N2118

PAPUA NEW GUINEA

[In the National Court of Justice]

WS 1254 OF 1997

BETWEEN:

BANK OF SOUTH PACIFIC LIMITED
Plaintiff

AND:

RAUN WOK LIMITED TRADING AS
HIGHLANDS FUEL DISTRIBUTORS
Defendant

Waigani	:	Sakora J
2000		:	9 June
2001		:	28 May

Practice and Procedure – Striking out statement of claim – Dismissal for default of non compliance – Dismissal for want of prosecution – Statement of claim not struck out – Proceedings not dismissed – National Court Rules, O.4, r.36., O.8, r.27 and O.10, r.5.

Practice and Procedure – Strike out defence – Summary judgment – Notice of and Order for garnishee – Account with garnishee bank not account of judgment debtor – National Court Rules, O.8, r.27, O.12, r.40, O.12, r.38 and O.13, rr.56 and 57.

Counsel:
Mrs Davani for the plaintiff/respondent
Mr Sirae for the defendant/applicant

28th May 2001

SAKORA J:	Mr Sirae of counsel for the defendant moves the Court pursuant to a Notice of Motion filed 14 March 2000 seeking orders that the plaintiff’s Statement of Claim in this matter be struck out and that this proceedings be dismissed for want of prosecution under O.10, r.5 National Court Rules (NCR).

In support of the application the defendant has filed an affidavit sworn by the learned counsel himself, of 14 March 2000, deposing to the history of the proceedings to date. Annexed to the affidavit is a letter caused to be sent to the plaintiff bank dated 11 February 2000, giving notice of the defendant’s intention to make this application within 14 days (Annexure "A").

Filed on behalf of the plaintiff on 24 March 2000 was a Notice of Motion seeking orders to strike out the defendant’s Defence dated 9 and filed 10 February 2000, and have entered against the defendant Summary Judgment pursuant to O.12, r.38 (NCR). Learned counsel for the plaintiff moved on this motion in response to the defendant’s application.

The history of the dispute between the parties giving rise to the originating process and these applications is well set out in the plaintiff’s Statement of Claim (paragraphs 3 to 12 inclusive) in the Writ of Summons issued out of the Registry of the National Court on 9 December 1997 (as amended 24 November 1998). It is, therefore, instructive to reproduce this in a summary way here.

On or about 19 July 1996 the defendant instituted legal proceedings by way of a Writ of Summons against a company called Mine Tech (PNG) Pty Ltd. Following the due service of the process and after the lapse of the required period under the NCR, the defendant (as plaintiff) obtained on 11 October 1995 judgment against that company for the sum of K17,662.77 with costs and interest. That judgment was entered on 17 October 1996.

It would appear that on or about 20 December 1996, the (present) defendant applied for and was granted leave to file and serve a Garnishee Notice on the (present) plaintiff pursuant to O.13, rr.56 and 57 NCR. The Notice was duly served on the plaintiff bank at its Mt Hagen branch on 19 February 1997. And pursuant to such Notice the plaintiff undertook the necessary search of the account name, and, thereafter, paid the defendant, the judgment creditor the sum of K17,712.77.

It is the plaintiff’s claim that after the payment out of the account in compliance with the Garnishee Notice and Order, it discovered that the account debited in respect of this was an account operated by a customer other than the judgment debtor. It is asserted that the account debited to pay the defendant was operated by an organisation known as Mine Tech-Tor-Rau Joint Venture, a registered business name owned by two companies in the names of Mineral and Technical Services Pty Ltd and Tor-Rau Pty Ltd., the latter being a local partner in the joint venture. Thus, it is further asserted, the company known as Mine Tech (PNG) Pty Ltd against whom the defendant obtained the judgment orders is not the same company as Minerals and Technical Services Pty Ltd.

Following the discovery of the error, the plaintiff demanded the refund of the K17,712.77 that had been mistakenly paid to the defendant. The defendants continuing refusal to heed the demand has led to the present proceedings under which those applications have been brought.

Defendant’s Case

The defendant relies on O.10 r.5 and O.4, r.36 NCR for the two-pronged application. The rule under the first Order is in the following terms:

5.	Want of Prosecution.
Where a plaintiff does not, within six weeks after the pleadings are closed, set the proceedings down for trial, the Court, on motion by any other part, may, on terms, dismiss the proceedings or make such other order as the Court thinks fit.

The second Order then expands on this by providing under O.4, r.36(1) that:

Where a plaintiff makes a default in complying with any order or direction as to the conduct of the proceedings with due dispatch the Court may stay or dismiss the proceedings.

The plaintiff’s amended Writ of Summons was issued on 24 November, 1998. The defendant filed its Defence on 10 February 1999, having filed its Notice of Intention to Defend on 6 January 1999. These are matters of official record, and, thus, Mr Sirae is in error about this in his written submissions.

It is the defendant’s contention that since the filing of the Defence the plaintiff had not taken any action on its part to prosecute the claim. In a letter dated 11 February 2000 (Annexure "A", supra; see also Annexure "A" to the affidavit of Edward Latu sworn 10 April 2000 filed on behalf of the plaintiff), the plaintiff was given notice of the defendant’s intention to apply to the Court invoking the relief provided for under O.10, r.5 (supra). Learned counsel for the defendant asserts in his submissions that this letter was written "exactly 2 years and 1 day after the Defence was filed", but this obviously was an error, because, according to the records, the Defence was filed on 10 February, 1999, (supra).

In any case, the plaintiff was accorded an "extended period" of 14 days within which to prosecute, failing which the defendant would make application as advised (second sentence, Annexure "A" to the affidavits of Tom Sirae and Edward Latu (supra respectively). It was not 7 days as Mr Sirae states in his submissions.

It is in the light of the foregoing sequence of events (or absence of) that the defendant contends, in its second leg of the application, that the plaintiff’s Notice of Motion be dismissed as being an abuse of the process of the Court.

The Case for the Plaintiff

In support of the plaintiff’s application, three affidavits have been sworn and filed. These are noted hereunder as follows:

•	.Mathias Manowo, sworn 6 and filed 15 March 2000
•	.Edward Latu, sworn 12 and filed 13 April 2000
•	.Benneth Kome, sworn 12 and filed 13 April 2000.

Two other affidavits sworn on behalf of the plaintiff were admitted into evidence with the consent of counsel for the defendant though there appeared to have been "short service" (see O.4, rr.42 and 44 NCR: Time for service of notice of motion and supporting affidavits; but see also O.6, r.8: acceptance of service by solicitor). These affidavits were both sworn 9 June 2000, the same day as the hearing of these applications: second affidavit by Mathias Manowo and Gideon Kehara respectively.

Mathias Manowa, a bank officer in the employ of the plaintiff, confirmed the contents of his earlier affidavit (supra), then proceeded to depose to his conducting a "system search" of the computerised records of the accounts when the Notice of Garnishee was served on the bank. It would appear that this search resulted in the discovery that the only account held with the bank was that of Mine Tech (PNG) Pty Limited. And the judgment debtor was Mine Tech (PNG) Pty Limited, though the wrong account, that in the name of Mineral Technological Services Ltd, was debited with the judgment amount of K17,712.77.

Gideon Kehara, a law clerk in the employ of plaintiff’s lawyers, deposed to conducting a "company search" of three named companies. This search resulted in establishing the fact that only one of these, Mineral and Technical Services Limited was currently registered, with Mine Tech unregistered and Torau Pty being a foreign company not showing on the Companies Office records (see Annexure "A" to this affidavit).

From these searches results it transpired that the company Mine Tech (PNG) Pty Ltd, against whom the defendant had obtained the orders for default judgment, was not the same company as Mineral and Technical Services Pty Ltd. These were two totally different corporate entities. Thus, it has been contended by the plaintiff all along that it is legally entitled to the refund of the sum of K17,712.77 as the funds so debited did not belong to the judgment debtor, Mine Tech (PNG) Pty Ltd. It was not the account operated by this company that had been debited with the judgment amount in compliance with the Garnishee Order of the Court.

In this respect it is argued by the plaintiff that the Defence filed by the defendant does not disclose any evidence of a defence, and that, therefore, it should be struck out and summary judgment entered in favour of the plaintiff. Otherwise, it is submitted, the defendant’s continuing refusal to return the funds without asserting any legal entitlement compounds an already serious case of either theft or fraud.

In relation to the defendant’s argument that there has been inordinate delay in prosecuting the claim, learned counsel for the plaintiff relies on the facts, the chronology of events, to say that there has not been any delay, adding further that, in any case, pleadings had not closed at the time of the letter of notice and warning (11 February 2000). And it was noted in this respect also that the present lawyers for the defendant only came on the scene, as it were, on 6 January 1999.

Conclusion

Dealing with the defendant’s application pursuant to O.10, r.5 NCR first, two comments need to be made before proceeding further. The first is that, the Court’s powers here are discretionary. Thus, instead of using what may be described as the power of "pre-emptive strike" to end the proceedings by dismissing the originating process, the Court may make other and less stringent orders, as it thinks fit. The second point is that the relief under this Rule is available only after the pleadings have closed and there has been a failure to set the matter down for trial. And this last action necessarily requires the concurrence and co-operation of the parties.

In respect of the reliance by the plaintiff on O.4, r.36, the powers of the Court here are available only after there has been a default or a failure of comply with orders and direction that have been given already. Compliance with these need to be with "due dispatch". And whether or not there has been due dispatch on the prosecution of the proceedings depends very much on the peculiar facts of each case.

An additional argument advanced by the defendant is in relation to the plaintiff’s application. It is contended that the application amounts to an abuse of process. Similar argument is levelled against the defendant by the plaintiff. The Oxford Dictionary of Law (New ed.) defines the phrase abuse of process as: "A tort where damage is caused by using a legal process for an ulterior collateral purpose. Actions that are obviously frivolous, vexatious, or in bad faith can be stayed or dismissed by the court . . .

Osborn’s Concise Law Dictionary (6th ed) defines phrase to mean: "Abuse of procedure. A frivolous or vexatious action as eg; setting up a case which had already been decided by a competent court. . . ."

In the NCR, O.8, r.27 makes specific provision for such a situation, and it reads as follows:

27.	Embarrassment, etc.

(1)	Where a pleading –
(a)	discloses no reasonable cause of action or defence or other case appropriate to the nature of the proceeding;
(b)	has a tendency to cause prejudice, embarrassment or delay in the proceeding: or 
(c)	is otherwise an abuse of the process of the Court, the Court may at any stage of the proceedings, on terms, or otherwise, order that the whole or any part of the pleading be struck out.
(2)	The Court may receive evidence on the hearing of an application for an order under sub-rule (1) of this Rule.

Another device for summary disposal of an action is as provided for under O.12, r.40, which reads:

40.	Frivolity, etc.

(1)	Where in any proceedings it appears to the Court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings –
(a)	no reasonable cause of action is disclosed;
(b)	the proceedings are frivolous or vexatious; or
(c)	the proceedings are an abuse of the process of the Court,

the Court may order that the proceedings be stayed or dismissed generally or in relation to any claim for relief in the proceedings.

(2)	The Court may receive evidence on the hearing of an application for an order under sub-rule (1) of this Rule.

As well as the abuse of process argument, the plaintiff seeks the more stringent remedy to bring the whole proceedings to an end. This is done by availing (or invoking the powers) of summary judgment under O. 12, r. 38 NCR. This Rule reads as follows:

38.	Summary judgment.

(1)	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 giving the evidence, the defendant has no defence to the claim or part, or no defence as to the amount of any damages claimed.

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

(2)	. . .
(3)	. . .

Recently I have had occasion to canvass the case law in this jurisdiction as well as in Australia and England on this procedure, and to consider the circumstances for and the appropriateness of applications such as envisaged by O.12, r.38 NCR: Christopher M Smith v. Ruma Constructions Limited (Unreported, N1982, of August 2000). I was greatly assisted in that case by what the Supreme Court said in the case of Tsang v. Credit Corporation [1993] PNGLR 112 (Kapi DCJ, Sheehan & Brown JJ). The Court there said that there are two elements involved in this Rule, and these were (at page 117):

(a)	evidence of the facts proving the essential elements of the claim; and 
(b)	that the plaintiff or some responsible person gives evidence that in his belief there is no defence.

Their Honours stated further that (ibid):

If a defence is filed or evidence is given by the defendant . . . the plaintiff must show that, upon the facts and/or the law, the defendant has no defence. The plaintiff will not be entitled to summary judgment if there is a serious conflict of fact or law. Whether a case should go to trial on these issues will be determined on the facts of each case. However, the authorities show that the summary jurisdiction should only be invoked in a clear case. (underlining mine).

In the light of the preceding discussions on the law and the facts (as presented), the Court makes the following findings of fact(s):

•	Pleadings in this matter had not concluded.
•	There has not been an inordinate delay in the prosecution of the proceedings.
•	The bank account garnished to satisfy the judgment debt was not an account in the name of and operated by the judgment debtor.
•	The judgment creditor was not legally entitled to be paid the sum of K17,712.77 by the garnishee bank (now the plaintiff bank).
•	The judgment debtor, Mine Tech (PNG) Pty Limited, named in the Garnishee Notice and Order is a separate entity from Mineral Technological Services Pty Limited.

Further to the foregoing it is the judgment of this Court that the defendant has virtually no defence to the plaintiff’s Statement of Claim. It has no demonstrable bona fide triable issue for this Court to order the proceedings to progress to trial. What the defendant’s situation amounts to can be properly described as unjust enrichment through reliance on an error by the plaintiff bank, an error that is, in the Court’s opinion, no fatal to its claim.

Thus, the Court orders that the defendant’s application be dismissed, and that summary judgment be entered for the plaintiff.
________________________________________________________________________
Lawyers for the Plaintiff:		Blake Dawson & Waldron
Lawyers for the Defendant:		Nonggor & Associates