N760

PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]

OK TEDI MINING LTD

V

NIUGINI INSURANCE CORPORATION AND OTHERS (NO 2)

Waigani
Kapi DCJ

21 September 1989
4 October 1989

PRACTICE AND PROCEDURE - National Court - Declaratory relief - Jurisdiction - Procedural objection to claim for - Where no consequential relief sought - Within discretion of court - Relevant considerations - Multiplicity of proceedings - Disposition of issues - Complex proceedings - Whether advisable in.

Held

(1) A procedural objection may now be made to a claim for a declaratory order on the ground that no consequential relief is sought.

Dent v Thomas Kavali [1981] PNGLR 488 at 490, considered.

(2) In determining whether such a procedural objection should be allowed, relevant discretionary considerations include whether allowing the claim would be encouraging multiplicity of proceedings and/or whether it would finally settle the real dispute between the parties.

(3) In order to keep the issues clear in a case which was complicated and likely to take a long time to complete, it was not advisable to deal with an additional claim for declaratory relief.

Cases Cited

Bruce v The Commonwealth Trade Marks Label Association (1907) 4 CLR 1569.
Dent v Thomas Kavali [1981] PNGLR 488.
Glasgow Navigation Co v Iron Ore Co [1910] AC 293.
Luna Park Ltd v The Commonwealth of Australia (1923) 32 CLR 596.
National Capital District Interim Commission v Bogibada Holdings Pty Ltd [1987] PNGLR 135.
Ok Tedi Mining Ltd v Niugini Insurance Corporation (No 1) [1988-89] PNGLR 355.
Russian Commercial and Industrial Bank v British Bank for Foreign Trade Ltd [1921] 2 AC 438.
Swift Australian Co (Pty) Ltd v South British Insurance Co Ltd [1970] VR 368.
Taumaku Morea v Central Provincial Government [1978] PNGLR 415.

Motion

This was a motion on notice seeking, inter alia, to strike out parts of the statement of claim.

Editor’s Note

See also Ok Tedi Mining Ltd v Niugini Insurance Corporation (No 1) [1988-89] PNGLR 355.

Counsel

R L Hunter QC with A J Sullivan, for the plaintiff.
I V Gzell QC with D R Cooper, for the defendants.
Cur adv vult

4 October 1989

KAPI DCJ: By a notice of motion filed on 13 September 1989 the applicant/defendants seek various orders. In this judgment I will deal with matters that have been contested by the parties.

PAR 16

The plaintiff filed an amended statement of claim on 4 May 1989. Clauses 16, 16a, 16b and 16c were contained in the statement of claim. In an earlier application, the defendants applied to have all the mentioned clauses struck out and to give liberty to the plaintiff to replead the issues. In making my ruling, I struck out cl 16a only of the statement of claim. (See Ok Tedi Mining Ltd v Niugini Insurance Corporationu (No 1) [1988-89] PNGLR 355.)

At the hearing of the application now before me (21 September 1989), the plaintiffs filed a further amended statement of claim. On this pleading, the plaintiff has repleaded the whole of cl 16. Under cl 16, the plaintiff has confined the nature of its claim to loss or damage to the dam at Ok Ma and claims the sum of K69,723,134. Under cll 16a to 16af of the statement of claim, the plaintiff repleaded the claim for reinstatement of a new dam at Lukwi. In respect of this latter claim, the plaintiffs claim a declaration that the insurance companies are liable to indemnify the plaintiff in respect of the replacement costs of building a tailings system at Lukwi or at such other location as may be approved or required by the State. It has been conceded by the plaintiff that the remedy with respect to reinstatement at Lukwi is confined to a declaration in relation to liability because at this stage they are not in a position to build, or not in a position to estimate the cost of, a replacement dam.

The defendants submit that I should strike out cll 16a to 16af on two bases. First, that the plaintiff repleaded the issue which was struck out in an earlier application. Secondly, that the plaintiff at this stage pleaded a hypothetical state of facts, that is to say, that the claim for reinstatement at Lukwi has not eventuated and therefore, the declaration sought is in essence seeking an advice from the court as to its position in a claim which is to take place in the future. The defendants rely on a number of cases: see Glasgow Navigation Co v Iron Ore Co [1910] AC 293 at 294, Bruce v The Commonwealth Trade Marks Label Association (1907) 4 CLR 1569 at 1570, Luna Park Ltd v The Commonwealth of Australia (1923) 32 CLR 596 at 600, Swift Australian Co (Pty) Ltd v South British Insurance Co Ltd [1970] VR 368 at 368-369. It is submitted that the plaintiffs new basis for a claim to a declaration is hypothetical. It seeks a declaration of entitlement to an indemnity in respect of capital costs which it may or may not incur in the future, depending on what the Government of Papua New Guinea decides under the agreement.

The plaintiff concedes that the cost of reinstating an alternative dam at Lukwi is yet to occur in the future and they do not seek any damages at this stage but they submit that their alternative claim is one for a mere declaratory order. They submit that factors required to be established before a declaratory order can be made are set out in the case of Russian Commercial and Industrial Bank v British Bank for Foreign Trade Ltd [1921] 2 AC 438 at 448. They are:

1. There must exist a controversy between the parties.

2. The proceedings must involve a right.

3. The proceedings must be brought by a person who has a proper or tangible interest in obtaining the order.

4. The controversy must be subject to the court’s jurisdiction.

5. The defendant must be a person having a proper or tangible interest in opposing the plaintiffs claim.

6. The issue must be a real one. It must not be merely of academic interest, hypothetical or one whose resolution would be of no practical utility.

The plaintiff submits that in respect of all these matters there is no dispute and therefore the cause of action by way of declaration should be allowed to stand.

I asked Mr Gzell QC of counsel for the defendants, whether the defendant’s complaint was that there was no cause of action in the declaration. He replied that that was not the case but submitted that such a declaration is dependent on whether the plaintiff will incur any costs in reinstating an alternative dam at Lukwi or at any other suitable site. It is submitted that the plaintiff may or may not incur this cost depending on whether the alternative dam is constructed. In my view, this answer reveals the true nature of the objection raised to the alternative claim by way of a declaration.

Before going into the nature of the objection made, it is useful at this stage to outline the present status of the law in Papua New Guinea with regard to declaratory orders. It was considered that under O 4, r 11, of the old National Court Rules, jurisdiction was granted to the Court to make mere declaratory orders: see Taumaku Morea v Central Provincial Government [1978] PNGLR 415. Bredmeyer J expressed some doubt as to whether or not rules of procedure and practice could give substantive jurisdiction: see Dent v Thomas Kavali [1981] PNGLR 488 at 490. Bredmeyer J, however, went on to find that the basis for the jurisdiction of the Court to make mere declaratory orders is to be found in the second leg of s 155(4) of the Constitution. In National Capital District Interim Commission v Bogibada Holdings Pty Ltd [1987] PNGLR 135, I came to the same view that the jurisdiction of the Court in granting declaratory orders is now to be found under s 155(4) of the Constitution. As I pointed out (at 138), the Court has a wide discretion given by the words "in such circumstances that seem to them proper" in s 155(4) of the Constitution.

Now going back to the nature of the objection by the defendants, I do not think that the defendants are challenging the factors which need to be established for a declaratory order to be made as are set out in the case of Russian Commercial and Industrial Bank v British Bank for Foreign Trade Ltd. The only matter that could be raised as a point of contention is the sixth factor in that the defendants say the declaration sought is one of a hypothetical situation. However, this hypothetical argument does not relate to the fact that there is a real issue between the plaintiff and the defendants as to whether in the circumstances of this case the defendants are liable to indemnify the plaintiff with regard to reinstatement of a dam at Lukwi. The defendants’ contention is that the consequential remedy of damages is hypothetical at this stage and they therefore object to the Court giving a mere declaratory order. In essence, this objection was the subject of the old National Court Rules. As I have already stated, O 4, r 11, was intended to deal with the objection now raised by the defendants. It was in these terms:

"An action or proceeding shall not be open to objection on the ground that a mere declaratory judgment or order is sought thereby; and the Court may make binding declarations of right in an action or other proceeding properly brought, whether any consequential relief is or could be claimed therein or not."

Although I did not decide the issue in National Capital District Interim Commission v Bogibada Holdings Pty Ltd, I now agree with Bredmeyer J that this rule could only relate to a matter of practice and procedure and not substantive law relating to jurisdiction. The matter of procedure which it regulated was that no objection could be taken where a mere declaratory order was claimed. With this rule, the defendants could not make the objections they now make. However, this rule has been abolished by the new National Court Rules (Ch No 38). What then is the position now? Having regard to the wide nature of the power in s 155(4) of the Constitution and the fact that O 4, r 11, has been abolished by the new Rules, I am of the opinion that an objection may now be made to a mere declaratory order on the basis that it does not seek any consequential relief. This is a procedural objection which is quite distinct from trying a case on a declaratory order and then in the exercise of the discretion the Court deciding whether to grant a declaration or not. In considering this procedural objection, there may be cases in which the Court may, in the exercise of its discretion, decide to allow a claim for a declaratory order to go on to trial. In this particular case, I consider the following factors in exercising my discretion. The plaintiff makes two claims:

(a) an indemnity or damages for breach of contract for the loss at the Ok Ma dam, and

(b) an action for a declaration for and indemnity in respect of a replacement or reconstruction of a dam at Lukwi.

In respect of the declaration, if a claim for declaration is allowed to stand, by necessity the claim with respect to reinstatement at Lukwi is broken into two parts: first, by way of a declaration in the present action; secondly, by way of assessment of damages when the extent of damages in relation to reconstruction of the dam at Lukwi is assessed. To do this would be encouraging multiplicity of proceedings. A similar argument was put to me in National Capital District Interim Commission v Bogibada Holdings Pty Ltd and I said the following, at 139:

"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 a 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 present case, the claim for declaration in this action is only relevant if the plaintiffs reconstruct a new dam at Lukwi. They are not able to make any such claim by way of indemnity or damages until those costs are incurred. When those costs are incurred, then the plaintiff would be in a position to bring such an action. In my view, that is the appropriate time to bring this cause of action in relation to the reconstruction of a dam at Lukwi.

There is another reason why I would not allow the claim for a mere declaratory order to proceed in this particular action. The claim in relation to the indemnity or alternative damages for breach of contract for loss or damage at the Ok Ma dam is one where the issues raised are complicated. It is not appropriate also to try a claim for a declaration which does not finally settle the dispute with regard to Lukwi. In order to keep the issues clear in a case which is complicated and would take a long time to complete, it is not advisable also to deal with a question of a mere declaratory order. For these reasons, I would not allow the claim for a mere declaratory order to stand in this statement of claim. In coming to this ruling, I am aware that this in no way prevents the plaintiff from ever bringing the action again. This action may be brought at the appropriate time when all the issues may be dealt with together in the one action.

Claim for declaratory relief struck out

___________________

Lawyers for the applicant/defendants: Brian White & Associates.
Lawyers for the respondent/plaintiff: Blake Dawson Waldron.