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National Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
OS NO. 162 OF 2021
BETWEEN:
VJ HOLDINGS LIMITED (1-5399)
Plaintiff
AND:
MASSTIM LIMITED (1-20971)
First Defendant
AND:
JOHNSON HII
Second Defendant
AND:
JOEL KALATE
Third Defendant
Kokopo: Suelip AJ
2021: 22nd & 29th June
CIVIL – Practice and Procedure – application to dismiss – Order 12 Rule 40(1)(a)(b)(c) – plaintiff signed MOU with landowner company prior to being issued a Forest Clearance authority – resolution that landowner company terminated agreement with plaintiff and engaged first defendant – plaintiff filed proceedings to stop the first defendant from dealing with project – plaintiff alleges factions in landowner company –termination of agreement with landowner company remain unchallenged – court’s power discretionary
Cases Cited
Philip Takori v. Simon Yagari (2008) SC905
Kerry Lerro t/a Hulu Hara Investments Ltd v. Philip Stagg & 2 ors [2006] N3050
PNG Forest Products Limited & Anor v. Jack Genia & Anor [1992] PNGLR 85
Counsel
R Raka, for the Plaintiff
E Isaac, for the Defendants
DECISION
29th June, 2021
1. SUELIP AJ: This is the defendants’ application to dismiss the entire proceedings for disclosing no cause of action, for being frivolous and vexatious, and for being an abuse of the process. This application is made pursuant to Order 12 Rule 40(1)(a)(b)(c) of the National Court Rules.
2. The application is contested.
3. In the plaintiff’s originating summons, the following are claimed:
4. The Defendants shall pay the Plaintiff’s costs of the proceedings.
4. On 21 May 2021, the plaintiff obtained interim injunctions to restrain the defendants from interfering, intimidating, or harassing the plaintiff in its logging operations in the Simbali Tree Plantation Project under Permit FCA 15-19 located in the Simbali Area, Sinivit Rural LLG, Pomio District, East New Britain Province.
5. On 4 June 2021, after inter parte hearing on the return of the interim injunctions, the Court ordered the defendants to refrain from interfering with the plaintiff’s rights and the plaintiff was also ordered to refrain from acting on any presumed rights until further orders of the Court.
6. The issue is whether these proceedings should be dismissed for disclosing no cause of action, or for being frivolous and vexatious, or for being an abuse of the process of the Court.
7. Order 12 Rule 40(1) of the National Court Rules states:
40. Frivolity, etc.
(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 in relation to any claim for relief in the proceedings.
8. The defendants’ evidence in support of their application is primarily that the landowner company, Ngusu Glan Limited has severed its relationship with the plaintiff in a resolution and has since terminated any agreement with the plaintiff. The meeting held by the clan members on 18 April 2020 resulted in a resolution that the landowner company agreed to terminate its relationship with the plaintiff for its nonperformance of its obligations pursuant to the agreement. In a letter dated 20 April 2020, the landowner group advised the plaintiff of their resolution to terminate their agreement with the plaintiff. As the relationship no longer exist, the defendants submit that there is no cause of action against them.
9. As regards the action being frivolous and vexatious, the defendants say that this action will fail as there is no evidence of interference by the defendants.
10. In relation to the submission that these proceedings are an abuse of the Court process, the defendants say that this action ought to be made against the landowner company, not the defendants.
11. In response, the plaintiff objects to the use of the affidavits of Charley Lesley and Otte Kewafa in that there is no resolution by the landowners giving them the authority to depose affidavits in support of the first defendant. The plaintiff also submits that Charley Lesley’s shareholding of 50% of the landowner company may not be in the best interest of the company.
12. Further, the plaintiff says it has a legitimate relationship with the landowner company as provided for in the Memorandum of Understanding (MOU) of 15 August 2019, and the Logging and Marketing Agreement (LMA) of 3 March 2020. There is also evidence in the affidavit of Chew Pang Heng that the first defendant’s lawyers admit going into the project site. The plaintiff submits this constitutes a reasonable cause of action.
13. As regards the action being frivolous and vexatious, the plaintiff submit that its rights are being interfered with by the defendants and this promoted them to file this action.
14. In respect of the action being an abuse of the Court process, the plaintiff says that it is essentially seeking declaratory orders to ascertain its rights, which rights are being interfered with by the defendants. In addition, the plaintiff submits that the National Forest Authority have not given the first defendant permission to operate the Simbali Tree Plantation Project hence, its action is not an abuse of process.
15. In Philip Takori v. Simon Yagari (2008) SC905, the Supreme Court refereed to Kerry Lerro t/a Hulu Hara Investments Ltd v. Philip Stagg & 2 ors [2006] N305, where it discussed the issue of disclosing a reasonable cause of action. At paragraph 23 of the Supreme Court judgement, it states and I quote:
“6. With regard to the issue of disclosing a reasonable cause of action or defence, the Court must be clear that, there are two 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.
‘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.’ ...”
16. Also, in Kerry Lerro t/a Hulu Hara Investments Ltd v. Philip Stagg & 2 ors (supra), His Honor Justice Kandakasi (as he then was) held inter alia, and I quote:
“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.
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.”...
17. In PNG Forest Products Limited & Anor v. Jack Genia & Anor [1992] PNGLR 85, His Honour Mr Justice Sheehan (as he then was) had the occasion to discuss the question of whether or not the Court should dismiss the entire court proceeding as being frivolous and vexatious and as being an abuse of process. At page 87 of the Judgment, His Honor said, and I quote:
"Quite apart from this rule, the court also has an inherent jurisdiction to protect itself from abuse of process. Thus, if the court is satisfied that the conditions of this rule have been satisfied, it may strike out that offending action. It can in appropriate cases, therefore, prevent a party from presenting its case in court or from defending one brought against it. But the refusal to try a party’s claim or the striking out of its defence is not lightly done, and there has been a long history of case law determining what is a ‘reasonable" cause of action or defence and what is "frivolous or vexatious". (underlining mine)
Consideration
18. Let us start with what reliefs the plaintiff seeks in its originating summons. Essentially, the plaintiff is seeking a declaration that it remains as the principal developer/contractor pursuant to the MOU and the LMA of the Simbali Tree Plantation Project under the timber permit described as Forest Clearance Authority No: FCA 15-19 located at Simbali Area, Baining Local-level Government, Gazelle District, East New Britain Province. The permit was issued on 7 October 2020 by the Papua New Guinea Forest Authority. The primary reason for the plaintiff in seeking this declaration is the defendants’ interference on the project. The defendants admit going onto the project site in the letter to the Provincial Police Commander dated 6 May 2021 from their lawyers.
19. The defendants have in evidence the termination of any agreement with the plaintiff by the landowner company through a resolution. However, did the termination comply with provisions of the MOU and LMA? This is a matter for the parties’ privy to the agreements to resolve. This is not the issue here. What is being sought in this proceeding is to stop the first defendant from interfering with the plaintiff’s project operations.
20. In the MOU, there are specific provisions on the obligations of the developer/contractor and the landowner company. In Clause 5.0 (d), it is stated that the landowner company cannot engage another contractor and/or company of the same nature of business who may wish to develop the Simbali project area when the permit is secured. Clause 22.0 of the LMA also provides for termination specifically. This will be an issue for the contractor and the landowner to resolve in a separate proceeding and I need not go any further.
21. Even if the termination was in order, the approval and granting of Simbali Tree Plantation Project under Permit FCA 15-19 to the plaintiff will be an issue of contention. The said permit has not been revoked and granted to the first defendant or any other entity yet.
22. As it is, there is a reasonable cause of action in that the plaintiff is only trying to protect itself from the interference of a third party, a competitor in the logging business. The termination of any agreement between the plaintiff and the developer/contractor is not in issue here. Nevertheless, the termination or otherwise of the agreement will be the main contention to be determined prior to this matter progressing any further. There is an Order of the Court to restrain the defendants from interfering with the rights of the plaintiff and the plaintiff is also restrained from acting on any of their presumed rights until further orders of the Court.
23. I find there is a cause of action disclosed in this proceeding and therefore this action is neither frivolous nor vexatious, nor
is it an abuse of the process of the Court. The application by the defendants to dismiss this proceeding is refused with costs to
be paid on a party/party basis to be taxed if not agreed.
________________________________________________________________
Nelson Lawyers: Lawyers for the Plaintiff
Emmanuel Lawyers: Lawyers for the Defendants
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URL: http://www.paclii.org/pg/cases/PGNC/2021/592.html