N6220

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS (COMM) 168 OF 2013

BETWEEN:

EASTERN HIGHLANDS SAVINGS & LOAN SOCIETY LIMITED (IN LIQUIDATION)
Plaintiff

AND:

NOWEK LIMITED
Defendant

Waigani: Hartshorn J.
2015: 13th February,
2016: 22nd January

PRACTICE AND PROCEDURE - Application to dismiss proceeding- grounds to dismiss is for being frivolous, vexatious and an abuse of process – defendant has not made out its application that the proceeding is frivolous, vexatious and an abuse of process - defendants notice of motion seeking that relief dismissed - Order 8 Rule 27 and Order 12 Rule 40 National Court Rules, sections 51 and 52 Savings and Loans Society Act (SLS Act), s.155(4) Constitution.
 
Cases cited: 

Kerry Lerro v. Stagg & Ors (2006) N3050
Takori v.Yagari & Ors (2008) SC905 
Peter Makeng & Ors v. Timbers (PNG) Ltd & Ors (2008) N3317
Mt Hagen Urban Local Level Government v. Sek No. 15 (2009) SC1007
Siu v. Wasime Land Group Incorporated (2011) SC1107

Counsel:

Mr. B. Nutley, for the Plaintiff 
Mr. R. G. Otto, for the Defendant

22nd January, 2016

1. HARTSHORN, J. This is a decision on an application to dismiss this proceeding. The application is made by the defendant Nowek Ltd (Nowek) and is opposed by the plaintiff Eastern Highlands Savings & Loan Society Ltd (In Liquidation) (EHSL).

2. Nowek seeks to dismiss this proceeding on the grounds that it is frivolous, vexatious and an abuse of process as EHSL was dissolved and so does not have any standing to sue, there was no winding up order of EHSL and that the liquidator was not properly appointed.

3. Nowek relies upon Order 8 Rule 27 and Order 12 Rule 40 National Court Rules, sections 51 and 52 Savings and Loans Society Act (SLS Act), and s.155(4) Constitution.

Background

4. EHSL commenced this proceeding seeking amongst others, the vacant possession of a certain property, leave to issue a Writ of Possession, Mesne Profits and Damages. EHSL is a Savings and Loans Society in liquidation and is the registered proprietor of the property. Vacant possession of the property has been ordered and an application to set aside that order was unsuccessful.

Contentions

5. As mentioned, Nowek contends that this proceeding should be dismissed as EHSL was dissolved and so does not have any standing to sue, there was no winding up order of EHSL and that the liquidator was not properly appointed.

6. EHSL contends that the proceeding should not be dismissed as Nowek's application is statute barred pursuant to s.62 SLS Act, Nowek is estopped from making this application and the issues concerning the appointment of the Liquidator and of the order for winding up of EHSL have been raised and determined in other proceedings.

Law

7. As to s. 155(4) Constitution, it is settled law that it is only to be relied upon to protect the primary rights of parties in the absence of other relevant law. In addition, s. 155(4) cannot be applied to do anything contrary or inconsistent with the provisions of the National Court Rules: Peter Makeng & Ors v. Timbers (PNG) Ltd & Ors (2008) N3317 per Injia DCJ (as he then was). Consequently, as the defendant is able to have recourse to Order 8 Rule 27 and Order 12 Rule 40 National Court Rules, there is not an absence of other relevant law and so I will not consider s. 155(4) Constitution further.

8. There are numerous authorities in respect of the principles which apply to applications under Order 12 Rule 40 and Order 8 Rule 27 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 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."

Consideration

Whether EHLS has standing

9. Nowek contends that EHLS does not have standing to bring this proceeding as it was dissolved by virtue of a Gazettal Notice to that effect dated 5th March 2007. A perusal of this Gazettal Notice indicates that the Acting Governor (of the Central Bank) and Acting Registrar of Savings and Loan Societies purports to amongst others, order the dissolution of Eastern Highlands Savings and Loan Society Limited, in accordance with section 51 SLS Act, to take effect from the date of publication of the Gazettal Notice.

10. A perusal of s. 51 SLS Act however indicates that it does not provide for the dissolution of a Society and so a Society cannot be dissolved in accordance with that section. Consequently, as s. 51 SLS Act does not require or permit the Registrar to dissolve a Society by instrument in a gazette, s. 89 (2) Interpretation Act as to the effect of a gazettal notice, does not apply. Moreover, s. 57 SLS Act specifically provides that a Society is not dissolved until the requirements of s. 57 (a) and (b) SLS Act have been complied with. There is no evidence before me that those requirements have been complied with.

11. Further, the Governor (of the Central Bank) and Registrar Savings and Loan Societies gave notice of the appointment of Mr. Andrew Pini as the newly appointed liquidator of EHLS in the National Gazette dated 19th March 2013. By virtue of this notice, the Governor (of the Central Bank) and Registrar is clearly of the view that EHLS has not been dissolved.

12. In these circumstances, I am of the view that the purported dissolution in the National Gazette dated 5th March 2007 is a mistake, the Society has not been dissolved and EHLS through its liquidator has standing to bring this proceeding.

Whether application concerning Registrar's decisions is statute barred

13. In challenging the winding up of EHSL and the appointment of the liquidator, Nowek is challenging the decisions of the Registrar of Savings and Loan Societies, the Governor of the Central Bank, as it is the Registrar that has the power to order the winding up of a Society and to appoint a liquidator (s.51 and s. 52 SLS Act).

14. The only provision in the SLS Act that provides for a decision of the Registrar to be challenged is s. 62 which is as follows:

"62. Appeals.

 (1) A person aggrieved by a decision of the Registrar or of a liquidator may, within 30 days after the decision or within such further time as the National Court in a particular case allows, appeal as prescribed to the National Court, whose decision is final."

15. Section 62 provides for an appeal by a person aggrieved, within 30 days after the decision sought to be challenged, or within such further time as the National Court allows. There is no other provision in the SLS Act that allows for a challenge to a decision of the Registrar. As Nowek's application is not an appeal under the SLS Act it should be dismissed on this basis.

16. If however, it is assumed for present purposes only, that Nowek's application is an appeal, and further, if it is assumed, again for present purposes only, that Nowek can be considered a "person aggrieved"; as there is no evidence of this court making an order allowing, and this court not being aware of any order allowing, further time for an appeal, clearly an appeal against the decisions of the Registrar is now barred as those decisions were made in 2007.

17. For the above reasons, Nowek has not made out its application that the proceeding is frivolous, vexatious and an abuse of process and so its notice of motion seeking that relief should be dismissed. Given this it is not necessary to consider the other submissions of counsel. As to costs, I am not satisfied that EHLS has satisfied the requirements for costs to be awarded on a solicitor client basis.

Orders

18. The Orders of the Court are:

a) The notice of motion filed 4th December 2014 of the defendant is dismissed;

b) the defendant shall pay the plaintiff's costs of and incidental to the said notice of motion on a party party basis to be taxed if not agreed;

c) Time is abridged.

____________________________________________________________
O'Briens: Lawyers for the Plaintiff 
Themis Lawyers: Lawyers for the Defendant