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Kumul Consolidated Holdings v Kurkuramb Estates Ltd [2017] PGNC 404; N7429 (8 May 2017)

N7429

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 107 of 2017

BETWEEN:
KUMUL CONSOLIDATED
HOLDINGS
Plaintiff

AND:
KURKURAMB ESTATES
LIMITED
Defendant

Waigani: Hartshorn J
2017: 5^th April
: 8^th May

Application to dismiss this proceeding

Cases Cited:
Papua New Guinea Cases

Fly River Provincial Government v. Pioneer Health Services Ltd (2003) SC705
Kerry Lerro v. Stagg & Ors (2006) N3050
Mt Hagen Urban Local Level Government v. Sek No. 15 (2009) SC1007
Niugini Civil and Petroleum Ltd v. West New Britain Development Corporation Ltd (2005) N2909
Takori v.Yagari & Ors (2008) SC905
Siu v. Wasime Land Group Incorporated (2011) SC1107

Overseas Cases

Cape Distribution Ltd v. Cape Intermediate Holdings Plc [2016] EWHC 119

Counsel:

Mr. E.G. Andersen, for the Plaintiff
Mr. R. Bradshaw, for the Defendant

8^th May, 2017

1. HARTSHORN J: This is a decision on a contested application to dismiss this proceeding.

Background

2. The plaintiff, a corporation (KCH), pleads that amongst others it entered into an agreement with the defendant company (KEL) for KCH to pay KEL K46.6 million and that it paid KEL that sum. The agreement concerns amongst others land described as portion 406 Milinch Aroa Fourmil Manu, Central Province and being that described in State Lease Volume 35 Folio 83 (KEL Land). It is pleaded that there are express or implied terms of that agreement which KEL breached.

3. Two of these terms that are pleaded to have been breached concern the State Lease for the KEL Land being obtained by KEL by fraud, and the unimproved value of it being K 84,400.00 and not K 46.6 million. KCH claims amongst others the sum of K 46.6 million from KEL.

This application

4. KEL seeks to dismiss this proceeding pursuant to Order 8 Rule 27 and Order 12 Rule 40 National Court Rules as amongst others:

a) pursuant to clause 4 of a Memorandum of Agreement between KCH, the Department of Defence (State), and KEL in October 2016 (MOA), the parties undertook not to commence any other proceedings or make any further claim against each other in respect of or in connection with or arising out of matters set out in the MOA or any aspect thereof;

b) the claim of KCH is untenable. This is because amongst others, at the time that the MOA was entered into concerning, amongst others, the KEL Land, the State had already compulsorily acquired the KEL Land from KEL. KCH did not acquire the KEL Land and has no interest in it. Any claim to be made in respect of the KEL Land against KEL should be made by the State;

c) KCH has the same claim in two separate proceedings. This is a multiplicity of proceedings and an abuse of process;

d) KCH has pleaded that KEL obtained a State Lease by fraud and that KCH is the victim of fraud. Sufficient particulars of the alleged fraud have not been pleaded.

5. KCH submits that the proceeding should not be dismissed as:

a) there is not an abuse of process because of a multiplicity of proceedings as KCH has clearly indicated that it wishes to consolidate the alleged duplicitous proceedings;

b) there are sufficient particulars of fraud pleaded;

c) there is a reasonable cause of action disclosed.

Law

Order 12 Rule 40 National Court Rules

6. I will consider the application initially pursuant to Order 12 Rule 40 National Court Rules. 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 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

7. As to the clause 4 MOA issue, clause 4 MOA is as follows:

“NO CLAIM

The parties undertake that they will not commence any other proceedings within Papua New Guinea or elsewhere whether legal and/or administrative or otherwise, or make any further claim against each other in any manner whatsoever in respect of or in connection with or arising out of matters set out in this MOA or any aspect hereof.”

8. Counsel for KCH did not make any submissions on this issue.

9. Counsel for KEL relied upon the following statement from the Supreme Court case of Fly River Provincial Government v. Pioneer Health Services Ltd (2003) SC705

“..... it is trite law that until a court declares a contract null and void, a contract is otherwise valid.”

10. Further, in this instance, in its statement of claim, KCH is not seeking that the MOA be declared null and void or that clause 4 MOA be altered in some way or deleted.

11. In Niugini Civil and Petroleum Ltd v. West New Britain Development Corporation Ltd (2005) N2909 the court said in regard to an arbitration clause:

“It is necessary to ask this question so as not to lose sight of the fundamental task of the court, which is to ascertain the intention of the parties, evidenced by the agreement that they have lawfully entered into. Sakora J made the point pithily in Huon Electrical Ltd v. RD Tuna Cannery Ltd (2000) N2005, when granting an application by a defendant to stay proceedings and refer a dispute to arbitration. His Honour stated:

The... point to make is that the contract containing the arbitration clause ... is an agreement, a mutual agreement at that, between the parties. It is, therefore, no function of the Court to write up new contracts for the parties, as it were. The Court’s function is only to interpret the contract, according to law, to determine what was it that the parties intended and entered into, and with what legal consequences, if any.”

12. I refer also to the following passage in Cape Distribution Ltd v. Cape Intermediate Holdings Plc [2016] EWHC 119, which to my mind, is particularly apt and persuasive:

“Where the parties have expressed their agreement in a written document, the primary source of information about the agreement and the parties’ intention is the document itself. What the parties meant is most obviously to be gleaned from the language of the provision because, unlike commercial common sense and the surrounding circumstances, the parties have control over the language they use in a contract. Again save perhaps in a very unusual case, the parties must have been specifically focusing on the issue covered by the provision when agreeing the wording of that provision: Arnold at [17] per Lord Neuberger. Thus, where the parties have used unambiguous language, the court has to apply it (Rainy Sky at [23] per Lord Clarke) and if the words used yield a fairly clear solution, then a court should pause long before concluding that the draftsman has used words with a meaning that do not fit the objective he was seeking to attain ...”

13. Clause 4 MOA is clear and unambiguous. That it refers to “any other proceedings” and that the MOA was entered into after the proceedings commenced by KEL, is indicative of the parties specifically focusing on the issue covered by clause 4 when agreeing the wording of clause 4. KCH is bound by this clause as are the other parties, and is barred from filing this proceeding. As I am satisfied that KCH’s claim is therefore bound to fail, it is frivolous and should be dismissed.

14. As to KCH’s claim being untenable, it is clear that when KCH entered into the MOA - the agreement pleaded, the KEL Land had been compulsorily acquired by the State. This is stated in the recitals to the MOA. Putting aside the provisions of the MOA, any claim that there may be as to the title of the KEL Land is a claim of the State. A perusal of the MOA does not reveal that it provides KCH with any remedy against KEL in respect of the KEL Land. Notwithstanding the poor drafting of the MOA, it is apparent that clause 3(a) MOA provides that the consideration for KCH paying the compensation amount to KEL is the issuance of the State Title for the Landcon Naval Base to KCH. Putting aside clause 4 MOA, KCH has a claim against the State in regard to the title of the Landcron Naval Base therefore.

15. Given this, I am satisfied that KCH does not have a tenable claim against KEL, it is bound to fail and is therefore frivolous and should be dismissed.

16. As I have found that the proceeding should be dismissed on the two bases referred to, it is not necessary to consider the other submissions of counsel.

Orders

17. It is ordered that:

a) This proceeding is dismissed;

b) The plaintiff shall pay the defendants’ costs of and incidental to this proceeding to be taxed if not otherwise agreed.

c) Time is abridged.

____________________________________________________________
Dentons PNG: Lawyers for the Plaintiff
Bradshaw Lawyers: Lawyers for the Defendant