N7867

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS (CC4) No.657 of 2017

BETWEEN:
GERU HOLDINGS LIMITED
Plaintiff

AND:
JAMES KRUSE of DELOITTE TOUCHE TOHMATSU
First Defendant

AND:
BANK OF SOUTH PACIFIC LIMITED
Second Defendant

Waigani:   David, J
2019:  4 & 10 April

PRACTICE & PROCEDURE – application for dismissal of proceedings generally– relevant considerations – multiplicity of proceedings – abuse of process - application granted

Cases Cited

Anderson Agiru v Electoral Commission and The State (2002) SC687
William Duma v Yehiura Hriehwazi (2004) N2526
Kerry Lerro v Philip Stagg (2006) N3050
Philip Takori v Simon Yagari (2008) SC905
Telikom PNG Limited v ICCC & Digicel (PNG) Limited (2008) SC908

Treatise Cited:

Papua New Guinea Civil Procedure in the National Court by Injia et al

Counsel:

Camillus M. Gagma, for the Plaintiff 
Ian Raymond Shepherd, for the First Defendant

RULING
10 April, 2019

1.	DAVID, J: INTRODUCTION:   This is a ruling on two contested applications.  One is moved by the first defendant pursuant to a notice of motion filed on 8 February 2019 seeking principally an order under Order 12 Rule 40(1)(a), (b) or (c) of the National Court Rules and/or the inherent jurisdiction of the Court that the proceedings be dismissed generally. The other is moved by the plaintiff pursuant to a notice of motion filed on 28 November 2018 seeking three main orders and they are; to amend the originating summons filed on 16 August 2017 (the originating summons) under Order 8 Rules 50 and 53 of the National Court Rules; for leave to join Peter Kama in his capacity as director and shareholder of both Geru Holdings Ltd and Piunde Ltd (In Liquidation) as second plaintiff in these proceedings pursuant to Order 5 Rules 2, 3 and 4 of the National Court Rules; and for the second defendant to produce to the Court and the plaintiff, copies of the statements of loan account for three loan accounts for Piunde Ltd (In Liquidation) that constitute the total loan default sum of K3.39 million within seven days of the order pursuant to Section 155(4) of the Constitution and Order 9 Rule 12 of the National Court Rules.

EVIDENCE

2.	The first defendant relies on the affidavits of:

1.	Asher Waffi filed on 8 February 2019; and
2.	Ian Raymond Shepherd filed on 31 August 2017.

3.	The plaintiff relies on the affidavits of:

1.	Peter Kama filed on 16 August 2017; 
2.	Peter Kama filed on 18 May 2018; 
3.	Peter Kama filed on 18 October 2018;  and
4.	Peter Kama filed on 28 November 2018.

4.	The plaintiff also made reference to the originating summons.

5.	I have considered the parties’ evidence.

OBJECTION TO USE OF AFFIDAVIT

6.	The plaintiff objects to the use of the affidavit of Asher Waffi by the first defendant on the basis that; the second defendant has not filed any notice of intention to defend the proceedings; while Asher Waffi was an employee of the second defendant, he has no personal knowledge of matters concerning these proceedings and those in OS No.797 of 2015 and WS No.428 of 2017 so the facts he deposes to are hearsay and even amount to perjury; the affidavit contains submissions, analysis of facts deposed to in the affidavits relied on by the plaintiff, opinion and not percipient; the affidavit filed is a result of conspiracy between lawyers for the first and second defendants to suit their own convenience.      

7.	Mr Shepherd of counsel for the first defendant contends that the first defendant is entitled to use the affidavit of Mr Waffi largely under Section 61 of the Evidence Act as matters he deposes to in his capacity as legal officer of the second defendant are matters to his knowledge concerning the business records of the second defendant.  In addition it is argued that; Mr Waffi has appeared before Kariko, J for the second defendant bank in proceedings entitled WS 428 of 2015 and is aware of the background of those proceedings; the plaintiff continues to serve the second defendant with court documents concerning these proceedings; it is outrageous and offensive for counsel to suggest that he and Mr Waffi are involved in a conspiracy for their convenience.

8.	 The National Court decision of William Duma v Yehiura Hriehwazi (2004) N2526 states that affidavits must contain facts and not opinions (unless it is expressed to be expert opinion), arguments and submissions.

9.	Where there is a scandalous, irrelevant or otherwise oppressive matter in an affidavit, the matter may be struck out or the affidavit may be taken off the file:  Order 11 Rule 28 of the National Court Rules.

10.	While there is some merit in the plaintiff’s argument regarding the contents of the affidavit in light of the decision in William Duma v Yehiura Hriehwazi, I reject the plaintiff’s objection on the basis that:

1.	Taking Section 35 of the Evidence Act as a guide, no notice was given by the plaintiff to the first defendant before the hearing that it objects to the use of the affidavit so the plaintiff is taken to have consented to its use by the first defendant in support of its application;
2.	Otherwise an objection ought to have been made promptly and as soon as possible after the service of the affidavit whether it was served with the motion or not. 
3.	Mr Waffi has sworn the affidavit as a legal officer for the second defendant and appears to depose to matters coming to his knowledge about proceedings in OS No.797 of 2015 and WS No.428 of 2017 (which is still on foot pending the outcome of an appeal to the Supreme Court against a ruling of Kariko J) in the course of his employment;
4.	The Court file shows that the second defendant has participated in these proceedings before including on the occasion when the plaintiff moved an application seeking an order in the nature of an injunction on 10 October 2017;
5.	The affidavit was filed by the first defendant in support of its application;
6.	Affidavits in supporting of a motion are required to be filed on the date of filing the motion (Order 4 Rule 49(12) National Court Rules) and  there is no evidence brought before me to show that the requirement for service of motions and affidavits under the National Court Rules were not complied with (Order 4 Rules 42 & 44) hence giving the plaintiff no opportunity to raise its objection;
7.	The plaintiff has not shown to the Court which part or parts of the affidavit contains submissions.
8.	It is not suggested that the contents of the affidavit are scandalous, irrelevant or otherwise oppressive. 
9.	Matters contained in the affidavit which do not meet the requirements mentioned in William Duma v Yehiura Hriehwazi will be disregarded.  

OBJECTION TO COMPETENCY OF MOTION

11.	The plaintiff contends that the motion is incompetent and should be struck out as the first defendant relies on multiple grounds under Order 12 Rule 40(1).  They should not be lumped together as they are distinct and alternative grounds with different requirements and there should be an election as to which ground is relied on.  Consequently, the application was ambiguous and confusing and has left the plaintiff guessing as to the grounds of the application it was argued.
 
12.	The first defendant’s submissions demonstrate that the application to dismiss the proceedings is strongly predicated upon Rule 1(c).  In addition, it also relies on the inherent jurisdiction of the Court.

13.	I have not been referred to any case authority or rule(s) in the National Court Rules that supports the proposition that is advanced.   The nearest assistance I can draw from in deliberating on the point in contention is from the treatise, Papua New Guinea Civil Procedure in the National Court by Injia et al at p.281 where the learned authors state:

“Each of the grounds under Rule 40 are alternative grounds which should be specifically pleaded in the notice of motion as a distinct ground.  They should not be lumped together.” 

14.	I think what this means is that when a party relies on Rule 40(1) in its motion, the pleading must not be incomprehensible, ambiguous and does not inform the opposite party what it is alleged against him.   The terms of the motion are clear.  

15.	Order 12 Rule 40(1) sets out alternative grounds upon which proceedings may be stayed or dismissed generally or in relation to any claim for relief in the proceedings where it appears to the Court that; no reasonable cause of action is disclosed; or the proceedings are frivolous or vexatious; or the proceedings are an abuse of process of the Court.     The National Court Rules do not make express provision prohibiting reliance on all three grounds under Rule 40(1) by way of alternative pleading.  I have not found any case authority both by the Supreme Court and the National Court supporting the proposition advanced by the plaintiff.  In the absence of such a prohibition, I am of the view that reliance on all three alternative grounds are in order so the motion is competent and properly before the Court.

16.	For these reasons, I will reject the plaintiff’s objection.

BRIEF BACKGROUND

17.	In the substantive proceedings commenced by the originating summons, the plaintiff seeks, inter alia, a declaration that the Deed of Appointment of Agent for Sale purportedly signed by Robin Fleming under power of attorney on behalf of the Bank South Pacific Limited on 3 January 2014 and signed by James Kruse on 17 November 2015 (the Deed of Appointment of Agent for Sale) is illegal therefore null and void.

18.	The plaintiff is or was the owner of several properties located in Kundiawa in the Simbu Province which were all mortgaged to the second defendant.  These properties are; Allotment 10 Section 3 and Allotments 10, 11 and 12 Section 4 (the properties).  By the Deed of Appointment of Agent for Sale, the first defendant, James Kruse was appointed as agent for the sale of the properties.  The first defendant advertised the properties for sale and inviting expressions of interest initially in December 2015 and later in April 2017 in the Post Courier on both occasions.  Allotment 10 Section 3 was sold to Morobe Properties Limited for K3,100,000.00 by the second defendant exercising its power of sale as mortgagee. 
  
PLAINTIFF’S EVIDENCE

19.	The evidence for the plaintiff is adduced through Peter Kama who is a director and shareholder of the plaintiff company. 

20.	The Deed of Appointment of Agent for Sale is invalid on the basis that:

1.	it is entered into between the first defendant and the second defendant without his knowledge and consent;
2.	there is no execution date on page 3 or anywhere else;
3.	not all pages were signed;
4.	the deed is unsealed;
5.	the execution dates are different “almost 2 years apart”;
6.	the signature of Robin Fleming, Chief Executive Officer of the second defendant is not the same as in the second defendants 2014 Financial Report therefore “forged”.

21.	Based on the invalid Deed of Appointment of Agent for Sale and without the knowledge and consent of the plaintiff as director and shareholder of the plaintiff company, the defendants have advertised the properties for sale inviting expressions of interest initially in December 2015 and recently in April 2017.   One of the properties namely, Allotment 10 Section 3 was sold to Morobe Properties Ltd, a company owned by a Gerard Philip who is a close friend of the first defendant on 3 January 2014.

22.	He was not given a notice of default under Section 67 of the Land Registration Act so all transactions performed by the defendants pursuant to the invalid Deed of Appointment of Agent for Sale are being done without his knowledge and consent. 

23.	 The affidavits also depose to matters going to; the background of financial assistance obtained from the second defendant and the security arrangement involving the properties; various proceedings filed in the National and Supreme Court; and matters relied on in support of the relief sought by the plaintiff in its motion.

FIRST DEFENDANT’S EVIDENCE

24.	Mr Waffi’s affidavit essentially refers to the refusal by the Court of the plaintiff’s application for interim injunction and the ruling it made in which I observed that it was an abuse of process to file multiple proceedings seeking the same relief pursued in WS No.428 of 2017 and comments about the plaintiff’s application.     

25.	Mr Shepherd is the lawyer for the first defendant.  He represented the first defendant in proceedings commenced by OS 797 of 2015 (Geru Holdings Limited v James Kruse & Deloitte Touche Tohmatsu) in which the plaintiff sought similar relief to that sought in the current proceedings, that is, inter alia, that the first defendant and Deloitte Touche Tohmatsu were not “appointed or authorised agents of the plaintiff to deal with the said properties..“ and injunctions to effectively restrain the sale of the properties. Interim injunctions obtained in those proceedings were discharged by Justice Hartshorn on 23 January 2017 and His Honour also ordered that the proceedings continue on pleadings.  

26.	However, instead of continuing on pleadings and contrary to the order of Justice Hartshorn, the plaintiff on 3 May 2017 discontinued those proceedings and the next day on 4 May 2017 commenced fresh proceedings by WS No.428 of 2017 (annexure “A”).   In those proceedings, the plaintiff is also challenging the sale of the properties and essentially the same parties are defendants in those proceedings.   The same argument questioning the validity of the Deed of Appointment of Agent for Sale raised by Mr Kama in OS No.797 of 2015 as demonstrated in paragraphs 12 to 14 of his affidavit sworn on 24 February 2016 (annexure “B”) is also raised in paragraphs 10 to 14 of his affidavit in the current proceedings and they are almost in identical terms.

27.	On 26 May 2017 and again on 13 June 2017, Justice Kariko heard an application for interim injunctions to stay the sale and advertisement of the properties which are the subject of the current proceedings.  In support of that application, Mr Kama relied on his affidavit sworn on 30 April 2017 (annexure “C”).  That affidavit and the affidavit relied upon in the current proceedings are almost identical in every respect with respect to the first thirteen paragraphs.  On 5 July 2017, Justice Kariko dismissed the plaintiff’s application on the basis that the plaintiff’s conduct was regarded as an abuse of process.

28.	The plaintiff has appealed that ruling in the Supreme Court in SCA 105 of 2017.     An application for a stay of Justice Kariko’s ruling pending appeal was heard by Justice Kassman on 24 August 2017 and he has reserved his ruling.

29.	The same issues are currently before the National Court in WS No.428 of 2017 and whilst those proceedings remain on foot coupled with the fact that an appeal is pending from an interlocutory ruling of Justice Kariko, the plaintiff has filed the current proceedings.   
 
ISSUES

30.	The main issues that I need to decide are:

1.	Whether the first defendant has established a case for the dismissal of the proceedings generally under any of the grounds specified under Order 12 Rule 40(1)?
2.	Whether the plaintiff should be granted leave to amend the originating summons?
3.	 Whether the plaintiff should be granted leave to join Peter Kama as a party?
4.	Whether the second defendant should produce documents identified in paragraph 4 of the motion to the Court and the plaintiff within the period suggested?  

31.	I will address the first issue first as its outcome will determine whether or not I should go on to address the remaining issues.

HAS THE FIRST DEFENDANT ESTABLISHED A CASE FOR THE DISMISSAL OF THE PROCEEDINGS UNDER ANY OF THE GROUNDS SPECIFIED UNDER OREDER 12 RULE 40(1)?

First defendant’s submissions

32.	The first defendant contends that the proceedings ought to be summarily dismissed generally as:

1.	In the Court’s ruling on 18 October 2017 in relation to the plaintiff’s application for an interim relief to restrain the defendants from executing or putting into effect the Deed of Appointment of Agent for Sale, it found that these proceedings were an abuse of the process on the basis that the issue of legality of the Deed of Appointment of Agent for Sale had been raised in two National Court proceedings and the affidavits filed in both proceedings were substantially the same as the affidavits relied on in these proceedings.
2.	The plaintiff has not appealed the Court’s findings that these proceedings were an abuse of the process.
3.	Notwithstanding the Court’s ruling, the plaintiff has filed a motion to amend the originating summons to seek additional orders and to join Peter Kama as a party.
4.	The amendments also seek to challenge the registration of the transfer in favour of Morobe Properties Limited. 
5.	The draft amended originating summons seeks in paragraphs 4, 5, 6 and 7 the same relief, ie, challenging the validity of the Deed of Appointment of Agent for Sale.
6.	The proceedings in WS No.428 of 2017 are still current and have been adjourned to the Registry by Kariko, J pending the outcome of an appeal to the Supreme Court against his decision refusing interlocutory orders.     

Plaintiff’s submissions

33.	The plaintiff essentially contends that the application should be refused as:

1.	The proceedings disclose a cause of action known in law nor are they an abuse of process.
2.	As to the argument on multiplicity of proceedings, WS 428 of 2017 concerns a claim for damages alleging breaches of a loan agreement and unfair conduct of the fourth defendant in its dealings with the plaintiffs given its predominant financial position.
	 
Relevant legal principles

34.	The legal principles that apply in relation to applications to dismiss proceedings under Order 12 Rule 40(1) of the National Court Rules are well settled and have been the subject of many decisions in both the Supreme Court and the National Court such as Philip Takori v Simon Yagari (2008) SC905; Telikom PNG Limited v ICCC & Digicel (PNG) Limited; and Kerry Lerro v Philip Stagg (2006) N3050.

35.	These principles are:

“1.	Our judicial system should never permit a plaintiff or a defendant to be “driven from the judgment seat” in a summary way, “without a Court having considered his right to be heard.” A party has a right to have his case heard, as guaranteed by the Constitution and the laws of the land.  The Rules are designed to enhance those rights and to ensure the prompt and fair disposal of matters coming before the Court. That right cannot be lightly set aside. 
2.	At the same time however, the law such as the Rules under consideration provide for and the Court has an inherent jurisdiction to protect and safeguard against any possible abuse of the processes of the Court.
3.	The object of these rules are therefore “to stop cases which ought not to be launched — cases which are obviously frivolous or vexatious or obviously unsustainable.”  In other words “the object of the rule was to get rid of frivolous actions.”
4.	A claim may be frivolous if it can be characterized as so obviously untenable that it cannot possibly succeed or that the claim or defence is bound to fail if it proceeds to trial.   
5.	A claim or defence may be vexatious if the case amounts to a sham or one which cannot succeed and is one that amounts to harassment of the opposing party who is unnecessarily put to the trouble and expenses of defending or proving the claim.   
6.	With regard to the issue of disclosing a reasonable cause of action or defence, the Court must be clear that there are two (2) parts to the phrase “cause of action”.  First, it entails a right given by law such as an entitlement to reasonable damages for breach of human rights under s.58 of the Constitution, commonly referred to as the “form of action”. Secondly, it entails the pleadings disclosing all the necessary facts which give rise to the form of action.
7.	The phrase “cause of action” could thus be defined in terms of a legal right or form of action known to law with:
“every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the court.  It does not comprise of every piece of evidence which is necessary to prove each fact, but every fact is necessary to be proved.”
8.	A statement of claim or a defence (as the case may be) must therefore clearly plead the form of action by pleading the necessary legal elements or ingredients of the action and relevant and necessary facts (not the evidence) giving rise to the form of action.  It follows therefore that, where a statement of claim or a defence is so ambiguous or lacking in particularity that it does not facilitate orderly and rational pleadings, which would enable the real issues to be identified, and instead leaves it to guess work, it should be struck out. 
9.	These rules provide a summary judgment procedure or remedy which is available to a plaintiff or a defendant, and one which vests and calls for an exercise of a discretion by the Court.
10.	The discretion must be exercised sparingly and only in a case where the statement of claim or the defence (as the case might be) is “obviously and almost incontestably bad.”  In other words, this discretion can be exercised only in cases that “are plain and obvious so that the master or Judge can say at once that the statement of claim [or defence] as it stands, is insufficient, even if proved, to entitle the plaintiff [defendant] to what he asks for.  
11.	[T]he pleadings must be so bad and or vague and is not a case of lack of particulars or a lack of better pleading which cannot be cured by a request and or orders for further and better particulars and or amendment respectively under O.8, rr. 36, 50 or 51 of the Rules.  Lack of particulars or lack of better pleadings is distinctly separate from a failure to disclose a reasonable cause of action or an action that is frivolous, vexatious or harassment. As such, clear and separate consequences follow. There is provision under the rules for requesting and or orders for further and better particulars or better pleadings as opposed to a right in a defendant or an opposing party to apply for a dismissal straightaway. A party must be careful not to ask for and the Court must stop to ensure that it is not being asked to dismiss a claim because of lack of particulars or lack of proper pleading which can be cured by appropriate amendments to the pleadings.   Regard must also be had to the fact that the Rules are not an end in themselves but a means to an end and by reason of which a strict compliance of the Rules can be dispensed in the interest of doing justice in accordance with O.1, r.7 of the Rules in appropriate cases. 

36.	The Court’s power to stay or dismiss proceedings under any of the grounds specified in Order 12 Rule 40 (1) is discretionary and also by its inherent jurisdiction, it has power to protect and safeguard any abuse of its processes.   

37.	Under Order 12 Rule 40, the Court may stay the proceedings or dismiss the proceedings, either generally or in relation to any claim for relief in the proceedings.  Evidence may be received by the Court on the hearing of an application for an order under this rule.

38.	In Anderson Agiru v Electoral Commission and The State (2002) SC687, the Supreme Court explained abuse of process in the following terms:

	“…. the court’s inherent power is its authority to do all things that are necessary for the proper administration of justice.  Such inherent power consists of all powers reasonably required to enable the court to perform efficiently its judicial functions and to protect its dignity and integrity.  Essential to these inherent powers is the court’s duty to protect itself by ensuring that vexatious litigants do not abuse the court’s process by instituting frivolous or vexatious suits…..   

	In The State v Peter Painke [1976] PNGLR 210, O’Leary AJ emphasized that: 
“mere motive, however reprehensible, will not be sufficient” (to constitute abuse of process) “it must be shown that, in the circumstances in which the interposition of the court is sought, the remedy would be unsuitable, and would enable the person obtaining it fraudulently to defeat the rights of others, whether legal or equitable”.    

	The court must ensure that a multiplicity of proceedings is not commenced by unsuccessful litigants.  That is that a litigant having selected one mode of proceeding and having failed to obtain a remedy, cannot generally be entitled to then institute an alternative proceeding seeking the same remedy that was denied in the earlier proceeding.”

39.	I now apply the relevant principles in the context of the present case.

40.	In my ruling of 18 October 2017, I observed that the issue of the appointment of the first defendant as agent for sale under the Deed of Appointment of Agent for Sale is one amongst other issues raised in OS No.797 of 2015 and WS No.428 of 2017.  At paragraphs 37 and 38 of my ruling I observed as follows:

	“37.	Clearly, these proceedings amount to an abuse of the process of the Court given the issue about the legality or not of the appointment of the first defendant as agent for sale under the Deed of Appointment of Agent for Sale was raised in OS No.797 of 2015 and WS No.428 of 2017.   The affidavits of Peter Kama relied on to pursue applications for interim injunctions in those proceedings and the current proceedings which are in evidence all place reliance on that supposition.  

38.	My initial impression is that there appears to be a strong argument advanced by the first defendant about the validity of the Deed of Appointment of Agent for Sale as opposed to the plaintiff’s, but that is matter for substantive determination. So whilst there is a serious question to be determined (either of law or fact) in the substantive proceedings, I agree with the defendants’ submission that multiple proceedings filed by the plaintiff seeking essentially the same relief should not be tolerated and the plaintiff should make an election as to which proceedings he intends to pursue.”    

41.	The two proceedings remain on foot.  No election was made by the plaintiff.  In the result, I will accept Mr Shepherd’s submission and dismiss the proceedings generally for being an abuse of process. 

CONCLUSION

42.	I have granted the first defendant’s application under Order 12 Rule 40(1)(c).   However, I could have, in the exercise of my inherent jurisdiction, also dismissed the proceedings for abuse of process given my ruling of 18 October 2017 was not challenged by way of an appeal to the Supreme Court.

43.	Given my decision to dismiss the proceedings generally, it is now not necessary to address the other issues.   The plaintiff’s motion is defeated and will be dismissed.

44.	As to costs, they shall follow the event and be on a party-party basis. 

ORDERS

45.	The formal orders of the Court are that:

(a)	the first defendant’s application moved by notice of motion filed on 8 February 2019 is granted.
(b)	The proceedings are dismissed generally for abuse of process.
(c)	The plaintiff’s notice of motion filed on 28 November 2018 is dismissed.
(d)	All relief sought in the plaintiff’s notice of motion filed on 28 November 2018 are refused.
(e)	Subject to any particular costs order to the contrary, the plaintiff shall pay the first defendant’s costs of and incidental to these proceedings and its application,  if not agreed, to be taxed.	

___________________________________________________________________
Gagma Legal Services: Lawyers for the Plaintiff 	                               
Ashurst:  Lawyers for the First Defendant