National Court of Papua New Guinea

DAVANI .J: On 14th February, 2005, I heard motions filed by both the plaintiff and the defendant, these motions being;

• Notice of Motion filed on 21st May, 2004, by the plaintiff seeking that the defendants amended Defence be struck out and the court enter summary judgment of K245,000.00 for the plaintiff together with cost and other orders.
  
• Motion filed by the defendant on 10th December, 2004, seeking leave to amend its Defence and also for the proceedings to be dismissed for being statute-barred, relying on s. 16 (1) (a) of the Frauds and Limitations Act 1988. The defendant also asks that the affidavits the plaintiff seeks to rely on be either taken off the file for being scandalous, irrelevant and oppressive or that the proceedings be struck out. He relies on O. 11 R. 28 of the National Court Rules in making that application.
  

On hearing both counsel, I refused the application for summary judgment and also dismissed the whole action as being statute-barred. I informed both counsel that I will give my detailed reasons at a later date and this I now do.

In its application for summary judgment, the applicant/plaintiff (‘plaintiff’) submits that the defendant does not have any defence for the reason that it has admitted to owing monies to the plaintiff. In making those submissions, the plaintiff relies on his affidavit sworn on 29th January, 2004, more specifically paragraphs 12, 13 and 14 where he deposes to the defendant’s lawyers agreeing or recommending to settle the case by payment of K245,898.54 and which agreement or recommendations he referred to as ‘admissions’. These admissions are contained in annexures marked ‘F’, ‘G’ and ‘H’. Annexure ‘F’ is a letter from the plaintiff to the Strategic Advisor KPMG-IPG of 25th January, 2002, setting out his claim for the net amount of K271,923.86. and where he states his concern that the claim had been outstanding for six years.

I refer to the plaintiff’s summary of entitlements because this will again arise in my reasons relating to the defendant’s submission on the plaintiff’s claim being statute-barred. In that summary, the plaintiff refers to unpaid contract entitlements as commencing from the period 29.11.96 to 31.12.96. For money in lieu of three months notice, the plaintiff claims for the period 1.1.97 to 31.3.97. For his claim on the non-contract period per clause 1.7 of the Contract, the plaintiff claims for the period 1.1.97 to 31.12.00. Again, in claiming the employer’s 1.35% contribution to POSF, the plaintiff claims for the period 1.1.97 to 31.12.00. (my emphasis)

Annexure ‘G’ is the defendant’s submission to the defendant’s Board which is marked ‘Confidential’ and which is a document signed by the defendant’s then Corporate Lawyer, where he recommends payment of entitlements to the plaintiff.

Annexure ‘H’ is the defendant’s memorandum from its Corporate Lawyer to KPMG where the Corporate Lawyer recommends payment of entitlements to the plaintiff. On this memorandum are hand-written notes by officers of the company. Again, this is a confidential document.

Although objections were not raised by counsel for the defendant in relation to the admisibility of the plaintiff’s affidavit, counsel raised submissions under O. 11 R. 28 of the National Court Rules that the affidavit should be struck out because the materials contained in that affidavit are scandalous, irrelevant or otherwise oppressive. This provision reads;

"28. Scandal, etc

Where there is scandalous, irrelevant or otherwise oppressive matter in an affidavit, the Court may order that –

(a) the matter be struck out; or
(b) the affidavit be taken off the file."

Counsel for defendant also referred the court to Pt. 38 R. 8 of Ritchies Supreme Court Procedure NSW in reinforcing his argument that affidavit evidence should only be
struck out if it is clearly incapable of affecting the probability of any matter in issue in the proceedings. Ritchies states further that it is inappropriate to use the present rule to strike out material which is defective in form and where the defect is capable of being remedied, by leave, at the final hearing.

It is the court’s view that it should not place any reliance or weight on this affidavit and its attachments because these are hearsay materials. They are also scandalous and oppressive and are not capable of being remedied. This affidavit is incapable of affecting the probability of whether there is a breach of Contract because the attachments to the plaintiff’s affidavit are not only hearsay, scandalous, oppressive and irrelevant, but are also confidential and privileged documents. I will discuss the implications of the plaintiff being in possession of the defendant’s confidential documents in the latter part of this decision. Nevertheless, it would have been appropriate if the plaintiff had secured these documents by way of discovery or by way of Summonses to Give Evidence and Produce Documents, at least some interlocutory process. Having said that, I now refer to the text Australian Civil Procedures 4th Edn, by Bernard Cairns referred to me by defendants counsel, which briefly defines the term ‘legal profession privilege.’ At pg. 383, the author states:

"Legal profession privilege is intended to preserve confidentiality between legal advisor and client. As such, the privilege protects from disclosure communications between a client and a legal advisor for the purpose of obtaining confidential legal advice. It also protects from disclosure documents prepared for use in existing or anticipated litigation. ...

The policy underlying legal professional privilege is that frank and complete disclosure as between legal advisor and client is necessary for the proper conduct of litigation. On a broader basis, confidentiality between the legal profession and its client is necessary because of the nature of the legal system. Generally, it is in the public interest for legal transactions to be conducted through legal practitioners. It is said that a client must be able to approach a legal practitioner with the certainty that the practitioner cannot be compelled to disclose confidential communication. This does not apply to routine communications that a party would make in any event. To attract legal professional privilege, the communication must be a confidential communication with a legal practitioner, or one made for the purpose of existing or anticipated litigation."

Again in Australian Civil Procedures (supra), the author states:

"Legal professional privilege attaches either when a communication is to obtain confidential legal advice, or is for use in existing or anticipated litigation. A confidential communication to a legal advisor to obtain legal advice is privileged irrespective of the existence or expectation of litigation. It is privileged because of its nature...Legal professional privilege extends to confidential professional communications between a salaried legal advisor and the employer." (pg. 386 and see Waterford v. Commonwealth of Australia (1987) CLR 54 at 60 – 62).

In my view, legal professional privilege should extend to the defendant’s confidential documents. There is no evidence as to whether litigation was anticipated or not but if information is given to a lawyer for the purpose of being passed to another person, or to be used in court, then that information is not confidential and can be discovered. (see Cairns (supra) pg. 387 and Telebooth Pty Ltd v Telstra Corps [1994] VicRp 21; [1994] 1 VR 337).

It is the common law that confidentiality is the basis of legal professional privilege. Confidential communications between a client and legal adviser are always privileged because "what creates the privilege is the confidential nature of the relationship between solicitor and client." (see Brown v the King [1911] ArgusLawRp 17; [1911] VLR 159; Australian Civil Procedures (supra) pg. 387 Brown v the King). In this case, the alleged "admissions" by the defendants are not admissions in the strict legal sense but is advice from the defendant’s lawyers to the defendant on the steps to take and is confidential advice. Again in Australian Civil procedures (supra), it states therein that "legal professional privilege applies to confidential advice given by salaried legal advisers" (pg. 386 and see Ritz Hotel Ltd v Charles of the Ritz Ltd (No. 4) (1987) 14 NSWLR 100). So the confidential advice given by the defendant’s lawyers to them is privileged and should not be released to the public or used in litigation. It is also worth pointing out that the "admissions" referred to by Mr Kaore for the plaintiff are not "admissions" in the strict legal sense. Osborn’s Concise Law Dictionary, sixth edn. by John Burke defines admissions as:

"Statements, oral, written or inferred from conduct made by or on behalf of a party to a suit, and admissible in evidence, if relevant, as against interest. They are either formal or informal.

(1) Formal admissions for the purpose of the trial may be made on pleadings, as e.g where a contract and breach are admitted;

(2) Informal admissions may be made before or during the proceedings;

..."

So Mr Kaore’s submissions that annexures ‘F’, ‘G’ and ‘H’ to the plaintiff’s affidavits are admissions is incorrect and misleading. They are not admissions within the legal definition but are privileged documents and should not be relied on or referred to by any court when making a decision. As referred to in the definition above, the documents would be admissions if they were admissible in evidence. But as I have referred to above, they are not.

Although the documents were not made available to the defendant through the discovery process, it is apparent that he, through some other means, obtained the plaintiff’s confidential documents. The plaintiff must be protected. These documents were not intended to be used at trial and should never be.

On that basis, I will not admit these documents into evidence relying on the above enunciated principle.

Again, to the application for summary judgment now before me, I refer to the defendant’s amended Defence filed on 2nd June, 2003. The plaintiff does not make any submissions on the viability or merits of the amended Defence, only submitting on the ‘admissions’ by the defendant and which I have discussed above. However, again, as to the application for summary judgment, the law is that there are two elements that must be satisfied before the grant of such judgment. These are;

(a) evidence of the facts proving the essential elements of the claims; and

(b) that the plaintiff or some responsible person give the evidence that in his belief there is no defence.

In relation to the first element, I have considered the various documents attached to the affidavit of the plaintiff and find them to be hearsay material. I also find that they breach the rule on lawyer/client professional privilege, hence will not be considered or admitted into evidence.

As to the second element, it is law that a party will not be entitled to summary if there is a serious conflict on questions of fact or law. Whether a case should go to trial on these issues will be determined on each case (see Kumul Builders Pty Ltd v Post and Telecommunication Corporation [1991] PNGLR 299). The plaintiff submits that his contract of employment was breached because he was terminated before disciplinary charges were heard and that on this basis, his termination was unlawful. He also submits that under clause 1.7 of his Contract with the defendant, but for the unlawful termination, he would have been automatically appointed as an unattached officer for three years. He in effect is submitting that failure to renew the contract or reappoint him as an unattached officer for three years, constitutes a breach of contract. In this case, the plaintiff was terminated on one month’s notice rather than the normal three months. The court held in Teio Ila v Wilson Kamit N2291 that;

"the law has therefore developed in the way it has allowed for a reasonable period of notice to enable a dismissed employee to look for alternate employment before his employment would come to an end. The law has also come to allow an employer to pay in lieu of notice on the basis that what the employee is paid will support him in the mean time while alternative employment is been sought ..... Thus it would be unjust enrichment for an employee to be paid by his former employer even though he is not rendering any service to the employer. The payment to a former employee could be an unjustified expense."

His term of employment under the Contract with the Defendant expired on 31st December, 1996. So the opportunity and time to renew or reappoint arose on 1st January, 1997. But he was not reappointed. So it would effectively be an unjust enrichment on his part to claim for a period that was not allowed for in the notice to him that his contract would not be renewed and which letter I refer to in the latter part of this judgment. Furthermore, the defendant in its amended Defence pleads that if there was any cause of action which arose from the giving of notice on 26th November, 1996, or alternatively upon the defendant’s alleged failure to renew the Contract on 1st January, 1997, then the cause of action did not accrue within six years before the commencement of the action and is therefore barred by s. 16 (1) (a) of the Frauds and Limitations Act 1988. That provision reads;

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

(1) Subject to sections 17 and 18, an action –

• (a) that is founded on simple contract or on tort; or

...

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

The defendant further pleads in its amended Defence that the plaintiff’s employment was terminated by a letter of 26th November, 1996, where the defendant advised that the plaintiff’s contract of employment ‘will not be renewed.’ On questioning plaintiff’s counsel as to when the cause of action arose, plaintiff’s counsel submitted that proceedings were not filed before the expiration of the six-year limitation period because the plaintiff was pursuing settlement. In response to those submissions, Defendants counsel referred the court to Halsburys 4th Edn., vol. 28 at par. 608 which states;

"The mere fact that negotiations have taken place between a claimant and a person against whom a claim is made does not debar the defendant from pleading a statute of limitation, even though the negotiations may have led to delay and caused the claimant not to bring his action until the statutory period has passed."

In fact, it would have been sensible for the plaintiff to issue proceedings and continue with negotiations, but he chose not to do so. To avoid stale claims from being pursued in court, there is law to put an end to these claims. Chitty on "Contracts vol. 1 General Principles" at pars. 1581 and 1582 discusses that there should be an end to litigation and that stale demands should be suppressed which is why the law imposes a six-year limitation for simple contracts. As an example, Mr MacDonald referred the court to Koine Gone v Gidion Alick [1994] PNGLR 545 where the court dismissed a maintenance claim brought by a child 10 years after its birth. Woods .J held that in affiliation proceedings, the cause of action is in relation to the paternity of the child, in this case, when the child was born. Because maintenance is a money claim, the court held that the relationship of the mother and the child’s alleged father, is that of a simple contract, hence the applicability of s. 16 (1) of the Frauds and Limitations Act 1988.

As to when a cause of action accrues, Mr MacDonald referred the court to Otto Magiten v Raka N2179 where it was held that a cause of action accrues when a contract requires a thing to be done and it is not done at this time. I refer to the events that have transpired to show when the cause of action commenced. The plaintiff had, since commencement of his discussions with the defendant regarding a settlement, referred to either the end of 1996 or January, 1997, as the period of accrual of his benefits and which I find to be the date/s when the cause of action commenced. I have demonstrated this by reference to the defendant’s calculations of his entitlements referred to in the former part of this decision. If the court were to calculate from 1st January, 1997, to 29th April, 2003, then the matter is deemed to be statute-barred after 1st January, 2002. The Writ of Summons and Statement of Claim in this matter was filed on 14th April, 2003, about a year and three months later. The Writ of Summons and Statement of Claim is followed by an amended Writ of Summons and Statement of Claim which was filed on 27th October, 2003, some two years and nine months later. Clearly, there can be no doubt that the plaintiff’s action is statute-barred.

Again, the plaintiff was advised by the defendant’s letter of 26th November, 1996, that his contract would not be renewed and that he should collect his salary and benefits which were in lieu of notice. If he was aggrieved by that, then the cause of action would have commenced on 26th November, 1996. However, the plaintiff, by the calculation of his entitlements, demonstrates that the cause of action commenced on 1st January, 1997. He is clearly out of time by two years and nine months, relying on the amended Writ of Summons and Statement of Claim.

In relation to the application for summary judgment, I find that the plaintiff has not shown that the defendant does not have a defence. Furthermore, it would be futile to proceed to trial because the matter is statute-barred.

It is on that basis that the court makes the following orders;

1. That the plaintiff’s application for summary judgment is refused;

2. The whole action is dismissed as being statute-barred;

3. The plaintiff shall pay the defendant’s costs of the proceedings to be taxed if not agreed.

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Lawyer for the Plaintiff : Kaore Lawyers
Lawyer for the Defendant : Posman Kua Aisi Lawyers