N7951
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 1075 OF 2018 (COMM)

BETWEEN
DAVIDWESTERN ADVERTISING LIMITED
Plaintiff

AND
HIRI 152 DEVELOPMENTS LIMITED
First Defendant

AND
PAPA RESOURCE DEVELOPMENTS LIMIETD
Second Defendant

AND
BURIA REAREA CAUTION BAY LIMITED
Third Defendant

AND
BOERA ENTERPRISES LIMITED
Fourth Defendant

AND
POREBADA INVESTMENTS LIMITED
Fifth Defendant

AND
HIRI SPECIAL PURPOSES AUTHORITY 
Sixth Defendant

Waigani: Anis J
2019: 14 & 19 August

MOTION – Section 155(4) of the Constitution – Order 12 Rule 40(a), (b) and (c) of the National Court Rules – dismissal based on abuse of court process – whether earlier proceeding resolved the matter – whether the 3rd and 6th defendants were estopped from being sued by the plaintiff – res judicata – whether the issues had been determined by an earlier proceeding – pleading - whether pleading did not disclose cause of action against the 3rd and 6th defendants – court’s power – discretionary – whether court should exercise discretion and dismiss the proceeding summarily against the 3rd and 6th defendants

Cases Cited:

Simakade Holdings Ltd and Or v. Dengnenge Resources Development Ltd and 3 Ors (2019) N7901

Counsel:

Mr Komia, for the Plaintiff
Mr T M Rei, for the Third and Sixth Defendants

RULING

19th August, 2019

1. ANIS J: The 3rd and 6th defendants (2 defendants) applied to dismiss the proceeding against them, on 14 August 2019. Their application was contested. I heard and reserved my ruling to today at 1:30pm.

2. This is my ruling.

BACKGROUND

3. The Hiri Local Level Government (LLG) is part of Central Province or the Central Provincial Government. A portion of its land area is regarded as part of the Papua New Guinea Liquefied Natural Gas (PNGLNG) impact area. Landowners from within the impact area created various companies including the Five (5) defendants.

4. In 2012, various developments were undertaken at the impact area in Hiri in the Central Province. The plaintiff was engaged to carry out civil works including engineering, construction, road grading and sealing to and from the various Hiri villages that were within the LNG impact area. The plaintiff had alleged that despite the work that it had undertaken as agreed to, the 5 defendants and the Central Provincial Government, had failed to settle its claim. So in an earlier proceeding, that is, WS 654 of 2014, the plaintiff claimed a total sum of K9, 122,101.40 against the 5 defendants and the Central Provincial Government. That matter was discontinued after consent orders were signed between the parties whereby a sum of K4, 500,000 was paid out by the Central Provincial Government, to the plaintiff. The plaintiff has since commenced the present proceeding against the 5 defendants and the 6th defendant, to claim the remaining balance of K4, 622, 101.40 which it says is still outstanding. So far, the plaintiff has obtained default judgment against the 1st, 2nd, 4th and 5th defendants. 

MOTION

5. The 2 defendants’ notice of motion (application) was filed on 26 June 2019. It seeks orders under section 155(4) of the Constitution and Order 12 Rule 40(1)(a), (b) and (c) of the National Court Rules, that is, for this Court to dismiss the proceeding against them based on abuse of the court process. 

6. I note that rule 40 of the National Court Rules has sub-rule (1) therein which has not been pleaded in the application. I will assume that to be an oversight by the 2 defendants. I will proceed on that basis; that the application is made pursuant to Order 12 Rule 40(1). I also note this. Despite pleading sub-rules (a), (b) and (c), the 2 defendants specifically state in their application that the proceeding should be dismissed based on abuse of the court process. Abuse of court process is contained under Order 12 Rule 40(1)(c) of the National Court Rules. I will therefore proceed on that basis, that is, that proceeding should be dismissed pursuant to Order 12 Rule 40(1)(c) of the National Court Rules. 

7. May I remind counsel for the 2 defendants that it is important to plead the correct source in a notice of motion otherwise the notice of motion will face the risk of being struck out or that it will be strictly interpreted in the manner as it is pleaded. See case, Simakade Holdings Ltd and Or v. Dengnenge Resources Development Ltd and 3 Ors (2019) N7901. I note that in this case, no objection was taken by the plaintiff, so I have made findings as stated above.

ISSUE

8. The main issue is this: Whether the claim against the 2 defendants in this proceeding had been resolved in the proceeding WS 654 of 2014 and therefore whether it is an abuse of the Court process by filing this proceeding seeking the same or similar relief.

SUBMISSIONS

9. The 2 defendants submit as follows. They say that the matter had been resolved and discontinued in proceeding WS 654 of 2014. They say that a consent order and a deed of settlement had been entered into between the parties to conclude the said proceeding. The 2 defendants submit that the 3rd defendant was a party in proceeding WS 654 of 2014. As for the 6th defendant, they argue firstly that because the matter had been resolved, the plaintiff cannot recommence the same cause of action against the 6th defendant or any person. They refer to their defence of res judicata in their pleadings. They also submit this. They say that the 6th defendant did not exist at the time when the cause of action begun in 2012. They also say that the 6th defendant was not a party to the arrangements or agreements that were and are the subject of the claim by the plaintiff. Finally, the 2 defendants refer to the pleading in the statement of claim and say that it does not disclose a valid cause of action against each of them.

10. The plaintiff submits the following in reply. It does not take issue with the outcome of proceeding WS 654 of 2014 and what had been agreed to by the parties in the said proceeding. But it submits that the 2 defendants have misconstrued the terms of the consent order that had been entered into in the said proceeding and the terms of the deed of settlement that had been signed by the parties based on the consent order. It says that only the 6th defendant who was the Central Provincial Government, was indemnified from law suits in proceeding WS 654 of 2014 and not the other 5 defendants who are now named in this proceeding. It says that there is nothing in the consent order or in the terms of the deed of settlement that stops it from suing the defendants in the present proceeding including the 2 defendants.

11. In relation to the argument that the 6th defendant had not existed or had not been a party to the contractual arrangements in 2012 or in 2015, the plaintiff submits this. It refers to the Constitution of the 6th defendant and argues that by virtue of section 47, the 6th defendants is liable. It argues that whatever name the 6th defendant may have been regarded under in the past, dealings, transactions or liabilities that were carried out or incurred under these names, are saved and shall be deemed to be those of the 6th defendant by virtue of section 47 of its Constitution. It also submits that the 6th defendant is a nominal defendant but it was named because it is an agent of the State that is responsible for funding, projects and interests of the Hiri LLG and its various sectors including the 5 defendants named in this proceeding. And finally this. It says that based on its statement of claim, the 6th defendant has actually agreed in writing to pay K4, 622,101.40, which is the full amount that is sought in this proceeding.

PROCEEDING WS 654 of 2014

12. The parties are at common ground in relation to what had transpired in proceeding WS 654 of 2014. The parties are at common ground that the 3rd defendant was named as a defendant in that proceeding and the 6th defendant was not. The parties are also at common ground that the parties therein had signed a consent order. The consent order was made on 12 June 2015 (consent order). It is contained in evidence, that is, Annexure B to David Kinn’s affidavit filed on 4 April 2019.

13. Let me address the consent order. It reads, and I quote in part,

1.	The Sixth Defendant will settle the Plaintiffs’ invoices for actual work done in the agreed sum of Four Million and Five Hundred Thousand Kina (K4,500,000) being for the full and final settlement of the part of the Plaintiffs’ claim as accepted by the Sixth Defendant.
2.	That the payment mention in item 1 shall be paid to the Plaintiffs’ Lawyers Trust Account upon parties executing the Deed of Settlement and Release.
3.	The Plaintiffs’ Lawyers shall file and serve a Notice of Discontinuance of the whole of the current proceedings together with an Affidavit in Support which shall contain the duly signed Deed of Settlement and Release within 7 days from execution of the Deed of Settlement and Release which shall take place forthwith.
4.	The Plaintiffs are at liberty, either jointly or severally, to pursue any outstanding part of their respective claims that they may have against the First, Second, Third, Fourth and Fifth Defendants as arising from a contractual arrangement entered directly between the Plaintiffs and the Defendants.
.....
(Underlining mine)

14. When I consider the terms of the order, I note the following. Under term 1, the plaintiffs and the defendants appeared to have agreed that the Central Provincial Government would be indemnified from any lawsuits against it by the plaintiffs upon the 6th defendant paying the K4.5 million. Under term 6 of the consent order, the plaintiffs and the defendants again appeared to have agreed that the Plaintiffs, namely, Davidwestern Advertising Group Limited and Rumbam Engineering Contractors and 9 Ors, were free to, after discontinuing proceeding WS 654 of 2014, sue the 5 defendants, except for the 6th defendant, in relation to contractual arrangements the plaintiffs may have directly had with the 5 defendants. I have used the phrase, appeared to have, in my considerations above because this is not the time for the Court to make a final determination of the substantive arguments or the defence of the 2 defendants, and I have not and will not do that now. Those are arguments which in my view should be reserved for the trial. However, for this purpose, they do, in my view, show existence of material issues which is all I need to be satisfied of for now. 

15. Let me also refer to term 2 of the consent order. It refers to the parties signing a deed of settlement (first deed). The first deed is in evidence, that is, at annexure A to the affidavit of David Kinn filed on 4 April 2019. I make the following remarks to the copy of the first deed that is provided. Firstly, it appears to be undated. Secondly, I notice that page 3 (pages are not numbered) appears to be missing. And the third but perhaps a crucial part of the deed for this purpose is this. I notice that under Clause O at page 4, it reads, and I quote in part, The Releasors further agree to release and/ or indemnify the Landowners, Landowner companies, Incorporated Associations and /or Landowner ILGs from further claims, suits etc, that arises from this background facts. And I note that the term Landowner, as defined in the first deed means and I quote, refers to Hiri 152 Development Limited, Papa Resources Development Limited, Buria ReaRea Caution Bay Limited, Boera Enterprises Limited and Porebada Investments Limited. These are the names of 5 of the defendants in the present proceeding including the 3rd defendant. And I note that the 5 defendants may be regarded as Releasees in the first deed. It is therefore also arguable whether the plaintiff has also indemnified the 5 defendants including the 3rd defendant, apart from the Central Provincial Government, in the first deed. This, in my view, is an issue that should be properly trialed with full disclosure of an authentic copy of the first deed.

6TH DEFENDANT

16. I note that counsel for the 2 defendants has conceded to the fact that his clients do not dispute what may be regarded as an error in the name of the 6th defendant in the present proceeding. Counsel however submits that his clients’ submission on point concerns the existence of the 6th defendant at the material time. Counsel submits that the 6th defendant only came into existence in 2017 or 2018, that is, according to counsel, well after the contractual arrangements or dealings the plaintiff had had with the other defendants whether it be in 2012 or in 2015. Counsel also submits that the pleadings do not disclose a valid action against the 6th defendant. 

17. I have had the benefit of perusing the Constitution of the 6th defendant. It was tendered in Court by consent. I firstly refer to section 3. It states, and I quote in part, An Authority by the name of Hiri Local-level Government Special Purposes Authority is hereby established to act as an agent for the National Government, Provincial Government and Local-level Governments to which its jurisdiction applies in implementing development projects including infrastructure, social and economic projects in the district.

18. I next refer to section 47. It states, and I quote, 

TRANSFER OF ASSETS ETC, BY THE AUTHORITY

All: (a) assets held, and
(b) obligation and liabilities of, 

Such arrangements, whether Development Authorities or any other forms of establishments intended for service delivery and investment purposes established on behalf or by Hiri Local-level Government, including finances and accounts are immediately on the date of the commencement of this Constitution, transferred to the new Special Purpose Authority.

19. When I consider these provisions, they tend to support the plaintiff’s contentions in relation to the establishment of the 6th defendant and its purpose, that is, to act as an agent for the State in implementing development projects including infrastructure, social and economic projects in the district. I therefore see prima facie reasons which support the plaintiff’s position in naming or including the 6th defendant in this proceeding with the other 5 defendants. Full arguments on point of course may be raised and be dealt with at the trial proper.

20. Let me also say this. The plaintiff also alleges that the 6th defendant has signed a second valid deed of settlement (second deed) with it in relation to the full sum that is claimed in the statement of claim. It says that the second deed was signed on 29 August 2016. The deed is in evidence, that is, in Annexure D to David Kinn’s affidavit filed on 4 April 2019. The pleading to this claim is contained at paragraphs 25 and 26 of the statement of claim. The plaintiff pleads, and I quote, 

25.	In addition to the paragraph 23 above, on 29 August 2016, the Sixth Defendant entered into or executed a Deed of Settlement with the Plaintiff agreeing that the said Deed of Settlement is purposely and only for the amicable settlement of K4.7 million outstanding and due to the Plaintiff.
The Plaintiff will read and rely on the Deed of Settlement at the trial as if the same were pleaded herein in its entirety.

26.	In the premises, the First, Second, Third, Fourth, Fifth Defendants and/or the Sixth Defendant are indebted to the Plaintiff for the total sum of K4, 622,101.40.
21. I note that the 2 defendants deny paragraphs 25 and 26 of the statement of claim. They allege that the 6th defendant was not created nor had existed at the material time. These allegations however and in my view, “cross swords”, so to speak, with the 6th defendant’s own Constitution and of the 6th defendant’s actions in relation to the second deed that it may have signed with the plaintiff on 29 August 2016. And if I may add, the second deed may be in conflict with the terms of the first deed. These are matters which in my view should be dealt with in a proper trial.

SUMMARY

22. It is my conclusive view that the material issues may require proper consideration and that the way to achieve that would be to deal with them at the actual trial. I am not satisfied that the proceeding is an abuse of the court process. That said, I also find valid legal questions being raised by the 2 defendants in the matter. I must emphasis that in making this ruling, that I am not in any way determining the substantive issues in the pleadings, namely, the statement of claim and the defence of the 2 defendants. I find that there are prima facie reasons which show that this matter should not be summarily dismissed but should rather proceed to trial and be determined on its merit.

COST

23. Cost is discretionary. I will order cost to follow the event on a party/party basis to be taxed if not agreed.

THE ORDERS OF THE COURT

24. I will make the following orders:

1.	The 3rd and 6th defendants’ notice of motion filed on 26 June 2019 is refused.
2.	Cost of the application shall be paid by the 3rd and 6th defendants to the plaintiff, on a party/party basis which may be taxed if not agreed.
3.	Time for entry of these orders is abridged to the date of settlement by the Registrar of the National Court which shall take place forthwith.
25. The Court orders accordingly.

_______________________________________________________________
Chesterfield Lawyers: Lawyers for the Plaintiff
T M Rei Lawyers: Lawyers for the Third and Sixth Defendants