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National Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
WS NO 235 OF 2012
PAUL PILIMBO PORA
Plaintiff
V
DEAN HULL
First Defendant
AARLIE HULL
Second Defendant
LARRY HULL
Third Defendant
NEW GUINEA TRADERS LLC
Fourth Defendant
JAMES KRUSE
Fifth Defendant
TIMBI KOMBRA
Sixth Defendant
DAVID BORLAND
Seventh Defendant
DELOITTE TOUCHE TOHMATSU
Eighth Defendant
MICHAEL WILSON
Ninth Defendant
KOEYA PERI
Tenth Defendant
WARNER SHAND LAWYERS
Eleventh Defendant
PAUL MIAMEL
Twelfth Defendant
BANK SOUTH PACIFIC
Thirteenth Defendant
Madang: Cannings J
2012: 7, 18 December
PRACTICE AND PROCEDURE – whether proceedings should be dismissed for failure to disclose reasonable cause of action, being frivolous and vexatious, abuse of court's process – National Court Rules, Order 12, Rule 40
The plaintiff commenced proceedings against 13 defendants, claiming damages for 11 causes of action. Only two of the defendants filed a defence within the time permitted by the Rules. The plaintiff moved the court for summary judgment against those two defendants and for default judgment against the other 11. All defendants then moved the court for various orders, including leave to file their defences out of time and dismissal of the proceedings. The court dealt with five motions together.
Held:
(1) As some of the defendants' motions raised the question of whether the proceedings should be entirely dismissed it was convenient to deal with that question first even though the motions that raised the question were filed later in time than the plaintiff's motion for summary judgment and default judgment as a determination that the proceedings are dismissed, which can be made by the court of its own motion, would dispose of all issues raised by the five motions, other than costs.
(2) The statement of claim discloses no reasonable causes of action and deserves to be dismissed as it is plain and obvious even if the matters pleaded were proved it would not entitle the plaintiff to what he is asking for, and it is so prolix, complex and ambiguous it is incapable of facilitating orderly and rational pleadings that would enable the real issues to be identified and it raises so many causes of action (some of which are unknown to the law) against multiple defendants it leaves the defendants guessing as to what the plaintiff's allegations are in relation to them and it fails generally to demonstrate that the plaintiff's claim for damages has a clear legal basis.
(3) The proceedings are frivolous and deserve to be dismissed for that reason in that the plaintiff's claim is so obviously untenable that it cannot possibly succeed and the plaintiff would be bound to fail if the matter went to trial.
(4) The proceedings are not vexatious as the grievances of the plaintiff are genuine and his motivation is not to engage in harassment of the defendants.
(5) The proceedings are to some extent an abuse of process in that they seek orders that would require the court to make a fresh determination of issues of fact and law that were determined in prior proceedings (for winding-up of a company then owned and controlled by the plaintiff).
(6) In the circumstances its appearing to the Court that in relation to the proceedings generally no reasonable cause of action is disclosed and the proceedings are frivolous and an abuse of the processes of the Court, the Court ordered under Order 12, Rule 40(1)(a) and 40(1)(b) and 40(1)(c) of the National Court Rules that the proceedings are dismissed.
(7) Costs did not follow the event as 11 of the defendants failed to file defences and were in default of the Rules and those defendants who sought dismissal of the proceedings (including the 12th and 13th defendants, who filed a defence) failed to adequately set out the jurisdictional basis on which dismissal was sought and explain with clarity to what extent the proceedings should be dismissed. The parties were ordered to bear their own costs.
Cases cited
The following cases are cited in the judgment:
Anderson Agiru v Electoral Commission (2002) SC687
Eliakim Laki and 167 Others v Maurice Alaluku (2002) N2001
Gabriel Apio Irafawe v Yauwe Riyong (1999) N1915
Kiee Toap v Department of Lands & Physical Planning (2004) N2766
Kiee Toap v The State and Electoral Commission (2004) N2731
Lero v Stagg (2006) N3050
PNG Forest Products Pty Ltd and Another v The State and Genia [1992] PNGLR 85
Tigam Malewo v Keith Faulkner (2009) SC960
NOTICES OF MOTION
This is a ruling on five motions seeking amongst other things an order for dismissal of the proceedings.
Counsel
P P Pora, the plaintiff, in person
N Tenige, for the 1st, 2nd, 3rd and 10th defendants
E Wamp, for the 5th, 6th, 7th & 8th defendants
B T Nutley, for the 9th & 11th defendants
M G R Henao, for the 12th & 13th defendants
18 December, 2012
1. CANNINGS J: This is a ruling on five motions that have been filed in relation to proceedings commenced by the plaintiff, Paul Pilimbo Pora, regarding a company, Highlands Arabicas Ltd, which he used to own and control.
WS NO 235 OF 2012
2. The plaintiff claims that he suffered significant losses and damages due to breaches of contract and deceit by the first three defendants, members of the Hull family, who are United States citizens, regarding the affairs of Highlands Arabicas Ltd. He claims that he started the company in 2002 and was until 2005 conducting a successful coffee production and exporting operation through it. In 2005 he decided to expand the company's operations in collaboration with the first three defendants and the fourth defendant, a US-registered company controlled by them. He claims that the first three defendants reneged on an agreement under which he was to obtain a significant interest in the fourth defendant in return for his transfer of a 49% interest in Highlands Arabicas Ltd to them.
3. The deceitful conduct of the first three defendants set in train a course of events, the plaintiff claims, leading to a winding-up petition against Highlands Arabicas Ltd and him being forced to transfer the remaining 51% shareholding in the company to the first three defendants. The result is that he has lost the company that he built up. He claims that the deceit and contractual breaches and other civil wrongs committed by the first three defendants have been facilitated and exacerbated by the actions of the other defendants: the receiver of the company, James Kruse, and other persons associated with the accounting firm Deloitte Touche Tohmatsu (the fifth, sixth, seventh and eighth defendants), the lawyers who acted for the Hull family, Koeya Peri, Michael Wilson and other persons associated with the law firm Warner Shand Lawyers (the 9th, 10th and 11th defendants) and Bank South Pacific and its recoveries manager in its asset management division Paul Miamel (the twelfth and thirteenth defendants).
FIVE MOTIONS
4. The plaintiff commenced proceedings by writ of summons on 19 March 2012. Only the 12th and 13th defendants filed a defence within the time permitted by the Rules, so on 25 October 2012 the plaintiff filed a notice of motion moving the court for summary judgment against those two defendants (on the ground that their defence carried no weight) and for default judgment against the other 11 (on the ground that they were in default of the Rules).
5. All defendants then filed notices of motion seeking various orders that would result in refusal of the orders sought in the plaintiff's motion:
6. The five motions have been heard together. As most of the defendants' motions raise the question of whether the proceedings should be dismissed it is convenient to deal with that question first. Even though those motions were filed after the plaintiff's motion it is better to first determine the question of whether the proceedings are dismissed, as if the proceedings are dismissed this will dispose of all issues raised by the five motions, other than costs.
SHOULD THE PROCEEDINGS BE DISMISSED?
7. Three of the defendants' motions seek dismissal of the proceedings under Order 12, Rule 40(1) of the National Court Rules, which states:
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; or
(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.
8. Proceedings may be dismissed under this provision if two preconditions are met. First, it appears to the Court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings:
9. Secondly the Court exercises a discretion to dismiss the proceedings (rather than staying the proceedings or refusing to dismiss the proceedings) and to dismiss them generally or only in relation to particular claims for relief. I will now address each of the four scenarios prescribed by Rule 40(1) (as described in Kiee Toap v The State and Electoral Commission (2004) N2731 and Kiee Toap v Department of Lands & Physical Planning (2004) N2766) to see if any of them apply here.
NO REASONABLE CAUSE OF ACTION
10. Proceedings will disclose no reasonable cause of action in the following situations:
11. The statement of claim is 24 pages in length and consists of 133 paragraphs. I have formed the view that it is plain and obvious that even if the matters pleaded in it were proven it would not entitle the plaintiff to what he is asking for. It is so prolix, complex and ambiguous it is incapable of facilitating orderly and rational pleadings that would enable the real issues to be identified. It pleads 11 causes of action in paragraph 63, which are described as:
(a) breaches of his basic constitutional rights of his protection of the law, freedom of employment and protection for his property and unjust deprivation of property as guaranteed under Section 5 of the Preamble to the Constitution;
(b) the tort of deceit;
(c) breaches of contract;
(d) the tort of unlawful interference in the plaintiff's lawful trade and profession as an investor and manager of his company, Highlands Arabicas Ltd;
(e) the tort of intimidation and employing unlawful means in achieving their aim;
(f) the tort of negligence;
(g) breaches of statutory duties;
(h) breaches of and abuse of the Papua New Guinea Companies Act;
(i) the tort of malicious presentation of a winding-up petition;
(j) abuse of the court's process;
(k) the tort of conspiracy committed by all the defendants; and
(l) breach of the provisions of the Fairness of Transactions Act 1993.
12. Most of them are unknown to the law. The first one – (a) breach of constitutional rights under Section 5 of the Preamble to the Constitution – makes no legal sense. The Preamble to the Constitution does not create any cause of action. If a person wishes to pursue an action for breach of constitutional rights this is pursued by commencing enforcement proceedings under Section 57 of the Constitution. Likewise with those purported causes of action set out in sub-paragraphs (d), (e), (g), (h), (i), (j), (k) and (l). None of them makes legal sense. None can form the foundation for success. Any reasonable person will have to re-read the statement of claim on numerous occasions just to try to understand what the plaintiff's actual grievances are.
13. The statement of claim has to be assumed to be prosecuting proper causes of action if the defendants are to frame a defence. This is an extremely difficult task as there are multiple defendants and the statement of claim does not make it clear which particular defendants have committed which acts and omissions said to constitute each cause of action. Where there are multiple defendants the originating process must demonstrate what each particular defendant has done which is said to give rise to liability against that defendant (Tigam Malewo v Keith Faulkner (2009) SC960). However, on numerous occasions allegations are made against "the defendants" without specifying which defendants are alleged to have done which acts. For example under the heading "Particulars of the tort of unlawful interference committed by the defendants" it is pleaded in paragraph 72 that:
The defendants unlawfully removed the plaintiff from the position of manager of his company in 2008. [Emphasis added.]
14. Paragraph 75 states:
The defendants later resorted to the employment of threats of court action and liquidation to completely remove the plaintiff from his company and install the Hull family as the owners of the company, which they actually did. [Emphasis added.]
15. Pleadings that are so vaguely expressed are virtually impossible to respond to in any meaningful way. I conclude that the proceedings disclose no reasonable cause of action.
FRIVOLOUSNESS
16. If a case can be characterised in the following way, it is frivolous:
17. These proceedings are frivolous as the plaintiff's claims are so obviously untenable that they cannot possibly succeed and the plaintiff would be bound to fail if the matter went to trial.
VEXATIOUSNESS
18. Proceedings are vexatious where:
19. These proceedings come close to being regarded as vexatious as the defendants are being harassed without good and proper reasons and are being put to the trouble and expense of defending proceedings which cannot possibly succeed in their present form. However, I consider that the grievances of the plaintiff are genuine.
20. One of the few advantages of a person such as him representing himself in court (however there are many disadvantages of having a self-represented litigant in a case as complex and vague as this) is that he was able to convey to the court his real emotions. He feels that he has been the victim of a conspiracy and he has lost his company and his capacity to earn wealth and maintain the standard of living that he and his family had come to enjoy. This is all due to the actions of others, which he considers to have been unethical and illegal. I do not think his motivation for commencement of these proceedings has been to engage in harassment of the defendants. I find that the proceedings are not vexatious.
ABUSE OF PROCESS
21. An abuse of process will occur when the Court's processes are misused. The principles that are to be applied when the court is considering whether or not there has been an abuse of its processes were summarised by the Supreme Court in Anderson Agiru v Electoral Commission (2002) SC687 in these terms:
Those principles in essence are that, the court's inherent power is its authority to do all things that are necessary for the proper administration of justice. Such inherent power consists of all powers reasonably required to enable the court to perform efficiently its judicial functions and to protect its dignity and integrity. Essential to these inherent powers is the court's duty to protect itself by ensuring that vexatious litigants do not abuse the court's process by instituting frivolous or vexatious suits. It behoves litigants therefore to carefully choose their causes of action before they commence proceedings in this Court purporting to enforce their rights. The court should summarily dismiss proceedings it considers frivolous, vexatious or is an abuse of process. ...
In The State v Peter Painke [1976] PNGLR 210, O'Leary AJ emphasized that: "mere motive, however reprehensible, will not be sufficient" (to constitute abuse of process) "it must be shown that, in the circumstances in which the interposition of the court is sought, the remedy would be unsuitable, and would enable the person obtaining it fraudulently to defeat the rights of others, whether legal or equitable".
The court must ensure that a multiplicity of proceedings is not commenced by unsuccessful litigants. That is that a litigant having selected one mode of proceeding and having failed to obtain a remedy, cannot generally be entitled to then institute an alternative proceeding seeking the same remedy that was denied in the earlier proceeding.
22. Many of the allegations and grievances of the plaintiff relate to the manner in which a winding-up petition involving Highlands Arabicas was conducted in 2009 in MP No 608 of 2009. The fifth defendant James Kruse was appointed as interim liquidator in September 2009 and his application to terminate the liquidation was granted by the National Court in June 2010. A settlement agreement which resulted in the transfer of the plaintiff's shares to the first and second defendants in January 2010 was reported to the Court. The present proceedings are to the extent to which orders are sought that would require the Court to make a fresh determination of issues of fact and law that were determined in the winding up proceedings an abuse of process.
CONCLUSION
23. It appears to me that the proceedings in their present form fail to disclose a reasonable cause of action and are frivolous (though not vexatious) and to a significant extent an abuse of process. I therefore have a discretion under Order 12, Rule 40(1)(a), (b) and (c) of the National Court Rules, which I will exercise by ordering the dismissal of the entire proceedings. This is not a conclusion that all causes of action that the plaintiff has attempted to plead in the statement of claim are incontestably bad. However, when so many causes of action, most of which are illusory, are pleaded against so many defendants, the almost inevitable consequence will be that the proceedings will be defective and require dismissal; and I have found that to be the case here. It is unnecessary to consider any other aspect of any of the five motions that have been heard. Dismissal of the proceedings supersedes all other relief that has been sought, other than costs.
COSTS
24. Normally costs follow the event, particularly in a case of dismissal under Order 12, Rule 40(1). However there are two considerations that make this a different sort of case. First, all but the 12th and 13th defendants failed to file a defence to the statement of claim. They were in default of the Rules and were slow in bringing motions for dismissal. This sort of dilatory conduct can result in refusal of a motion to dismiss proceedings or set aside a default judgment and it is certainly a relevant consideration to take into account in the exercise of the Court's discretion as to costs (Lero v Stagg (2006) N3050).
25. Secondly all of the defendants who sought dismissal of the proceedings filed notices of motion that suffered from imprecision: none of them identified precisely which paragraph of Order 12, Rule 40(1) was being relied on, and none of them clarified whether what was being sought was dismissal of the proceedings against particular defendants or dismissal generally. Written and oral submissions did not clarify these issues and when simple questions were asked from the bench about them no simple answers were forthcoming. This was ironic given that the defendants' main complaint was about imprecision and vagueness on the part of the plaintiff. For these reasons I have decided that the parties will bear their own costs.
ORDER
26. The Court orders in relation to the five notices of motion before it that:
(1) The proceedings WS No 235 of 2012 are dismissed generally under Order 12, Rule 40(1)(a) and 40(1)(b) and 40(1)(c) of the National Court Rules.
(2) The relief other than dismissal of the proceedings sought in the plaintiff's notice of motion filed 12 October 2012, the 5th, 6th, 7th and 8th defendants' notice of motion filed 25 October 2012, the 1st, 2nd, 3rd and 10th defendants' amended notice of motion filed 8 November 2012, the 9th, 10th and 11th defendants' notice of motion filed 9 November 2012 and the 12th and 13th defendants' notice of motion filed 5 December 2012 is refused.
(3) The parties shall bear their own costs.
Ordered accordingly.
_________________________________________________________________
Warner Shand Lawyers: Lawyers for the 1st, 2nd, 3rd & 10th Defendants
Ashurst Lawyers: Lawyers for the 5th, 6th, 7th & 8th Defendants
Warner Shand Lawyers: Lawyers the 9th & 11th Defendants
BSP Legal Services: Lawyers for the 12th & 13th Defendants
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