N7051

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS No.126 of 2015

BETWEEN:
LENDEAPON WAL
Plaintiff

AND:
OIL SEARCH (PNG) LIMITED
First Defendant
	
	AND:
                                            BSP CAPITAL LIMITED
Second Defendant

Waigani   :   David, J
2017 :  7 & 9 June

PRACTICE & PROCEDURE – application to remove party – application should be made as soon as possible after the institution of the proceedings -  National Court Rules, Order 5 Rule 9.

PRACTICE & PROCEDURE – pleadings-application for leave to amend statement of claim - discretionary matter for Court – relevant considerations for exercise of discretion- application of considerations — National Court Rules, Order 8 Rule 50(1).

Cases Cited:
Papua New Guinea Cases

New Guinea Limited v Thomason [1975] PNGLR 454
Komboro George v Motor Vehicles Insurance (PNG) Trust (1993) PNGLR 477
The Papua Club Inc. v Nusaum Holdings Ltd (2002) N2273
Michael Kewa v Elias Mai Kombo (2004) N2688

Overseas cases cited:

Carpenter’s Investment Trading Co Ltd v Commonwealth (1952) 69 WN 175 
 Sproule v John Fairfax & Sons Ltd [1968] 3 NSWR 655 

Counsel:
No appearance, for the Plaintiff
Michael Kuma, for the First Defendant
Samuel Ahabh, for the Second Defendant

	RULING	
9th June, 2017

1.   DAVID J: INTRODUCTION:  The plaintiff commenced the current proceedings by writ of summons endorsed with a statement of claim on 17 February 2015.  He is seeking orders for; restitution of 5,843 shares negligently transferred; market value of the 5,843 shares negligently transferred; accrued dividend payments for the year 2009 to the time of judgment in respect of the said shares; K100,000.00 for loss of future investment portfolios; K15,000.00 for out of pocket expenses; general damages for frustration, distress and anxiety; costs; and interest pursuant to statute.    

2.   This is a ruling on two applications.  One was moved by the first defendant pursuant to a notion of motion filed on 28 March 2017 seeking an order under Order 5 Rule 9 and Order 12 Rule 1 of the National Court Rules for it to be removed as a party.  The other was moved by the second defendant pursuant to a notion of motion filed on 10 May 2017 seeking leave under Order 8 Rule 50(1) of the National Court Rules to amend its defence.    Both motions were returnable on 7 June 2017 at 9.30 am. 

3.   Having been satisfied that both motions were duly served on the plaintiff through its lawyer, Jeffersons whose offices are located at Oxford First Aid Supplies Building, Allotment 9 Section 52 Ahuia Street, Gordons, National Capital District not less than three days before the time fixed for hearing, I proceeded to hear the applications in the absence of the plaintiff.  The first defendant’s motion was served on 3 April 2017 at 10:29 am. The second defendant’s motion was served on 23 May 2017 at 4:09 pm.

4.   I will determine the first defendant’s application first.

APPLICATION TO REMOVE FIRST DEFENDANT AS A PARTY

5.   The first defendant’s application is supported by the affidavits of:

(a)	Michael Kuma sworn on 27 March 2017 and filed on 28 March 2017;
(b)	Steven Gabie sworn and filed on 20 April 2017.

6.  Mr Kuma for the first defendant submits that the first defendant should be removed as a party because there is no allegation of any wrongdoing on the part of the first defendant with regard to the alleged negligent transfer of 5,843 shares allegedly owned by the plaintiff in the first defendant.  This is because the shares in the first defendant are managed by Computershare Investor Services Pty Limited in Melbourne, Australia.

7.	The second defendant does not object to the moving of the motion or the relief sought.   

8.	Has the first defendant been improperly or unnecessarily joined?

9.	Order 5, Rule 9 of the National Court Rules states:

“Where a party—
(a)	has been improperly or unnecessarily joined; or
(b)	has ceased to be a proper or necessary party,
the Court, on application by any party or of its own motion, may, on terms, order that he cease to be a party and make orders for the further conduct of the proceedings.”

10.    This rule does not expressly provide a time as to when an application ought to be made. However, I am of the view that if a party has been improperly or unnecessarily joined or has ceased to be a proper or necessary party, it is necessary that the party be removed from the suit as soon as possible after the institution of the proceedings either on application by a party or of the court’s own motion. 

11.	It has been held that if a defendant participates in the proceedings and delays in bringing an application, this may prejudice any subsequent application brought pursuant to this rule:  Carpenter’s Investment Trading Co Ltd v Commonwealth (1952) 69 WN 175; Sproule v John Fairfax & Sons Ltd [1968] 3 NSWR 655. 

12.	It is my view that if the joinder of a party is related to substantive issues of law that are fairly arguable, then the party sought to be removed should not be removed on the ground of misjoinder.         

13.	I do not see any merit in first defendant’s motion.  I cannot understand why the first defendant would want to be removed when the shares concern shares allegedly held by the plaintiff in the first defendant itself which allegedly were transferred negligently to three persons named at paragraph 9 of the statement of claim essentially without his consent or authority.   It is also my view that the first defendant should not be removed from proceedings if its interests will be directly affected by orders and other relief sought by the plaintiff.
 
14.	In addition, according to the court file; the first defendant filed its defence on 1 April 2015; the second defendant filed its defence on 24 March 2015; the parties have engaged in the discovery of documents under Order 9 Division 1 of the National Court Rules; and on 24 May 2016, a notice to set down for trial was endorsed by the parties and filed.  Prior to the filing of the application, the first defendant has participated in the proceedings for more than two years now and its conduct in bringing this application is dilatory.  

15. 	In the result, I will refuse the relief sought in the motion to remove the first defendant under Order 5 Rule 9(a) of the National Court Rules and dismiss the application.

APPLICATION TO AMEND SECOND DEFENDANT’S DEFENCE

16.	The second defendant’s application is supported by the affidavits of:

(a)	Samuel Ahabh sworn and filed on 9 May 2017;
(b)	Simon Adani sworn on 24 May 2017 and filed on 26 May 2017. 

17.	It was submitted by Mr Ahabh of counsel for the second defendant that the application should be granted on the grounds that:

(a)	the amendment will enable the Court to determine whether or not the second defendant has a proper defence based on the statute of limitations;
(b)	the second defendant failed to specifically plead in its defence the statute of limitations and that is an error which the proposed amendment will rectify;
(c)	the amendment will not cause any real prejudice or injustice to the parties particularly on the part of the plaintiff;
(d)	the application was made bona fide;
(e)	the plaintiff will be fairly compensated with costs for such amendment.
(f)	the second defendant is keen on defending the action whereas the plaintiff has not taken any active steps to prosecute the action leaving the matter in abeyance;   
(g)	the interest of justice lies in favour of granting the application;
(h)	this was an efficacious amendment as the proposed amendment has real likelihood of resulting in these proceedings being dismissed for being time-barred by virtue of Section 16(1)(a) of the Frauds and Limitations Act as the plaintiff’s cause of action is founded on the tort of negligence.

18.	The first defendant does not object to the moving of the motion or the relief sought.   

19.	Should the second defendant’s application to amend its defence be granted? 

20.	The power of the Court to either grant or not to grant the leave sought by the second defendant is derived from Order 8 Rule 50 of the National Court Rules. Sub-rule (1) of the rule provides that at any stage of the proceedings, the Court may grant leave to a party to make an amendment to any document in the proceedings either on application of a party or of its own motion in such manner as the Court thinks fit. Sub-rule (2) then provides that all necessary amendments shall be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings, or of correcting any defect or error in any proceedings, or of avoiding multiplicity of proceedings.

21.	The Court’s power under this rule, is discretionary and broad, and in exercising that discretion, the Court has the duty to do so judicially and on proper principles, so that justice is done in the case even at the late stage of the proceedings: see New Guinea Limited v Thomason [1975] PNGLR 454; Komboro George v Motor Vehicles Insurance (PNG) Trust (1993) PNGLR 477.

22.	In The Papua Club Inc. v Nusaum Holdings Ltd (2002) N2273, Gavara-Nanu, J set out five considerations to be taken into account when deciding whether or not to grant leave to amend a document.  These are:  

(a)	Will the amendment enable the Court to determine the real question in controversy between the parties? 
(b)	Will the amendment correct any defect or error in the proceedings?
(c)	Will the amendment cause real prejudice or injustice to other party?
(d) 	Is the application for such amendment made mala fide or bona fide?
(e)	Can the other party be fairly compensated with costs for such amendment?

23.	Three other considerations were added to that list by Cannings, J in Michael Kewa v Elias Mai Kombo (2004) N2688.  	These are:

(a)	Is the party applying prevented by its conduct or the manner in which the proceedings have been progressed from being permitted to amend its pleadings?
(b)	Where do the interests of justice lie?
(c)	Is the proposed amendment efficacious? That is, is it a proper amendment?   

24.	I adopt the foregoing considerations and apply them to the facts and circumstances of the present case below.    

Will the amendment enable the Court to determine the real question in controversy between the parties? 

25.	Yes. I accept the second defendant’s submissions.

Will the amendment correct any defect or error in the proceedings?

26.	Yes. It will.    Order 8 Rule 14 of the National Court Rules provides that a party must specifically plead, inter alia, any statute of limitation showing illegality which he alleges makes any claim  of the opposite party not maintainable which if not pleaded may take the opposite party by surprise. I accept the second defendant’s submissions.

Will the amendment cause real prejudice or injustice to other party?

27.	 No. I accept the second defendant’s submissions.  The plaintiff will have the opportunity to respond. 	

Is the application for such amendment made mala fide or bona fide?

28.	I agree with the second defendant that there is no evidence of any mala fides.  The application is made bona fide.

Can the other party be fairly compensated with costs for such amendment?

29.	Yes. It will, but the plaintiff has shown no interest in opposing the application by being absent at the hearing notwithstanding that he was given proper notice.

Is the party applying prevented by its conduct or the manner in which the proceedings have been progressed from being permitted to amend its pleadings?
30.	Yes.  Pleadings have closed and the parties have completed the discovery of documents process under Order 9 Division 1 of the National Court Rules.  They have endorsed a notice to set down for trial which was filed on 24 May 2017 and the matter is ready for directions hearing.  

Where do the interests of justice lie?

31.	I am of the opinion that it is the interests of justice to grant the application.

Is the proposed amendment efficacious? That is, is it a proper amendment?   

32.	For reasons stated already, I am of the opinion that it is a proper amendment.    

33.	In balancing the considerations, I have found seven of the considerations in favour of the second defendant and one against it.  That favours the exercise of my discretion in favour of granting the application and I do so.  

ORDERS

34.	The formal orders of the Court are:

(a)	The first defendant’s motion filed on 28 March 2017 to remove the first defendant as a party is dismissed. 
(b)		The second defendant’s motion filed on 10 May 2017 to amend its defence is granted.
(c)	The second defendant’s amended defence shall be filed and served on the plaintiff and the first defendant within 7 days from today.
(d)	The parties are at liberty to take other steps permitted by the National Court Rules thereafter. 
(e)	Costs in relation to both motions shall be in the cause.  

___________________________________________________________________
Jeffersons Lawyers: Lawyers for the Plaintiff 				
Bradshaw Lawyers: Lawyers for the First Defendant			   
In-house Lawyers: Lawyers for the Second Defendant