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Kumbusiri v Oromarie [2012] PGNC 296; N5094 (2 November 2012)

N5094

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 1436 OF 2009

JOSEPH LENDE KUMBUSIRI for Himself & On behalf of Konombuyufu Clan, Mafenga Clan, Afoiya Clan, Miruma Clan, Amayufa No. 1 Clan, Amayufa No. 2 Clan of Upper Asaro
First Plaintiffs

AND

WAMIYUFA COFFEE LIMITED

Second Plaintiff

V

DAVID OROMARIE
First Defendant

AND

JULIE OROMARIE
Second Defendant

AND

SIHERENI LIMITED
Third Defendant

Goroka: Ipang AJ
2012: 26 October & 2 November

PRACTICE AND PROCEDURE – defendants application seeking to dismiss proceedings for being statute barred - initial proceedings filed by plaintiffs is to recover title to an Agricultural State Lease –On behalf of Plaintiffs, First Defendant would co-ordinate and manage plantation and the funds for the plaintiffs – plaintiffs and Defendants in fiduciary relationship – first defendant breached fiduciary relationship by paying monies belonging to the plaintiff to himself and registering the plantation under his own company name - due to failed obligation by defendant time has to be computed from 2003 onwards – application for dismissal of proceedings for being time barred dismissed - 16 (i) of the Statute of Fraud & Limitations Act 1988.

Cases Cited
Papua New Guinea Cases

Tau Gumu v Papua New Guinea Banking Corporation WS 1421 of 2001 (7 December, 2001) N2288 (Unreported)

Overseas Cases

Kitchen v Royal Air Forces Association & Ors [1985] 2 ALL ER 241
Bristol and West Building Society v Mathew [1998] Ch. 1 per Millet LJ

LEGISLATIONS

Workers Compensation Act Chapter 179
Frauds and Limitations Act 1988

Counsel

Mr. G. Gendua, for the Plaintiffs

Mr. D. A. Umba, for the Defendants

DECISION

26 November, 2012

1. IPANG AJ: By their application filed on the 31 August, 2012, the Defendants as respectively named seek to have this proceedings dismissed for being statute barred pursuant to section 16 (i) of the Statute of Fraud & Limitations Act 1988.
   
2. The initial proceedings filed by the plaintiffs is that the plaintiffs sued defendants to recover title to an Agricultural State Lease described as Portion 2, Milinch Bundi, Fourmil Ramu, Eastern Highlands Province. The lease comprised of a large coffee plantation in the Upper Asaro Area. The plaintiffs are customary landowners of the land which was converted to the State Lease and leased for agricultural purposes. They alleged that upon the expiry of the lease, the land should have been offered back to them. Plaintiffs therefore alleged that the defendants obtained title to the State Lease by fraud. Defendants denied and defended the claim.
   
3. In support of the Defendants' application is the affidavit of D. A. Umba sworn and filed on the 31 of August, 2012.
   
4. The section 16 of the Statute of Fraud & Limitations Act 1988 is in the following:
   

"16. Limitation of actions in contract, tort etc...

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

• (a) That is found on simple contract or on tort;
  

Shall not be brought after expiration of six(6) years commencing on the date on which the cause of action accrued."

5. The Plaintiffs alleged fraud and dishonesty by Defendants in purchasing Sihereni Coffee Plantation. Mr. Umba of counsel for the Defendants deposed in paragraph 5 of his affidavit that the paragraph 37 (iii) of the Statement of Claim, the plaintiffs pleaded that on the 22 February, 2001 the First Defendant purchased Kental Limited for K20, 000.00 and in paragraph (iv) they alleged that the purchase was a secret deal only known to the First and Second Defendants.
   
6. Mr. Umba said the act of purchasing the said land or plantation was on the 22 February, 2001. So, if that purchase was done dishonestly or by fraud then the plaintiffs had until 22 February, 2007 to file the Originating Summons. Defense Counsel said the plaintiffs filed the Originating Summons on the 13 November, 2008 which is 1 year, 9 months out of time.
   
7. At this juncture it will be convenient to set out the Statement Claim in full.
   

Statement of Claim

1. The Principal Plaintiff is an adult citizen who comes from Konomboyufa clan of Upper Asaro of the Daulo District of Eastern Highlands Province. He is capable of suing and being sued in his personal name and capacity.
   
2. The Plaintiff commences this proceeding representing himself and for and on behalf of all members of Konombuyufa clan, Mefenga clan, Afoiya clan, Miruma clan, Amyufa No. 1 clan and Amayufa No. 2 clan, all of Upper Asaro of Daulo District, Eastern Highlands Province.
   
3. In or about 1952 the Colonial Administration of Papua New Guinea purchased a land mass generally known as Gisumnoso in the Upper Asaro area for Agricultural purpose.
   
4. The Colonial Administration then leased the Agricultural State Lease described as Portion 2, Milinch Bundi, Fourmil Ramu, Eastern Highlands Province, contained in Volume 25 Folio 133 (herein after referred to as "the land" to an expatriate man named Ian Downs, who developed it into a coffee plantation, which was known as Gisumnoso Coffee Plantation.
   
5. The ownership of the plantation changed hands through several owners since then and the last owner was a company named Kenta Limited, and the management of the plantation was vested with Angco Limited.
   
6. Kenta Limited was a company owned by John Nilkare and Late Gai Duambane who were then National Politicians.
   
7. The Plaintiffs upon realizing that the Plantation had been acquired or owned by the two politicians protested and demanded that two men sell the plantation to the Plaintiffs.
   
8. In 1993 Angco Coffee Limited moved out of the plantation as it was no making money from the plantation and told the Plaintiffs the plantation was going to be sold for K20, 000.00.
   
9. At all material times the Plaintiff expressed firmly their interest to purchase the plantation and attempted to solicit funds.
   
10. It is claimed that due to the slow pace in raising funds and that the plantation was left unattended by Angco Coffee Limited the Plaintiffs divided the plantation into 73 blocks and allocated them into 73 family groups.
    
11. The 73 family groups were at all material times known as Block holders, who were assigned to maintain and take care of the blocks and the plantation as a whole.
    
12. The Block holders maintained the plantation from 1993 to 1999.
    
13. In early 1999 the Plaintiffs organized themselves and set their aim, which was to pick and sell coffee cherries from the plantation, raise funds to purchase the plantation.
    
14. It is claimed the Plaintiffs realized they needed an educated person to coordinate and manage the plantation and the funds for them, in order that they purchase the plantation.
    
15. In early March 2009 the Plaintiffs invited the First Defendant, who was then working with Bilati Coffee plantation as a Clerk or Assistant Manager and earning about K200,00 to come and be Care Taker Manager at Gisumnoso Coffee Plantation.
    
16. It is claimed the First Defendant accepted the invitation to be the Plantation Manager and encouraged the Plaintiffs to find ways to raise funds.
    
17. It is further claimed that on 8th May, 1999 the elders of the six clans told the 73 Block holders to labour for free in maintaining the blocks and that all coffee cherries they picked would be sold to Patrick Kondo at his Bilati Coffee Wet Factory at Six Mile, Goroka and that the First Defendant would collect and keep the proceeds of the coffee cherry sales in trust.
    
18. Commencing 8th May 1999 the Block Holders picked and sent truck loads of coffee cherries to Bilati Coffee Wet Factory at Six Mile, which were weighed and invoiced and the First Defendant who was still working with Bilati Coffee, collected the invoices, presented them to the Management of Bilati Coffee and collected the money.
    
19. In mid June 1999 the Plaintiff asked the First Defendant to buy some cartons of lamb flaps with money from the sale of coffee cherries to stage a mumu at which the First Defendant would formally announce to the Block Holders and the rest of the members of the six clans of his position. The First Defendant rejected the invitation, saying he personally had no money and further made no mention of the money he held in trust from the sale of coffee cherries.
    
20. It is claimed the block holders put a "mumu" with 3 cartons of lamb flaps and at which the First Defendant who was invited formally announced his acceptance of the job as the Plantation Manager and further stressed that the plantation belonged to the people and it would help to ease many social problems.
    
21. It is further claimed that some days after the "mumu" the First Defendant demanded that the Plaintiffs contribute money in order that he operate a Trust Account at a Bank in Goroka, into which the money from the sales of the coffee cherries would be deposited and at which time he said he had no money to contribute towards purchasing of the plantation.
    
22. The Plaintiffs say they contributed and raised K2, 500.00, which they gave to the First Defendant, who himself went into Westpac Bank in Goroka and later told the Plaintiffs that he had opened a Trust Account, to which none of the Members of the Plaintiffs' clans were co-signatories.
    
23. The Plaintiffs claim that First Defendant after opening the Bank Account set his pay as Plantation Manager at K300.00 a fortnight, or a 10kg bag of Trukai Rice and the Plaintiffs accepted the salary rate.
    
24. It is claimed the First Defendant, following his announcement as the Manager of the plantation did no physically operate from Gisunomso plantation. He remained with Bilati Coffee as its employee and was only collecting money from the Plaintiffs' sale of the Coffee cherries.
    
25. The Plaintiffs say that at the end of 2002 the First Defendant left his employment with Bilati Coffee and commenced his new job at Gisunomso plantation as the Manager.
    
26. At all material times the Principal Plaintiff was acting as the Care-Taker Manager of Gisunomso Plantation as of 8th may 1999 up to the end of 2002.
    
27. During the four years from 1999 to 2002 the Block holders of the plantation picked coffee cherries and sold them to Bilati Coffee Wet Factory at Six Mile and all the proceeds from the sale of the coffee, as arranged, was collected by the First Defendant and kept such money in his custody or the Bank in Trust.
    
28. It is claimed that over these four years the Plaintiffs queried with the First Defendant repeatedly as to the amount of money they had made and wanted to know if they raised sufficient funds to purchase the plantation.
    
29. The first defendant either did not respond directly to the queries the Plaintiffs raised or that he demonstrated defensive and offensive behavior and never disclosed to the Plaintiffs any report on the financial status.
    
30. The Plaintiffs say that during the four year period they made on average an amount of K547, 500.00 or thereabout from the sale of the coffee cherries and this amount in full was held in trust by the First Defendant. Particulars of the money will be provided at trial.
    
31. It is claimed that in 2003 the Asian Development Bank gave a grant of K43, 000.00 to Gisunomso Coffee plantation and it was received, kept and used by the First Defendant alone.
    
32. In about the end of 2003 the Plaintiffs realized that the First Defendant had registered a company called Sihereni Limited and purchased the coffee plantation, then known as Gisunomso Coffee Plantation or otherwise known as Kenta Limited.
    
33. It is claimed the Plaintiffs did not know and did not give consent to the First Defendant to establish and incorporate the company, Sihereni Limited.
    
34. It is claimed the First Defendant had a corrupt and pre-mediated plan to acquire the land or plantation and own it to the exclusion of the Plaintiffs when he was invited by the Plaintiffs to be the Manager of Gisumnoso Coffee Plantation.
    
35. It is further claimed the First Defendant filed documents with the Registrar of Companies to incorporate Sihereni Limited, which contained false and misleading information and actions amounting to fraud and deceit.
    

Particulars of Deceit and Fraud in Lodging Documents to Incorporate Sihereni Limited.

(i) First Defendant incorporated Sihereni Limited on 15th June, 2000, without the consent or knowledge of the Plaintiffs.

(ii) Money applied to incorporate Sihereni Limited came from the Plaintiffs' coffee money which the First Defendant held in Trust and the money was applied without the Plaintiffs' consent and or knowledge.

(iii) First Defendant filled out Form 2 under Companies Act (Consent of Director of Proposed Company) ON 08th June, 2000 and had Joseph Kumbusiri who is now the Principal Plaintiff, as a Director, with a signature purported to be that of Joseph Kumbusiri's. The signature was done by the First Defendant, which did not resemble Joseph Kumbursiri's signature.

(iv) The First Defendant on 08th June 2000 put Joseph Kumbusiri's name on Form 2 under the companies Act as a Director without the consent or k knowledge of Joseph Kumbusiri.

(v) First Defendant filled out Form 4 under the Companies Act (Consent of Shareholder of Proposed Company) on 08th June 2000 and wrote down Joseph Kumbusiri's name as a Shareholder with a signature purported to be that of Joseph Kumbusiri's. The signature was written by the First Defendant and it did not resemble Joseph Kumbusiri's signature.

(vi) The First Defendant on 08th June 2000 wrote Joseph Kumbusiri's name on Form 4 of the Companies Act as a Shareholder without the consent or knowledge of Joseph Kumbusiri.

(vii) The First Defendant on 08th June 2000 wrote the name "Nondoho Ambane" on Form 2 of the Companies Act as a Shareholder.

(viii) "Nondoho Ambane" was never born of a woman and so has never been in existence. It is a ghost name who was allocated 100 shares.

36. The Plaintiffs did not know and did not give permission to Sihereni Limited to acquire the Plantation.
    
37. It is claimed the First Defendant was dishonest and fraudulently applied or used the Plaintiffs' money, being the proceeds from the sale of coffee cherries and purchased or acquired the land or plantation last known as Kental Limited.
    

Particulars of Dishonesty and or Fraud in acquiring the land or Kenta Limited:

(i) From May 1999 to 2002 the First Defendant held in trust the Plaintiffs' money being proceeds from sale of cherry coffee.

(ii) During the four (4) year period the First Defendant failed to inform or disclose to the Plaintiffs the money he held in trust and further refused to disclose the financial status report when demanded by the Plaintiffs.

(iii) On 22nd February 2001 the First Defendant's company, Sihereni Limited purchased Kenta Limited for K20, 000.00.

(iv) The purchase of the land was secret deal only known to the First and Second Defendants, when they in fact knew it was the Plaintiffs' paramount interest to acquire the land and operate the plantation.

(v) The First and Second Defendants in applying the Plaintiffs' money, which they held in trust and acquiring the land secretly without the knowledge and consent of the Plaintiffs and registering it in their company's name, Sihereni Limited, amounts to dishonesty and fraud.

38. The Plaintiffs' claim that the manner in which the First and Second Defendants dealt with the Plaintiffs' money and acquired the land amounted to deceit and fraudulent act and will rely on the Land Registration Act and the Criminal Code Act for the land that has been registered in the name of Sihereni Limited to be deregistered.
    
39. The Plaintiffs will also seek orders that they be rightful group to acquire or register the land in their company's name, Wamiyufa Limited.
    
40. The Plaintiffs will also seek damages or refund of their monies that the Plaintiffs misappropriate.
    
41. The Plaintiffs through their respective clan leaders have given their consent and or authority for the Principal Plaintiff to act in a representative capacity in this action and such consent or authority is contained in Schedule "A", which is attached to this Writ of Summons.
    
8. Joseph Lende Kumbusiri in his affidavit sworn and filed on the 11 October, 2012 deposed in paragraph 5 that the First Defendant cheated and tricked them and acquired their land which has the coffee plantation on it. He said it was first known as Gisumnoso Coffee Plantation, and then changed to Kenta Limited and now to Sihereni Limited. In paragraph 12 Kumbusiri said he is a village man. He said he was told that the defendants and their lawyer are making an application to dismiss this proceeding in its entirety because of the Writ of Summons was filed outside six (6) years from the date First Defendant cheated them and had the plantation transferred to his company Sihereni Limited.
   
9. In paragraph 14 Kumbusiri said he nor the plaintiffs cannot be blamed for anything, even if this proceeding was filed outside six year period. He said as a village, he reacted when he first became aware of the First Defendant's fraudulent act. He said he and other plaintiffs did not know of the day David Oromarie fraudulently acquired the title to the land or soon after but he said they became aware of it and started this action.
   
10. In paragraph 32 of the Statement of Claim the plaintiffs pleaded that in about the end of 2003 the plaintiffs realized that the First Defendant had registered a company called Sihereni Limited and purchased the Coffee Plantation then known as Gisumnoso Coffee Plantation as otherwise known as Kenta Limited. In their submission the plaintiffs said they became aware of the First Defendant's alleged deceitful conduct in or about the end of 2003.
    

Issues

11. Is the claim by the plaintiffs statutory barred by s. 16 (1) of the Frauds and Limitations Act 1988 because of expiry of 6 years from which the cause of action accrued?
    
12. Whether the plaintiffs' cause of action arose from the time they became aware of the fraudulent act by the First Defendant.
    
13. The First Defendant bought off the Gisumnoso Coffee Plantation on the 22 February, 2001. The plaintiffs who are village people, semi literate and illiterate were not aware of the transaction until about the end of 2003. They say they were not in a position to take action against the First Defendant in 2001 or 2002.
    
14. Plaintiffs also argued that it is unfair to apply s. 16 (1) of Frauds and Limitations Act 1988 as it defeats the course of justice. They also say it will be harsh and oppressive to them and contrary to s. 41 of the Constitution. Thus, the plaintiffs questioned; is it fair and just or is it harsh and oppressive to dismiss the plaintiffs' proceedings pursuant to s. 16 (1) of the Frauds and Limitations Act?
    
15. In Tau Gumu v Papua New Guinea Banking Corporation WS 1421 of 2001 (7 December 2001) N2288, the plaintiff was employed by the Defendant Bank as a Bank Officer and was attached to Customer Services Section. His job required long and constant hours of standing. He has experienced some pains on his right leg and knee in early 1978. In 1979 he had a fall at his work place and his condition worsened. He went in and out of the hospital constantly from 1991 to 1994. In 1993 his leg was amputated above his knee. Defendant was well aware of the conditions of the plaintiff since 1979 and particularly so when they plaintiff's leg was amputated. However, it had failed to lodge the relevant notice under s. 42 of the Workers Compensation Act for appropriate Worker's Compensation. As a result, the plaintiff's insurance claim was denied. Discovery of this was not made until 1998.
    
16. In Tau Gumu (supra) plaintiff claimed the Bank failed to give notice of injury contrary to s. 42 (1) of Workers Compensation Act. Thus, plaintiff said this amounted to a breach of the Bank's statutory duty. Kandakasi, J (in Tau Gumu (supra)) made this finding:
    

"I find that, the defendant's failure to give the required notice under Workers Compensation Act and notify the plaintiff of that failure, led the plaintiff to believe that the necessary requirements were being taken care of and that he need not do anything in relation to his right to compensation. As such, he did not know that he had a cause of action against the defendant until he became aware of the defendant's failure to lodge the require notice under section 42 (1) of the WCA in 1988. Knowledge of the Bank's failure is the most important, if not the material fact in this action. It is the failure of the Bank that is the basis of the action. Without it, there would not be an action. Time must be computed from 1988 onwards."

17. Thus, Kandakasi, J found the actions of the defendant in failing to disclose to the plaintiff that they had not lodged the relevant notice under s. 42 (1) of Workers Compensation Act until its'disclosure in 1988 by the plaintiff himself amounts to concealment by either deliberate or constructive fraud and the cause of action is not statutory time barred.
    
18. In the case of Kitchen v Royal Air Forces Association & Ors [1985] 2 ALL ER 241 as quoted by Kandakasi, J in Tau Gumu (supra), the Solicitors who were instructed to pursue the plaintiff's claim for damages against the electrical company in November, 1945 did not do so within the 12 months time limit as required under the Fatal Accidents Act. Plaintiff took it upon herself by causing a letter to the electrical company. The electrical company approached plaintiff's Solicitor and made 100 pounds donation to the plaintiff minus 5 pound deducted as Solicitor's fee. Plaintiff was not made aware of the source of the funds.
    
19. Plaintiff then on the 30 September 1985 sued her Solicitors for negligence in handling her claim and was awarded damages. The Solicitors appealed on the ground that the action was time barred. The court held that the act to conceal the source of the donation had amounted to concealment by fraud of the plaintiff's right of action for negligence against the solicitors and thus the cause of action was not time barred.
    
20. In this instant case, it can be noted from the Statement of Claim, paragraphs 1 up to 13 on how the plaintiffs have gone through organizing themselves to purchase the Coffee Plantation. In paragraph 7 of the Statement of Claim, plaintiffs demanded John Nilkare and Late Gai Duambane to sell the plantation to them. Paragraph 8, in 1993 Angco Coffee Limited moved out of the plantation and told the plaintiffs the plantation was going to be sold for K20, 000.00.
    
21. Paragraph 14 of the Statement of Claim, plaintiffs realized they needed an educated person to co-ordinate and manage the plantation and the funds for them, in order that they purchase the plantation. First Defendant who was working as a Clerk or Assistant Manager with Bilati Coffee Plantation was invited to be the Care Taker Manager at Gisumnoso Coffee Plantation. First Defendant encouraged plaintiffs to find ways to raise funds.
    
22. In paragraph 17, the plaintiffs say that on the 8th May 1999 the elders of sic clans told 73 block holders to labour for free and that coffee cherries picked would be sold to Bilati Coffee Plantation and that the First Defendant would collect and keep the proceeds of the coffee cherries in trust. In paragraph 18, plaintiffs collected coffee cherries sent them to Bilati coffee and the First Defendant collected the money. This continued on until the end of 2002, First Defendant left Bilati Coffee and commenced his new job as Manager at Gisumnoso Plantation. If we see paragraph 21, the First Defendant demanded that the plaintiffs contribute money in order that he (First Defendant) would operate a Trust Account at a Bank in Goroka. In paragraph 22, plaintiffs raised K2, 500.00 gave it to First Defendant who went to Westpac Bank in Goroka and opened up a Trust Account. None of the plaintiffs were signatories to this Trust Account.
    
23. From the Statement of Claim, the plaintiffs have trusted and relied on the First Defendant to do everything possible for them to purchase the Coffee Plantation. If we really examine carefully, we should be able to determine that the kind of relationship that has been created and existed between the First Defendant and the Plaintiffs the fiduciary relationship. The characteristics of the fiduciary relationship can be identified and the principal duties are as stated by Millet LJ in Bristol and West Building Society v Mathew [1998] Ch. 1.
    

"A fiduciary is someone who has undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence. The distinguishing obligation of a fiduciary is the obligation of loyalty. The principal is entitled to the single-minded loyalty of his fiduciary. This core liability has several facets. A fiduciary must act in good faith; he must not make a profit out of trust; he must not lace himself in a position where his duty and his interest may conflict; he may not act for his own benefit or the benefit of a third person without informed consent of his principal. This is not intended to be an exhaustive list, but it is sufficient to indicate the nature of fiduciary obligations. They are the defining characteristics of the fiduciary. As Dr. Finn pointed out in his classic work Fiduciary Obligations (1977) p. 2, he is not subject to fiduciary obligations because he is a fiduciary; it is because he is subject to them that he is a fiduciary."

24. The Osborn's Concise Law Dictionary, 9th Ed. Sweet & Maxwell, 2001 at pg. 168 defines the term, Fiduciary as a person who holds a position of trust in relation to another and who must therefore act for that person's benefit.
    
25. Under the arrangement the plaintiffs had with the First Defendant, the First Defendant would co-ordinate, manage the plantation and the funds for the plaintiffs so that the plaintiffs would purchase Sihireni Coffee Plantation. Based on that understanding the First Defendant accepted the plaintiffs' invitation to be the Plantation Manager. However, through this fiduciary relationship the First Defendant collected all the money from the wet cherries sold to Bilati Coffee and various monies paid to him.
    
26. Plaintiffs say in or at the end of 2003 they realized that the First Defendant had registered a company called Sihereni Limited and purchased the coffee plantation then known as Gisunomso Coffee Plantation or otherwise known also as Kenta Limited.
    
27. Applying the characteristics of a fiduciary relationship in Bristol case (supra) it is obvious in that the First Defendant has breached his fiduciary obligation in that he may not act for his own benefit or benefit of a third person without informed consent of the plaintiffs. In this instant case, he did not inform the plaintiffs and the plaintiffs did not know and did not give their consent or permission to Sihereni Limited to purchase and acquire the Coffee Plantation. Because of this failed obligation by the First Defendant, time must be computed from 2003 and onwards.
    
28. I will therefore refuse Defendants application to dismiss proceedings and dismiss the application with costs. Costs to be agreed, if not to be taxed.

_________________________________

Gendua Lawyers: Lawyer for the Plaintiffs

Umba Lawyers: Lawyers for the Defendants