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National Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
OS NO. 305 OF 2010
BETWEEN
THE NATIONAL COUNCIL OF YOUNG MENS CHRISTIAN ASSOCIATION OF PAPUA NEW GUINEA (INC)
Plaintiff
AND
FIRMS SERVICES LIMITED trading as RAGEAU MANUA & KIKIRA LAWYERS
First Defendant
AND
NIUMI WARKIA
Second Defendant
AND
RHONDA OWANE
Third Defendant
AND
WESTPAC BANK (PNG) LIMITED
Fourth Defendant
AND
THE REGISTRAR OF TITLES
Fifth Defendant
Lae: Gabi, J
2010: 1st October
CONVEYANCING – contract of sale and transfer of land by second and third defendants holding themselves out as executives of plaintiff – sale and transfer of land facilitated by first defendants - allegations of fraud involved in transactions – wrong mode of commencing proceedings – proceedings to be initiated by writ of summons – both application seeking to amend originating summons and to set aside ex parte order dismissed – originating summons converted to pleadings – plaintiffs to file statement of claim – defendants to file defence and/or cross-claim pursuant to National Court Rules
Facts:
The brief facts are that the second and third defendants, holding themselves out as Treasurer and Acting Secretary respectively of the plaintiff, and the first defendant executed a Contract of Sale of Land and Transfer on 5th March 2009 in respect of a piece of land situated at Section 104, Allotment 6, Lae, Morobe Province, contained in State Lease Volume 79 Folio 118. The first defendant facilitated the conveyance. It is alleged that at the time of sale the Board members of the plaintiff were Henry Pital as Chairman, Francis ToMangana as General Secretary, Andrew Kuloko, John Ilam and Dotti Kero as ordinary Board members. The plaintiff's case is that the second and third defendants, who hold no official positions in the Board of the plaintiff, had no authority to enter into a contract of Sale of Land and Transfer with the first defendant. The sale and transfer of the property to the first defendant was unlawful and fraudulent and the registration of the transfer of title of the property in favour of the first defendant may be set aside pursuant to section 33 of the Land Registration Act. The plaintiff is alleging fraud in the sale of land and transfer of title.
There are two applications before the Court; one by the plaintiff for leave to amend the Originating Summons filed on 16th June 2010, and the other by the first defendant to set aside or discharge the ex-parte injunction granted on 17th June 2010 and to dismiss the entire proceeding for disclosing no cause of action.
Held:
Cases Cited
B. Fortunaso Pty Ltd vs. Bank of South Pacific & Ors [1992] PNGLR 275
Dent vs. Thomas Kavali [1981] PNGLR 488 at 490
Douglas Charles Dent vs. Thomas Kavali [1981] PNGLR 488
Mainland Holdings Ltd and Others vs. Stobbs and Others (2003) N2522
Mark Ekepa and Others vs. William Gaupe and Others (2004) N2694
Mount Hagen YMCA vs. Mamun Investments & Ors [1991] PNGLR 337
National Capital District Interim Commission vs. Bogibada Holdings Pty Ltd [1987] PNGLR 135
Ok Tedi Mining Ltd vs. Niugini Insurance Corporation [1988-89] PNGLR 425
Pacific Native Timber (PNG) Ltd vs. Andrew Donaldson (2005) N2933
Patterson Lowa & Ors vs. Wapula Akipe [1991] PNGLR 265
Taumaku Morea vs. Central Provincial Government [1978] PNGLR 415
Wamena Trading Ltd vs. Civil Aviation Authority of Papua New Guinea (2006) N3058
Counsel
S. Tedor, for the Plaintiff
L. Manua, for the First Defendant
J. Kais, for the Second & Third Defendants
RULING
1st October, 2010
1. GABI J: Introduction: There are two applications before the Court; one by the plaintiff for leave to amend the Originating Summons filed on 16th June 2010, and the other by the first defendant to set aside or discharge the ex-parte injunction granted on 17th June 2010 and to dismiss the entire proceeding for disclosing no cause of action.
The Evidence
2. The following affidavits have been filed in this matter: (i) affidavit of Henry Pital dated 15th June 2010; (ii) affidavit of Francis ToMangana dated 15th June 2010; (iii) affidavit of Sialis Tedor dated 16th June 2010; and (iv) affidavit of Lionel Manua dated 9th July 2010.
Facts
3. The brief facts are that Niumi Warkia and Rhonda Owane, holding themselves out as Treasurer and Acting Secretary respectively of the plaintiff, and the first defendant executed a Contract of Sale of Land and Transfer on 5th March 2009 in respect of a piece of land situated at Section 104, Allotment 6, Lae, Morobe Province, contained in State Lease Volume 79 Folio 118. The first defendant facilitated the conveyance. It is alleged that at the time of sale the Board members of the plaintiff were Henry Pital as Chairman, Francis ToMangana as General Secretary, Andrew Kuloko, John Ilam and Dotti Kero as ordinary Board members.
Cause of action
4. The affidavit evidence before the Court clearly shows the plaintiff's cause of action. The plaintiff's case is that Niumi Warkia and Rhoda Owane, who hold no official positions in the Board of the plaintiff, had no authority to enter into a contract of Sale of Land and Transfer with the first defendant. The sale and transfer of the property to the first defendant was unlawful and fraudulent and the registration of the transfer of title of the property in favour of the first defendant may be set aside pursuant to section 33 of the Land Registration Act. The plaintiff is alleging fraud in the sale of land and transfer of title. I am of the view that the plaintiff clearly has a cause of action against the defendants.
Declaration
5. The counsel for the first defendant submitted that the plaintiff is seeking declaration, which is a mere prayer for relief, and the claims are in very broad and general terms, which makes it impossible for the defendants to respond to the allegations. He argued that the proceeding will not succeed for the following reasons: (i) the plaintiff has not pleaded a cause of action known in law; (ii) the plaintiff failed to plead the legal or constitutional basis for the Court's jurisdiction to grant the orders; (iii) the first defendant has an indefeasible title unless the plaintiff can apply to declare the title invalid under section 33 of the Land Registration Act; and (iv) as the plaintiff claims fraud, it must proceed by way of a writ of summons and plead particulars of fraud pursuant to O.4 r.2 and O.8 r.30 of the National Court Rules.
6. It is clear that the power of the Court to make declaratory orders is derived from s. 155(4) of the Constitution: National Capital District Interim Commission v. Bogibada Holdings Pty Ltd [1987] PNGLR 135; Ok Tedi Mining Ltd v. Niugini Insurance Corporation [1988-89] PNGLR 425; Douglas Charles Dent v. Thomas Kavali [1981] PNGLR 488; Patterson Lowa & Ors v. Wapula Akipe [1991] PNGLR 265; Mount Hagen YMCA v. Mamun Investments & Ors [1991] PNGLR 337 and B. Fortunaso Pty Ltd v. Bank of South Pacific & Ors [1992] PNGLR 275.
7. In National Capital District Interim Commission v. Bogibada Holdings Pty Ltd (supra), Kapi DCJ (as he then was), made two observations. First, where granting of declaratory orders sought would not settle the dispute between the parties, declaratory orders should be refused. Secondly, declaratory orders are made according to the principles of equity adopted under Schedule 2.2 of the Constitution.
8. The principles applicable to the grant of declaratory orders are: (i) there must exist a controversy between the parties; (ii) the proceedings must involve a right; (iii) the proceedings must be brought by a person who has a proper or tangible interest in obtaining the order; (iv) the controversy must be subject to the court's jurisdiction; (v) the defendant must be a person having a proper or tangible interest in opposing the plaintiff's claim; and (vi) the issue must be a real one. It must not be merely of academic interest, hypothetical or one whose resolution would be of no practical utility: Ok Tedi Mining Ltd v. Niugini Insurance Corporation (supra). In that case, Kapi DCJ (as he then was) said at 247:
"Before going into the nature of the objection made, it is useful at this stage to outline the present status of the law in Papua New Guinea with regard to declaratory orders. It was considered that under O 4, r 11, of the old National Court Rules, jurisdiction was granted to the Court to make mere declaratory orders: see Taumaku Morea v. Central Provincial Government [1978] PNGLR 415. Bredmeyer J expressed some doubt as to whether or not rules of procedure and practice could give substantive jurisdiction: see Dent vs. Thomas Kavali [1981] PNGLR 488 at 490. Bredmeyer J, however, went on to find that the basis for the jurisdiction of the Court to make mere declaratory orders is to be found in the second leg of s 155 (4) of the Constitution. In National Capital District Interim Commission vs. Bogibada Holdings Pty Ltd [1987] PNGLR 135, I came to the same view that the jurisdiction of the Court in granting declaratory orders is now to be found under s 155 (4) of the Constitution. As I pointed out (at 138), the Court has a wide discretion given by the words 'in such circumstances that seem to them proper' in s 155 (4) of the Constitution."
9. It is clear to me that the plaintiff has a cause of action against the defendants. The claim is based on fraud. With respect to the declaratory orders, there is no dispute that the principles set out in Ok Tedi Mining Ltd case (supra) apply to this case and therefore the cause of action by way of declaration are properly before the Court. There is a serious dispute regarding property rights before the Court.
Discharge of injunction
10. I agree with counsel for the first defendant that there are six considerations to take into account in deciding whether to discharge
or vary an interim injunctive order
(see Mainland Holdings Ltd and Others v. Stobbs and Others (2003) N2522; Mark Ekepa and Others v. William Gaupe and Others (2004) N2694; Pacific Native Timber (PNG) Ltd v. Andrew Donaldson (2005) N2933; Wamena Trading Ltd v. Civil Aviation Authority of Papua New Guinea (2006) N3058). The considerations are: First, has there been any change in circumstances since the previous orders were made, which render their
continuation unnecessary or inappropriate? Second, what has been the relative conduct of the parties since the earlier orders were
made? Third, are there previously undisclosed relevant facts, which have been discovered since the interim orders were made? Fourth,
has it subsequently been discovered that the order was granted on an erroneous legal basis? Fifth, where the grounds relied on to
support the setting aside or variation of the interim order, argued before the Court when it granted the earlier order? Or did the
party wanting to discharge or vary the earlier order have the opportunity to raise those grounds? Finally, was the court misled when
it issued the interim injunctive order? If yes, was that attributable to the conduct of the party which sought the interim order?
Has there been any change in the circumstances since the previous orders were made, which render their continuation unnecessary or inappropriate?
11. This is a telling consideration (see Injia DCJ (as he then was) in Mainland Holdings case). If there has been a material change in the circumstances that substantially increases the applicant's chances of having the earlier order dissolved or varied, the application may be granted.
12. The interim order was granted on the basis that Niumi Warkia and Rhonda Owane, without authority, fraudulently sold the property to the first defendant. I note that the proceeding was served on both defendants, but they have not placed any affidavit evidence before the Court to contest or dispute the allegation that they had no authority to sell the property to the first defendant and that the said sale and transfer were fraudulent. In his affidavit, Mr. Manua deposed that the first defendant has an indefeasible title. At the time of the grant of the interim injunction, I was aware of both the registration of the transfer of title in favour of the first defendant and the allegation of fraud against the defendants. In the present case, little has changed since the interim order was granted.
What has been the relative conduct of the parties since the earlier orders were made?
13. Have they been behaving themselves? Are the hands of the person who is benefitting from the earlier order still clean? If the party who obtained the interim order behaves badly the interim order may be dissolved. In this case, the conduct of the plaintiff has not changed. It continues to maintain that the sale of land and the transfer of the title to the first defendant are fraudulent and unlawful.
Are there previously undisclosed relevant facts, which have been discovered since the interim orders were made?
14. If there are undisclosed relevant facts, those facts may be taken into account in determining whether or not to dissolve the interim order. However, they do not deserve the same weight as when there is a material change in circumstances after the interim order is made.
15. Counsel for the first defendant submitted that the Undertaking as to Damages was not signed by the plaintiff's authorized officer and that it is not sealed with the official seal of the entity. The Undertaking was signed by the lawyer for the plaintiff, which is contrary to the Practice Directions. However, I do not consider this aspect to be fatal as a new Undertaking was signed by Francis ToMangana on 17th August and filed on 18th August 2010. The Undertaking has not been sealed as the Records of the plaintiff including the Common Seal are still in the possession of the second and third defendants.
Has it subsequently been discovered that the order was granted on an erroneous legal basis?
16. This is a factor that may be taken into account, but it is not a very weighty consideration. The interim order should only be dissolved or varied where the court has made a clear error of law in the course of making its earlier order that the exercise of discretion should be interfered with. In this case, the order was granted on the basis of the allegation of fraud in the sale of land and the transfer of title to the first defendant. It was not granted on an erroneous legal basis.
Where the grounds relied on to support the setting aside or variation of the interim order, argued before the Court when it granted the earlier order? Or did the party wanting to discharge or vary the earlier order have the opportunity to raise those grounds?
17. If the interim order was granted ex parte, the court will favour the setting aside or variation of the order. If it was not, the court will be less inclined to set it aside.
18. In the present case, the answer to both these questions is no. The interim order was granted ex parte. I have considered the issue of sale of land and transfer of title to the first defendant, in the light of the evidence and submissions presented by counsel for the first defendant, to see whether there are good reasons for having the interim order set aside. I am of the view that the plaintiff has an arguable case and that there is a serious question to be tried.
Was the court misled when it issued the interim injunctive order? If yes, was that attributable to the conduct of the party which sought the interim order?
19. This is a very important consideration, which focuses on the conduct of the party that obtained the original interim order. There is no evidence placed before me by the defendants to show that the court was misled.
20. For all the above reasons, I refuse to set aside or discharge the injunction.
Writ of Summons
21. I agree with counsel for the first defendant that in view of the issues raised by the plaintiff the proceeding should have commenced by Writ of Summons. The appropriate method of resolving all the issues is by Writ of Summons and Statement of Claim which would allow for proper pleading of facts and issues of law for determination by the Court. The proceeding is converted to a Writ of Summons and Statement of Claim. In the exercise of my discretion, I make the following orders:
1. Both applications are dismissed;
2. The Originating Summons filed on 16th June 2010 is converted to pleadings;
3. The plaintiff shall file a Statement of Claim within the next 30 days;
4. Thereafter, the pleadings shall take their normal course, by the defendants filing their Defence and Cross-Claim, if any, under the prescribed time period as stipulated by the National Court Rules and for pleadings to continue thereafter;
5. Each party shall pay their own costs of these applications;
6. Time is abridged to time of settlement, which shall take place forthwith.
________________________________
Sialis Tedor & Associates: Lawyer for the Plaintiff
Rageau, Manua & Kikira Lawyers: Lawyer for the 1st Defendant
Huon Lawyers: Lawyer for the 2nd & 3rd Defendant
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