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Kui Valley Business Incorporated v Mosley [2011] PGNC 278; N4548 (18 August 2011)

N4548

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS. NO. 959 OF 2009

BETWEEN:

KUI VALLEY BUSINESS GROUP INCORPORATED
Plaintiff

AND:

HUGH MOSLEY
First Defendant

AND:

DELOITTE TOUCHE TOHMATSU
Second Defendant

Kainantu/Goroka: Yagi J
2011: 17th & 18th August

EVIDENCE – Affidavit evidence – Evidence Act, s. 34 - use of affidavit in an interlocutory application - objections - National Court Rules, Order 11 Rules 23(1)(b) and 28(b) – affidavit containing matters which are hearsay, opinion, scandalous and oppressive - affidavit struck out and removed from the file.

Cases Cited:

Mathias Karani v Yawa Silupa & Electoral Commission of PNG (2004) N2517

Counsel:

D. Umba, for the Plaintiff
M. Henao, for the Defendants

RULING
18th August, 2011

1. YAGI J: There are two interlocutory applications before the Court for hearing. The first application is by the plaintiff in which the plaintiff seeks to have the defendants' defence struck out and have summary judgment entered in its favour under Order 12 Rule 38(1)(b) of the National Court Rules (NCR). The second application by way of a cross motion is by the defendants to strike out or dismiss the plaintiff's notice of motion for being incompetent under Order 8 of the Motions Amendment Rules 2005 and for abuse of process under Order 12 Rule 1 of the NCR.

2. The defendants have also raised two grounds of objection in their cross motion. These objections relate to the admissibility of the affidavit or parts thereof which is being relied upon by the plaintiff in support of its application. These objections are set out in paragraphs 3 and 4 of their cross motion and are as follows:

"3. The affidavit of George Kuno purportedly sworn on 4 April 2011 and filed 5 April 2011 be taken off the file, pursuant to Order 11 Rule 28(b) and/or Order 12 Rule 1 of the National Court Rules.

4. Further or in the alternative, paragraphs 15, 16, 17, 17(a), 17(b), 17(c), 17(d), 17(e), 17(f), 17(g), 17(g)(ii), 17(g)(iv), 17(g)(v), 17(g)(vi), 17(g)(vii), 17(g)(viii), 17(g)(ix), 17(g)(x), 17(g)(xii), 17(i), 17(k), 17(l), 18 contained in the Affidavit of George Kuno purportedly sworn 4 April 2011 and filed 5 April 2011 be struck out, pursuant to Order 11 Rule 28(a) of the National Court Rules."

3. At the hearing both counsel agreed that the defendants' objections be dealt with first as a determination in favour of the objections may render the plaintiff's application incompetent. I accepted the approach agreed to by counsel in view of the evidentiary requirement under Order 12 Rule 38(1)(b) of the NCR which the plaintiff's application is based.

4. A brief background of the case is this. The plaintiff is a local incorporated business group from the Simbu Province. In 2003 it was placed under liquidation pursuant to a National Court order. The first defendant is a qualified accountant and at all material times a partner in the accounting firm Deloitte Touche Tohmatsu, the second defendant. At the time of liquidation, the Court appointed the first defendant as the liquidator of the plaintiff. The appointment was made under the provisions of the Companies Act. The first defendant carried out his duties and responsibilities as the liquidator of the plaintiff's affairs and business until 2008 when the Court terminated the liquidation. He therefore relinquished the control of the affairs and business of the plaintiff to its executive committee and shareholders.

5. On taking over from the first defendant, the plaintiff took strong views about the manner in which the second defendant conducted the liquidation on its behalf. It therefore filed this action against the defendants.

6. The claim by the plaintiff against the defendants in the proceedings is essentially for damages for alleged breaches of statutory duties under the Companies Act. It claims that the first defendant was negligent in the discharge of his duties and responsibilities by failing to properly conduct the liquidation on its behalf. The defendants have denied the allegations and filed a defence to that effect.

7. The plaintiff seeks to rely on two affidavits sworn by Mr. George Kuno. The first affidavit was filed on 5th April 2011 and a further or supplementary affidavit filed on 1st July 2011. The objection by the defendants is directed at the earlier affidavit.

8. The defendants contend that the earlier affidavit should not be admitted into evidence and be relied upon by the plaintiff in these proceedings in particular for the purpose of its application on the basis that it contains hearsay materials and does not constitute facts in breach of s. 34 of the Evidence Act and Order 11 Rule 23(1)(b) of the NCR. Mr. Henao for the defendants points to Annexure "E" of the first affidavit as a classical example of the breach and submits that such a breach is serious enough that warrants sanction particularly in the context of the kind of relief being sought by the plaintiff. The defendants further argue that the relevant parts of the affidavit referred to in paragraph 4 of its cross motion contains allegations which are scandalous, irrelevant and oppressive as to the reputation and standing of the first defendant and Mr. James Kruse and hence offends Order 11 Rule 28(b) of the NCR.

9. Mr. Umba for the plaintiff concedes to the discrepancies in respect to the amendments regarding the dates on which the affidavit was attested, however, argues that these discrepancies are relatively minor in nature and do not affect the substance of the matters deposed to in the affidavit and the court should therefore exercise its discretion and allow the affidavit. Counsel further referred to various paragraphs in the affidavits of Mr. George Kuno and sought to explain the basis of the averments or statements and submits that the parts of the affidavits complained of are not scandalous, irrelevant or oppressive and therefore the objections should be dismissed.

10. I have considered the arguments by the parties and also perused the affidavit of Mr. George Kuno and particularly the objectionable parts.

11. I start by considering the grounds of the objection. Reliance is placed on s. 34 of the Evidence Act and Order 11 Rules 23(1)(b) and 28(b) of NCR.

12. Section 34 of the Evidence Act states:

"34. Evidence by affidavit

(1) Subject to this section, in any legal proceedings before a tribunal to which this Division applies the tribunal may at any time order that –

(a) a particular fact or facts may be proved by affidavit; or
(b) the affidavit of a witness may be read in the proceedings on such conditions as the tribunal thinks reasonable; or
(c) a witness whose attendance ought to be dispensed with be examined by interrogatories or before an examiner named by the tribunal.

(2) Where it appears to the tribunal that a party to, or a person interested in, the proceedings bona fide and reasonably requires the production of a witness for cross-examination and that the witness can be produced, an order shall not be made under Subsection (1) authorizing his evidence to be given by affidavit.

(3) Nothing in an order under Subsection (1) affects the power of the tribunal to refuse to admit evidence tendered in accordance with any such order if, in the interests of justice, the tribunal thinks it proper to do so."

12. Rule 23 of Order 11 states:

"(1) Where there is any interlineations, erasure or other alteration in the jurat or body of an affidavit –

(a) the affidavit may nevertheless be filed, unless the Court otherwise orders; but

(b) the affidavit may not be used without the leave of the Court unless the person before whom the affidavit is sworn initials the alteration and, in the case of an erasure, re-writes in the margin of the affidavit any words or figures written on the erasure and signs or initials them.

(2) Sub-rule (1) applies to an account verified by affidavit as if the account were part of the affidavit."

14. Order 11 Rule 28(b) provides:

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

(a) .............................

(b) the affidavit be taken off the file."

15. The basic function of a court of law is to receive evidence, make a finding of fact based on the evidence and apply the law to the facts in order to decide an issue in a just, fair and impartial manner. Subject to law, a decision, judgment or order of the court must be respected and enforced without question by everyone in society. For the decision to be accepted and respected, the Court must act on evidence that is strong, convincing, coherent and credible. The court should not act on evidence that is questionable. Therefore the rules of evidence have developed to ensure that there is cogency and credibility in the evidence that is to be acted upon by a court of law. This brings integrity into the legal and judicial process. The rules therefore provide the necessary safe guards to prevent the evidence from being contaminated. The law recognizes that contamination may occur in situations where the evidence consists of hearsay facts, based on opinion or irrelevant matters. The law also seeks to protect witnesses who come before it to give evidence. Examples of the legal protection are found in ss. 21 (discrediting of witness), 26 (cross-examination as to credit) and 27 (indecent and scandalous questions) of the Evidence Act.

16. The law also provides sanctions and penalties against falsifying evidence including improper and illegal use of affidavits. Affidavits that are intended for use in a court must comply with the requirements of the law. Counsel for the defendants referred to Mathias Karani v Yawa Silupa & Electoral Commission of PNG (2004) N2517 as one such case. In that case his Honour Justice Kirriwom had an occasion to deal with an affidavit that was not authenticated before a Commissioner for Oaths. I agree with the following statement by His Honour:

"Affidavits intended to be used in any court proceedings must be sworn before a Commissioner for Oaths in accordance with section 16 of the Oaths Affirmations and Statutory Declarations Act 1962. Anyone who relies on an affidavit material must have that evidence properly authenticated before a Commissioner for Oaths. The reason is simple. Commissioner for Oaths can be liable for criminal prosecution under section 19 of the Act if they witness or authenticate as true any false statement in an affidavit."

17. It is therefore important in my view that the court must protect its process against improper and illegal means by which contaminated evidence is sought to be admitted into the court.

18. In an interlocutory process before the National Court, such as the present application, the NCR expressly authorizes the use of affidavits to support an application. However, there are entrenched safeguards and qualifications provided under the NCR to protect the integrity of the evidence and generally the process of the court. A party desiring to rely on an affidavit in support of his or her application must comply with the requirements of the law, in particular the requirements of the Evidence Act, Oaths Affirmations and Statutory Declarations Act 1962 and the NCR.

19. As I said the NCR expressly provides for use of affidavits in interlocutory applications such as the present case before the Court. This is provided for under Division 5 of Order 4. In deed Order 4 Rule 44 of the NCR specifically directs that an affidavit be filed as to matters of facts.

20. Under Order 4 Rule 44, where a notice of motion is based on facts or facts and documents, then these facts and documents must by produced by way of an affidavit. Moreover, Order 12 Rule 38(1)(b), which is the basis of the plaintiff's application, specifically require an affidavit to be filed in support of the application. It furthermore requires that the person swearing the affidavit must depose to particular matters of fact and belief.

21. It is clear from the Rules which the objections are based that a deponent of an affidavit is permitted to depose only to matters of facts. He is not permitted to depose to matters or facts which are based on hearsay. Neither can a deponent be permitted to make scandalous or oppressive statements. He is also not permitted to depose to matters which are opinionated or offensive.

22. I have carefully perused the affidavit of Mr. George Kuna and find that, except in relation to matters of fact relating to his personal and professional background and credentials, the whole of the matters that he deposed to are not based on facts. They are based on his finding as an investigator through his engagement by the plaintiff's lawyer and therefore they are opinions and hearsay. The findings are mostly based on secondary sources. I also find that the much of opinions he expressed are of legal nature. Substantial part of the affidavit also comprised of legal submissions. With due respect to Mr. George Kuno, notwithstanding his sound background and experience in company laws and practices, he is not qualified and competent to express any legal opinion. More importantly, except for expert witnesses, the law expressly prohibits a deponent from expressing opinions, legal or otherwise, and making submissions in an affidavit.

23. One of the specific objections relates to the question of whether the affidavit by Mr. George Kuno sworn on 4th April 2011 was properly attested. As I alluded to earlier the Court's attention was drawn to annexure "E" of the affidavit where a number of alterations were made in respect the date of attestation. The alteration is repeated throughout the entire body of the affidavit. It is not limited to only one but all the annexures to the affidavit. It raises a serious question as to whether the affidavit was properly attested by the Commissioner for Oaths. This is exactly the point that the Court in Mathias Karani (supra) expressed serious concern about. In that case the Commissioner for Oaths did not attest the affidavit. In this case, the Commissioner for Oaths did attest to the affidavit, however, he failed to initial or sign in respect to the subsequent alterations as required by Order 11 Rule 28(b) of the NCR. A failure to comply with the Order 11 Rule 28(b) in my view renders the affidavit defective and therefore inadmissible.

24. I am satisfied that the grounds of objection have substantial merits.

25. The plaintiff submits that the Court should nevertheless exercise its discretion and grant leave to the plaintiff to rely on the affidavit to enable it to proceed with its application. I do not think that it would be proper for the Court to accede to that request. Acceding to such a request would amount to circumventing the law and condoning and encouraging illegal practice. In any event there is no application for leave before the Court. I find there is substantial defect in the affidavit and moreover the affidavit contains inadmissible evidence.

26. Accordingly, I uphold the objections and rule that the affidavit of Mr. George Kuno sworn on 4th April 2011 and filed on 5th April 2011 is inadmissible and should be taken off the court file or record.

____________________________________________________________
Umba Lawyers: Lawyer for the Plaintiff
Blake Dawson Waldron: Lawyer for the Defendants