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Heng Siong Kong v Tai [2023] PGNC 191; N10403 (10 July 2023)


N10403


PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]


OS NO. 787 OF 2015
CONSOLIDATED WITH WS NO. 400 OF 2016, WS NO. 490 OF 2016 AND WS NO. 491 OF 2016


BETWEEN:
HENG SIONG KONG (also known as THOMAS KONG) and JINN HUH CHAN (also known as JORDAN CHAN) in their personal capacity and in their capacity as Directors of Feflo (PNG) Limited
First Plaintiffs


AND:
FEFLO (PNG) LIMITED
Second Plaintiff


AND:
GRANDSHINE (PNG) LIMITED
Third Plaintiff


AND:
YAMA (PNG) LIMITED
Fourth Plaintiff


AND:
ANDY TAI in his personal capacity and also in his capacity as a Detective Constable of the Royal Papua New Guinea Constabulary
First Defendant


AND:
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Second Defendant


AND:
PIK YING SIA (also known as JOSEPH SIA)
Third Defendant


AND:
TENG KUOK SIN (also known as PETER TENG)
Fourth Defendant

Waigani: Shepherd J
2023: 23rd June & 10th July

PRACTICE & PROCEDURE - application to summarily dismiss two of four consolidated proceedings for non-compliance with procedural orders and want of prosecution – National Court Rules – Order 1 Rule 8 – Order 4 Rule 36(1) - Court’s discretion – principles to be applied – whether the plaintiff’s default has been intentional or contumelious – whether there has been inordinate and inexcusable delay – whether a reasonable explanation has been given for delay – whether the delay has caused injustice or prejudice to the defendant – whether the conduct of the parties or their lawyers warrants dismissal – whether dismissal of the plaintiff’s proceedings is in the interests of justice – parties’ respective lawyers each breached procedural orders – complex matters of fact and law at issue in substantive claims of the parties - parties in this instance should not be vicariously liable for their lawyers’ defaults - application for summary dismissal refused.


Cases Cited:
Niale v Sepik Coffee Producers Ltd (2004) N2637
Rabaul Shipping Ltd v Rupen (2008) N3289
Seravo v Bahafo (2001) N2078
Tani v Motor Vehicles Insurance Ltd (2010) N3984

Legislation:

National Court Rules: Order 1 Rule 8; Order 4 Rule 36(1)

Counsel:

Mr Melvin Yalapan, for the Defendants/Applicants
Mr Meli Muga, for the Plaintiffs/Respondents


DECISION

10th July, 2023

  1. SHEPHERD J: This is a decision on an application seeking the dismissal of proceedings OS 787 of 2015 and WS 400 of 2016 and for orders compelling the lawyers for the defendants in related proceedings WS 490 of 2016 and WS 491 of 2016 to sign trial books so that the latter two cases can proceed to trial.

Background

  1. Consolidated proceedings OS 787 of 2015, WS 400 of 2016, WS 490 of 2016 and WS 491 of 2016 all relate to shareholder disputes and complex matters in issue involving Feflo (PNG) Limited, a logging company incorporated in Papua New Guinea but financed from abroad, which was operating three forestry projects in West New Britain Province and New Ireland Province between 2005 and 2010.
  2. By order of this Court made on 20 December 2016, these four sets of proceedings in OS 787 of 2015, WS 400 of 2016, WS 490 of 2016 and WS 491 of 2016 were effectively consolidated and must be dealt with together.
  3. Heng Siong Kong (also known as Thomas Kong) and Jinn Huh Chan (also known as Jordan Chan) are the first plaintiffs in OS 787 of 2015 and are suing in their personal capacities and as directors of the second plaintiff, Feflo (PNG) Ltd (Feflo). Local companies Grandshine (PNG) Limited and Yama (PNG) Ltd are the third and fourth plaintiffs.
  4. The plaintiffs in OS 787 of 2015 commenced suit on 8 December 2015 seeking a raft of judicial declarations and interim injunctions against the four defendants cited in that proceeding. After a long and convoluted procedural history, on 16 May 2022 the plaintiffs via Simpson Lawyers filed an amended statement of claim in OS 787 of 2015 pursuant to leave of the Court granted on 13 May 2022.
  5. The relief sought by the plaintiffs in OS 787 of 2015 in their amended statement of claim[1] is prolix and includes claims for:

(1) judicial declarations to the effect that the sale of certain assets having a stated value of USD 2million sold by Feflo to its co-plaintiffs Grandshine (PNG) Ltd and Yama (PNG) Ltd was valid; that actions taken by first defendant Detective Constable Andy Tai to evict the plaintiffs from a property at Islander Village, Hohola, National Capital District were unlawful; and that actions taken by third defendant Pik Ying Sing (also known as Joseph Sia), fourth defendant Teng Kuok Sin (also known as Peter Teng), first defendant Detective Constable Andy Tai and vicariously the State as second defendant which interfered with the business operations of the plaintiffs were unlawful;

(2) a series of interim injunctions aimed at restraining the defendants from taking actions which could otherwise adversely affect the business interests of the plaintiffs pending the Courts’ determination of the plaintiffs’ claims in OS 787 of 2015.

(3) general damages, including damages for frustration, hardship and inconvenience.

(4) liquidated damages;.

(5) exemplary damages;

(6) statutory interest on damages.

  1. On 24 May 2022 Yalapan & Associates acting for the third defendant Joseph Sia filed Mr Sia’s amended statement of defence and cross-claim[2] in response to the plaintiffs amended statement of claim in OS 787 of 2015.
  2. A revised statement of defence and revised cross-claim was subsequently filed by Yalapan & Associates for Joseph Sia and Feflo on 31 August 2016[3] in OS 787 of 2015 pursuant to an interlocutory order of the Court made on 29 August 2016.
  3. By his revised defence and revised cross-claim, Joseph Sia is seeking on behalf of himself and Feflo an extensive range of orders against the plaintiffs/cross-defendants, including damages for outstanding rents as well as eviction orders in respect of the Islander Village property, general damages for fraudulent and tortious conduct, aggravated or exemplary damages for breach of fiduciary duties, and interest at 8% per annum on any judgment sum that may be awarded by the Court.
  4. Proceedings WS 400 of 2016, which are related to OS 787 of 2015, were commenced by Thomas Kong and Jordan Chan as first plaintiffs and Feflo as second plaintiff on 27 April 2016. The defendants cited in WS 400 of 2016 are first defendant Siales Taman of the Office of the Registrar of Companies, second defendant Alex Tongayu as Registrar of Companies, the State as third defendant and Joseph Sia as fourth defendant.
  5. The amended statement of claim filed by Simpson Lawyers for the plaintiffs in WS 400 of 2016 on 16 May 2022[4] pursuant to leave of the Court granted on 13 May 2022 seeks, among others, the following relief:

(1) judicial declarations to the effect that actions taken by Joseph Sia in relation to the redemption and/or cancellation of the first plaintiffs’ shares in Feflo and the appointment of Joseph Sia as sole shareholder, director and company secretary of Feflo were unlawful and therefore void;

(2) an order under s.71 of the Companies Act 1997 for rectification of Feflo’s share register to include the names of Thomas Kong and Jordan Chen as shareholders;

(3) orders that Siales Taman and the Registrar of Companies restore all records of Feflo to what they were before 18 December 2015;

(4) a series of interim and permanent injunctions to restrain Joseph Sia from holding himself out as the sole shareholder, director and owner of Feflo and restraining Joseph Sia from making any further changes to the company records of Feflo held at the Office of the Registrar of Companies;

(5) general damages against Siales Taman, the State and Joseph Sia;

(6) exemplary damages against Siales Taman and Joseph Sia;

(7) statutory interest on damages, claimed at 8% per annum.

  1. On 24 May 2022 Yalapan & Associates Lawyers filed an amended defence and cross-claim[5] for Joseph Sia and Feflo in response to the plaintiffs’ amended statement of claim in WS 400 of 2016.
  2. This was followed by the filing by Yalapan & Associates on 31 August 2016 of a revised defence and revised cross-claim for Joseph Sia and Feflo[6] in WS 400 of 2016 pursuant to leave granted by the Court on 29 August 2022
  3. By his revised defence and revised cross-claim filed in WS 400 of 2016, Joseph Sia is seeking, among others:

(1) the Court’s determination of questions relating to the entitlement of Joseph Sia to hold shares in Feflo;

(2) a judicial declaration that the Registrar of Companies lawfully cancelled the shares held by Thomas Kong and Jordan Chen in Feflo;

(3) damages of K750,000 payable by Thomas Kong for his unpaid shares in Feflo owed to Joseph Sia;

(4) damages of K400,000 payable by Jordan Chan for his unpaid shares in Feflo owed to Joseph Sia;

(5) further orders for “accounts and enquiries”;

(6) interest at 8% per annum on any judgment sum awarded by the Court.

  1. Further proceedings WS 490 of 2016 were then filed by Yalapan & Associates on 11 May 2016 for Feflo as first plaintiff and Joseph Sia as second plaintiff. The writ of summons in WS 490 of 2016 cites a total of thirteen defendants, namely Thomas Kong, Jordan Chan, Kun Chen Liu, Chun An Chan, Chieng Lung Chen, Shih Pin Chen, Grandshine (PNG) Ltd, Yama (PNG) Ltd, Kong Chung Nei, Emily Alibaya, Lu King Tung, Shen Wen Kao and Lien Tung Wong.
  2. Feflo as first plaintiff in WS 490 of 2016 claims a range of damages, including damages for the loss of two timber concessions, damages for the value of assets pleaded to have been transferred from Feflo to Yama (PNG) Ltd, aggravated or exemplary damages against all defendants generally for breach of fiduciary duties and negligence, orders for the defendants to pay amounts discovered on the giving of accounts, as well as statutory interest on damages.
  3. Joseph Sia as second plaintiff in WS 490 of 2016, suing as a shareholder and director of Feflo, claims the following relief:

(1) judgment against all defendants for the sum of Malaysian ringgit RM 33,666,199.29 or its equivalent in PNG currency[7] for Joseph Sia’s loss of investment in Feflo;

(2) aggravated or exemplary damages against all defendants;

(3) general damages for fraudulent, negligent and otherwise tortious conduct;

(4) damages and/or compensation in equity payable for losses suffered by Joseph Sia from benefits derived by all defendants;

(5) orders for “accounts and enquiries” and payment of further amounts discovered on the giving of accounts;

(6) interest pursuant to statute on such damages as may be awarded by the Court.

  1. The remaining set of related proceedings is WS 491 of 2016. The writ of summons in WS 491 of 2016 was filed by Yalapan & Associates for Feflo and Joseph Sia on 11 May 2016. The facts pleaded in the statement of claim in WS 491 of 2016, while similar in some respects to those set out in the statement of claim in WS 490 of 2016, relate more to allegations of conflict of interest and alleged specific acts of fraud by various of the defendants cited in WS 491 of 2016 in connection with the transfer of Feflo’s assets to Yama (PNG) Ltd.
  2. The relief claimed in WS 491 of 2016 by Feflo and Joseph Sia is almost identical that which they have each claimed in WS 490 of 2016.
  3. Directions were made by the Court on 6 May 2022 which were designed to enable these four cases to progress more expeditiously to trial. Reproduced below are extracts from the Court’s directional order which I made on 6 May 2022:

“ (4) The Plaintiffs in OS No. 787 of 2015 and WS No. 400 of 2016 and the Plaintiffs in WS No. 490 of 2016 and WS No. 491 of 2016 by their respective counsel, Mr Meli Muga and Mr Melvin Yalapan, are to compile separate Trial Books in respect of each of their clients’ two proceedings, which Trial Books shall each comprise true copies of:

  1. an Index consisting of a complete list of the documents contained in the Trial Book, the Index to be divided into columns showing the date of filing of each document already filed, a short description of each document, the court document number (if already filed), the name of the law firm that filed each document (if applicable), as well as the tab number and page numbers for each document contained in the Trial Book;

b) originating process (originating summons or writ of summons);

  1. all currently active pleadings (including latest statement of claim where pleadings have been ordered);

d) all affidavits on which each party to the proceeding intends to rely at trial;

  1. the Table of Relevant Facts in Chronological Order & Summary of Legal Issues for all four of the above proceedings filed by Yalapan & Associates Lawyers on 6 September 2019 (Court Document No. 87 in WS No. 491 of 2016);
  2. any further documentation of direct relevance to the proceeding on which each party intends to rely and to adduce in evidence at trial;
  3. certificate of correctness of the Trial Book, to be signed and dated by all counsel in the proceeding;

and each Trial Book shall be paginated and tabbed.

  1. Counsel for the Plaintiffs in each case are to cause to be delivered to counsel for the Defendants in each case no later than Friday 27 May 2022 a draft Index for each of the two Trial Books they are required by term 4 of this Order to prepare.
  2. Counsel for the Defendants in each case are to reply to each received draft Index by communicating, on instructions received from their clients, their response in writing by letter or electronic transmission to counsel for the Plaintiffs no later than Friday 10 June 2022.
  3. Counsel for the Plaintiffs and counsel for the Defendants are to agree and settle on the draft Index for each of the Trial Books for their clients’ respective cases no later than Friday 24 June 2022.
  4. Counsel for the Plaintiffs in each case are to cause to be delivered to counsel for the Defendants in each case no later than Friday 8 July 2022 the final version of each of the two Trial Books which they have prepared for certification of correctness by counsel for the Defendants
  5. Counsel for the Plaintiffs and counsel for the Defendants shall in each case take all steps necessary to ensure that each Trial Book is certified as correct by all counsel, so as to enable counsel for the Plaintiffs in each case to file and serve each Trial Book they have prepared no later than Friday 15 July 2022.
  6. All four of these proceedings shall return before the Court on Thursday 21 July 2022 at 9.30 am for further directions to be made:

a) to deal with any remaining pre-trial procedures or issues;

  1. to progress each case to trial, which trials shall be heard together and shall be by way of affidavit evidence subject to the parties’ rights of cross-examination.
  1. On 21 July 2022 the Court made further directional orders to enable Mr Yalapan, counsel for Joseph Sia, to file replacements for amended statements of defence and cross-claims for Joseph Sia because the earlier amended statements of defence and cross-claims filed in OS 787 of 2015 and WS 400 of 2016 were struck out on 24 June 2022 for having been filed by Yalapan & Associates out of time in breach of a Court order of 13 May 2022. All four consolidated cases were adjourned on 21 July 2022 to return before the Court on 1 August 2022 at 9.30 am and Mr Yalapan and Mr Muga, counsel for Thomas Kong and Jordan Chan, were directed to hand up on that return date, by consent, a set of draft directions for the consideration of the Court which would vary and extend the timetable for the filing of the trial books referred to in the prior order of the Court made on 6 May 2022.
  2. On 1 August 2022 Mr Muga appeared before the Court soon after 9.30 am when all four consolidated proceedings were called, but Mr Yalapan failed to do so. The Court had no option but to adjourn all four proceedings on 1 August 2022 for a week to 8 August 2022 at 1.30 pm. It was a condition of the order of 1 August 2022 that if there was no appearance by Mr Yalapan on the return of the consolidated proceedings on 8 August 2022 or if Mr Yalapan did not come ready on that occasion to hand up by consent the draft directions required by the Court’s order of 21 July 2022, Joseph Sia’s proceedings in WS 490 of 2016 and WS 491 of 2016 would be dismissed for non-compliance with orders of the Court.
  3. On 8 August 2022 Mr Muga and Mr Yalapan both appeared before the Court at 1.30 pm. However on that occasion Mr Yalapan had still not finalized his negotiations with Mr Muga regarding the content of the draft directions which were supposed to have been handed up to Court that afternoon. The Court issued the following directions on 8 August 2022:

“ (1) Consolidated proceedings OS No. 787 of 2015, WS No. 400 of 2016, WS No. 490 of 2016 and WS No. 491 of 2016 are further adjourned to Monday 15 August 2022 at 1.30 pm for the draft Consent Directions referred to in term 1 of the Court’s prior Order of 21 July 2022 to be handed up by counsel Mr Melvin Yalapan.

(2) In the event that counsel Mr Melvin Yalapan does not hand up, or cause to be handed up, the outstanding draft Consent Directions on Monday 15 August 2022 at 1.30 pm, counsel Mr Melvin Yalapan shall be personally fined the sum of K2,000 for not enabling his clients’ compliance for the purpose of Order 4 Rule 36 of the National Court Rules and the Court shall at the same time consider the dismissal of case WS No. 490 of 2016 and case WS No. 491 of 2016, with such order as to costs as the Court may think fit.

(3) Costs in the cause.

(4) The time for entry of this Order is abridged to the time of signing by the Court which shall take place forthwith. ”

  1. When the four consolidated proceedings returned before the Court again on 15 August 2022, Mr Muga and Mr Yalapan both appeared. Objection was taken by Mr Muga on behalf of his clients to replacements for the amended defences and cross-claims that had been filed by Yalapan & Associates Lawyers in OS 787 of 2015 and WS 400 of 2016 on 30 June 2022. The ground of Mr Muga’s objection was that the amended cross-claims were not compliant with the requirements as to form for a cross-claim as prescribed by Order 8 Rule 39 of the National Court Rules. The Court upheld Mr Muga’s objection. However, this in turn frustrated yet again the timeline for the filing of the trial books which had been ordered by the Court on 6 May 2022 to have been filed no later than 15 July 2022.
  2. Mr Yalapan was given one last chance by the Court on 15 August 2022 to get his client’s amended pleadings in OS 787 of 2015 and WS 400 of 2016 properly compliant with Order 8 Rule 39 of the National Court Rules. The Court on 15 August 2022 adjourned all four consolidated proceedings to 29 August 2022 at 1.30 pm on condition that Mr Yalapan was to apply for leave of the Court to file in proper form fresh defences and cross-claims in OS 787 of 2015 and WS 400 of 2016. It was an express term of the Court’s order of 15 August 2022 that if Mr Yalapan failed to comply with that condition, then on the return of the cases before the Court on 29 August 2022 proceedings WS 490 of 2016 and WS 491 of 2016 would be “dismissed for want of prosecution and/or for non-compliance with this Order and prior Orders of the Court made on 21 July 2022 and 8 August 2022”.
  3. Mr Yalapan duly applied to the Court for leave to file and serve revised defences and cross-claims for Joseph Sia in OS 787 of 2015 and WS 400 of 2016 and leave to do so was granted by the Court on 29 August 2022. The Court also directed on 29 August 2022 that all four proceedings were to return to Court on 26 September 2022 at 1.30 pm for the parties’ respective counsel to jointly hand up a set of draft directions to be made by consent in respect of all four consolidated proceedings, the draft directions to have an extension to the timeline for the filing and service of the trial books previously ordered but with regard, if possible, to reducing the number of trial books from four to two trial books, or even one trial book if respective counsel could agree.
  4. When an adjournment of the four consolidated proceedings was sought on 25 September 2022 by Ms Christine Copland of Simpson Lawyers without objection by Mr Yalapan, the Court adjourned the four cases to return before the Court on 30 September 2022 at 2.00 pm.
  5. On 30 September 2022 Mr Muga and Mr Yalapan both appeared before the Court on the return of the four consolidated proceedings. The text of the operative content of the directional order that was made by the Court on 30 September 2022 is set out below:

“ (1) Pursuant to Order 1 Rule 15 of the National Court Rules, the Order made in [these consolidated proceedings] on 6 May 2022 (“the Principal Order”) is varied as follows:

(a) The Plaintiff in each of the cases shall prepare separate Trial Books for substantive hearing;
(b) The time referred to in term 5 of the Principal Order for delivery by respective counsel of the draft Indices for the Trial Books specified in term 4 of the Principal Order is extended to Friday 7 October 2022;

(2) [These consolidated proceedings] shall return to Court on Friday 25 November 2022 at 1:30 pm for such further directions to be made as the Court thinks fit, with liberty to apply. ”

  1. On or about 14 November 2022 I contracted Covid-19, which was confirmed by a CPR “positive” test conducted at 2K Medical Centre at East Boroko, NCD on 17 November 2022. In accordance with the strict requirements of the Controller of the National Covid-19 Pandemic Response then in force, I went into two-weeks’ home quarantine on 17 November 2022. I was still in quarantine lock-down on Friday 25 November 2022 when the subject consolidated proceedings were due to return before the Court. The four cases were therefore not listed for that day. The virus ran its course and I finally tested “negative” for Covid-19 on 28 November 2022, following which I resumed judicial duties. However, by that stage the four consolidated proceedings had been adjourned generally to the Civil Registry of the Court.
  2. Subsequent to 25 November 2022 neither Mr Muga nor Mr Yalapan wrote to the Civil Registry to request that the consolidated proceedings be re-listed for mention or continuation. What then occurred is somewhat confusing. Mr Yalapan filed a document entitled “Amended Notice of Motion” in WS 491 of 2016 on 9 February 2023[8] seeking further directional orders to extend the timetable for the filing of trial books. This amended notice of motion in WS 491 of 2016 was supported by an affidavit sworn by Mr Yalapan on 6 December 2022 but not filed until 9 February 2023.[9] However, Mr Yalapan apparently decided not to pursue that amended notice of motion for Mr Sia. At some point in March 2023 or early April 2023, Mr Yalapan lodged a further notice of motion, this time in OS 787 of 2015, seeking: (1) the dismissal of OS 787 of 2015 and WS 400 of 2016, and (2) orders to the effect that Simpson Lawyers certify the correctness of trial books for WS 490 of 2016 and WS 491 of 2016. The Civil Registry ultimately registered a replacement of that notice of motion on 26 May 2023[10], after it had been signed by Mr Yalapan on 21 May 2023 and brought to my attention by my associate several days later. The motion was allocated a hearing date of 21 June 2023 at 1.30 pm. On 30 June 2023 Mr Yalapan then filed an affidavit sworn by Joseph Sia on 29 June 2023[11] in support of the present motion.
  3. The subject motion, which affected all four consolidated proceedings, came on for hearing before me 21 June 2023, shortly after 1.30 pm. Mr Yalapan appeared for Joseph Sia. There was initially no appearance by any counsel from Simpson Lawyers, the lawyers on the record for Thomas Kong and Jordan Chan. I allowed Mr Yalapan to commence his submissions after an affidavit of service he had filed in OS 787 of 2015 on 15 June 2023 was re-sworn by him before me. At 2.05 pm on 21 June 2023, while the Court was in session, Mr Ishmael Opahi of Simpson Lawyers belatedly made his appearance before the Court for Mr Kong and Mr Chan. Mr Opahi made an oral application for an adjournment of the two motions. Mr Opahi explained that Mr Muga, counsel who had the carriage of the proceedings for Thomas Kong and Jordan Chan at Simpson Lawyers, was out of Port Moresby and that he, Mr Opahi, had not been briefed on the matters before the Court but had been sent to request an adjournment. On being questioned by me, Mr Opahi agreed that he was unaware of the matters raised by the motion before the Court and that he could be of no assistance to the Court. Mr Opahi’s oral application for adjournment was refused on the grounds that there was satisfactory proof before the Court that service of the subject motion and its affidavit material in support had been duly served by Mr Yalapan on the office of Simpson Lawyers three weeks before, on 30 May 2023, and that no forewarning of any intended application for adjournment of the motion on 21 June 2023 had been given by Simpson Lawyers to the Civil Registry or to my associate or to my personal secretary or to Mr Yalapan. The Court then proceeded on 21 June 2023, in Mr Opahi’s presence, to hear the balance of Mr Yalapan’s submissions on the motion. The Court reserved its decision on the motion for delivery to today, Monday 10 July 2023.

THE MOTION BEFORE THE COURT

  1. The motion filed for Mr Sia by Yalapan & Associates on 26 May 2023 seeks the following orders:

(1) Pursuant to Order 1 Rule 8 and Order Rule 36(1) of the National Court Rules, that proceedings WS 787 of 2015 and WS 400 of 2016 be dismissed for want of prosecution and irregularity.

(2) Pursuant to Order 12 Rule 1 and Order 4 Rule 36(1) of the National Court Rules, that the Order made by the Court on 30 September 2022 for the filing of trial books by the parties’ respective counsel by 18 November 2022 be “amended” such that the trial books for WS 490 of 2016 and WS 491 of 2016 be signed off by the lawyers for the defendants in those two proceedings by 15 June 2023.

(3) Such other orders as the Court thinks fit.

  1. Mr Yalapan relies on two affidavits in support of the motion, namely:

(1) the affidavit of Joseph Sia sworn on 29 May 2023 and filed in OS 787 of 2015 on 30 May 2023;

(2) Mr Yalapan’s own amended affidavit sworn on 6 December 2022 and filed in OS 491 of 2016 on 9 February 2023.

ISSUES

  1. Mr Sia’s motion and his affidavit material in support have raised two issues for determination by the Court:

(1) Whether the proceedings in WS 787 of 2015 and WS 400 of 2016 should be summarily dismissed for non-compliance with procedural orders of the Court and want of prosecution and/or irregularity?

(2) Whether the lawyers acting for the plaintiffs in OS 787 of 2015 and WS 400 of 2016 should be ordered to certify the correctness of the trial books in WS 490 of 2016 and WS 491 of 2016 or whether some other order should be made?

ISSUE 1 – APPLICATION FOR DISMISSAL OF WS 787 OF 2015 AND WS 400 OF 2016

  1. The order of the Court made on 30 September 2022 varied the timetable given in the prior directional order of the Court of 6 May 2022 which had originally required the parties’ respective counsel to certify and file trial books for all four consolidated cases no later than 15 July 2022. The variation order of the Court of 30 September 2022 set out a new timetable which required each counsel to file and serve their respective clients’ trial books, duly certified correct by opposite counsel, by 18 November 2022.
  2. Mr Yalapan indicates at para. 2 of his amended affidavit that he “submitted the Trial Book for review and certification by [Simpson Lawyers] on 16th November 2022 and have been waiting since for a call ... to settle the Trial Book and to execute the relevant Certificate of Consent.” Mr Yalapan does not say which trial book he is referring to in para. 2 of his affidavit. I presume that as Mr Yalapan’s affidavit was filed in WS 491 of 2016 on 9 February 2023, Mr Yalapan is referring in his para. 2 to a trial book he prepared for WS 491 of 2016. If that is the correct situation, then no mention is made at that juncture in Mr Yalapan’s amended affidavit as to whether any trial book he may have prepared for WS 490 of 2016 was also delivered to Simpson Lawyers on 16 November 2022.
  3. Mr Yalapan then confusingly indicates in para. 10 of his amended affidavit to the effect that his client’s trial books for WS 490 of 2016 and WS 491 of 2016 have been with Simpson Lawyers since 5 October 2022 waiting for certification by counsel Mr Muga but that those two trial books have not been returned to Mr Yalapan for filing.
  4. I am therefore unable to reconcile what Mr Yalapan deposes in para. 2 of his amended affidavit with what he says in para. 10 of his same affidavit.
  5. Mr Yalapan states at para. 3 of his amended affidavit:

“ 3. The only thing outstanding that I fail[ed] to locate the Defence’s Affidavit in Response to the Plaintiff’s Affidavit in Support of the Claim dated 20th November 2016. I advised the Defendant’s Lawyers on 26th May 2022, and again on the 5th October 2022 of same. ”

  1. Mr Yalapan then deposes in paragraph 6 of his amended affidavit that he met with Mr Muga at the Court precincts on 5 December 2022, at which time they agreed that the trial books together with other outstanding matters “would be attended to by 9 December 2022”, meaning I presume that both counsel had agreed that they would resolve any outstanding issues regarding the content of the four trial books and that they would each certify opposite counsel’s two trial books ready for filing by 9 December 2022.
  2. Mr Yalapan goes on to say in his affidavit to the effect that, as at the date of swearing of his amended affidavit on 9 February 2023, he had been waiting for Simpson Lawyers to finalise matters relating to the filing of the four trial books but that nothing had happened in that regard. Mr Yalapan says in para. 8 of his amended affidavit to the effect that the defendants, inferentially meaning Simpson Lawyers, did not call a meeting with him or Joseph Sia during the Court vacation in January 2023 to ameliorate the mutual default that had occurred with filing of the parties’ trial books.
  3. The Court’s record for all four of these consolidated proceedings shows that no trial books, certified correct by Mr Muga and Mr Yalapan, have been filed to date by Simpson Lawyers or by Yalapan & Associates.
  4. As already noted, Mr Sia’s affidavit in support of the orders he seeks was sworn on 29 May 2023 and filed in OS 787 of 2015 on 30 May 2023. Mr Sia’s affidavit is short. It is less than one page. He deposes that neither he nor Yalapan & Associates have been served with copies of the trial books for OS 787 of 2015 and WS 400 of 2016. He says that Mr Kong and Mr Chan have been inexcusably careless, although what he no doubt means is that their lawyers have been careless. Mr Sia concludes his brief affidavit by stating that he suffers losses every day because he has been told that Mr Kong and Mr Chan have sold all the logging equipment, which is one of the contested issues in the consolidated proceedings, and that Mr Kong and Mr Chan continue to occupy the house property at Islander Village, Hohola, NCD, from which they should be evicted.
  5. Mr Sia’s motion invokes Order 1 Rule 8 and Order 4 Rule 36(1) of the National Court Rules (NCR) as the jurisdictional basis should the Court be persuaded to dismiss Mr Kong and Mr Chan’s proceedings in OS 787 of 2015 and OS 400 of 2016.
  6. Order 1 Rule 8 NCR states:

8. Non-compliance with Rules not to render proceedings void

Non-compliance with any of these Rules, or with any rule of practice for the time being in force, shall not render any proceedings void, unless the Court so directs, but the proceedings may be set aside, either wholly or in part as irregular, or may be amended or otherwise dealt with, in such a manner, and on such terms, as the Court thinks fit.


  1. Order 4 Rule 36(1) NCR states:

36(1) Where a plaintiff makes default in complying with any order or direction as to the conduct of the proceedings, or does not prosecute the proceedings with due despatch, the Court may stay or dismiss the proceedings.

  1. The question then arises: do the circumstances as presented by Mr Yalapan in connection with the default of Simpson Lawyers in not certifying correct any of the trial books for the four consolidated proceedings and in not returning Mr Sia’s two trial books for WS 490 of 2016 and WS 491 of 2016 back to Yalapan & Associates after counsel conferred with each other on 5 December 2022 warrant orders of the Court for the summary dismissal or setting aside of OS 787 of 2015 and WS 400 of 2016 for non-compliance with the Court’s order of 30 September 2022 and/or for want of prosecution?
  2. At the outset of consideration of this issue, I observe for the purposes of Order 1 Rule 8 NCR that I find no irregularity in the form in which the pleadings have been filed for Mr Kong and Mr Chan in OS 787 of 2015 and WS 400 of 2016. Any irregularity that has occurred is referable to Simpson Lawyers’ non-compliance with the order of the Court of 30 September 2022, although the same observation could also apply to some extent with Yalapan & Associates’ own non-compliance with that same Court order.
  3. The procedural law relating to dismissal of proceedings for want of prosecution and non-compliance with orders of the Court is well settled.
  4. The Court has a wide discretion when determining an application to dismiss a proceeding for want of prosecution and non-compliance of procedural orders of the Court. The constitutional right of a party to be heard cannot lightly be set aside. When exercising its discretion, the Court must be mindful of five principles, three of which were summarised by Kandakasi J (as he then was) in Seravo v Bahafo (2001) N2078, augmented by two additional principles by Cannings J in Niale v Sepik Coffee Producers Ltd (2004) N2637, followed in other cases such as Rabaul Shipping Ltd v Rupen (2008) N3289 (Lay J) and Tani v Motor Vehicles Insurance Ltd (2010) N3984 (David J). The five principles which the Court must consider on an application for dismissal of proceedings for want of prosecution, and which I adopt as being of equal application to non-compliance with orders of the Court, are these:

(1) Has the plaintiff’s default been intentional or contumelious or has there been inordinate and inexcusable delay in prosecution of the plaintiff’s claim?

(2) Has a reasonable explanation for delay been given by the plaintiff?

(3) Has the delay cause injustice or prejudice to the defendant?

(4) Does the conduct of the parties and their lawyers warrant dismissal of the plaintiff’s proceedings?

(5) Is dismissal of the plaintiff’s proceedings in the interests of justice?

  1. I now apply these five principles to the circumstances presented for Mr Sia by his counsel.

Intentional or contumelious default or inordinate or inexcusable delay in prosecution of claim

  1. Non-compliance by all parties’ lawyers with the directional order of 30 September 2022 to file trial books by 18 November 2022 is an established fact.
  2. Mr Yalapan submits that the reason he has been unable to comply with the Court’s order of 30 September 2022 is because Simpson Lawyers failed to return to him prior to 18 November 2022, duly certified correct, the trial books for WS 490 of 2016 and WS 491 of 2016 which were compiled by Mr Yalapan and which he says in his amended affidavit were delivered to the office of Simpsons Lawyers on 5 October 2022, alternatively on 15 November 2022. It seems that the reason Simpson Lawyers did not return Mr Sia’s trial books to him in time is because Mr Yalapan had been unable to locate and include in those two trial books copies of an affidavit sworn by someone, presumably Mr Sia, in response to an affidavit that had been filed for the plaintiffs in support of their claim. Mr Yalapan does not identify in his amended affidavit the affidavit he says was unable to locate and which was missing from Mr Sia’s two trial books.
  3. Mr Yalapan has not annexed to his amended affidavit copies of any correspondence that may have passed between his law firm and Simpson Lawyers regarding issues arising from compilation of the four trial books that have obviously frustrated the certification of any of those trial books. The Court therefore does not know the true extent or nature of any complications which may have occurred in that regard, other than what Mr Yalapan has superficially deposed in paragraph 3 of his amended affidavit.
  4. Because of the paucity of evidence presented by Mr Yalapan as to what communications have passed between himself and Mr Muga at Simpson Lawyers regarding the ongoing delay in both sides not having filed their clients’ respective trial books, I am not prepared to find that there has been intentional or contumelious conduct on the part of Simpson Lawyers in not having complied with the Court’s order of 30 September 2022. Nor am I prepared to find on the evidence adduced for Mr Sia, such as it is, that there has been inexcusable delay by Simpson Lawyers. There could very well be issues that are referable to Mr Yalapan’s own conduct and which have not been rectified by him after being requested by Mr Muga to do so, as would seem to be the case in view of what was apparently agreed by both counsel at their meeting at the Court precincts on 5 December 2022 as deposed to by Mr Yalapan.
  5. However, I do find that there has been ongoing delay of more than 6 months, as from 18 November 2022 down to the time of hearing of Mr Sia’s motion on 23 June 2023, in Simpson Lawyers not having rectified whatever issues have prevented them from complying with the Court’s order of 30 September 2022.
  6. This consideration tends to favour Mr Sia, although this is surmise on the part of the Court in view of the absence of any substantial evidence as to the content of the communications that passed between the parties’ respective lawyers subsequent to the Court’s order of 30 September 2022.

Has a reasonable explanation for delay been given by the plaintiffs?

  1. I have already noted that service of Mr Sia’s notice of motion and two affidavits in support were personally served by Mr Yalapan on the office of Simpson Lawyers on 30 May 2023. The notice of motion clearly stated that it was set down for hearing on 21 June 2023 at 1.30 pm. Mr Muga of Simpson Lawyers therefore had three weeks within which to file affidavit material to explain the reasons for his non-compliance with the Court’s order of 30 September 2022 and why there has been six months’ delay in rectifying that non-compliance. No such affidavit material has been filed. No reasonable explanation from Simpson Lawyers for that delay was in evidence before the Court at the hearing of Mr Sia’s motion on 21 June 2023.
  2. This consideration favours Mr Sia.

Has the delay cause injustice or prejudice to Mr Sia?

  1. Mr Sia contends in his brief affidavit to the effect that he is sustaining financial losses every day because he says he has been told that the sale of logging equipment by Mr Kong and Mr Chan has already occurred and that the loss of that logging equipment, which comprises loading barges, trucks and logging camp equipment, is depriving him (or Feflo) of the income-producing benefit of that equipment. This is hearsay evidence on the part of Mr Sia and therefore of little evidentiary value.
  2. The ownership of the logging equipment by Feflo and who are the lawful shareholders and directors of Feflo are primary causes of action and issues for determination which have been pleaded by Mr Sia in WS 490 of 2016 and WS 491 of 2016 and repeated in Mr Sia’s cross-claims in OS 787 of 2015 and WS 400 of 2016. Mr Sia wishes to shortcut Mr Kong and Mr Chan’s claims in OS 787 of 2015 and WS 400 of 2016 by having those proceedings summarily dismissed without any trial on the merits and without any substantial proof having been adduced at the hearing of his motion for dismissal of the actual prejudice he is presently experiencing beyond that which could be determined at trial. I am not satisfied that a case of present prejudice on the part of Mr Sia which would justify the extreme sanction of summary dismissal at this stage of Mr Kong and Mr Chan’s proceedings in OS 787 of 2015 and WS 400 of 2016 has been made out.

This consideration favours Mr Kong and Mr Chan.

Does the conduct of the parties and their lawyers warrant dismissal of the plaintiff’s proceedings?

  1. I am not satisfied on the evidence presented in support of Mr Sia’s motion that the fault for Simpson Lawyers obvious non-compliance with the Court’s order of 30 September 2022 is not attributable in part to the conduct of Yalapan & Associates. Had Mr Yalapan adduced documentary evidence to demonstrate that he had complied with whatever requests may have been made of him by Simpson Lawyers to enable Mr Muga to certify the correctness of the Mr Sia’s trial books for WS 490 of 2016 and WS 491 of 2016 or had there been compelling evidence at the motion’s hearing to have shown that there was nothing further which Mr Yalapan himself needed to do after his meeting with Mr Muga at the Court precincts on 5 December 2023 to ensure his own compliance with the Courts’ order of 30 September 2022, then this could have assisted Mr Sia’s motion for the summary dismissal of Mr Kong and Mr Chan’s cases. No such evidence was presented.
  2. This consideration favours Mr Kong and Mr Chan.

Is dismissal of the plaintiff’s proceedings in the interests of justice?

  1. All parties to the complex factual and legal issues pleaded in these four consolidated proceedings who are, or have been, actively involved in this litigation, are entitled to have their causes of action determined by the Court on the merits, unless there has been serious misconduct in their prosecution of the various cases. I find on the evidence adduced in support of Mr Sia’s motion that none of the active parties in these four consolidated proceedings are themselves guilty of any personal misconduct in the prosecution of their respective cases. Such misconduct as has occurred is attributable to procedural non-compliance by their own lawyers, and in particular in this instance to Simpson Lawyers’ failure to have provided the Court with a reasonable explanation as to that law firm’s delay in complying with the Court’s order of 30 September 2023.
  2. But I observe that Mr Yalapan has himself in the past also failed to comply with earlier orders of the Court. I refer here to the order of the Court made on 24 June 2022 which struck out the amended statements of defence and cross-claims for Mr Sia which had been filed out of time by Yalapan & Associates in OS 787 of 2015 and WS 400 of 2016 in breach of an order made on 13 May 2022. On 21 July 2022 the Court then granted Mr Yalapan a reprieve when it made an order which allowed him to file replacements for the pleadings in OS 787 of 2015 and WS 490 of 2016 that had been struck out on 24 June 2022.
  3. I find that the law firms acting for the various parties in this litigation have in the past each breached orders of the Court. However I also find that it is not in the interests of justice that the non-compliance by those law firms with procedural orders of the Court should be vicariously attributed to their respective clients. The amount of damages claimed by the various active parties against each other in these four consolidated proceedings ranges from upwards of K1million to more than K25million. There are complex issues of fact and law requiring determination in this litigation. In my view, there can be no justification on the evidence presented to the Court at this juncture to warrant the summary dismissal of two of the four cases involved in this litigation.

Summary of Issue 1

For the reasons given, I conclude in this instance that the non-compliance by Simpson Lawyers with the Court’s order of 30 September 2022 and that law firm’s subsequent inaction to take remedial steps should not outweigh the interests of the active parties in having their respective cases proceed to trial and determination on the merits by the Court. The brevity of the evidence presented in support of Mr Sia’s motion and the commercial complexity of this consolidated litigation is such that I am not persuaded that a case has been made out for the summary dismissal of OS 787 of 2015 and WS 400 of 2016. To find otherwise would, in my considered view, be a serious injustice to all active parties. The motion for dismissal of OS 787 of 2015 and WS 400 of 2016 is refused.

ISSUE 2 – SHOULD THE LAWYERS ACTING FOR THE PLAINTIFFS IN OS 787 OF 2015 AND WS 400 OF 2016 BE ORDERED TO CERTIFY THE CORRECTNESS OF THE TRIAL BOOKS IN WS 490 OF 2016 AND WS 491 OF 2016 OR SHOULD SOME OTHER ORDER BE MADE?

  1. Given the matters I have alluded to, it is clear that the Court is not in a position to issue meaningful directions at this stage which would effectively remedy the unfortunate situation regarding the non-filing of the trial books which has prevailed subsequent to the meeting which occurred between Mr Muga and Mr Yalapan at the Court precincts on 5 December 2022. It is not possible for the Court at this stage to know what needs to be done by Simpson Lawyers and by Yalapan & Associates for each of those law firms to fully rectify the matters which have prevented each of them from complying with the Court’s order of 30 September 2023.
  2. The Court will therefore direct that Mr Muga and Mr Yalapan are to each file by Friday 18 August 2023 comprehensive affidavits explaining what each of them requires the other to do so as to enable multiple trial books, or a reduced number of trial books, to be certified correct by them and then filed and served. All four of these proceedings will then return before the Court for further directions to be made on Monday 4 September 2023 at 1.30 pm.

COSTS

  1. Costs usually follow the event. However, although Mr Sia’s motion for dismissal has been refused, the actions taken by Mr Yalapan to bring the issues raised in his client’s motion to the attention of the Court were commendable and have assisted this litigation to resume. The costs of Mr Sia’s motion will therefore be ordered to be paid by Simpson Lawyers on a party-party basis.

ORDER

70. The formal terms of the Court’s order are as follows:

  1. The motion filed on 26 May 2023 for the Third Defendant in OS 787 of 2015 is refused.
  2. Mr Meli Muga of Simpson Lawyers and Mr Melvin Yalapan of Yalapan & Associates are to each file by Friday 18 August 2023 comprehensive affidavits explaining what each of them requires the other to do so as to enable multiple trial books, or a reduced number of trial books, to be certified correct by them and then filed and served by the other.
  3. These consolidated proceedings OS 787 of 2015, WS 400 of 2016, WS 490 of 2016 and WS 491 of 2016 shall return before the Court on Monday 4 September 2023 at 1.30 pm for further directions.
  4. Simpson Lawyers shall pay the costs of the Third Defendant’s said motion in OS 787 of 2015 on a party-party basis, such costs to be taxed if not agreed.
  5. The time for entry of this Order is abridged to the time of signing by the Court which shall take place forthwith.

Order accordingly
_________________________________________________________________
Simpson Lawyers: Lawyers for the Plaintiffs in OS 787 of 2015 & WS 400 of 2016; Lawyers for the Defendants in WS 490 of 2016 and WS 491 of 2016


Yalapan & Associates: Lawyers for the Plaintiffs in WS 490 of 2016 & WS 491 of 2016; Lawyers for the Third Defendant in OS 787 of 2015 and the Fourth Defendant in WS 400 of 2016


[1] Court document no. 79 in OS 787 of 2015.
[2] Court document no. 80 in OS 787 of 2015.
[3] Court document no. 90 in OS 787 of 2015.
[4] Court document no. 49 in WS 400 of 2016.
[5] Court document no. 50 in WS 400 of 2016.
[6] Court document no. 61 in WS 400 of 2016.
[7] On present foreign exchange rates, RM33,666,199.29 equates to approximately K25 million.
[8] Court document no. 100 in WS 491 of 2016.
[9] Court document no. 101 in WS 491 of 2016.
[10] Court document no. 96 in OS 787 of 2015.
[11] Court document no. 97 in OS 787 of 2015.

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