N6158

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 1367 OF 2007

BETWEEN:

HANDY FINANCE LIMITED, TARITO ENTERPRISES LIMITED, NIKAS FINANCIAL LENDING SERVICES, KENMOK FINANCE LIMITED, A.C.E. FINANCIAL LENDING SERVICES, YUWA FINANCE LIMITED, DOBU FINANCE LIMITED, MELANESIAN FINANCE LIMITED, REGIONAL FINANCE LIMITED, LOANS FINANCE LIMITED, SKY FINANCE LIMITED, 2MORO FINANCE, KINA TOEA LENDING SERVICES LIMITED and WAMA FINANCE LIMITED
First, Second, Third, Fourth, Fifth, Sixth, Seventh, Eighth, Ninth, Tenth, Eleventh, Twelfth, Thirteenth and Fourteenth Plaintiffs

AND:

ISAAC BRIAN LUPARI, CBE Chairman of the Central Agencies Coordinating Committee (CACC) Chief Secretary to Government
First Defendant

AND:

GABRIEL YER Secretary Department of Finance
Second Defendant

AND:

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Third Defendant

Waigani: Hartshorn J.
2014: 8th December
2015: 10th November

 Application to strike out defence and for judgment to be entered

Cases cited: 

Vari Gari v. Motor Vehicle Insurance Ltd (2005) Unreported and Unnumbered
White Corner Investments Ltd v. Haro (2006) N3089

Counsel:

Mr. B. S. Lai, for the Plaintiffs 
Ms. S. Vate, for the Defendants 

10th November, 2015

1. HARTSHORN J: This is a decision on a contested motion that seeks to strike out a defence and have judgment entered.

The claim

2. It is pleaded that amongst others:

a) The plaintiffs are either incorporated companies or operate under registered business names and that they are involved in the business of lending money to borrowers, the majority of whom are public servants;

b) The plaintiffs were all allocated deduction codes by the Department of Finance. This assisted the plaintiffs in making direct salary deductions from their public service clients;

c) In July 2007 a Financial Instruction no. 3/2007 was issued by the second defendant, the Secretary for the Department of Finance. It directed the cessation of all of these deduction codes. As a result, the plaintiffs are unable to recover their loan repayments from their public service clients;

d) the defendants have trespassed upon the business of the plaintiffs' and have breached the plaintiffs' qualified rights under s. 53(1) Constitution, which provides protection from unjust deprivation of property.

The defence

3. The defendants in their defence plead amongst others that: 

a) The plaintiffs are able to recover their loan repayments from public service clients by other means such as a standing order from the borrower's bank;

b) The instruction to cease the deduction codes is not a breach of contract. The deduction codes are facilities of, and owned by the State and are not part of the plaintiffs' business arrangements;

c) There is no trespass, the plaintiffs' proprietary rights are not affected and the cessation of the deduction codes was made for public policy reasons.

The motion

4. The plaintiffs' submit that the defence should be struck out as:

a) it does not plead any breach of a statute, or any illegality in the use of the deduction codes or the individual loan agreements;

b) it is unclear what the defendants' "form of action" is;

c) the court can be guided by its decision in Finance Corporation Ltd v. The State (2014) N5682, which was a similar case upon similar facts. In that case the defence was struck out, judgment was entered and further, the deduction codes were restored; 

d) the defendants' have not disclosed a meritorious defence.

5 The defendants' submit that the defence should not be struck out as:

a) Finance Corporation v. The State (supra), although similar, concerned a claim for breach of contract. In this instance, the claim is for trespass and breach of a constitutional right. Consequently the decision in Finance Corporation v. The State (supra) is not of assistance to the plaintiffs, as claimed;

b) As to the trespass claim, there is a defence on the merits. It is pleaded that the deduction codes are facilities of and are owned by, the State. As ownership is an element of trespass, a meritorious defence to the trespass claim is raised;

c) As to the constitutional rights claim, it is pleaded that there are alternative ways for the plaintiffs' to recover the loan repayments of their public servant clients. This is a meritorious defence as to whether the plaintiffs' have been deprived of their alleged proprietary rights.

Consideration

6. The plaintiffs' rely upon Order 8 Rule 27 (1) (a) and Order 12 Rule 1 National Court Rules. Order 8 Rule 27 (1) (a) is the relevant Rule and is as follows:

"27. Embarrassment, etc. (15/26)
 
 (1) Where a pleading-

 (a) discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading; or

 (b)….

 (c)….

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."

7. The plaintiffs' cite the National Court case of Kerry Lero trading as Hulu Hara Investments Ltd v. Philip Stagg (2006) N3050 in support of their motion. In this regard I have also had recourse to the following passage of Lay J. in Vari Gari v. Motor Vehicle Insurance Ltd (2005) Unreported and Unnumbered, referred to in White Corner Investments Ltd v. Haro (2006) N3089, with which I respectfully agree:

"The jurisdiction of the Court under O8 r27 is to see if the pleadings plead an almost incontestably bad cause of action which cannot possibly succeed, and cannot be cured by amendment (PNG Forest Products Pty Ltd and Inchcape Berhad v The State and Jack Genia [1992] PNGLR 85), assuming the truth of the facts pleaded in the statement of claim (Gabriel Apio Irafawe v Yawe Riyong (N1915)), and to a lesser extent, in the defence, as explained by any evidence adduced on the application solely for the purpose of explaining the pleadings. It is not a demurrer procedure and should not be applied where the pleading is arguable but, on the evidence, the chances of success are slight. If the pleading is arguable and not otherwise embarrassing or vexatious an application under O8 r27 ought not to succeed (Brimson v Rocla Concrete Pipes Ltd: Supreme Court Proceedings New South Wales Vol.2 [13.029] of 30 April 1983).

8. From a perusal of the defence, it is pleaded that the deduction codes held by the Department of Finance are facilities of the State and that neither the plaintiffs nor their public service clients own them. This is a reasonable defence to raise in regard to the claim of trespass and in my view cannot be categorised as a defence that is bound to fail. Similarly as to the constitutional rights claim, the pleading in the defence that there are alternative ways for the plaintiffs to recover their loan repayments is not bound to fail. Consequently, I am not satisfied that the plaintiffs have satisfactorily made out that the defendants' defence discloses no reasonable defence, as required by Order 8 Rule 27 (1) (a) National Court Rules.

9. Given this it is not necessary for me to consider the other submissions of counsel. The relief sought by the plaintiffs' should be refused.

Orders

10. The Orders of the Court are:

a) The relief sought in the notice of motion of the plaintiffs' filed 22nd October 2014 is refused;

b) The plaintiffs' shall pay the defendants' costs of and incidental to the said notice of motion;

c) Time is abridged.

_____________________________________________________________
B. S. Lai Lawyers: Lawyers for the Plaintiffs 
Office of the Solicitor General: Lawyers for the Defendants