N601

PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]

NATIONAL CAPITAL DISTRICT INTERIM COMMISSION

V

BOGIBADA HOLDINGS PTY LTD
AND CONTINENTAL TRADING PTY LTD

Waigani
Kapi DCJ

4-6 May 1987
24 July 1987

PRACTICE - National Court - Declaratory orders - Jurisdiction to make - Discretionary nature of - Undesirability of multiplicity of proceedings - National Court Rules, O 16, r 9(5)1 - Constitution, s 155(4).

Held

(1) The National Court has power to make merely declaratory orders according to the principles of equity adopted under Sch 2.2 of the Constitution, such powers deriving from s 155(4) of the Constitution.

Dent v Thomas Kavali [1981] PNGLR 481, followed.

(2) The power of the court to make such declaratory orders involves a wide discretion which is not confined by the terms of the National Court Rules, O 16, r 9(5).

(3) Declaratory relief should be refused, where the granting of the declarations sought would not settle the dispute between the parties as the plaintiff intended to claim damages and other remedies and as it is desirable that litigants should be encouraged to bring all matters in dispute in the one action to avoid multiplicity of proceedings.

Cases Cited

Avia Aihi v The State [1981] PNGLR 81.
Dent v Thomas Kavali [1981] PNGLR 488.
"Federal Huron", The Ship v OK Tedi Mining Ltd [1986] PNGLR 5.
Rooke v Lord Kensington (1856) 2 K & J 753; 69 ER 986.
SCR No 2 of 1981; Re s 19(1)(f) of the Criminal Code [1982] PNGLR 150.
Taumaku Morea v Central Provincial Government [1978] PNGLR 415.
Wahgi Savings and Loans Society Ltd v Bank of South Pacific Ltd (unreported, Supreme Court, judgment SC185, 25 November 1980).

Summons

This was an application by way of originating summons seeking declarations that there had been a breach of trust and that a lease was void.

Counsel

G Powell, for the plaintiff.
D Applegarth, for the first defendant.
W Neill, for the second defendant.
Cur adv vult

24 July 1987

KAPI DCJ: The relief sought in these proceedings is in the nature of declaratory orders. When the proceedings were instituted by way of judicial review, the plaintiff sought declaratory orders as well as damages. However, at the hearing, the originating summons was amended by deleting the claim for damages leaving the application as a claim for declaratory orders only.

During submissions, counsel for the first defendant raised the question of the appropriateness of the use of the procedure of judicial review in this case. During the course of considering this issue, an important issue has arisen, and that is, the question of the jurisdiction of the National Court to grant mere declaratory relief only. The issue was not raised during submissions and the parties were recalled and made further submissions in writing on the issue.

Declaratory relief is an equitable remedy and, therefore, the jurisdiction of the court is to be found in the principles of equity in England which have been adopted as part of the law in Papua New Guinea. The principles of equity which are applicable in Papua New Guinea pursuant to Sch 2.2 of the Constitution, are principles of equity applying in England as at 16 September 1975.

Prior to 1850 in England, where a declaration was sought for a title or right it was not possible to grant relief unless it was adjudicated upon as part of other substantive relief. By the Chancery Act (13 & 14 Vict c 35), power to grant mere declaratory relief was granted. However, the grant of this jurisdiction was very limited. For instance, it could only be granted by the consent of the parties. By the Chancery Procedure Act [1852] (15 & 16 Vict c 86) s 50:

"No suit in the said court shall be open to objection on the ground that a merely declaratory decree or order is sought thereby, and it shall be lawful for the court to make binding declarations of right without granting consequential relief."

This provision was again given a very restrictive interpretation. See Rooke v Lord Kensington (1856) 69 ER 986. It was held that a declaratory order could be made if the principal equitable relief could also have been given. A major change to the law on this question was brought about by the Judicature Act 1873. The law under this Act is now expressed in the present English Rule, O 15, r 16:

"No action or other proceeding shall be open to objection on the ground that a merely declaratory judgment or order is sought thereby and the court may make binding declarations of right whether or not any consequential relief is or could be claimed."

It is clear from this brief survey that jurisdiction to grant merely declaratory orders was extended by legislation in England.

As far as Papua New Guinea is concerned, at Independence, Sch 2.2 of the Constitution adopted the principles of equity as part of the underlying law of Papua New Guinea. However, under Sch 2.2(3) the principles of equity are adopted notwithstanding any revision of them by any statute of England that does not apply in the country. That is to say, principles of equity apply without the statutory modification unless those statutes are also adopted to apply in Papua New Guinea. See Wahgi Savings and Loans Society Ltd v Bank of South Pacific Ltd (unreported, Supreme Court, judgment SC185, 25 November 1980). See also The Ship "Federal Huron" v OK Tedi Mining Ltd [1986] PNGLR 5. The legislation which has extended the equitable principles in England has not been adopted by Sch 2.6 of the Constitution. It would appear that under "pure" principles of equity, this Court has no power to grant mere declaratory orders.

However, it has been held by this Court since Independence that the court has jurisdiction to make mere declaratory orders under O 4, r 11 of the old National Court Rules which is exactly in the same terms as the English Rule. This has been said to be the statutory basis upon which this jurisdiction has been exercised. See Taumaku Morea v Central Provincial Government [1978] PNGLR 415. Bredmeyer J has expressed some doubt as to whether or not this could be a statutory basis for jurisdiction and held that this rule can only relate to matters of practice and procedure: see Dent v Thomas Kavali [1981] PNGLR 488 at 490. However, it is not necessary for me to decide the correctness of this view, as O 4, r 11, has been abolished by the new National Court Rules 1983, which came into force on 4 July 1983. Insofar as O 4, r 11 of the old Rules was relied upon as the basis of the exercise of this jurisdiction, this has now been taken away.

It has been submitted that the National Court has inherent jurisdiction to make declaratory orders under the second leg of s 155(4) of the Constitution. This provision was fully considered in SCR No 2 of 1981; Re s 19(1)(f) of the Criminal Code [1982] PNGLR 150. I said (a view which has been considered to be a narrow view) at 171:

"In my view the words ‘such other orders’ are to be interpreted to relate to orders of a similar character as referred to in the first limb of s 155(4) of the Constitution. The use of the word ‘such’ in the provision compels me to come to such conclusion. As to what are these specific orders it is wise not to attempt an exhaustive list. However, these orders must have some resemblance in character or in nature to the prerogative writs. An essential character of prerogative writs in this context is that they are remedial in nature. That is to say they are processes by which the rights of parties are protected or enforced."

At 171, I continued:

"... An illustration of this is to be found in Mauga Logging. In Mauga Logging, the Chief Justice found that under the principles of equity an injunction to restrain a man who is alleged to be a debtor from parting with his property, is not possible. However, his Honour found that he had wide powers under the second limb of s 155(4) of the Constitution to extend the order in the nature of interlocutory injunctions to do justice in the circumstances of the case."

At 172, I said:

"In principle, the application of principles of common law and equity under Sch 2 of the Constitution (underlying law) in relation to remedial orders is quite separate and they can only be developed under the conditions set out under Sch 2.3 and Sch 2.4 of the Constitution and subject to change by statute. Whereas under s 155(4) of the Constitution very wide powers are given to the Supreme Court and the National Court to make remedial orders of a similar nature. They can make these orders in any case whatsoever. They are only limited by the words ‘in such circumstances as seem proper to them’ in the first limb and the words ‘as are necessary to do justice in the circumstances of a particular case’ in the second limb."

According to this view, an order in the nature of an injunction comes within the meaning of the words "such other orders". The view which I have expressed would extend to an order in the nature of a declaration. This definitely comes within the view expressed by Kearney Dep CJ in Avia Aihi v The State [1981] PNGLR 81 at 91:

"... I consider that the subsection gives unfettered discretionary power both to this Court and the National Court so to tailor their remedial process to the circumstances of the individual case as to ensure that the primary rights of parties before them are protected. And so, for example, the development of remedial process such as the Mareva injunction need not be as tortuous here as in England."

Kearney Dep CJ followed this same view in SCR No 2 of 1981 at 158. The question of the application of s 155(4) to a declaratory order was specifically considered by Bredmeyer J in Dent v Thomas Kavali [1981] PNGLR 488 at 490:

"I consider the National Court’s jurisdiction or power to grant a declaratory order comes from the Constitution, s 155(4), in particular the latter words of that section."

I therefore find that this application can be supported under the second leg of s 155(4) of the Constitution.

The procedure for an application for declaration is provided for by O 16 of the National Court Rules. These proceedings have been made in accordance with the rules.

Under O 16, r 9(5):

"Where the relief sought is a declaration, an injunction or damages and the court considers that it should not be granted on an application for judicial review but might have been granted if they had been sought in an action begun by writ by the applicant at the time of making his application, the court may, instead of refusing the application, order the proceedings to continue as if they had been begun by writ."

Counsel for the first defendant submitted that the declaratory orders sought in this application might have been granted if they had been sought in an action begun by a writ. He submitted that I should come to this conclusion and instead of proceeding to consider the merits, I should treat these proceedings as though they were commenced by a writ and adjourn the matter for hearing at a future date or, alternatively, dismiss the proceedings and let the plaintiff commence a new action by way of a writ. Clearly, this is a discretionary matter.

The discretion of the court on this issue need not be confined by the terms of O 16, r 9(5) of the National Court Rules. The court has a wide discretion given by the words "in such circumstances as seem to them proper" in s 155(4) of the Constitution.

The proceedings relate to the Koki Market. The development of this market began in about 1965. A trust was established by legislation: Koki Market-Place Trust Act (Ch No 60) to control and manage the market place and other amenities in Port Moresby. The Trust consisted of Chairman, Deputy Chairman and five other members. In about mid 1983, the Trust was in a bad financial position. In order to overcome the situation, the Trust considered venturing into commercial enterprises in and outside the market to generate revenue. In order to do this, it was necessary to get the approval of the Minister under the Act. The proposals by the Trust were rejected by the Minister. The Trust, however, understood that it could lease the market premises to private firms and in this way generate revenue.

Mr Griffin who has had a long standing relationship with Koki Market and as a member of the Koki Market Trust together with a Mr Tom D Jones also a member of the Trust formed a company, Bogibada Holding Pty Ltd, the first defendant in these proceedings. The idea was to operate this as a business venture, independently of the Trust and lease portions of the market and in this way generate revenue.

A lease was granted to the company by the Trust for a period of 30 years. The company has been running various business enterprises including the leasing of the property to other private companies such as the second defendant.

The National Parliament abolished the Koki Market Trust by Koki Market-Place Trust (Repeal) Act 1986. This Act has effectively transferred the property in the market to the National Capital District Interim Commission, the plaintiff. The plaintiff has taken steps to bring the market under its control. In the process of doing this, it has raised questions about the propriety of the lease to the first defendant. It claims that Mr Griffin and Mr Tom D Jones were trustees and that they acted in a manner to benefit themselves and thus in breach of their responsibilities and obligations. The question of the powers of the Trust have also been questioned about leasing the property for such a long period. The plaintiff also claims that the lease has not been registered and seeks an order that the lease is, therefore, void and of no effect.

Essentially, the plaintiff sought declarations that:

(a) there was a breach of trust; and

(b) the lease executed by the Trust was void and of no effect.

It is apparent from the nature of the evidence that has been presented before me that the plaintiff intends to take control of the situation. The first defendant is unable to reach any compromise on the issues. It will be necessary for the plaintiff to take appropriate action to take control of the premises. Any declaration is not able to settle the dispute. The plaintiff intends to make a claim for damages. The plaintiff may take action against Mr Griffin for breach of trust. The issues sought in the declaration could be raised in these actions.

If I were to grant the declaration sought, I would be deciding the whole dispute between the parties in a piecemeal manner. That is to say, the parties would now get certain questions of fact and law decided. That would hardly resolve the dispute between the plaintiff and the first defendant. If the declarations were granted in its favour, the plaintiff would continue with a claim of damages or account of profits in a separate action. This would not only escalate costs to parties but also encourage multiplicity of proceedings before the court. In my view, this should be discouraged in this jurisdiction. Litigants should be encouraged to bring all matters in a dispute in the one action to avoid multiplicity of proceedings. An appropriate method of resolving all the issues would be by way of a writ. This would allow for proper pleading of all facts and issues of law for determination by the court.

In the exercise of my discretion, I would not grant the declarations. In the instant case, it would not be appropriate to convert the proceedings under O 16, r 9(5) of the National Court Rules, as the plaintiff intends to bring an action for damages in the future. The appropriate order is to dismiss the proceedings and the plaintiff can commence fresh proceedings.

Summons dismissed

_______________________

Lawyer for the plaintiff: G Powell.
Lawyers for the first defendant: Warner Shand Wilson Donigi Reiner.
Lawyer for the second defendant: William Neill.