N7569

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS 178 of 2015

BETWEEN:
ANDITA KEKO and 13 other
Landowner Agents as named in the
Schedule to this Originating Summons
First Plaintiffs

AND:
JUSTICE FOUNDATION FOR PORGERA LTD
Second Plaintiff

AND:
BARRICK (NIUGINI) LTD
First Defendant

AND:
HON BYRON CHAN, MP Minister for
Mining of the Independent State of Papua New Guinea
Second Defendant

AND:
THE ATTORNEY GENERAL as
Nominal Defendant for the Governor General
of the Independent State of Papua New Guinea
Third Defendant

AND:
THE INDEPENDENT STATE OF PAPUA
NEW GUINEA
Fourth Defendant

Waigani: Hartshorn J
2015: 4th September
2016: 25th July
   Application to dismiss proceeding

Cases Cited: 

Bernard Kosie v. John Kapi Natto (2015) N6263
Bernard Kosie v. John Kapi Natto (2016) unreported SCA 55/15 delivered 6/5/16) 
Kerry Lerro v. Stagg & Ors (2006) N3050
Louis Lucian Siu v. Wasime Land Group Incorporated (2011) SC1107
Mamun Investment Ltd v. Onda Koim (2015) SC1409
Mt Hagen Urban Local Level Government v. Sek No. 15 (2009) SC1007
Puri Ruing v. Allan Marat (2012) N4672
Takori v.Yagari & Ors (2008) SC905
Wan Global Limited v. Luxurflex Limited (2012) SC1199
Counsel:

Mr. P. Harry, for the Plaintiffs
Mr. M.M. Varitimos QC and Mr. R. Bradshaw, for the First Defendant

25th July, 2015

1.   HARTSHORN J:  This is a decision on an application to dismiss this proceeding. The application is made by the first defendant Barrick (Niugini) Limited (Barrick) and opposed by the plaintiffs. The application is made pursuant to Order 12 Rule 40 (1) (a), (b) and (c) National Court Rules and this court’s inherent jurisdiction to control proceedings before it.

Background

2.   The plaintiffs, comprising persons described as landowners, and a company, seek by way of originating summons, amongst others, declaratory relief to the effect that a certain Mining Development Contract made on 12th May 1989 (MDC) is void ab initio and the Porgera Special Mining Lease No 1 granted on the same date (SML), is of no legal force or effect.

This application

3.   Barrick contends that this proceeding should be dismissed as:

a)	the proceeding should have been commenced by way of judicial 	review proceedings, for which leave was required, and applying the principles for the grant of leave, leave would never have been granted; 

b)	the plaintiffs should have sought all the relief in the one proceeding, including claims based on trespass and negligence, rather than the 	proposed multiple proceedings;

c) 	the claim is statute barred;

d) 	the action is clearly misconceived and untenable;

e)	the proceeding is vexatious and in the circumstances constitutes harassment of the first defendant by use of court proceedings seeking 	to declare contracts entered into over 25 years ago, and acted upon, void ab initio or invalid.

4.   The plaintiffs’ contend that the proceeding should not be dismissed as amongst others:

a)	the application of Order 12 Rule 40 National Court Rules is focused 	on pleadings in a statement of claim and not on an originating summons that seeks a declaration that concerns the State entering into a contract without legislative power and that the contract should be set aside as void ab initio;

b)	any party seeking a declaration to determine its rights must be heard;

c)	the determination of the declarations sought is incapable of strike out proceedings before the plaintiffs’ articulate their arguments in the National Court;

d)	the originating summons is not an abuse of process;

e)	the originating summons is neither frivolous, vexatious or a 	duplication of previous proceedings;

f)	the declarations sought are serious issues to be tried and do not fall into the category of cases where no reasonable cause of action is 	disclosed.

Order 12 Rule 40 National Court Rules

5.   As to the plaintiffs’ contention concerning Order 12 Rule 40 National Court Rules that it is focused on pleadings in a statement of claim and not on an originating summons that seeks a declaration, Order 12 Rule 40 is in Division 4 of Order 12 National Court Rules. Order 12 Rule 37 provides that Division 4 applies to all proceedings except proceedings which include certain categories which are not relevant to this proceeding. Further, Order 12 Rule 40 provides at its beginning, “Where in any proceedings…….” I am satisfied therefore that Order 12 Rule 40 can be relied upon for a proceeding commenced by an originating summons and in respect of an originating summons that seeks a declaration.

6.   There are numerous authorities in respect of the principles which apply to applications under Order 12 Rule 40 National Court Rules and I refer to the following cases in this regard: Kerry Lerro v. Stagg & Ors (2006) N3050, Takori v.Yagari & Ors (2008) SC905, Mt Hagen Urban Local Level Government v. Sek No. 15 (2009) SC1007 and Louis Lucian Siu v. Wasime Land Group Incorporated (2011) SC1107. The Court in Mount Hagen v. Sek (supra) in paragraphs 27 to 30 conveniently sets out the requirements of Order 12 Rule 40 (1) (a), (b) and (c) as follows: 

“27.	The terms “vexatious”, “frivolous”, “abuse of the process of the Court” and “reasonable cause of action” under O.12 r.40 of the National Court Rules have been judicially considered, defined and expounded in a number of decisions in both the National and Supreme Courts. These cases include Ronny Wabia v. BP Exploration Co. Limited & 2 Others [1998] PNGLR 8 (N1697); PNG Forest Products Pty Ltd and Another v. The State and Genia [1992] PNGLR 85; Gabriel Apio Irafawe v. Yauwe Riyong (1996) N1915; Eliakim Laki and 167 Others v. Maurice Alulaku and Others (2002) N2001; Kiee Toap v. The Independent State of Papua New Guinea & Another (2004) N2766; Kerry Lerro trading as Hulu Hara Investments Limited v. Philip Stagg, Valentine Kambori & The State (2006) N3050; Philip Takori & Others v. Simon Yagari & 2 Others (2008) SC 905. These cases say the same thing. 

28.	The law with regard to an application for dismissal of proceedings based on O.12 r.40 is settled in our jurisdiction. We note that the principles are succinctly set out in Kerry Lerro’s case (supra) and which has more recently been approved and applied by the Supreme Court in Philip Takori’s case (supra). 

29.	The phrase ‘disclosing a reasonable cause of action’ consists of two parts; cause of action and form of action. A cause of action is defined as a legal right or form of action known to law whereby a plaintiff in a statement of claim must plead all necessary facts and legal elements or ingredients to establish or prove his claim.  The principles stated by these cases can be summarized as follows:

(i)	A plaintiff or claimant should not be driven from the judgment seat in a summary manner and that the Court should be cautious and slow in exercising its discretionary power.
 	
(ii)	The Court has an inherent jurisdiction to protect and safeguard its processes from abuse.

(iii)	The purpose of O.12 r.40, is to give the Court power to terminate actions or claims which are plainly frivolous or vexatious or untenable.

(iv)	A frivolous claim is one that is characterized as a claim that is plainly and obviously untenable, that cannot possibly succeed and bound to fail if it proceeds to trial.

(v)	A vexatious claim is one that is said to be a sham and cannot succeed where it seeks to merely harass the opposing party and put that party to unnecessary trouble and expense in defending or proving the claim.

30.	In an application under O.12 r.40 of the NCR, the Court may dismiss a proceeding or action where it is satisfied that the pleading in the statement of claim is seriously wanting where a necessary fact or legal element has not been pleaded.”

Whether the proceeding should have been commenced by way of judicial review

7.   Barrick contends that by seeking the relief that the MDC is void ab initio and that the SML is invalid, the plaintiffs are in essence challenging a decision of the Governor General. That is the Governor General’s decision to execute the MDC and SML on the advice of the National Executive Council. The decision is challenged on the basis that the Governor General exceeded or lacked the requisite jurisdiction and so the MDC and SML are invalid and should be quashed.

8.   The declarations sought by the plaintiffs in this instance in substance or in effect are seeking to achieve what should be achieved by seeking orders in the nature of certiorari, after applying and being granted leave for judicial review. The practical effect of the declarations, if granted, would be that the decision of the Governor General, on advice of the National Executive Council, to execute the MDC and the SML would be quashed. The proceeding therefore should have been commenced under Order 16 National Court Rules. That it was not renders this proceeding an abuse of the process of the court. 

9.   The plaintiffs’ did not make submissions on this issue.

Consideration

10.   In regard to whether the plaintiffs’ are challenging the decision of the Governor General on the basis that he exceeded or lacked jurisdiction, I am satisfied that they are for the reasons contended by Barrick. I am fortified in this view by the submissions of the plaintiffs’ in which it is stated that, amongst others at [4] “….. there is no power in the Act for the Governor General to execute the MDC or sign Contracts on behalf of the State.” and that, at [9], “The Governor General had no power to sign the MDC ….”

11.   The declarations sought by the plaintiffs’ are in effect that the decision of the Governor General to enter into the MDC and SML is void ab initio and of no legal force or effect. The argument is that as in reality what is being sought are orders in the nature of certiorari but disguised as declarations, Order 16 Rule 1 (1) National Court Rules requires this proceeding to have been commenced pursuant to Order 16. That it was not constitutes an abuse of process. This is particularly so, as by not commencing the proceeding pursuant to Order 16, leave to apply for judicial review has not been sought.

12.    I considered this issue in Puri Ruing v. Allan Marat (2012) N4672 and Wan Global Limited v. Luxurflex Limited (2012) SC1199 (see also Bernard Kosie v. John Kapi Natto (2015) N6263, an appeal from which was refused in Bernard Kosie v. John Kapi Natto (2016) unreported SCA 55/15 delivered 6/5/16).

13.   In Ruing v. Marat (supra), after referring to the Supreme Court cases of Michael Gene v. Hamidian Rad [1999] PNGLR 444 and Telikom (PNG) Ltd v. ICCC and Digicel (2008) SC906, I referred to the following observations of Lay J. in Rabaul Shipping Ltd v. Rupen (2008) N3289. At paragraph 7 His Honour said the following with which I respectfully agree:
 
“If this were a case where the Court was being asked to declare wrong a decision of a tribunal exercising a discretion I would have great difficulty in accepting that an ordinary summons was the appropriate procedure because in those circumstances the only purpose of such a declaration is to quash the decision of the tribunal given the statutory authority to make the decision. That is an order in the nature of a prerogative writ by another name…”

14.    I then said that in my view in the case before me:

“… the only reason for the declaration that is sought in this instance is to quash the decision of the Head of State made on the advice of the NEC. That is, for this court to review that decision and then to quash it. So although the plaintiffs are not seeking an order for certiorari, they are seeking an order in the nature of, or similar to, certiorari. Pursuant to Order 16 Rule 1 (1) National Court Rules, an application for an order in the nature of certiorari shall be made by way of an application for judicial review in accordance with Order 16 National Court Rules. It is mandatory. Such an application has not been made in this instance. The application that has been made is by originating summons pursuant to Order 4 and constitutes an abuse of the process of this court as it has been commenced incorrectly.”	 

15.   As the practical effect of the declarations, if they are granted, is that the decision of the Governor General, on advice of the National Executive Council to execute the MDC and the SML would be quashed, I am satisfied that the declarations sought by the plaintiffs’ are in substance or in effect achieving what should be achieved pursuant to Order 16 National Court Rules. That is that orders in the nature of certiorari should have been sought. To apply for such orders, Order 16 Rule 1 (1) makes it mandatory for an order in the nature of amongst others, certiorari to be made by an application for judicial review. This could only occur if an application for leave for judicial review has been successful. As this proceeding should have been commenced pursuant to Order 16 National Court Rules but was not, and as commencement of such a proceeding is mandatory, the proceeding is an abuse of the process of this court and should be dismissed.

Whether the declarations sought are statute barred

16.   Notwithstanding the above, I also give consideration to whether the declarations sought are statute barred.

17.  Barrick contends that although declarations are sought in the originating summons, the plaintiffs’ claims are founded on or based upon contracts. If there were no MDC or SML, there would not be any action. As the MDC was entered into, and the SML was granted on 12th May 1989, the plaintiffs’ action is founded on simple contract, brought after the expiration of six years commencing on the date on which the cause of action arose: s. 16 (1) Frauds and Limitations Act (Limitations Act). 

18.   Further, the relief sought in paragraph 3 of the originating summons is framed to be dependent upon the granting of the relief in paragraphs 1 and 2. If they fail, so does the relief sought in paragraph 3. In any event, s. 16 (2) Limitations Act applies, it is contended. That section provides that an action for an account shall not be brought in respect of any matter which arose more than six years before the commencement of the action.

19.   Barrick relies upon the Supreme Court decision of Mamun Investment Ltd v. Onda Koim (2015) SC1409 and contends that as the date that the plaintiffs’ purported cause of action accrued was 12th May 1989, pursuant to s. 16 (1) and (2) Limitations Act, the plaintiffs’ action has no prospects of success as it is statute barred. 

20.  The plaintiffs’ did not make submissions on this issue.

Consideration

21. Section 16 (1) and (2) Limitations Act are as follows: 

“16.	Limitation of actions in contract, tort, etc.

    (1)	Subject to Sections 17 and 18, an action—
          (a) that is founded on simple contract or on tort; or
	(b) to enforce a recognisance; or
	(c) to enforce an award, where the submission is not by an 			      instrument under seal; or
	(d) to recover any sum recoverable by virtue of any enactment, 		      other than a penalty or forfeiture or sum by way of penalty or forfeiture,
shall not be brought after the expiration of six years commencing on the date on which the cause of action accrued.
 
(2)	An action for an account shall not be brought in respect of any matter which arose more than six years before the commencement of the action.”

22.  Section 18 Limitations Act is:

“18.	Claims for specific performance, etc.

Section 16 does not apply to any claim for specific performance of a contract or for an injunction or for other equitable relief.”

23.  To determine whether s.16 applies, as the plaintiffs’ are not claiming specific performance of a contract or an injunction, it is necessary to consider whether the relief sought in the originating summons is equitable.

24.  The relief claimed in the originating summons are two declarations and an account of profits. The claim for an account of profits is dependent upon the two declarations being granted.
25.  As to whether a claim for declaratory relief is itself a claim for equitable relief, in Mamun Investment v. Koim (supra), the Supreme Court, of which I was a member, considered various authorities and applied the principle stated in  H. Stanke & Sons Pty Ltd & Anor v. O’Meara [2007] SASC 246, a judgment of the Full Court of the Supreme Court of South Australia. The Supreme Court, after embarking upon a detailed consideration of authority on whether by seeking declaratory relief, an applicant was seeking equitable relief, said:
“There are other cases…. where the plaintiff’s case is founded upon equitable principles and the declaration is simply the device which gives effect to those principles.” 
and then:

“Whilst it may be accepted that applications for mere declaratory relief cannot be regarded as seeking equitable relief, it is necessary to examine the pleadings in each case in order to determine the true nature of the relief sought.”

26.   In Mamun Investment v. Koim (supra), the Supreme Court held that:
“8. In this instance the underlying basis for the declaratory relief claimed is not in equity. It is based upon a breach of a contract of sale and upon the tort of fraud. After giving consideration to the above authority, in our view the relief claimed in the Originating Summons cannot be categorised as “other equitable relief” in s. 18 Frauds and Limitations Act and so the respondents’ claims do not come within the wording of s. 18 Frauds and Limitations Act.”
27.   In this instance when the declarations sought are considered, it is clear that they are founded on or based upon contracts, the MDC and the SML. It is the case as contended by Barrick, that if there were no contracts, the MDC and the SML, there would be no action. I am satisfied that the underlying basis for the declaratory relief claimed is not in equity and so s.18 Limitations Act does not apply.
28.  In regard to the application of s. 16 (1) Limitations Act, I am satisfied that s. 16 (1) (a) applies as the MDC and SML are simple contracts. As to the date on which the plaintiffs’ purported cause of action accrued, the plaintiffs’ take issue with the execution of the MDC. This occurred on 12th May 1989 and so that is the date that the purported cause of action of the plaintiffs’ accrued. Clearly, the plaintiffs’ action has been brought after the expiration of six years commencing on the date on which the cause of action accrued. The plaintiffs’ action therefore has no prospects of success as it is statute barred.
29.  As the declarations sought would not be granted, the relief sought for an account, being dependent upon the success of the declarations, also fails. In addition, s. 16 (2) Limitations Act applies to the same effect.
30.   Consequently, as I have found that the proceeding is an abuse of process and the claim is statute barred, it is not necessary to consider the other submissions of counsel.
Orders
31. It is ordered that:
a)This proceeding is dismissed;
b)The plaintiffs’ shall pay the first defendant’s costs of and incidental to 	the notice of motion filed 5th May 2013 and this proceeding;
c)Time is abridged.
_____________________________________________________________
Stevens Lawyers:  Lawyers for the Plaintiffs                         
Bradshaw Lawyers:  Lawyers for the First Defendant