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Strickland Brothers v Attorney General [2014] WSSC 15 (29 April 2014)

SUPREME COURT OF SAMOA
Strickland Brothers v Attorney General [2014] WSSC 15

Case name: Strickland Brothers v Attorney General

Citation: [2014] WSSC 15

Decision date: 29 April 2014

Parties:
STRICKLAND BROTHERS a duly incorporated company having its registered office at Lepea AND ATTORNEY GENERAL sued on behalf of the Ministry of Police, Fire and Prisons

Hearing date(s): 29 November 2013

File number(s): CP 106/13

Jurisdiction: CIVIAL

Place of delivery: MULINUU

Judge(s): CHIEF JUSTICE PATU FALEFATU SAPOLU

On appeal from:

Order:

Representation:
S Wulf for plaintiff
M T Lui and N Mann for defendant

Catchwords:

Words and phrases:
tort of deceit, fraudulent purchase, accrual of the cause of action, vicariously liable, effect of fraud, misrepresentation, duress or coercion, pre-contractual fraudulent, tort of conversion or detinue

Legislation cited:
Limitation Act 1975
Sale of Goods Act 1975
Cheshire and Fifoot Law of Contract (1992)
The Law of Torts in Australia (1985)
The Law of Torts in New Zealand (2009) 5th ed
Contractual Remedies Act 1979 (NZ).
Guarantee Department [1999] UKHL 9; [2000] 1 AC 486
Lloyd v Grace, Smith & Co [1912] AC 716
Limitation Act 1975
Limitation of Actions (1998) by Oughton

Cases cited:
Attorney-General for New South Wales v Perpetual Trustee Co (Ltd) 1955] AC 457
Auckland Medical Aid Trust v Commissioner of Police [1976] 1 NZLR 485
Canadian Pacific Railway Co v Lockhart[1942] AC 591
Coomber v Berks JJ
Carrington v Attorney-General [1972] NZLR 1106,
Credit Lyonnais Bank Nederland (Now Generale Bank Nedelard NV) v Export Credits Dehn v Attorney-General [1988] NZHC 418; [1988] 2 NZLR 564
Nathan v Dollars & Sense [2008] NZSC 20; [2008] 2 NZLR 557
Palsey v Freeman
Tamworth v Attorney-General [1991] 3 NZLR 616
Auckland Harbour Board v Kaihe [1962] NZLR 68
Webster v Lampard [1993] HCA 57; (1993) 177 CLR 598
Johns v Johns and Holloway [2004] NZCA 42

Summary of decision:

IN THE SUPREME COURT OF SAMOA
HELD AT MULINU’U

FILE NO.: CP 106/13

BETWEEN:
STRICKLAND BROTHERS a duly incorporated company having its registered office at Lepea
Plaintiff

A N D:

ATTORNEY GENERAL sued on behalf of the Ministry of Police, Fire and Prisons
Defendant

Counsel:
S Wulf for plaintiff
M T Lui and N Mann for defendant
Hearing: 29 November 2013
Judgment: 29 April 2014

JUDGMENT OF SAPOLU CJ

1. These proceedings are concerned with a motion by the defendant and an application by the plaintiff. The motion by the defendant seeks to strike out the plaintiff’s statement of claim on two grounds, firstly, that the cause of action for breach of contract pleaded in the statement of claim is time barred by the provisions of the Limitation Act 1975 and, secondly, the statement of claim discloses no valid or reasonable cause of action. The application by the plaintiff seeks leave to bring the plaintiff’s action against the defendant pursuant to s.21 (2) of the Limitation Act 1975.

Factual background

2. The plaintiff, Strickland Brothers Ltd, is a duly incorporated company which operates hardware stores at Lepea and Salelologa selling hardware, building materials and other products. The defendant, the Attorney General, is sued on behalf of the Ministry of Police, Fire and Prisons. Its submissions were presented by Mr Mann.
3. As it appears from the plaintiff’s statement of claim which is supplemented in parts by the affidavit of its operations manager, the Ministry of Police, Fire and Prisons (the Ministry) had been a regular customer of the plaintiff for several years from 2003 to 2007. It is alleged that during that period, the Ministry placed numerous orders with the plaintiff company for the purchase of various hardware and building materials. These were for the construction of the Ministry’s new offices at Apia, Tafaigata, Faleolo and Savaii. The purchase orders, described individually as an as “Official Purchase Order” with the words “Government of Samoa Ministry of Police, Fire and Prisons” at the top, were prepared by the employees of the Ministry. These purchase orders were then taken to the plaintiff by an employee of the Ministry. It is not clear whether these employees were police officers and therefore members of the police force. Upon receipt of the purchase orders, the plaintiff would then prepare and issue an invoice for the goods to be supplied to the Ministry together with their prices. When the goods are ready to be supplied to the Ministry for each purchase order, there is a delivery docket prepared by the plaintiff. Presumably, this delivery docket is signed on behalf of the plaintiff and on behalf of the Ministry when the goods are received on behalf of the Ministry. Payment for the goods was not made upon delivery. This is because payment had to be processed through Treasury which would issue a cheque for payment. There is no evidence as to how long this process for payment normally took but it appears it could take quite some time. Counsel for the Ministry submitted that the standard business practice is that payment is made in two weeks from the date of delivery. If that is the standard business practice, it is not clear what is Government standard practice with regard to payment for goods or services supplied from the private sector. Perhaps the plaintiff should have disclosed how long it normally took for the Ministry to pay its orders from the plaintiff for hardware and building materials. The Ministry should also have been able to provide such information.
4. Of relevance to these proceedings are the transactions for which the purchase orders for building materials were placed by the employees of the Ministry with the plaintiff in 2006 and 2007 and which were supplied by the plaintiff but the Ministry has refused to pay. There were ten such transactions. Five of them were in 2006; the other five were in 2007.
5. Of the transactions in 2006, the delivery dockets for four of them, which are annexed to the affidavit of the plaintiff’s operations manager, show that delivery of the building materials for those four transactions took place from 22 August 2006 to 16 December 2006. This suggests that those transactions must have taken place from August 2006 to December 2006. For one of the five transactions in 2006 there is no delivery docket. But the purchase order was issued on 12 October 2006 and the required date of supply was 26 October 2006 which suggests that that transaction must have taken place in October 2006.
6. Of the five transactions in 2007, the delivery dockets for four of them, which are also annexed to the affidavit of the plaintiff’s operations manager, show that delivery of the building materials for those four transactions took place from 20 January 2007 to 19 March 2007. This implies that those transactions must have taken place from January 2007 to March 2007. The delivery docket for the fifth transaction shows that the delivery date for the building materials was 28 August 2007. The purchase order for that particular transaction was issued on 27 August 2007 and the date of the plaintiff’s invoice was 27 August 2008. So that transaction must have taken place on 27 or 28 August 2007. An interesting feature of the delivery docket for this transaction is that the building materials were delivered to a person at Fagaloa. I have noticed in respect of the delivery dockets for some of the other transactions that the building materials were also delivered to the same person at Lona, Fagaloa. I am not aware that the Ministry has an office at Fagaloa and there is no evidence that the Ministry has such an office. Some of the building materials were also delivered to Leififi and Satapuala. There is also no evidence that the Ministry has an office at Leififi or Satapuala. But it is alleged in the statement of claim that the various hardware and the building materials ordered by the Ministry from the plaintiff were for the construction of the Ministry’s new offices at Apia, Tafaigata, Faleolo and Savaii. There is no mention in the statement of an office at Leififi, Satapuala, or Lona, Fagaloa.
7. The total outstanding amount for the unpaid orders is $49,727.31. The plaintiff wrote numerous letters to the Ministry for payment of that outstanding amount. There is nothing in the statement of claim or the supporting affidavit of its operation manager as to the dates of those letters. At first, the response from the Ministry was that the matter of payment was with the Controller and Chief Auditor. Later the Ministry advised that the officer of the Ministry who had handled the purchase orders had resigned or stationed elsewhere. There is also nothing in the statement of claim or the supporting affidavit of its operations manager as to the dates of these responses from the Ministry. Then in 2009, the Ministry informed the plaintiff that it will not pay for the unpaid building materials as its employee who issued the purchase orders for the transactions in question had no authority to do so and therefore the purchase orders were illegal. Consequently, the Ministry is not liable to the plaintiff. The plaintiff must therefore seek recovery from the Ministry’s employee who was responsible for the fraudulent purchase orders. It is now known from the submissions of counsel for the Ministry that that employee had been charged and sentenced to prison. Other staff members of the Ministry alleged to have been involved are no longer employed by the Ministry.
8. The claim by the plaintiff is framed in contract. It was submitted for the plaintiff that the transactions were sale of goods transactions made directly between the plaintiff and the Ministry. The Ministry has refused to pay for the goods. This is therefore a straight forward claim in contract for the price of the goods; the contract being a contract of sale of goods.
9. Counsel for the Ministry acknowledged that the plaintiff’s claim is framed in contract. However, their submissions seem to suggest that the plaintiff should have brought its claim in tort. This is because the sale of goods transactions which were entered into by the relevant employees of the Ministry with the plaintiff were without the knowledge or authority of the Ministry. The Ministry should therefore not be vicariously liable in tort for the unauthorised acts of its employees. The plaintiff should proceed against the Ministry’s employees and not the Ministry.

The issues

10. As I see it, the issues in these proceedings may be stated as follows: (a) whether the plaintiff’s action should have been brought in contract or tort, (b) whether the Ministry is the proper plaintiff, (c) whether the plaintiff’s claim is barred by s.6 of the Limitation Act 1975 which provides a limitation period of 6 years for actions in contract or tort, and (d) whether the plaintiff’s action is barred under s.21 of the Act which gives protection to persons acting in execution of a statutory or other public duty. I will now deal with each of these issues in turn.

(a) First issue: Should the plaintiff’s action have been brought in contract or tort?

11. The plaintiff’s action is brought in contract against the defendant. This is because it is alleged by the plaintiff that the Ministry had ordered, through its employees, from the plaintiff goods, namely, building materials for the construction of what is said to be the Ministry’s new offices at Apia, Tafaigata, Faleolo, and Savaii. The plaintiff supplied those goods but the Ministry has refused to pay for them. Hence this action for breach of contract claiming the price of the goods from the defendant. Up to this point, there is no problem with the plaintiff’s claim being brought in contract for breach of a contract of sale of goods.
12. However, it appears from the statement of claim that the plaintiff was informed by the Ministry before the statement of claim was drafted and later filed that its employees who had ordered the building materials had done so fraudulently because they had ordered those building materials for their own personal use without the knowledge or authority of the Ministry. In other words, the relevant employees of the Ministry had deceived the plaintiff by making false representations to the plaintiff that the building materials were ordered by the Ministry for the use of the Ministry when in actual fact the building materials were being ordered by the employees, using purchase order forms of the Ministry, for their own personal use. In these circumstances, the proper action should have been in the common law tort of deceit for the false representations made by the Ministry’s employees to the plaintiff and not for breach of contract against the Ministry because there was no contract between the plaintiff and the Ministry.
13. Under s.58 (2) of the Sale of Goods Act 1975, the common law rules relating to fraud and misrepresentation are preserved and continue to apply to contracts for the sale of goods. Section 58 (2) provides:
    • “The rules of the common law including the law merchant, save in so far as they are inconsistent with the express provisions of this Act, and in particular the rules relating to the law of principal and agent, and the effect of fraud, misrepresentation, duress or coercion, mistake, or other invalidating cause, shall continue to apply to contracts for the sale of goods”
14. In the text Cheshire and Fifoot Law of Contract (1992) 6th Australian ed by JG Starke QC et al, the learned authors state at para [774], p.370:
    • “The tort of deceit provides compensation to anyone who has suffered financial loss caused by another’s fraud: The Law of Torts in Australia (1985) by Tridade and Cane 143-150. There is no need for a contractual relationship between the parties but we are concerned here with the tort of deceit where the loss suffered arises out of a contract. The typical situation is that the representee is induced to enter into a contract by a pre-contractual fraudulent statement. The victim then suffered loss which would not otherwise have been suffered if he or she had not been so induced”.
15. Because of its apparent relevance to the circumstances of this case, I would also refer to The Law of Torts in New Zealand (2009) 5th ed by Todd et al, where the learned authors state at para 15.2.01:
    • “The development of the tort of deceit dates from the famous case of Palsey v Freeman decided in 1789. Here the defendant falsely represented to the plaintiff that one Falch was a person to be trusted and to whom the plaintiff might safely give credit. The plaintiff, relying on the defendant’s representation, delivered goods to Falch on credit but was unable to obtain payment for them. The Court held that the defendant was liable. It maintained that a false representation made by the defendant with intent to defraud the plaintiff, and which caused the plaintiff damage, is the ground of an action on the case in the nature of deceit”
16. From the above statement, it is arguable that in the circumstances of this case the Ministry’s employees had defrauded the plaintiff by presenting to the plaintiff false purchase orders upon which the plaintiff relied and supplied goods to them. As a result, the plaintiff has suffered loss because the goods have not been paid.
17. In terms of an offer and acceptance analysis, I also find it difficult to accept that the Ministry should be liable in contract to the plaintiff. This is because the Ministry itself had never entered into a contract with the plaintiff for the purchase of goods. The Ministry had never made an offer to purchase goods from the plaintiff which the plaintiff accepted. This is because the Ministry did not authorise its employees to purchase the goods in question from the plaintiff. It had no knowledge of what its employees were up to. The offer that the plaintiff accepted was a deceitful offer made by the employees themselves. Therefore, there was no contract between the Ministry and the plaintiff so that the Ministry cannot be sued for breach of contract.
18. What is submitted on behalf of the plaintiff is that the employees concerned were the Ministry itself for the purpose of the transactions in question. In other words, the employees were identical with the Ministry for the purpose of those transactions.. I do not accept this submission. It does not accord with reality. The employees concerned were not the Ministry. They were merely employees of the Ministry. Their services have been terminated by the Ministry. In a master and servant or employer and employee relationship, the servant is not the master, nor is the employee the employer. If the two were one and the same, there will be no employment relationship. There may be circumstances where a master can be liable for the actions of his servant and likewise the employer for the actions of its employee. But that does not make the servant the same person as his master or the employee the same as his employer.
19. I have therefore come to the view that at common law the action by the plaintiff should have been brought in tort and not in contract. In saying this, I am conscious that the position in New Zealand has been changed by statute, namely, the Contractual Remedies Act 1979. In Law of Contract in New Zealand (2002) 2nd ed by Burrows, Finn and Todd, the learned authors state at para 11.2.7, p.344:
    • “At common law it was often very relevant whether the representor had made the misrepresentation negligently, fraudulently or in total innocence; if he or she had been negligent or fraudulent an action for damages in tort might be against him or her. Negligence consists of a failure to take care where there is a duty to do so; fraud (or deceit) exists when the representor lacks an honest belief in the truth of his or her statement. However, in respect of misrepresentation under the Contractual Remedies Act 1979 negligence and fraud are irrelevant in actions between the contracting parties, whether they be for damages or cancellation of the contract. Sections 6 and 7 of the Act both confer remedies in contract for misrepresentation ‘whether innocent or fraudulent’”.
20. We do not have legislation similar to the Contractual Remedies Act 1979 (NZ). Whether we will have such a legislation in the future remains to be seen. In the meantime, the common law still applies in this context.

(b) Second issue: Is the Ministry of Police and Prisons (the Ministry) the proper plaintiff in this case?

21. I will discuss the second issue under the following sub-issues.

(i) The legal position if the Ministry’s employees were members of the police force

22. Having decided that the plaintiff’s action should have been brought in tort, the second issue is whether the Ministry is the proper plaintiff to sue. Here the difficulty is that it is not clear from the statement of claim whether the employees of the Ministry who fraudulently ordered the goods from the plaintiff were police officers or not. This is because of the special position of the police under the law. If they were non-police officers, then there is no difficulty. But if they were police officers, then I need to consider the relevant law which is applicable to the police in this kind of situation.
23. Under Article 83(j) of the Constitution, an officer of police is not included in the “Public Service” which means the service of Samoa. Section 2 (1) of the Government Proceedings Act 1974, which is the interpretation provision of the Act, provides an inclusive definition of the term “servant” or “servant of the Government” to include a Minister of the Government. There is no express mention whether a member of the police force is also included in the definition of the term “servant” or “servant of the Government”. This is important because in terms of s.6 (1) (a), the Government is only liable for the torts committed by its servants or agents. It follows that if a police officer is not a servant or agent of the Government in terms of s.2, then the Government is not liable for any tort committed by a police officer.
24. In Auckland Medical Aid Trust v Commissioner of Police [1976] 1 NZLR 485 it was held that the police would be acting within the service of the Crown when discharging their duties of preserving order and preventing crime. At p.491, Wilson J stated:
    • “It is settled that the police are not servants of the Crown for all purposes. “See Attorney-General for New South Wales v Perpetual Trustee Co (Ltd) 1955] AC 457; [1955 1 A11 ER 846, where the Privy Council held that the Crown could not recover damages for the loss of the services of a police constable as the result of injuries caused by the negligence of a third person. That decision turned on the particular nature of the service of the police as contrasted with the domestic type of service in respect of which the cause of action lay. But in the course of his judgment in this case Viscount Simonds said this of a police officer:
      • ‘“And he is to be regarded as a servant or minister of the King because, as Lord Blackburn said in Coomber v Berks JJ (9 App Cas at p67), the administration of justice, both criminal and civil, and the preservation of order and prevention of crime by means of what is now called police, are amongst the most important functions of government and, by the constitution of this country, these functions do, of common right, belong to the Crown. A constable, then, may be said in a certain context, and sometimes with the appendage ‘or minister’, to be a ‘servant of the Crown’” ([1955] 1 A11 ER 846, 852).
25. There have been New Zealand cases where the Crown has been held liable for the torts committed by members of the police force in the course of their duties as members of the police force. For example, in Carrington v Attorney-General [1972] NZLR 1106, the plaintiff brought civil proceedings pursuant to s.6(a) of the Crown Proceedings Act 1950 which provides that the Crown (as represented by the Attorney-General) may be sued, in the same manner as a person sui juris, in respect of acts committed by its servant or agents. The proceedings brought by the plaintiff against the Attorney-General on behalf of the Crown in that case was for damages for wrongful arrest and wrongful detention committed by a detective sergeant in the course of his duties as a member of the police force. The plaintiff was successful in his action. In Dehn v Attorney-General [1988] NZHC 418; [1988] 2 NZLR 564, the plaintiffs sued the Attorney General on behalf of the New Zealand Police in tort alleging trespass, assault, and defamation said to have been committed by certain members of the police force against the plaintiffs in the course of their duties. The claim in trespass succeeded but only nominal damages of $1 was awarded. The claims for assault and defamation failed. In Tamworth v Attorney-General [1991] 3 NZLR 616, the plaintiff brought civil proceedings against the Attorney-General on behalf of the New Zealand Police in the tort of conversion or detinue. The plaintiff’s claim was entertained by the Court but it failed because it was not proved to the required standard. These cases demonstrate that civil proceedings can be brought against the Attorney General for torts committed by police officers in the course of their duties as members of the police force.
26. If, as I have assumed for present purposes, the employees of the Ministry who prepared the false purchase orders and presented them to the plaintiff and received the goods were police officers, then the question arises whether the fraud they are alleged to have committed was committed within the course of their duties as members of the police force. If that is so, should the Ministry be vicariously liable in the tort of deceit for that fraud. These questions were not addressed in the submissions of counsel which makes me suspect that the employees concerned may not have been police officers. I turn now to consider the position if the employees were not police officers.

(ii) The legal position if the Ministry’s employees were not members of the police force

27. If the employees concerned were not members of the police, then for the Ministry to be vicariously liable for the fraud they committed against the plaintiff, it will have to be shown that they were acting in the course of their employment when they committed the fraud. The cause of action would have to be in the tort of deceit.
28. In The Law of Torts in New Zealand (2009) 5th ed by Todd et al, the learned authors state at para 22.1, pp.1027–1028.
    • “Vicariously liability arises where one person is held to be liable for torts committed by a second person, even though without fault himself or herself. Vicarious liability is a process by which strict liability is imposed by the common law; for most practical purposes, although not in principle, ‘one person takes the place of another so far as liability is concerned’.
    • “In fixing a defendant as being vicariously liable, three questions are asked. First, has a tort been committed? Secondly, what is the nature of the relationship between the person who committed the tort and the person who is alleged to be vicariously liable for it? Thirdly, what connection exists, if any, between the tort and the relationship in question?
    • The most common illustration by far is the vicarious liability of an employer for any tort committed by an employee in the course of the employee’s employment. Here, employment provides the nature of the relationship, and the connection between the tort and the employment relationship is furnished by the fact that the tort is committed in the course of employment”.
29. The principle on which vicarious liability for the wrong of a servant or agent depends was stated in Credit Lyonnais Bank Nederland (Now Generale Bank Nedelard NV) v Export Credits Guarantee Department [1999] UKHL 9; [2000] 1 AC 486 where Lord Woolf MR said at p.494:
    • “It is that the wrong of the servant or agent for which the master or principal is liable is one committed in the case of a servant in the course of his employment, and in the case of an agent in the course of his authority. It is fundamental to the whole approach to vicarious liability that an employer or principal should not be liable for the acts of servant or agent which are not performed within this limitation. In many cases particularly cases of fraud, the question arises as to whether the particular conduct complained of is an unauthorised mode of performing what the servant or agent is engaged to do”.
30. One of the reasons given in support of the Ministry’s contention that it would not be vicariously liable for the acts of its employees is that it did not authorise those acts or had any knowledge of it. The classic statement on this point was made in Canadian Pacific Railway Co v Lockhart[1942] AC 591 where Lord Thankerton said at p.599:
    • “It is clear that the master is responsible for acts actually authorised by him: for liability would exist in this case, even if the relation between the parties was merely one of agency, and not of service at all. But a master...is liable even for acts which he has not authorised, provided they are so connected with acts which he has authorised that they might rightly be regarded as modes – although improper modes – of doing them. In other words a master is responsible not only for what he authorises his servant to do, but also the way he does it... On the other hand, if the unauthorised and wrongful act of the servant is not so connected with the authorised act as to be a mode of doing it, but is an independent act, the master is not responsible; for in such a case, the servant is not acting in the course of his employment but has gone outside it”. (emphasis mine)
31. Another reason given in support of the Ministry’s contention that it should not be responsible for its employees acts is that its employees acts were for their own benefit. In The Law of Torts in New Zealand (2009) 5th ed by Todd et al, the learned authors state at p.1049:
    • “What if the wilful wrongdoing in question is plainly intended to benefit the employees alone, albeit carried out in the course of the employees normal duties? Here the Courts have accepted that insofar as an act is done for the employer’s benefit that is a valuable indication that it was done in the course of employment, but that the converse is not true. In cases based on fraud, a heavy emphasis is placed on ostensible authority when deciding whether the employees actions were committed in the course of employment or were merely a ‘frolic’ of his or her own. In the leading decision, Lloyd v Grace, Smith & Co [1912] AC 716, an employee who was employed to carry out conveyancing without supervision fraudulently induced the plaintiff to convey properties to himself. The plaintiff was under the impression that she was executing documents which were necessary to sell the properties on her behalf to others. The House of Lords held unanimously that the defendants were vicariously liable. The employees fraud was simply an unauthorised mode of doing the very work which he was employed to do”.
32. In the leading New Zealand authority on vicarious liability of a principal for the acts of an agent Nathan v Dollars & Sense [2008] NZSC 20; [2008] 2 NZLR 557, Blanchard J, in delivering the judgment of the New Zealand Supreme Court, said at para [41], p. 573:
    • “We come now to our second proposition, that the fraudulent act may be done within the scope of an agency, even if done exclusively for the benefit of the agent (and even more so when it is done for the benefit of the principal as well as for the benefit of the agent). The leading authority is Lloyd v Grace, Smith & Co [1912] AC 716 in which a firm of solicitors was held liable for frauds covertly committed against a client by their managing clerk for his won benefit entirely. The firm had gained nothing from the frauds. The House of Lords rejected the argument that a principal was not liable for the fraud of his agent unless committed for the benefit of the principal. The case has often been understood to be an authority on apparent or ostensible agency, as Mr Templeton submitted it should be regarded, and indeed there are passages in the speeches which might support that view. But the better view, we think, is that their Lordships were in this respect not drawing any distinction between actual and apparent authority. The managing clerk plainly had actual authority to conduct business of the kind conducted for the plaintiff and in the course of which defrauded her. Lord Macnaghten proceeded on the basis of what he described as a clear finding of the trial Judge that the fraud ‘was committed in the course of Sandle’s employment and not beyond the scope of his agency...’ And Lord Shaw concluded his reasons by referring to the finding ‘that the fraud was committed in the course of, and within the scope of, the duties with which the defendants had entrusted Sandles as their managing clerk.’ In those circumstances, he said, they stood answerable in law for their agent’s misconduct”.
33. Even though the above citation from Nathan v Dollars & Sense [2008] NZSC 20; [2008] 2 NZLR 557, para [44], p.573, was made in the context of the vicarious liability of a principal for the fraud committed by an agent for his own benefit, it is also applicable to vicarious liability of an employer for the fraudulent acts committed by an employee in the course of his employment for his own benefit.
34. The expression “scope of employment” and “course of employment” have been used interchangeably as pointed out in The Law of Torts in New Zealand (supra) at para 22.4, p.1030. They really mean the same thing.
35. As it appears from the statement of claim, the Ministry was a regular customer of the plaintiff from 2003 to 2007. During that period of time numerous orders were placed by the Ministry with the plaintiff for the purchase of hardware and building materials. The purchase orders were prepared by the employees of the Ministry and presented to the plaintiff who then supplied the hardware and building materials. However, on ten separate occasions in 2006 and 2007, those same employees prepared fraudulent purchase orders and presented them to the plaintiff who was not aware of the fraud. Building materials were supplied by the plaintiff pursuant to those fraudulent purchase orders which they then took for their own personal use. In my view, these fraudulent purchase orders were so connected with the act of preparing purchase orders and presenting them to suppliers for building materials which the Ministry’s employees were authorised to do that the employees can rightly be said to have acted within the scope of their employment. The Ministry should therefore be vicariously liable in the tort of deceit for the fraud of its employees. As it was said by Lord Thankerton in Canadian Pacific Railway Co v Lockhart [1942] AC 591, 599, a master is liable for the unauthorised and unlawful acts of his servant if they are so connected with acts the servant has been authorised to do that the unauthorised and unlawful acts might rightly be regarded as a mode, although an improper mode, of doing them. In such a situation, the servant will still be acting within the scope of his employment. It is immaterial that the unauthorised acts are done for the benefit of the employees: The Law of Torts in New Zealand (supra) p. 1049; Nathan v Dollars & Sense [2008] NZSC 20; [2008] 2 NZLR 557, 573.
36. Assuming, therefore, that the employees in question were not members of the police force, it is clear from the authorities that the Ministry as employer would be vicariously liable to the plaintiff in the tort of deceit for the fraud of its employees.

(c) Third issue: Is the plaintiff’s claim barred by s.6 of the Limitation Act 1975?

37. For present purposes I will have to assume that the plaintiff will amend its statement of claim in order to bring its claim in the tort of deceit.
38. Section 6 (1) (a) of the Limitation Act 1975 provides:
    • “Except as otherwise provided in this Act, the following actions shall not be brought after the expiration of 6 years from the date on which the cause of action accrued, that is to say:

(a) Actions founded on simple contract or tort”

39. Except for torts which are actionable per se, for example, libel, trespass to the person, trespass to land, and false imprisonment, a cause of action in tort generally accrues from the time the plaintiff suffers damage. However, it is to be borne in mind that s.6 is commenced with the words: “Except as otherwise provided in this Act”.
40. Section 26 of the Act, in so 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) ..., 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.”
42. An action in the tort of deceit is an action that is based on fraud. It follows that the limitation period for an action in deceit will not begin to run until the plaintiff has discovered the fraud or could with reasonable diligence have discovered it. In the English text, Limitation of Actions (1998) by Oughton, Lowry, and Merkin, the learned authors said at p.263:
    
    • “The tort of deceit, which is also relevant for the purposes of a common law action in respect of a fraudulent misrepresentation and an action by a principal against his agent or the third party where a bribe has been paid to the agent by the third party, is covered by special provisions of the Limitation Act 1980, s.32 (1) (a). This matter is covered in more detail elsewhere, but since the tort of deceit involves an allegation that the defendant is guilty of fraud and since fraud is the basis of the action, the effect of section 32 (1) (a) is that time will not start to run against the plaintiff until he is aware or could with reasonable diligence have become aware of the fraud on the part of the defendant”. (emphasis mine)

Section 32 of the Limitation Act 1980 (UK) and s.26 of our Limitation Act 1975 are expressed in similar terms.

43. As it appears from the statement of claim and submissions of counsel for the plaintiff, it was only in 2009 that the plaintiff first became aware of the fraud by the Ministry’s employees. This was when the Ministry informed the plaintiff that it will pay for the building materials in question as its employees who issued the purchase orders for those building materials had no authority to do so and the purchase orders were therefore illegal. This must mean that the limitation period for an action and deceit would only start run against the plaintiff from the time it first become aware in 2009 of the fraud by the Ministry’s employees. That being so, the limitation period of 6 years for an action in tort has not expired. It will be for the plaintiff to decide whether to amend its claim and bring it in tort.

(d) Fourth issue: Is the plaintiff’s claim barred by s.21 of the Limitation Act 1975?

43. Section 21 which gives protection for persons acting in execution of a statute or any public duty or authority provides:
    • “(1) No action is to be brought against any person (including the Government) for any act done in pursuance or execution or intended execution of any Act of Parliament, or of any public duty or authority, or in respect of any neglect or default in the execution of any such Act, duty, or authority, unless:
      • (a) Notice in writing giving reasonable information of the circumstances upon which the proposed action will be based and the name and address of the prospective plaintiff and of his or her solicitor or agent (if any) in the matter is given by the prospective plaintiff to the prospective defendant as soon as practicable after the accrual of the cause of action; and
      • (b) the action is commenced before the expiration of one year from the date of which the cause of action accrued:
    • PROVIDED THAT, where the act, neglect, or default is a continuing one, no cause of action in respect thereof is deemed to have accrued, for the purposes of this section, until the act, neglect, or default has ceased:
      • PROVIDED THAT the notice required by paragraph (a) may be given, and an action may thereafter be brought, while the act, neglect, or default continues:
        • PROVIDED THAT any such person may consent to the bringing of such an action at any time before the expiration of 6 years from the date on which the cause of action accrued, whether or not notice has been given to the prospective defendant as aforesaid.
    • “(2) Despite subsection (1), application may be made to the Court, after notice to the intended defendant, for leave to bring such an action at any time before the expiration of 6 years from the date on which the cause of action accrued, whether or not notice has been given to the intended defendant under subsection (1); and the Court may, if it thinks it is just to do so, grant leave accordingly, subject to such conditions (if any) as it thinks it is just to impose where it considers that the failure to give the notice or the delay in bringing the actions, as the case may be, was occasioned by mistake or by any other reasonable cause or that the intended defendant was not materially prejudiced in his defence or otherwise by the failure or delay.
      • (2A) No leave may be granted by a Court where an action has been commenced and no notice of the action was served under subsection (1)(a) before the commencement of the action.
      • (3) Where notice has to be given ot the Government under this section, it is to be given to the Attorney General, and may be so given by leaving it at the Attorney General’s office in Apia or by sending it by post in a registered letter addressed to the Attorney General at the office.
      • (4) Except as provided in subsection (3), where any notice has to be given under this section, it may be given either:
        • (a) By delivering it to the person to whom it has to be given; or
        • (b) By leaving it at the usual or last known place of abode in Samoa of that person; or
        • (c) By sending it by post in a registered letter addressed to that person at his or her usual or last known place of abode in Samoa of that person; or
      • (5) Where a notice is sent by post in manner prescribed by subsection (3) or (4)(c), it is taken to have been given at the time at which the letter would have been delivered in the ordinary course of post.
      • (6) This section does not apply to any criminal proceeding, or to any action commenced by the Audit Office under any Act.
44. On the assumption that s.21 of the Limitation Act 1975 applies to these proceedings as contended for the Ministry, the plaintiff filed a motion pursuant to s.21 (2) for leave to bring its action against the Ministry notwithstanding its failure to comply with the notice requirements of s.21 (1) (a) and to commence its action before the expiration of one year from the date on which the cause of action accrued. This was strongly opposed on behalf of the Ministry relying particularly on s.21 (2A).
45. It is clear from s.21 (1) that no action in terms of that provision can be brought unless, first, a notice is given to the prospective defendant in terms of s.21 (1) (a) as soon as practicable after the accrual of the cause of action, and, that the action was commenced before the expiration of one year from the date of accrual of the cause of action. If there has been non-compliance with the requirements of s.21 (1) that does not necessarily preclude the plaintiff from bringing or continuing with his action. Section 21 (2) provides that the plaintiff may still make application to the Court for leave to bring his action at any time before the expiration of 6 years from the date the cause of action accrued and the Court may grant leave to the plaintiff to bring his action if it thinks it is just to do so taking into consideration the matters set out in that provision.
46. In this connection, I refer to the approach applied pursuant to s.23 of the Limitation Act 1950 (NZ), which is similar in terms to s. 21 of our Act, in Auckland Harbour Board v Kaihe [1962] NZLR 68 where North and Cleary JJ said at p.90:
    • “When a question arises as to whether a notice has been given as required by s.23 of the Limitation Act 1950, the principal matters of substance (as opposed to questions of procedure) that fall to be considered are: (1) Was a notice given as soon as practicable? (2) If not, should the failure to give notice be excused by reason of mistake or other reasonable cause, or, alternatively, was the defendant materially prejudiced by the failure? (3) If there be other reasonable cause for the failure, or no material prejudice to the defendant, is it just for the Court to excuse the failure?”
47. The approach to a s.21 (2) application for leave stated by North and Cleary JJ in Auckland Harbour Board v Kaihe [1962] NZLR 69, 90, is not to be applied in a mechanical fashion for the overriding consideration is whether in the circumstances it is just to grant leave to a plaintiff to bring his or her action notwithstanding non-compliance with the requirements of s.21 (1).
48. On 8 August 2013, the plaintiff commenced proceedings against the defendant by filing a statement of claim. On 16 September 2013, the defendant filed a motion to strike out the statement of claim. On 20 November 2013, the plaintiff served on the defendant a notice pursuant to s.21 (1)(a) of the Act. And on 22 November 2013, the plaintiff filed a motion pursuant to s.21 (2) for leave to bring its action.
49. It was not in dispute that no notice was given by the plaintiff as soon as practicable after the accrual of its cause of action as required under s.21 (1) (a). It was also not in dispute that the plaintiff did not commence its action before the expiration of one year from the date of accrual of its cause of action as required under s.21 (1) (b). It was also not in dispute that the plaintiff’s motion for leave to bring its action was only filed 3 ½ months after the statement of claim was filed.
50. In terms of s.21 (2A), no leave may be granted where an action has been commenced but no notice was given pursuant to s.21 (1) (a) before the commencement of the action. Counsel for the Ministry therefore submitted that this is fatal to the plaintiff’s motion for leave and the claim should therefore be struck out because the plaintiff’s claim was commenced on 8 August 2013 but its s.21 (1) (a) notice was not served until 20 November 2013.
51. Having regard to the principles which guide the exercise of the Court’s strike-out jurisdiction, there are two difficulties with the Ministry’s strike out motion in terms of s.21. In the first place, it appears from the words of s.21 (1) that in order for s.21 to be available as a defence, the defendant would have to show that the act of which the plaintiff complains was an “act done in pursuance or execution or intended execution of any Act of Parliament, or of any public duty or authority, or in respect of any neglect or default in the execution of any such Act, duty, or authority.” This means that unless the act of which the plaintiff complains falls within those words, s.21 does not apply and is not available as a defence.
52. The act of which the plaintiff complains in the present proceedings is the act of the Ministry’s employees of issuing purchase orders, alleged to be fraudulent, and presenting them to the plaintiff for the supply of building materials. I do not understand such an act of issuing purchase orders to be an act that was done” in pursuance or execution or intended execution of an Act of Parliament.” Counsel for the Ministry also did not contend that the act of issuing purchase orders and taking them to the plaintiff the supply of building materials was such an act. I also do not understand the act of issuing purchase orders to be an act that was done “in respect of any neglect or default in the execution of any such Act, duty, or authority.” That is because the action by the plaintiff does not allege any negligence or failure to do something on the part of the employees of the Ministry. The acts alleged were deliberate fraud, not negligence or failure to do something. That then narrows the issue down to the question of whether the act of which the plaintiff complains was an “act done in pursuance or execution or intended execution of any public duty or authority.” In the absence of any contrary intention which appears from the Act, the onus is on the Ministry which invokes s.21 to show that s.21 applies to these proceedings on the ground that the act of which the plaintiff complains was “an act done in pursuance or execution or intended execution of any public duty or authority.” This is a threshold issue.
53. In the case of Webster v Lampard [1993] HCA 57; (1993) 177 CLR 598, the plaintiffs brought an action against a police sergeant who was a member of Western Australia Police Force alleging various torts. The police sergeant applied for summary judgment relying, inter alia, on s.47A of the Limitation Act 1935 (W.A) which is similar in terms to s.21 of our Act. The summary judgment application was granted and the plaintiff’s action in torts was struck out. On appeal by the plaintiffs to the Supreme Court of Western Australia, the appeal was dismissed. The plaintiffs further appealed to the High Court of Australia and their appeal was upheld. In the joint judgment of Mason CJ, Dean and Dawson JJ, their Honours said at p.605:
    • “Thus, the defence under s.47A of the Limitation Act 1935 (W.A) is only available in the present case if the acts alleged against Sergeant Lampard were, in the words of that section, ‘done in pursuance or execution or intended execution of any Act, or of any public duty or authority.’”
54. Further on at p.606, Mason CJ, Dean and Dawson JJ went on to say:
    • “Where a statutory defence is available in respect of acts having some such designated connection with the actual or intended course of official duty, the general onus of establishing that connexion will, in the absence of some identified contrary legislative intention, rest on the defendant who invokes the defence. Thus, in the present case, the general onus of establishing that Sergeant Lampard’s alleged acts had, for the purposes of s.47A of the Limitation Act, been ‘done in pursuance or execution or intended execution’ of the Police Act or of his public duties or authority as a sergeant in the Western Australian Police Force rested upon him as the defendant claiming the benefit of the defence under the section.”
55. Toohey J in his judgment said at p.617:
    • “Before s.47A of the Limitation Act can operate as a defence there must be an ‘act done in pursuance or execution or intended execution of any Act.’”
56. The first difficulty with the Ministry’s strike out motion, in so far as it is founded on s.21 of the Limitation Act 1975, is that Mr Mann did not address the threshold issue of whether the act of issuing purchase orders by the Ministry’s employers of which the plaintiff complains was an “act done in pursuance or execution or intended execution of any public duty or authority.” I do not agree that the act of which the plaintiff complains is any failure on the part of the Ministry to properly oversee its staff in carrying out their duties. The act of which the plaintiff complains is the alleged issuing of fraudulent purchase orders by the Ministry’s employees which had misled the plaintiff to supply building materials to those employees resulting in loss to the plaintiff.
57. The difficulty with the Ministry’s strike out motion is that it was not addressed in the submissions for the Ministry whether the act of issuing purchase orders by the Ministry’s employees was an “act done in pursuance or execution or intended execution of any public duty or authority.” More to the point, what is the public duty or authority, if any, that is in issue in the plaintiff’s proceedings? This is not clear to me, at least at this stage. The onus is on the Ministry which has invoked s.21 to clarify this matter.
58. Furthermore, if the plaintiff’s claim had been pleaded in the tort of deceit, then the act of which the plaintiff would seek to make the Ministry vicariously liable would be the act of its employees in allegedly issuing fraudulent purchase orders.
59. The second difficulty with the Ministry’s strike out motion, to the extent that it relies on s.21 (2A), is that s.21(2A) does not say that if an action has been commenced but no notice is given under s.21 (1) (a) before the commencement of the action then the action should be struck out. Section 21 (2A) does not say that. What s.21 (2A) says is that there is no jurisdiction to grant leave, evidently under s.21 (2), where no notice was given to the defendant before the commencement of the action. Other than that, s.21 (2A) is silent as to what would happen to the plaintiff’s action. Section 21 (2A) is also silent whether the plaintiff could discontinue its present action and bring a fresh action and a fresh application for leave after giving a fresh notice of its claim pursuant to s.21 (1) (a).
60. In this case, the plaintiff apparently has a meritorious claim for fraud against the Ministry’s employees alleged to have prepared fraudulent purchase orders which they used to deceive the plaintiff and obtain building materials which they took for their own use. One of those employees has been convicted of that fraud and sentenced to prison. The plaintiff also has an arguable case for making the Ministry vicariously liable in deceit for the fraud alleged to have been committed by its employees.
61. In terms of s.21 (2A), counsel for the plaintiff told the Court that the reason why no notice was given pursuant to s.21 (1)(a) before the statement of claim was filed was due to a mistake on his part. He was not aware of the requirements of s.21. This is not uncommon. I am confident that many lawyers, apart from the lawyers in the Office of the Attorney General, are not aware of the requirements of s.21.
62. Counsel for the plaintiff also referred in his submissions to the prejudice to the plaintiff if this action is not to proceed because of the substantial amount involved and it is highly doubtful whether the employees concerned would have the means to meet the plaintiff’s claim. On the other hand, I am not convinced that the Ministry would not be able to locate any witnesses. One such witness could be the employee who was convicted and sentenced to prison. That former employee may be summoned to give evidence. I am also not convinced that with its investigative powers and skills the police cannot find other witnesses. In relation to the relevant documentary evidence, if the Ministry no longer has copies of such evidence, the plaintiff should be able to provide the relevant purchase orders and copies of any invoices and delivery dockets that it issued in order to prove its claim. The onus is on the plaintiff to prove its claim.
63. In the circumstances of this case, I am of the opinion that s.21 (2A) does not preclude the plaintiff from discontinuing its present claim with costs being awarded to the Ministry. The plaintiff will then start afresh. A fresh notice will be given to the Ministry pursuant to s.21 (1) (a) before the fresh claim is filed. A fresh application in terms of 21(2) will also have to be filed for leave. The Court will then deal with that fresh application for leave and determine whether in the circumstances, including the fact that it is a fresh application, it will be just to grant the application.
64. I have dealt with this part of the strike out motion on the basis of what appears to be what the interests of justice demand in the circumstances following the approach taken by Bisson J in Posala v Attorney General [1998] WSSC 5. In doing so, I am conscious that s.21(2A) merely provides that there is no jurisdiction to grant leave where an action has been commenced without first giving notice under s.21(1) (a). Thus, s.21 (2A) applies only to an action that has been commenced. It does not preclude the plaintiff from discontinuing such action and start afresh complying with the procedural requirements of s.21.

Strike out jurisdiction on limitation grounds

65. For present purposes, it will be sufficient to refer to Johns v Johns and Holloway [2004] NZCA 42, para [2], where Tipping J said:
    • “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”.
66. In my respectful view, it has not been established conclusively that the claim by the plaintiff should be struck out on limitation grounds or otherwise.

Conclusion

67. The strike out motion is denied.
68. If the plaintiff decides to discontinue its present proceedings and start afresh, then that must be done in 10 days. Leave is reserved to counsel for the defendant to apply for costs within 7 days thereafter.
    

CHIEF JUSTICE

Solicitors
Meredith Law Office for plaintiff
Attorney-General’s Office, Apia, for defendant