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A1 City Guards Ltd v Alu [2024] PGSC 111; SC2650 (1 November 2024)

SC2650

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA NO 162 OF 2019

A1 CITY GUARDS LIMITED
Appellant

AND
LESLIE ALU
First Respondent

AND
NATIONAL CAPITAL DISTRICT COMMISSION
Second Respondent

Waigani: Liosi J, Dowa J & Wawun-Kuvi J
2024: 30^th May & 1^st November

SUPREME COURT –APPEAL-FRAUDS AND LIMITATION ACT- Whether the cause of action was ongoing? Whether there was evidence or pleadings that supported admissions, negotiations and assurances?

Cases Cited
Keitinga Ltd. v Ane (2024) PGSC 44; SC2577
Wialu v Andreas [2020] PGSC 60; SC1970
Habolo Building & Maintenance Ltd v Hela Provincial Government [2016] PGSC 67; SC1549
Public Curator of Papua New Guinea v. Kara [2014] PGSC 58; SC1420

Legislation
Claims By and Against the State Act 1996
Frauds and Limitation Act 1988

Counsel
A Benny, for the Appellant
M Mukwesipu, for the Respondents

DECISION

1^st November 2024

1. BY THE COURT: On 22 August 2019, the primary judge gave an interlocutory ruling dismissing the plaintiff's (appellant's) claim in WS 1238 of 2017, A1 Guard Limited v. Leslie Alu and National Capital District Commission. The primary judge found that the defendants (respondents) were entitled to the relief they sought in their notice of motion dated 3 May 2019, for the reason that the appellant’s claim was time-barred under s 16(1) of the Frauds and Limitation Act 1988. The appellant is appealing this ruling.
   

Background Facts

2. The appellant is a company incorporated under the Companies Act 1997. It is a security company.
   
3. The first respondent is the city manager and chief executive officer for the second respondent.
   
4. The appellant was engaged by the first respondent on 12 May 2010, to provide security services at Hohola Market, National Capital District. The engagement was terminated on 6 August 2010.
   
5. On 30 August 2010, the appellant issued an invoice for services totalling K75,240.00. The invoice was not settled.
   
6. On 3 February 2011, following several enquiries with nothing forthcoming from the respondents, the appellant served a notice under s 5 of the Claims By and Against the State Act 1996 (Claims Act) on the Solicitor General.
   
7. On 17 November 2017, the appellant filed the proceeding WS 1238 of 2017, A1 Guard Limited v Leslie Alu and National Capital District Commission. In its Statement of Claim, it pleaded that it had provided security services, invoicing the respondents who did not settle the debt despite numerous enquiries. It further pleaded that it served a s 5 notice under the Claims Act.
   
8. On 24 November 2017, the respondents filed their Notice of Intention to Defend and their Defence on 17 January 2018. The respondents pleaded, among other matters, that s 16 of the Frauds Act barred the appellant's claim.
9. The appellant filed its Reply, pleading, among other matters, that the cause of action was accruing because of pending negotiations.
   
10. On 3 May 2019, the respondents filed their Notice of Motion to dismiss the proceeding, citing failure to comply with the requirements under s 5 of the Claims Act and for being time-barred under s16 of the Frauds Act.
    
11. On 22 August 2019, after receiving submissions from both parties, the primary judge ruled that the proceeding was time-barred and dismissed it.
    

The Appeal

12. The grounds of appeal are:
    
    1. Her Honour erred in fact and in law in deciding that the proceeding was statute barred pursuant to section 16(1)(a) of the Frauds and Limitation Act 1998 when in fact the defendants by a minute dated 31st July 2013 assured the plaintiff of the settlement of its claim. Also, in November 2013, the plaintiff was further assured by a draft Deed of Release for the settlement of its claim. However, the defendants failed to settle the plaintiffs claim as assured. The plaintiff after having exhausted resorted to file these proceedings on 17 November 2017. Therefore, it was the defendants which created the false impression and as such it would be unconscionable to permit the defendants to succeed on their own failure.
    2. Her Honour erred in fact and in law in deciding that the cause of action accrued in the statement of claim is in or about 2010 even though this was a case of recurring damage over a long period since 2010 wherein the plaintiff/appellant has been pursuing its claim with the defendants since 2010 and continues to suffer to this date.
    3. Her Honour erred in fact and in law when she based her decision only on the submissions of the defendant/respondents and overlooked the affidavit materials filed indicating that there were ongoing negotiations between the parties but allowed the defendants to wear the cloak of Frauds and Limitation Act 1998 and deny the plaintiff of its claim for the services it had rendered and dismissed the plaintiff’s claim.
    4. Her Honour erred in fact and in law in upholding the defendants’ submissions when the plaintiff submitted that the defendants had knowledge of the plaintiffs claim and continue to give false assurances and had failed to pay for the services rendered by the plaintiff as per the invoice submitted. Thus, in the circumstances of this case the equity and justice dictate that the defendant should not be and cannot be allowed to benefit from its own failure.
       

Submissions from the Appellant

13. The appellant asserts that the appeal grounds revolve around the statute of limitations and the date the cause of action arose.
    
14. Counsel for the appellant contends that the cause of action was ongoing and recurred until the filing of the Writ of Summons in November 2017. He relies on the authorities in Wialu v Andreas [2020] PGSC 60; SC1970, Habolo Building & Maintenance Ltd v Hela Provincial Government [2016] PGSC 67; SC 1549; and Public Curator of Papua New Guinea v Kara [2014] PGSC 58; SC1420.
    

Submissions from the Respondent

15. The respondents contend that consideration of the motion was appropriate, as they had pleaded the statute of limitations in their defence. They relied on Oil Search Ltd v Mineral Resources Development Corporation Ltd [2010] PGSC 12; SC1022.
    
16. Counsel for the respondents argues that; (1) the claim was based on a simple contract, (2) the termination of the contract on 6 August 2010 gave rise to the cause of action on that date, or alternatively, on the date of the issuing of the invoice on 16 August 2010, and (3) the filing of the Writ on 17 November 2017 rendered the appellant's claim time barred for having been filed outside of the statutory limit of six years.
    
17. Counsel further submits that the appellant did not plead any of the matters that form the grounds of the appeal. That the case authorities’ that the appellant refers to, all support the requirement to plead the essential facts that give rise to an ongoing cause of action. The appellant did not plead the essential facts.
    
18. As to the ongoing negotiations, it is submitted that there is simply no evidence to support this contention. While it acknowledges that accrual might continue if a debt is admitted, in this case, the respondents have not admitted a debt, and there is no supporting evidence. The minute dated 31 July 2013, and the draft Deed of Release relied on by the appellant are not admissions of debt. Notably, the Statement of Claim and the Rely did not plead these facts.
    

Applicable Law on Appeal

19. The factors to consider when determining an appeal are settled. In the most recent case of Keitinga Ltd. v Ane (2024) PGSC 44; SC2577, the Court stated:
    

“In an appeal the Supreme Court is guided by the following principles when deciding whether the appeal should be upheld. The appeal court should be slow to interfere with the exercise of a discretionary power by the lower court unless it is satisfied that the court below:

1. acted upon a wrong principle; or
2. gave weight to extraneous or irrelevant matters; or
3. failed to take into account relevant considerations; or
4. made a mistake as to the facts,
5. and even where there is no identifiable error, the appellate court can infer such an error if the resulting judgement is "unreasonable or plainly unjust.”
   

Consideration

20. We will deal with the grounds of appeal together. The main issue arising out of the grounds of appeal is whether the trial judge erred in holding that the proceeding was statute barred under s 16 of the Frauds Act. Section 16 (1) of the Frauds Act is therefore relevant, and it states:
    

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

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

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

(b) to enforce a recognisance; or

(c) to enforce an award, where the submission is not by an instrument under seal; or

(d) to recover any sum recoverable by virtue of any enactment, other than a penalty or forfeiture or sum by way of penalty or forfeiture,

shall not be brought after the expiration of six years commencing on the date on which the cause of action accrued.” [Empasis ours]

21. The law under section 16 (1) of the Frauds Act is settled. An action for a simple contract shall not be brought after the expiration of six years commencing on the date on which the cause of action accrued, and the cause of action can accrue on a specific date or recur on subsequent dates or a series of occurrences: see Wialu v Andreas [2020] PGSC 60; SC1970, Habolo Building & Maintenance Ltd v Hela Provincial Government [2016] PGSC 67; SC 1549; and Public Curator of Papua New Guinea v Kara [2014] PGSC 58; SC1420.
    
22. In the present case, the trial judge accepted 6 August 2010 as the date on which the cause of action accrued. This date was pleaded in the Statement of Claim as the date of the termination of the service contract. The Writ of Summons being filed on 17 November 2017, was out of time by one year and the trial judge held the proceeding was statute barred.
    
23. According to the grounds of appeal, the appellant's grievance is that the judge made errors in fact and law by ruling that the case was statute-barred despite ongoing negotiations and assurances by the respondents. The appellant submits, because of those assurances and acknowledgement of the claim, the cause of action was recuring and continuous and thus it is not equitable to allow the respondents to benefit.
    
24. In our view, the appellant’s arguments fall short. Despite the appellant's claim that the respondents were aware of the claim against them, the mere knowledge of the claim does not constitute an acknowledgement or admission of a debt. For a cause of action to be kept alive through a recurrence, there must be an admission or acknowledgment of debt by correspondence or through an act of part payment by the respondents.
    
25. Here, there is no pleading nor any evidence that shows the respondents admitted to an amount owing or due to the appellant. The appellant did not plead that it was given assurances that the debt would be settled. It did not plead the facts referred to in the internal minute dated 31 July 2013 and the Draft Deed of Settlement in November 2013.Even then, those documents are of no evidentiary value. The documents are purportedly internal documents of the respondents given to the appellant by unidentified persons. And even if it were to be accepted that the documents were genuine, the purported minute dated 31 July 2013 from a legal officer to the principal legal officer was a recommendation with no footnote or acknowledgement from the first respondent or another officer of the second respondent with authority to admit the debt. This does not constitute an acknowledgement or admission of debt by the respondents nor an assurance to the appellant. The Draft Deed of Settlement suffers a similar fate.
    
26. In conclusion, there was nothing in the pleading nor the evidence that would have directed the mind of the primary judge towards a finding of an ongoing cause of action. The date of the cause of action, being the date of termination of service contract was clearly pleaded. The Writ of Summons was filed more than a year from the date of termination. There being no recurrence of the date of cause of action, the appellant’s claim was clearly filed out of time.
27. In the circumstances, it was open to the primary judge to make the findings and reach the decision she did. We find no reason to disturb the findings of the trial judge.
    
28. As a result, we concur with the primary judge's conclusion that the claim was time-barred and dismiss the appeal with costs.
    

Orders

29. The formal orders of the Court are:
    1. The Appeal filed on 10 November 2023 is dismissed in its entirety.
    2. The appellant shall pay the respondents the costs of the appeal, to be taxed if not agreed.
       

Niuage Lawyers : Lawyers for the Appellant
NCDC Legal Division : Lawyers for the Respondents