Terry Shelly v Yawe Riyong

• Jurisdiction: Papua New Guinea
• Judge: Injia CJ, Logan and Nablu JJ
• Judgment Date: 23 February 2017
• Citation: (2017) SC1567
• Court: Supreme Court
• Year: 2017
• Judgement Number: SC1567

Full : SCA No 29 of 2012 & SCA 111 of 2015; Terry Shelly and Nowek Limited v Yawe Riyong (2017) SC1567

Supreme Court: Injia CJ, Logan and Nablu JJ

Judgment Delivered: 23 February 2017

SC1567

PAPUA NEW GUINEA

[IN THE SUPREME COURT OF JUSTICE]

SCA NO 29 OF 2012

SCA 111 OF 2015

BETWEEN

TERRY SHELLY

First Appellant

AND:

NOWEK LIMITED

Second Appellant

AND:

YAWE RIYONG

Respondent

Waigani: Injia CJ, Logan and Nablu JJ

2017: 20 February; 23 February

LIMIITATION OF ACTIONS – Loan repayable on demand – When cause of action arises – Cause of action arises on making of loan not making of demand for repayment – Subsequent acknowledgements and part payments of loan debt – Consequential recommencement of from when time runs for limitation of action purposes – Plaintiff’s claim on one view also entailing claim for specific performance or other equitable relief – Inapplicability of s 16 - Proceeding for recovery instituted within time – Statute of Frauds and Limitations, ss 7, 10, 11, 16 and 18

PRACTICE AND PROCEDURE – CIVIL PRACTICE AND PROCEDURE – National Court – Application for leave to amend defence – Consent of parties to proposed amendment – Whether motions judge obliged to make grant leave to amend in terms of consent – Proposed amendment at variance with admissions and positive case advanced in existing defence – Over-riding requirement that judge be satisfied that consensually proposed order is appropriate – No error in refusal of leave to amend

HELD– Appeals dismissed.

Legislation:

1. Statute of Frauds and Limitations Act 1988, ss 7, 10, 11, 16(1)(a), 18

2. National Court Rules, Order 12, Rule 1

Cases Cited:

1. Norton v Ellam (1837) 2 M & W 463

2. Re McHenry; McDermott v Boyd (Barker’s Claim) [1894] 1 Ch 290

3. Young v Queensland Trustees Ltd (1956) 99 CLR 560

4. Busch v Stevens [1963] 1 QB 1

Counsel:

Mr R Otto, for the First and Second Appellants

Mr B M Koningi, for the Respondent

23rd February, 2017

1. BY THE COURT: These are two appeals, each by leave, from interlocutory judgments delivered in the National Court in proceedings instituted by writ by the present respondent, Mr Yawe Riyong, against the first and second appellants respectively, Mr Terry Shelley and Nowek Limited (Nowek). It was convenient for them to be heard together. An interlocutory order of the Court was made, directed to this end.

2. A noteworthy feature of the proceedings is the unsatisfactory nature of the whole of the pleadings. The statement of claim is a confused document, displaying an absence of precision as to proper parties, causes of action and related relief. The defence is no less imprecise in relation to such admissions as are made and in identifying the appellants’ positive case.

3. The appellants brought two interlocutory applications.

4. The first, filed on 25 November 2009, sought the dismissal of the proceeding pursuant to Order 12, Rule 1 of the National Court Rules on the basis that it was statute- barred, by virtue of s 16(1)(a) of the Statute of Frauds and Limitations Act 1988. That application was dismissed by the National Court (Yagi J) on the 21 February 2012, following a hearing on 17 February 2012. The parties have adopted a leisurely approach to the hearing and determination of the challenge to that order. That challenge has become proceeding SCA 29 of 2012.

5. The second, filed on 27 November 2014, sought, materially, leave to amend the appellants’ defence, which had been filed on 18 June 2009, at a time when other lawyers were acting for the appellants. That application was dismissed by the National Court (Polume-Kiele J) on 12 August 2015. The appeal by leave against that order is proceeding SCA 111 of 2015.

6. Regard to the statement of claim discloses that Mr Riyong alleged that in April, 1994 he had made an oral agreement with Mr Shelley whereby, in consideration of his advancing not less than K100, 000.00 to Mr Shelley for the purposes of Nowek’s business, Mr Shelley would transfer 51% of the shares in Nowek to Mr Riyong’s wife and cause her to be appointed as a director of that company (paragraph 11, statement of claim). It is not alleged by when this transfer and appointment were agreed to occur. Inferentially, in the absence of express provision, it would be necessary, in order to give business efficacy to any such agreement, to imply a term that the transfer and appointment were to occur as soon as reasonably possible. It suffices for present purposes to determine the appeals on that basis.

7. It is further alleged in the statement of claim that, pursuant to this alleged agreement, on three specified dates thereafter in 1994 (26 April, 7 May and 4 July), Mr Riyong made cash advances to Mr Shelley in the total sum of K130,000.00 (paragraph 13, statement of claim). The appellants admit that Mr Shelley received this total sum of K130, 000.00 (paragraph 13 of the defence). They allege that any cause of action arising from the 1994 agreement is barred by virtue of the operation of s16 of the Statute of Frauds and Limitations Act 1988 (paragraph 12 of the defence).

8. Notably, other allegations in the statement of claim are that:

(a) also in 1994, Mr Riyong gave two trucks having a total value of K115,000.00 to Mr Shelley for use in Nowek’s business (There is no allegation of a demand for the return of these trucks and a subsequent refusal and wrongful detention thereof. The receipt of the two trucks is admitted in the defence – paragraph 14);

(b) also pursuant to the agreement, and on a date not specified in the statement of claim, Riyong purchased, at a cost of K20,000.00 a used coffee processing equipment for Nowek (paragraph 15, statement of claim). The statement of claim does not make clear whether it is alleged the purchase of this equipment was to be treated as a loan to Mr Shelley for the purposes of Nowek’s business or a grant of possession of the equipment to Nowek on terms that it would be returned on demand, which demand has been refused and the equipment wrongfully detained. It is not necessary for the purposes of either appeal to resolve this ambiguity. The receipt of the coffee making equipment is admitted in the defence (paragraph 15).

(c) in 1997, pursuant to the agreement, Mr Riyong, “financed the purchase of Kamaliki land described as Portion 180 from Livestock Development Corporation” for Nowek, in the total amount of K165, 000.00 (paragraph 16, statement of claim. Once again, the statement of claim does not make clear whether this financing was to be treated as a loan to Mr Shelley for the purposes of Nowek’s business or a loan directly to Nowek. The defence is ambiguous in that it admits (paragraph 16) that Mr Riyong gave “financial assistance” to acquire the land but does not allege to whom that assistance was given. All that is additionally alleged is that it would be, “repaid later on demand”. It is not necessary to resolve any of these ambiguities to dispose of either appeal.

(d) on some unspecified date but pursuant to the agreement, Mr Riyong purchased in a total amount of K 35,000.00, 500 sheets of corrugated iron for fencing of Nowek’s business premises on the Kamaliki land (paragraph 17, statement of claim). Once again, the statement of claim does not make clear whether this purchase of corrugated iron sheets was to be treated as a loan to Mr Shelley for the purposes of Nowek’s business or a loan directly to Nowek. In the defence (paragraph 18), it is alleged that the fencing was undertaken using Nowek’s own resources. The date when the fencing was supposedly undertaken is not specified. It is not necessary for the purpose of either appeal either to resolve the ambiguity in the statement of claim or the merits of the defence).

(e) on some unspecified date but pursuant to the agreement, Mr Riyong paid the sum of K18,000.00 for the hire of a backhoe and trucks for the undertaking of earthworks in connection with the setting up of Nowek’s dry coffee factory (paragraph 18, statement of claim). Once again, the statement of claim does not make clear whether the payment of the hire charge was to be treated as a loan to Mr Shelley for the purposes of Nowek’s business or a loan directly to Nowek. In any event, the incurring of this charge is denied in the defence (paragraph 19), it being alleged that Nowek used funds borrowed from another company in order to construct the factory.

9. The statement of claim then alleges (paragraph 19) that, “on the faith of the agreement” between Mr Riyong and “the Defendants” (i.e. the appellants), Mr Riyong had made a total investment “in the Defendant” of K 483,000.00 (statement of claim, paragraph 19). The allegation that the agreement was with each of the appellants, not just Mr Shelley, is here made for the first time. No less confusingly, the defence (paragraph 20), though denying each and every allegation in paragraph 19 of the statement of claim, nonetheless alleges that Mr Riyong’s “financial assistance to the Defendants [sic] had been substantially repaid in accordance with the custom of trade in the coffee buying industry of Papua New Guinea”. Confusingly implicit in this allegation is an acknowledgement that...