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Papindo Trading Co Ltd v Tolopa [2020] PGNC 262; N8476 (26 June 2020)

N8476

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 1519 OF 2019

BETWEEN:
PAPINDO TRADING COMPANY LTD
Plaintiff

AND:
OLSWARD TOLOPA -ACTING SECRETARY, DEPARTMENT OF LANDS & PHYSICAL PLANNING
First Defendant

AND:
JOHN ROSSO- MINISTER FOR LANDS & PHYSICAL PLANNING
Second Defendant

AND:
TIKLIM COFFEE ESTATES LIMITED
Third Defendant

AND:

TARINA LIMITED

Fourth Defendant

AND:
BENJAMIN SAMSON- REGISTRAR OF TITLES
Fifth Defendant

AND:
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Sixth Defendant

Lae: Dowa AJ
2020: 20^th May & 26^th June

PRACTICE AND PROCEDURE – application by defendants to dismiss proceedings for being an abuse of process, frivolous and vexatious and for disclosing no reasonable cause of action - proceedings concern dispute over property the subject of an alleged illegal forfeiture –Plaintiff is alleging title obtained by the Fourth Defendant is affected by a series of improper and unlawful actions on the part of all the defendants and therefore is bona fide in dispute – there is prima facie evidence of triable issues – application by defendants is dismissed

Cases cited:

Mt Hagen Urban Local level Government v Sek No.15 (2009) SC1007

Pius Tikili v Home Base Real Estate Ltd (2017) SC1563

PNG Bible Church Inc v Carol Mandi (2018) SC1724

Rosemary John v James Nomenda (2010) N3851

Aisi v Nikent & NHC (2018) N7564

Counsel:

K Gamoga, for the Plaintiff
S Maliaki, for the First, Second, Fifth & Sixth Defendants
C Kos, for the Fourth Defendant

DECISION

26^thJune, 2020

1. DOWA AJ: This is a ruling on the Fourth Defendants Notice of Motion filed 6^th March, 2020.

2. The Fourth Defendant, in its Notice of Motion is seeking the following orders:

“1. Pursuant to Order 12 Rule 40 (1)(c) and (b) of the National Court Rules, this proceeding be dismissed for abuse of process for non-compliance with section 5 (2)(a) of the Claims By & Against the State Act 1996.

2. Alternatively, the proceedings against the fourth Defendant be dismissed for disclosing no reasonable cause of action, frivolous and vexatious pursuant to Order 12 Rule 40 (1)(a)- (c) of the National Court Rules.
   
3. Pursuant to Order 12 Rule 8 (3)(a) of the National Court Rules, the interim ex parte orders of 13^th February 2020 be set aside and or discharged.
   
4. Costs of and incidental to the proceedings.
   
5. Such further Orders as this Honourable Court deems fit.”
   

3. The Fourth Defendant was represented by C Kos of Charlie Kos Lawyers. Mr. Karo Gamoga appeared for the Plaintiff. The First, Second, Fifth and Sixth Defendants were represented by Ms. Maliaki of the Solicitor Generals’ Office. The Third Defendant made no appearance.

Facts

4. The proceedings concern a dispute over a property described as Allotment 12 Section 1 Mt Hagen, WHP. Since 26^th August 1996 the Plaintiff was the registered proprietor of the property under State Lease Volume 110 Folio 146. On or about 20^th March 2013 the Plaintiffs Title was forfeited and cancelled by the Lands Department.

5 On 2ⁿ April 2013, The Plaintiff commenced judicial review proceedings against the First and second Defendants’ decision to cancel the State Lease. On 12^th May 2016, the National Court, in a series of declaratory orders, effectively reinstated the State Lease held by the Plaintiff.

6. Meanwhile, on 11^th June 2014, a new State Lease (Volume17 Folio 175) over the property was granted by the Lands Department to Tiklim Coffee Estates limited, the Third Defendant. On 21^st June 2018 the ownership of the property was transferred from the Third Defendant to the Fourth Defendant. The Fourth Defendant has taken possession of the property initially but has since been restrained by an order of Court.

7. Aggrieved by the decisions and actions of the defendants, the Plaintiff has commenced the current proceedings seeking various reliefs in the statement of claim, in particular the following:

1. Cancellation of the Forfeiture of the Plaintiffs Title (enforcement of National Court Decision)
2. Reinstatement of the Plaintiff as registered proprietor (Enforcement of National Court Decision)

100. Nullification of the new State Lease issued to third Defendant

4. Nullification of the transfer from third Defendant to the fourth Defendant
5. Alternatively, Damages
   

8. The Plaintiff alleges, the defendants, either collectively or severally wrongfully dealt with the property in granting a new state lease to the third Defendant whilst there was a restraining order in place. The Plaintiff alleges the defendants failed to reinstate the State Lease to the Plaintiff after the court declared the forfeiture invalid. The Plaintiff alleges further that the defendants unlawfully facilitated the transfer and registration of the transfer between the third and fourth Defendants

9. The Plaintiffs are now seeking declaratory orders to nullify the sale and registration of the transfer of titles to the said properties. They also seek damages, in the alternative.

Fourth Defendants Defence

10. The Fourth Defendant filed a Defence, pleading that it is the registered proprietor, having purchased the property from the third Defendant between March and June 2018.

The transfer of title from the Third Defendant to the Fourth Defendant was duly registered. The Fourth Defendant alleges it has indefeasible title pursuant to section 33 of the Land Registration Act. The fourth Defendant says the Plaintiffs statement of claim does not disclose a cause of action against it. Further, The Fourth defendant contends that the proceedings are incompetent due to lack of notice under section 5 of the Claims by and against The State Act.

Fourth Defendants Notice of Motion

11. By Notice of Motion, The Fourth Defendant, therefore, seeks dismissal of proceedings for:

1. Failing to give due notice under section 5 of the Claims By and Against the State Act 1996 pursuant to Order 12 Rule 40 of the National Court Rules
   
2. Failing to disclose a reasonable cause of action and for frivolity pursuant to Order 12 Rule 40(1)(a) and (b) of the National Court Rules.
   

Section 5 Notice under Claims By & Against the State Act

12. The first issue for consideration is whether notice under section 5 of the Claims by and Against the State Act is given by the Plaintiff before instituting the current proceedings. I have not decided on this leg of the application. After I reserved my ruling, I noticed that the lawyers for the State have filed their Defence raising the same issue. As the lawyers for the State and the third Defendant did not make submissions on the matter at the time of the application, I prefer all the parties be heard too. This can be done at some later stage of the proceedings or at the time of substantive hearing as a preliminary issue.

No reasonable cause of action, Frivolity etc

13. The second issue for consideration is whether the Plaintiff’s proceedings disclose a reasonable cause of action in law. The relevant Rule under Order 12 Rule 40 (1) of the National Court Rules, is set out below:

Frivolity, etc. (13/5)

“(1) Where in any proceedings it appears to the Court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings-

(a) No reasonable cause of action is disclosed; or
(b) The proceedings are frivolous or vexatious; or
(c) The proceedings are an abuse of the process of the Court,

The Court may order that the proceedings be stayed or dismissed generally or inrelation to any claim for relief in the proceedings.

(2) The Court may receive evidence on the hearing of an application for an order under Sub-rule (1).

14. The law on Order 12 Rule 40 of the National Court Rules is well settled in the Supreme Court in Mt Hagen Urban Local level Government v Sek No.15 (2009) SC1007 in paragraphs 27-30.

“27. The terms “vexatious”, “frivolous”, “abuse of the process of the court” and “reasonable cause of action” under O.12 r.40 of the National Court Rules have been judicially considered, defined and expounded in a number of decisions in both the National and Supreme Courts. These cases include Ronny Wabia v. BP Exploration Co. Limited & 2 Others [1998] PNGLR 8 (N1697); PNG Forest Products Pty Ltd and Another v. The State and Genia [1992] PNGLR 85; Gabriel Apio Irafawe v. Yauwe Riyong (1996) N1915; Eliakim Laki and 167 Others v. Maurice Alulaku and Others (2002) N2001; Kiee Toap v. The Independent State of Papua New Guinea & Another (2004) N2766; Kerry Lerro trading as Hulu Hara Investments Limited v. Phillip Stagg, Valentine Kambori& The State (2006) N3050; Phillip Takori& Others v. Simon Yagari& 2 Others (2008) SC 905. These cases say the same thing.

28. The law with regard to an application for dismissal of proceedings based on O.12 R.40 is settled in our jurisdiction. We note that the principles are succinctly set out in Kerry Lerro’s case (supra) and which has more recently been approved and applied by the Supreme Court in Phillip Takori’s case (supra).
    
29. The phrase ‘disclosing a reasonable cause of action’ consists of two parts: cause of action and form of action. A cause of action is defined as a legal right or form of action known to law whereby a plaintiff in a statement of claim must plead all necessary facts and legal elements or ingredients to establish or prove his claim. The principles stated by these cases can be summarized as follows:
    
    • (i) A plaintiff or claimant should not be driven from the judgment seat in a summary manner and that the Court should be cautious and slow in exercising its discretionary power.
      
    • (ii) The Court has an inherent jurisdiction to protect and safeguard its processes from abuse.
      
    • (iii) The purpose of O.12 r.40 is to give the court power to terminate actions or claims which are plainly frivolous or vexatious or untenable.
      
    • (iv) A frivolous claim is one that is characterized as a claim that is plainly and obviously untenable, that cannot possibly succeed and bound to fail if it proceeds to trial.
      
    • (v) A vexatious claim is on that is said to be a sham and cannot succeed where it seeks to merely harass the opposing party and put that party to unnecessary trouble and expense is defending or proving the claim.
      
30. In an application under O.12 R.40 of the NCR, the Court may dismiss a proceeding or action where it is satisfied that the pleading in the statement of claim is seriously wanting where a necessary fact or legal element has not been pleaded.”
    

Fourth Defendant’s Title

15. The Fourth Defendant has a registered title to the property, and under Section 33 of the Land Registration Act, it is indefeasible except on grounds of fraud. Section 33 (1) reads:

s33. Protection of registered proprietor.

“(1) The registered proprietor of an estate or interest holds it absolutely free from all encumbrances except—

(a) in the case of fraud; and

(b) the encumbrances notified by entry or memorial on the relevant folio of the Register; and

(c) the estate or interest of a proprietor claiming the same land under a prior instrument of title; and

(d) in case of the omission or misdescription of any right-of-way or other easement created in or existing on the same land; and

(e) in case of the wrong description of the land or of its boundaries; and

(f) as to a tenancy from year to year or for a term not exceeding three years created either before or after the issue of the instrument of title of the registered proprietor; and

(g) as provided in Section 28; and

(h) a lease, licence or other authority granted by the Head of State or a Minister and in respect of which no provision for registration is made; and

(i) any unpaid rates, taxes, or other money which, without reference to registration under this Act, are expressly declared by a law to be a charge on land in favour of the State or of a department or officer of the State or of a public corporate body.”

16. The Fourth Defendant says it has purchased the property in good faith with a substantial amount of money. There is no allegation made against it. Therefore, the Fourth Defendant seeks orders in its favour. The Fourth Defendant relies on a decision of the National Court by Cannings J in Berr v Robin Yango (2015) N5859 in support of the application. However, I note the decision was made after the trial and all evidence was tendered and considered. In the present case the pleadings between some of the parties are not completed and it is too early to make findings of fact.

The Plaintiffs claim

17. On the other hand, the Plaintiffs are alleging that the title obtained by the Fourth Defendant is affected by a series of improper and unlawful actions on the part of all the defendants and therefore is bona fide in dispute. The Plaintiff has pleaded fraud against some of the Defendants. Whilst there is no specific allegation against the fourth Defendant, the allegations against the rest of the Defendants do disclose a reasonable cause of action. If the Plaintiff succeeds against one of the Defendants, it can have a bearing on the Fourth Defendant’s title to the property. It is not a case which is clearly unsustainable or obviously frivolous. See case –Ronny Wabia v BP Exploration Co. Limited & 2 others (1998) PNGLR 8. Without looking at the evidence, the facts raised above are triable issues.

18. For these reasons, the Fourth Defendant’s Notice of Motion, is refused.

19. Given that there are interim orders in place, I am of the view that steps be taken by the parties to have the substantive matter heard soon.

20. The formal orders:

(1) The Fourth Defendant’s Notice of Motion filed 26^th September 2019 is refused.

(2) Cost be in the cause.

(3) The matter be fixed for Directions hearing

(4) Time be abridged

________________________________________________________________
Gamoga Lawyers: Lawyer for the Plaintiff
Charles Kos Lawyers: Lawyers for the Fourth Defendant
Solicitor General: Lawyers for the First, Second, Fifth and Sixth Defendants