dishonest) assistance in a breach of trust are discussed.

If reference is made to s.19 (1) (a) of the Limitation Act 1975 which counsel for the plaintiff submits is the relevant limitation provision, that provision speaks of "an action by a beneficiary under a trust in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy." If s.19 (1) (a) is related to the plaintiff’s claim, then it can be argued that the plaintiff’s claim is "an action by a beneficiary under a trust". The action is "in respect of a fraud or fraudulent breach of trust" to which the administrator as "trustee was a party or privy". It is not necessary that the trustee was himself dishonest or fraudulent where the action is one for dishonest assistance in a breach of trust; but dishonesty must be shown against the third party who is alleged to have assisted the trustee in the breach of trust: Royal Brunei Airlines v Tan [2005] UKPC 4 per Lord Nicholls of Birkenhead; Twinsectra Ltd v Yardley & Others [2002] UKHL 12 per Lord Millet.

The plaintiff’s claim against the defendants, as clarified in the submissions of her counsel, is in substance (though may not be in full form at this stage) for dishonest assistance in a breach of trust. A beneficiary under a trust would have locus standi to bring such a claim.

As I have touched upon liability for "knowing receipt" and it is referred to in the submissions by counsel for the plaintiff perhaps I should refer briefly to Twinsectra Ltd v Yardley & Others [2002] UKHL 12 where Lord Millet at para 102 said:

"Liability for ‘knowing receipt’ is receipt-based. It does not depend on fault. The cause of action is restitutionary and is available only where the defendant received or applied the money in breach of trust for his own use and benefit: see Agip (Africa) Ltd v Jackson [1990] Ch 265, 291-292; Royal Brunei Airlines Sdn Bhd v Tan [1995] UKPC 4; [1995] 2 AC 378, 386. There is no basis for requiring actual knowledge of the breach of trust, let alone dishonesty, as a condition of liability. Constructive knowledge is sufficient, and may not even be necessary. There is powerful academic support for the proposition that the liability of the recipient is the same as in other cases of restitution, that is to say strict but subject to a change of position defence."

At para 107, Lord Millet went on to say:

"The accessory’s liability for having assisted in a breach of trust is quite different. It is fault-based, not receipt-based. The defendant is not charged with having received trust moneys for his own benefit, but with having acted as an accessory to a breach of trust. The action is not restitutionary, the claimant seeks compensation for wrongdoing".

In El Ajou v Dollar Land Holdings [1994] 2 A11 ER 685 Lord Hoffman appears to be of the view that knowledge on the part of the defendant of the breach of fiduciary duty to which the assets he received can be traced is a necessary requirement for liability in knowing receipt. His Lordship said at p. 700:

"For this purpose the plaintiff must show, first a disposal of his assets in breach of fiduciary duty; secondly, the beneficial receipt by the defendant of assets which are traceable as representing the assets of the plaintiff; and thirdly, knowledge on the part of the defendant that the assets are traceable to a breach of fiduciary duty".

What has been said is not a detailed discussion of liability for knowing receipt and I need not go further to explore whether it has been settled that knowledge, actual or constructive, is a necessary requirement for such liability even though the words "knowing receipt" would suggest that receipt of trust property in breach of trust must be "knowing", that is, with knowledge.

PART E

Discussion

A plaintiff must not be lightly denied his right to trial, that is to say, his right to have his claim tried in Court. It is therefore incumbent upon a defendant who seeks to strike out a claim on limitation grounds by way of preliminary proceedings to establish conclusively that the claim is time barred. If there is real doubt about the matter, the claim should not be struck out but allowed to go to trial where all the issues of fact and law can be fully explored: Johns v Johns and Holloway [2004] NZCA 42 per Tipping J at para [2].

With respect, I am of the clear view that the defendants have not established conclusively that any of the plaintiff’s causes of action has been time barred under s.6 (3) or s.9 (2) of the Limitation Act 1975. I have not been satisfied to the required standard that either of those provisions applies to any of the plaintiff’s causes of action. More particularly, it was not established when each of the plaintiff’s causes of action accrued for that is the point in time from which the limitation period begins to run in respect of a cause of action. Section 6 (3) also refers to "an action upon a deed". It was not shown that any of the plaintiff’s causes of action is "an action upon a deed". This should have been explained with sufficient clarity given that the defendants have to establish conclusively that the causes of action are time barred. Section 9 (2) refers to an action "to recover any land." It was also not clarified whether the causes of action by the plaintiff are solely for the purpose of recovering land. It is true that some of the remedies sought pursuant to some of the causes of action appear to have that effect but not all the remedies sought would appear to have that effect. Damages is the most obvious remedy that does not have that effect.

In respect of s.10 (2) of the Act, I have explained why I am doubtful whether this provision is applicable to the facts pleaded in respect of the plaintiff’s causes of action. In other words, it has not been established conclusively that s.10 (2) is applicable to any of the causes of action and, if it is applicable to any cause of action, it has not been established conclusively that such cause of action is time barred.

Even though s.26 of the Act was also cited by counsel for the first defendant, it did not really arise on the pleaded facts because counsel for the plaintiff did not argue that the limitation period for any cause of action was postponed by reason of the time any of the alleged fraud was discovered or could with reasonable diligence have been discovered. I have also explained why the limitation provisions of s.48 of the Administration Act 1975 which apply to relief sought in family protection proceedings are not applicable to the plaintiff’s claim which does not seek such relief.

With respect, I must say that one of the real difficulties with the defendants strike out motions lies in the procedure they have chosen to follow. Without filing any pleadings, the defendants sought to strike out the plaintiff’s claim as time barred. In doing so, the defendants had to proceed with their strike out motions on the basis of the facts alleged in the second amended statement of claim which the Court has to assume are capable of proof: Johns v Johns and Holloway [2004] NZCA 42 per Tipping J at para [2]. But the problem is that it is not apparent from the statement of claim when any of the causes of action accrued. What should have been done by the defendants was to plead the limitation statute as a defence and seek a trial of that defence as a preliminary issue. In such a preliminary proceeding, the defendants can adduce evidence to show when each cause of action accrued. Evidence can also be adduced to show when the limitation period expired.

It is still open to the defendants to plead the limitation statute as a defence if it is appropriate to do so. But that may have to await the plaintiff’s motion for leave to file a third amended statement of claim. If the plaintiff, as submitted by her counsel, is basing her claim in dishonest assistance in a breach of trust or knowing receipt both of which are equitable claims, then the defendants may have to consider s.19 of the Limitation Act 1975 before moving again to strike out on limitation grounds. The defendants may also have to consider, if it is appropriate to do so, the principle of limitation by analogy which may be applicable to an equitable claim for which no limitation period is provided in the Act.

PART F

Conclusions

From the foregoing, I have come to the following conclusions:

(a) The motions to strike out by the first and second defendants are dismissed.

(b) Costs reserved.

CHIEF JUSTICE

Solicitors
Woodroffe Law Firm for plaintiff
Brunt Keli Law Firm for first defendant
Drake & Co for second defendant