N8362

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS 363 of 2008

BETWEEN:
MELANESIAN TRUST SERVICES LIMITED
Plaintiff

AND:
PACIFIC EQUITIES AND INVESTMENTS LIMITED
Defendant

Waigani: Hartshorn J.
2010: 16th April
: 4th May

PRACTICE AND PROCEDURE - Application to Dismiss Proceeding – defendant seeks orders to dismiss as  the proceeding does not disclose a reasonable cause of action, is frivolous or vexatious or is an abuse of the process of the court - events have overtaken the declaratory relief sought in the Originating Summons - no practical utility in granting relief sought by plaintiff - declaratory relief sought in paragraph 1 of the Originating Summons is hypothetical -substantive claim is bound to fail – application to dismiss proceedings granted – proceedings dismissed - Order 12 Rule 40 National Court Rules
   
Cases Cited:
Papua New Guinea Cases
 
Stettin Bay Lumbar Company Pty Ltd v. Arya Ship Management Ltd (1995) SC488 
Ronny Wabia v. BP Exploration Operating Co Ltd [1998] PNGLR 8
Kiee Toap v. The State (2004) N2731, N2766
Lerro v. Stagg (2006) N3050
State v. Sam Akoita & Ors (2009) SC977

Overseas Cases

Russian Commercial and Industrial Bank v. British Bank for Foreign Trade Ltd [1921] 2 AC 438 
Tampion v. Anderson [1973] VR 321

Counsel:

Mr. J. Poya, for the Plaintiff 
Mr. S. Javati, for the Defendant

4th May 2010

1. HARTSHORN J: The Plaintiff, Melanesian Trustee Services Ltd (MTSL), as the trustee of Pacific Property Trust, by Originating Summons seeks various declarations to the effect that the Defendant, Pacific Equities and Investments Ltd (PEIL), as manager of the Property Trust, does not have the power to appoint an insurance broker on behalf of the Property Trust.

2. PEIL now seeks amongst others, to dismiss this proceeding pursuant to Order 12 Rule 40 National Court Rules as the proceeding does not disclose a reasonable cause of action, is frivolous or vexatious or is an abuse of the process of the court.

3. MTSL opposes the application and submits amongst others, that there is a legal question which needs proper interpretation by this court.

Frivolity

4. I will consider this issue first.

5. PEIL submits amongst others that:

a)	events have overtaken the declarations sought in the Originating Summons and there is no practical utility in granting them,

b)	the declaration sought in paragraph 1 of the Originating Summons is based on an incorrect fact and is hypothetical.

Utility

6. As to whether events have overtaken the declaratory orders sought in the Originating Summons and that there is no practical utility in granting the relief, the declaration sought in paragraph 1 of the Originating Summons, although no dates are referred to, appears to concern the events that prompted the Originating Summons to be filed. There is reference to the reappointment of the, “..current insurance broker…….as in this case..”.  In addition the other declaratory relief sought concerns the purported decision of PEIL in June 2008 to appoint Kanda Ltd as insurance broker.

7. I am satisfied that all of the declaratory relief sought is related to and restricted to the purported appointment of Kanda Ltd in June 2008.

8. In his oral submissions, counsel for MTSL submitted that the present broker is Marsh Ltd and the insurer is Pacific MMI.  He further informed the court that MTSL is not certain whether there is a dispute now and that this would be known when the current policy needs to be renewed. This, in my view, can be taken as confirmation that the dispute concerning the purported appointment of Kanda Ltd in June 2008 is over, but there may be a further dispute when the next appointment of an insurance broker is to be made. 

Hypothetical

9. The declaration sought in paragraph 1 of the Originating Summons is:

“A Declaration that the power to appoint a new insurance broker or to reappoint the current insurance broker for Pacific Property Trust and Pacific Balance Fund as in this case is vested only in the Plaintiff as the Trustee of Pacific Property Trust pursuant to provisions of the Pacific Property Trust Deed and the Provisions of the Deed of Appointment as Manager of Pacific Property Trust.”

10. It is common ground that when the Originating Summons was filed, the appointment of MTSL as the approved trustee of Pacific Property Trust had been purportedly revoked by the Securities Commission of Papua New Guinea by a notice in the National Gazette in February 2006.  It is also common ground that MTSL was approved as trustee for Pacific Property Trust by the Securities Commission by notice in the National Gazette with effect from 14th July 2008.

11. By letter dated 9th February 2006, the Securities Commission wrote to the Chairman of the Board of MTSL and informed amongst others that, “Until an interim Trustee is approved, MTSL is hereby directed to continue managing the affairs of both trusts…..”

12. So at the time that the Originating Summons was filed, MTSL was not the trustee of Pacific Property Trust.  It was at best, a manager.  MTSL did not become trustee for Pacific Property Trust for the material time, as its subsequent appointment as trustee only took effect from 14th July 2008.

13. It can be argued then that the declaration sought in paragraph 1 of the Originating Summons is hypothetical as it seeks relief on a fact situation that was not correct at the time when the relief was sought; that is that MTSL was the trustee of Pacific Property Trust.

14. As to seeking a declaration in respect of an issue that is hypothetical, in the Supreme Court case of Stettin Bay Lumbar Company Pty Ltd v. Arya Ship Management Ltd (1995) SC488, it was stated that one of the prerequisites for declaratory orders is that:

“The issue must not be merely academic interest, hypothetical or one whose resolution would be of no practical effect.”

15. Also in State v. Sam Akoita & Ors (2009) SC977, the Supreme Court cited with approval the celebrated case of Russian Commercial and Industrial Bank v. British Bank for Foreign Trade Ltd [1921] 2 AC 438 at 448 where the factors that are required to be established before a declaratory order can be made are listed. The 6th factor is:

“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.”

16. Following a consideration of the above, I am satisfied that events have overtaken the declaratory relief sought in the Originating Summons and there is no practical utility in granting that relief.  Further, as it can be argued that the declaratory relief sought in paragraph 1 of the Originating Summons is hypothetical, I am satisfied that the substantive claim is bound to fail.

17. PEIL relies on Order 12 Rule 40 National Court Rules which provides amongst others, that proceedings may be dismissed if they are frivolous.  Proceedings have been held to be frivolous if the plaintiff would be bound to fail if the matter went to trial: Ronny Wabia v. BP Exploration Operating Co Ltd [1998] PNGLR 8, Kiee Toap v. The State (2004) N2731, N2766, Lerro v. Stagg (2006) N3050 and Tampion v. Anderson [1973] VR 321.

18. The power to dismiss proceedings which are amongst others, frivolous, is discretionary under Order 12 Rule 40. 

19. As I have found that MTSL’s claim, if it proceeded to trial would be bound to fail and is frivolous, I order that it be dismissed. In deciding as I have it is not necessary to consider the other arguments of counsel.

Orders

20. It is ordered that:	

a)	this proceeding is dismissed.

b)	the costs of and incidental to the proceeding including the notice of motion of the defendant dated 9th July 2008 and filed 14th July 2008 are to be paid by the Plaintiff to the Defendant.	
_____________________________________________________________
Gubon Lawyers:  Lawyers for the Plaintiff     
Mawa Lawyers:  Lawyers for the Defendant