SC1461
PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA NO 157 OF 2010

FELIX KANGE, TRADING AS KANGE LAWYERS
First Appellant

DAVID KAYA
Second Appellant

V

UNABI KAYA, FOR HIMSELF AND ON BEHALF OF 
HOMUKU KUSE CLAN, CUSTOMARY LANDOWNERS OF HELEGOBIA LAND, IOWARA, EAST AWIN, NORTH FLY DISTRICT, 
WESTERN PROVINCE
First Respondent

SERA NEPSI, FOR HERSELF AND ON BEHALF OF 
PE SEGAI CLAN, CUSTOMARY LANDOWNERS OF 
KIWO LAND, IOWARA, EAST AWIN, NORTH FLY DISTRICT, 
WESTERN PROVINCE
Second Respondent

GREG POMI, FOR HIMSELF AND ON BEHALF OF 
WITIGI KUKUBE CLAN, CUSTOMARY LANDOWNERS OF KEREATANA LAND, IOWARA, EAST AWIN, NORTH FLY DISTRICT, 
WESTERN PROVINCE
Third Respondent

ISODUAME GYOWI, FOR HIMSELF AND ON BEHALF OF 
WITIME CLAN, CUSTOMARY LANDOWNERS OF 
WONA LAND, IOWARA, EAST AWIN, NORTH FLY DISTRICT, 
WESTERN PROVINCE
Fourth Respondent

HEYE GELE, FOR HIMSELF AND ON BEHALF OF
 YESA CLAN, CUSTOMARY LANDOWNERS OF 
AMORA LAND, IOWARA, EAST AWIN, NORTH FLY DISTRICT, 
WESTERN PROVINCE
Fifth Respondent

MUSI MINAE, FOR HIMSELF AND ON BEHALF OF 
UKYA CLAN, CUSTOMARY LANDOWNERS OF 
MOTRU LAND, IOWARA, EAST AWIN, NORTH FLY DISTRICT, 
WESTERN PROVINCE
Sixth Respondent

ROPSY WIKI, FOR HIMSELF AND ON BEHALF OF 
KUSE UDE CLAN, CUSTOMARY LANDOWNERS OF 
WAGUILA LAND, IOWARA, EAST AWIN, NORTH FLY DISTRICT, 
WESTERN PROVINCE
Seventh Respondent

CHRISTINA POLI, FOR HERSELF AND ON BEHALF OF 
KUGA CLAN, CUSTOMARY LANDOWNERS OF 
GUWEKOELE LAND, IOWARA, EAST AWIN, NORTH FLY DISTRICT, 
WESTERN PROVINCE
Eighth Respondent

PIMA GOBI, FOR HIMSELF AND ON BEHALF OF 
MODIA KUGA CLAN, CUSTOMARY LANDOWNERS OF 
MODIA LAND, IOWARA, EAST AWIN, NORTH FLY DISTRICT, 
WESTERN PROVINCE
Ninth Respondent

Waigani: Cannings J, Toliken & Ipang JJ
2015: 2 September, 28 October 

PRACTICE AND PROCEDURE – appeal against entry of summary judgment – National Court Rules, Order 12, Rule 38 – whether proper exercise of discretion by primary Judge – whether a clear case for entry of summary judgment – whether defence raised serious questions of fact or law.

Nine plaintiffs commenced proceedings by writ of summons in the National Court claiming a debt of K9,765,931.44 and damages for breaches of trust committed against them by two defendants. The defendants filed a defence, pleading amongst other things that the proceedings ought to be dismissed as the plaintiffs were acting in a representative capacity but failed to comply with requirements for institution of representative proceedings, that there was no trust relationship between the parties and that in fact the money had been paid to the plaintiffs. The plaintiffs filed a motion for summary judgment, which was upheld by the National Court, which ordered entry of summary judgment against the defendants subject to a trial on assessment of damages. The defendants appealed against the order, principally on the ground that the primary Judge erred in law in the exercise of his discretion by disregarding their defence, which denied liability and raised serious questions of fact and law.

Held: 

(1)	Summary judgment can only be entered when the two formal requirements of Order 12, Rule 38 of the National Court Rules (evidence of the facts on which the claim is based and of the plaintiff’s belief that there is no good defence) have been complied with and in the exercise of discretion the National Court reasonably concludes that it is a clear case involving no serious dispute on any question of fact or law.

(2)	Here, the formal requirements for entry of summary judgment were complied with, but it was not a clear case as the defence filed by the defendants raised serious questions of law (eg whether the true nature of the proceedings was that they were representative proceedings and if so whether the requirements for institution of such proceedings had been complied with and whether the elements of a trust relationship between either of the defendants and the plaintiffs had been adequately pleaded) and serious questions of fact (eg whether the plaintiffs had executed a power of attorney allowing the second defendant to receive the money the subject of the claim on behalf of the plaintiffs and whether that money had actually been disbursed to the plaintiffs’ representatives).

(3)	The primary Judge erred in the exercise of discretion as to entry of summary judgment.

(4)	The appeal was upheld, the order of the Court was quashed and the proceedings were remitted to the National Court before another Judge.

Cases cited

The following cases are cited in the judgment:

Chief Collector of Taxes v T A Field Pty Ltd [1975] PNGLR 144
Curtain Bros (Qld) Pty Ltd & Kinhill Kramer Pty Ltd v The State [1993] PNGLR 285
Simon Mali v The State (2002) SC690
Tigam Malewo v Keith Faulkner (2009) SC960
Tsang v Credit Corporation (PNG) Ltd [1993] PNGLR 112

APPEAL

This was an appeal against an order for summary judgment.

Counsel

P Ame, for the First Appellant
A Waira, for the Second Appellant
B Nahupa, for the Respondents

28th October, 2015 

1.      BY THE COURT: This is an appeal against an order of the National Court made in civil proceedings, entering summary judgment in favour of Unabi Kaya and eight other persons who claimed to be customary owners of land in the East Awin area of North Fly District, Western Province.

NATIONAL COURT PROCEEDINGS

2.    The National Court proceedings, WS No 699 of 2009, were commenced in 2009 by Unabi Kaya and eight others against two defendants: Unabi Kaya’s relative, David Kaya, and David Kaya’s lawyer, Felix Kange, trading as Kange Lawyers. The plaintiffs claimed K9,765,931.44  plus damages for breaches of trust committed against them by the two defendants. The plaintiffs pleaded that:

•	in 1986 their customary land was acquired by the State for purposes of establishing a refugee centre for people from the nearby West Papua region of Indonesia;

•	in 2008 the defendants received K10,880,753.44 from the National Government, on behalf of the plaintiffs, as compensation for the land acquisition;

•	the defendants paid only K1,114,822.00 to the plaintiffs, making decisions as to distribution of the money without consulting anyone;

•	the defendants never explained where the rest of the money went to;

•	each of the defendants received the money in trust on behalf of the plaintiffs and therefore are liable in breach of trust for remittance of the money (as a debt) and damages.

3.     The defendants filed a defence, pleading that:

•	the proceedings ought to be dismissed as the plaintiffs were acting in a representative capacity but failed to comply with the requirements for institution of representative proceedings;

•	the second defendant is the chief of the clan that the first plaintiff  claimed to represent and he acted in accordance with his powers;

•	there was no trust relationship between the parties; and

•	in fact, the money was paid to the plaintiffs or persons closely associated with them.

4.     On 16 April 2010 the plaintiffs filed a notice of motion, seeking summary judgment. The motion was heard on the morning of 14 October 2010 by Justice Gavara-Nanu. It was an inter-partes hearing of two hours duration. The Court adjourned for lunch and upon its resumption his Honour gave the following ex tempore ruling:

This is an application for summary judgment by the plaintiffs in the sum of K9,765,931.44. The established principles to be applied when considering an application for summary judgment such as this under Order 12, Rule 38 of the National Court Rules is that such judgment can only be entered in the clearest of cases where the plaintiff has demonstrated that there is no defence on merit to the claim or claims made by the plaintiff.

There is a long line of authorities which establish that the court can only enter summary judgment upon being satisfied that the defendant has no defence. To make such an order or finding, the court must be satisfied that the material facts are not disputed and that there is no issue warranting a trial.

In this case the plaintiff has shown that an amount of K10,880,753.44 was paid to the defendants through their lawyer. From this amount the plaintiffs agreed that an amount of K1,114,822.00 was paid to them but the rest is owing. This amount is K9,765,931.44.

Mr Felix Kange of Kange Lawyers who acted for the defendants has sworn an affidavit dated 25 August 2010 in which he deposed that he paid out some of the money to certain individuals or individual landowners. This evidence appears in annexure D to his affidavit.

While the plaintiffs or the principal plaintiffs may deny ... this claim, there are names mentioned in annexure D to Mr Felix’s affidavit. I am not sure whether these people come from the clans from which the principal plaintiffs are making these claims. This has not been clarified by the plaintiffs. It may be that if they come from the clans that the principal plaintiffs are representing in these proceedings then the amount being claimed by the plaintiffs may not be correct. This is a serious issue in dispute which in my view should be clarified on trial.

The question therefore ... is [the] quantum of damages the plaintiffs should be entitled to. There is overwhelming evidence that the plaintiffs are owed money by the defendants but the amount owed as I said earlier is not certain for reasons already given.

For these reasons, I will not enter summary judgment for the liquidated amount that has been claimed but I will enter judgment for the plaintiffs with damages to be assessed. And I order that the defendants pay the plaintiffs’ costs of today’s hearing. Those are the orders of the court.

5.     On the same day an order was entered in the following terms:

1	Summary judgment is entered against the defendants, with damages to be assessed.

2	The plaintiffs’ costs of and incidental to the application shall be paid by the defendants.

THE APPEAL

6.     The defendants appealed against that order. Their notice of appeal contained numerous grounds, most of which have been abandoned. The following remain:

4.1	His Honour erred in law in entering summary judgment for the respondents for damages to be assessed under Order 12, Rule 38 of the National Court Rules when the second appellant filed the following defence that made the case not a clear [case] for a summary judgment to be entered:

4.1.1	That the respondents did not get the consent from the landowners to represent the landowners in court. This defence was important to take note because [the] second [appellant] himself is the landowner and member of the Homuko Clan and some of the members of this clan are the [appellant’s] children, wife and other immediate family members who do not want to institute the proceedings against the appellant. Thus the respondents lacked authority to represent the entire clans including Utula, Bugen, Aibiko and Songorom clans, which are not named as parties in the National Court.

4.1.2	That the second appellant is the chief of the Homuku Kuse clan and the landowner and had the right to pursue the claim and disburse the money. Additionally he was given authority to pursue the claim and disburse the money and his dealings with the money was by right as the landowner and the authority given by the landowners and his dealings with the first appellant or any other person cannot be questioned by the respondents. 

4.1.5	The second appellant stated that he gave the instructions to the first appellant to pursue the claim and disburse the money and the first appellant did as instructed. After disbursing the money, there was no K9,765,931.44 or any amount kept in the first appellant’s trust account or in his possession or any other means for further disbursement.

4.1.6	That the second appellant stated that the respondents had filed the baseless and vexatious proceedings against him.

RELIEF SOUGHT

7.     The appellants seek orders quashing the order appealed from and dismissing the National Court proceedings, WS No 699 of 2009; in the alternative they want a notice of motion they had filed in the National Court seeking dismissal of the proceedings, heard and determined by another Judge of the National Court.

ISSUES

8.     The grounds of appeal concern one key argument: that the primary Judge erred in law as the appellants had filed a defence that made it not a clear case for summary judgment due to arguable questions of law and fact being raised. We consider that only two issues require our determination:

1	did the primary Judge err by disregarding the defence?

2	what orders should be made?

1 	DID THE PRIMARY JUDGE ERR BY DISREGARDING THE DEFENCE?

9.     We have concluded that his Honour disregarded the defence filed by the appellants and erred in entering summary judgment. In drawing that conclusion we note that his Honour heard argument on the decision-making model to be applied to a motion for summary judgment. The motion was brought under Order 12, Rule 38(1) (summary judgment) of the National Court Rules, which states:

Where, on application by the plaintiff in relation to any claim for relief or any part of any claim for relief of the plaintiff—

(a)	there is evidence of the facts on which the claim or part is based; and

(b)	there is evidence given by the plaintiff or by some responsible person that, in the belief of the person giving the evidence, the defendant has no defence to the claim or part, or no defence except as to the amount of any damages claimed,

the Court may, by order, direct the entry of such judgement for the plaintiff on that claim or part, as the nature of the case requires.

10.     It is uncontroversial that there are two formal requirements for entry of summary judgment expressly prescribed by Order 12, Rule 38(1). The plaintiff must present evidence of:

(a)	the facts on which the claim is based; and

(b)	the belief of the plaintiff or some responsible person that the defendant has no defence.

11.     If both those requirements are not met, summary judgment cannot be ordered. If both are met, summary judgment may be entered, but this is a matter of discretion which must be exercised judicially taking into account relevant considerations, in particular whether it is a clear case involving no serious dispute on any question of fact or law (Chief Collector of Taxes v T A Field Pty Ltd [1975] PNGLR 144, Tsang v Credit Corporation (PNG) Ltd [1993] PNGLR 112, Curtain Bros (Qld) Pty Ltd & Kinhill Kramer Pty Ltd v The State [1993] PNGLR 285).

12.    In the present case the primary Judge set out the above principles but did not apply them. His Honour made no formal statement that he was satisfied as to the two formal requirements. This was not a major error as it can be inferred that his Honour was so satisfied, and it is evident that the respondents did in fact comply with the two requirements. However, his Honour almost entirely disregarded the appellants’ defence which, as we pointed out earlier, pleaded that:

•	the proceedings ought to be dismissed as the respondents were acting in a representative capacity but failed to comply with the requirements for institution of representative proceedings;

•	the second appellant is the chief of the clan that the first respondent claimed to represent;

•	there was no trust relationship between the parties; and

•	in fact, the money was paid to the respondents or persons closely associated with them.

13.    The argument that the respondents had failed to comply with the requirements for institution of representative proceedings was a significant issue. The appellants were arguing that those requirements, spelt out by the Supreme Court in Simon Mali v The State (2002) SC690 and Tigam Malewo v Keith Faulkner (2009) SC960, were not met, ie:

•	all intended plaintiffs must be named in the originating process;

•	each and every intended plaintiff must give specific instructions (evidenced in writing) to their lawyers to act for them; and 

•	any person in whose name proceedings are commenced and who claims to represent other intended plaintiffs must produce an authority to the court to show that he was authorised by them to file proceedings as a class representative.

14.     Not only was this a significant defence which, if upheld, could lead to dismissal of the proceedings, the appellants presented evidence to support it. All other defences appeared arguable, yet the only one commented on by his Honour was that the respondents, or at least some of them, had in fact been paid. His Honour found that this was a serious issue which should be clarified on trial. His Honour ignored other arguments pleaded in the defence and presumed, without justification, that liability had been established.

15.     This was the antithesis of a clear case as the defence filed by the defendants raised serious questions of law (whether the true nature of the proceedings was that they were representative proceedings and if so whether the requirements for institution of such proceedings had been complied with and whether the elements of a trust relationship between either of the defendants and the plaintiffs had been adequately pleaded) and serious questions of fact (whether the plaintiffs had executed a power of attorney allowing the second defendant to receive the money the subject of the claim on behalf of the plaintiffs and whether that money had actually been disbursed to the plaintiffs’ representatives).
 
16.     We find that the learned primary Judge erred in the exercise of discretion as to entry of summary judgment.  

2	WHAT ORDERS SHOULD BE MADE?

17.     As the order of 14 October 2010 was made in error, the appeal will be allowed and the order quashed. We are not in a position to order dismissal of the National Court proceedings. That issue needs to be fully argued before the National Court. We will remit the matter to the National Court, before another Judge. Costs will follow the event.

ORDER	

(1)	The appeal is upheld.

(2)	The order of the National Court of 14 October 2010 in WS No 699 of 2009 is quashed.

(3)	The matter is remitted to the National Court before another Judge.

(4)	Costs of the appeal shall be paid by the respondents to the appellants, on a party-party basis, which shall, if not agreed, be taxed.

Judgment accordingly.
_______________________________________________________________
Ame Lawyers: Lawyers for the First Appellant 	
Cappollo Lawyers: Lawyers for the Second Appellant 	
Horizon Lawyers:  Lawyers for the Respondents