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National Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
OS No.561 of 2016
BETWEEN:
JOHN WANO & SIWI KUNI CO LTD
First Plaintiff
AND:
MOKONDA REINA REMA
Second Plaintiff
AND:
RADIO TAXIS LIMITED
Defendant
Waigani: David, J
2018: 12, 14, 15 & 20 March
COMPANY LAW – competency of proceedings - allegation by a director of replaced first plaintiff company that proceedings commenced without his consent – company with no constitution - statutory requirements governing proceedings of the board of a company – Companies Act, Sections 27, 28, 29, 32, 138 and Schedule 4.
PRACTICE & PROCEDURE – application to dismiss proceedings for disclosing no reasonable cause of action – National Court Rules, Order 12 Rule 40(1).
PRACTICE & PROCEDURE – application for summary judgment – National Court Rules, Order 12 Rule 38(1).
PRACTICE & PROCEDURE – application to continue proceedings on pleadings – National Court Rules, Order 4 Rule 35.
PRACTICE & PROCEDURE – application to join parties – National Court Rules, Order 5 Rule 8(1).
Cases cited:
AGC (Pacific) Ltd v Sir Albert Kipalan & Ors (2000) N1944
Curtain Brothers (Qld) Pty Ltd and Kinhill Kramer Pty Ltd v The State [1993] PNGLR 285
Chief Collector of Taxes v T.A. Field Pty Ltd [1975] PNGLR 144
Commissioner General of Internal Revenue v Bougainville Copper Ltd (2009) N3857
Dep International Private Ltd v Ambogo Sawmill Pty Ltd [1987] PNGLR 117
Hornibrook Constructions Pty Ltd v Kawas Express Corporation Pty Ltd [1986] PNGLR 301
Kumul Builders Pty Ltd v Post and Telecommunication Corporation [1991] PNGLR 299
Kara v Public Curator of Papua New Guinea (2010) N4048
Kiee Toap v The Independent State of Papua New Guinea (2004) N2731
Magasaki Ltd v Linus Bai (2007) N3221
Nali Hole v Allan Mana (2016) SC1536
Open Bay Timber Limited & PNG Forest Authority v Hon. Lucas Dekena & Ors (2013) N5109
Philip Takori v Simon Yagari (2008) SC905
PNG International Hotels Pty Ltd & Anor v The Registrar of Land Titles and Ors (2007) N2307
PNG Deep Sea Fishing Ltd v Critten (2010) SC1126
Ralph Augustine Saulep v ANZ Banking Group (PNG) Ltd (2016) N6395
Simon Puraituk v The State (2007) N3204
Severinus Ampaoi v Bougainville Copper Ltd (2012) SC1166
Tsang v Credit Corporation (PNG) Ltd [1993] PNGLR 112
The State v Henshi Engineering Pty Ltd [1998] PGSC51, SC594
Umapi Luna Pakomeyu v James Siai Wamo (2004) N2718
Wamena Trading Company Ltd v Civil Aviation Authority of Papua New Guinea (2006) N3058
William Duma v Eric Meier (2007) SC898; PGSC 34
Walapli v Parindali (2007) N3172
Counsel:
Gertrude Kubak, for the Plaintiffs
Sanol Malaga, for the Defendant
RULING
20 March, 2017
1. DAVID, J: INTRODUCTION: The defendant/cross-claimant, Radio Taxis Limited (the defendant) commenced eviction proceedings against a number of individuals who were occupying all that piece or parcel of land described as Portions 441 and 442 Milinch of Granville and Fourmil of Moresby in the National Capital District, State Lease Volume 8 Folio 1998 (the land) in the Port Moresby District Court on 26 March 2015 in proceedings entitled DCC Gr.5 No.109 of 2015 between the defendant there as complainant and Victor Guba and others as defendants (the eviction proceedings). On 3 August 2016, the District Court granted eviction orders. On 29 August 2016, the eviction orders were set aside. John Wano & Siwi Kuni Investment Limited, initially named as the first plaintiff and the second plaintiff, Mokonda Reina Rema were not named as parties to the eviction proceedings, so they applied to be joined as interested parties due to the existence of a contract for the sale and purchase of the land entered into between John Wano & Siwi Kuni Investment Limited and the Registrar of Companies exercising powers under Sections 372 and 373 of the Companies Act on behalf of Mai Trading Ltd, a defunct company dated 17 April 2012. On 14 October 2016, leave was granted for their joinder. On 10 May 2017, the District Court dismissed the eviction proceedings for lack of jurisdiction.
2. By originating summons filed on 31 August 2016, the plaintiffs commenced these proceedings whereby they claim, among others, a declaration that the first plaintiff (then named as John Wano & Siwi Kuni Investment Limited) is the legal proprietor of the land and is entitled to the full protection of the law under Section 33 of the Land Registration Act or alternatively, a declaration that the first plaintiff (then named as John Wano & Siwi Kuni Investment Limited) is entitled to be registered as the legal proprietor of the land and is entitled to the full protection of the law under Section 33 of the Land Registration Act. In the originating summons, the plaintiffs also claim consequential relief.
3. On 19 May 2017, the defendant filed its notice of intention to defend the action.
4. On 17 August 2017, the Court granted leave to the defendant to file a cross-claim.
5. On 24 August 2017, the defendant filed its cross-claim in which it claims that the plaintiffs are not entitled to the declarations sought, but to the contrary, it be declared as the registered proprietor of the land within the meaning given in Section 32(a) of the Land Registration Act and be entitled to the protection accorded to a registered proprietor under Section 33 of the Land Registration Act. In the cross-claim, the defendant/cross-claimant also seeks consequential relief.
6. Following enquiries made by the Court on 14 March 2018 about the name and standing of John Wano & Siwi Kuni Investment Limited then named as first plaintiff, on 15 March 2018, the name of the first plaintiff was substituted by John Wano & Siwi Kuni Co Ltd with leave of the Court upon a formal application to amend having been moved by the plaintiffs pursuant to an uncontested notice of motion filed on the same date.
RELIEF SOUGHT IN MOTIONS
7. This is a decision on two contested motions filed by the opposing parties that seek:
(a) want of instructions as John Wano, director and shareholder of the plaintiff company has not given his consent or approval for these proceedings to be instituted pursuant to Order 12 Rule 1 of the National Court Rules and Section 138 and Schedule 4 of the Companies Act.
(b) disclosing no reasonable cause of action or are frivolous or vexatious or are an abuse of the process of the Court pursuant to Order 12 Rule 40(1) of the National Court Rules.
8. With regard to the relief sought under Order 12 Rule 40(1), at the hearing, the defendant opted to pursue only the ground under Rule 40(1)(a) to dismiss the proceedings for disclosing no reasonable cause of action.
EVIDENCE
9. In support of its notice of motion filed on 14 September 2017, the defendant relies on the:
10. In support of their notice of motion filed on 10 October 2017, the plaintiffs rely on the:
ISSUES
11. The main issues that I need to consider and decide are:
WANT OF INSTRUCTIONS
Parties’ submissions
12. The defendant contends that these proceedings should be dismissed on the ground that the challenge as to the competency of the proceedings comes from John Wano Pepena who is a shareholder and director of the first plaintiff company then named as John Wano & Siwi Kuni Investment Limited and who states that he did not give his consent or instructions for the proceedings to be instituted contrary to Section 138 of the Companies Act 1997 and Schedule 4 to the Companies Act 1997. These proceedings therefore were instituted without complying with normal company processes and were defective for want of a company resolution to institute the proceedings.
13. On the other hand, the plaintiffs submit that the Court should reject the defendant’s contention and refuse the relief sought on the grounds that; John Wano Pepena authorised the second plaintiff and his family to incorporate the first plaintiff (then named as John Wano & Siwi Kuni Investment Limited) and to secure the land; he was named as a shareholder and director of the first plaintiff (then named as John Wano & Siwi Kuni Investment Limited) only out of respect as he did not financially contribute to the incorporation of the first plaintiff (then named as John Wano & Siwi Kuni Investment Limited); and he would not be affected by the eviction exercise carried out by the defendant as he was no longer residing on the land, but currently residing in Ialibu.
Law
14. It is instructive that I set out below Section 138 of the Companies Act and Schedule 4 to the Companies Act.
15. Section 138 of the Companies Act states:
PROCEEDINGS OF BOARD.
Subject to the constitution of the company, the provisions set out in Schedule 4 govern the proceedings of the board of a company.
16. Schedule 4 to the Companies Act reads:
PROCEEDINGS OF THE BOARD OF A COMPANY.
Sec. 138.
(1) The directors may elect one of their number as Chairman of the board.
(2) The director elected as Chairman holds that office until he dies, resigns, is prohibited from being a director of a company under Section 425, 426 or 428 or the directors elect a Chairman in his place.
(3) Where no Chairman is elected, or where at a meeting of the board the Chairman is not present within five minutes after the time appointed for the commencement of the meeting, the directors present may choose one of their number to be Chairman of the meeting.
(1) A director or, where requested by a director to do so, an employee of the company, may convene a meeting of the board by giving notice in accordance with this section.
(2) Not less than two days notice of a meeting of the board shall be sent to every director who is in the country, and the notice shall include the date, time, and place of the meeting and the matters to be discussed.
(3) An irregularity in the notice of a meeting is waived where all directors entitled to receive notice of the meeting attend the meeting without protest as to the irregularity or where all directors entitled to receive notice of the meeting agree to the waiver.
A meeting of the board may be held either–
(a) by a number of the directors who constitute a quorum, being assembled together at the place, date, and time appointed for the meeting; or
(b) by means of audio, or audio and visual, communication by which all directors participating and constituting a quorum can simultaneously hear each other throughout the meeting.
(1) A quorum for a meeting of the board is a majority of the directors.
(2) No business may be transacted at a meeting of directors where a quorum is not present.
(1) Every director has one vote.
(2) The Chairman does not have a casting vote.
(3) A resolution of the board is passed where it is agreed to by all directors present without dissent or where a majority of the votes cast on it are in favour of it.
(4) A director present at a meeting of the board is presumed to have agreed to, and to have voted in favour of, a resolution of the board unless he expressly dissents from or votes against the resolution at the meeting.
The board shall ensure that minutes are kept of all proceedings at meetings of the board.
(1) A resolution in writing, signed or assented to by all directors then entitled to receive notice of a board meeting, is as valid and effective as if it had been passed at a meeting of the board duly convened and held.
(2) Any such resolution may consist of several documents (including a document sent or received by facsimile machine, telex, computer or other electronic device that provides that document, or a copy of that document, to a person in a permanent form or image, including an electronic or magnetic form or image) in like form each signed or assented to by one or more directors.
(3) A copy of any such resolution shall be entered in the minute book of board proceedings.
Except as provided in this Schedule, the board may regulate its own procedure.
17. Section 138 is made subject to the constitution of the company.
18. Section 138 and Schedule 4 require that a company registered under the Companies Act must conduct its affairs according to the Companies Act in the absence of a constitution: Magasaki Ltd v Linus Bai (2007) N3221. A meeting of the board of directors of a company is governed by the processes or guidelines set out in Schedule 4 when the company has no constitution.
19. Section 27 of the Companies Act provides that a company need not have a constitution. If it does not, Section 29 of the Companies Act provides that the company and board, directors and shareholders have all the rights, powers, duties and obligations set out in the Act. If it does, Section 28 of the Companies Act provides that the company and board, directors and shareholders have the rights, powers, duties, and obligations set out in the Act except to the extent that they are negated or modified by the constitution.
20. According to Section 32 of the Companies Act; the constitution is binding between the company and each shareholder and between shareholders; and it has no effect to the extent that it contravenes or is inconsistent with the Act or any other Act.
21. From the evidence before me, it appears that the first plaintiff does not have a constitution. Therefore, the company and board, directors and shareholders have all the rights, powers, duties and obligations set out in the Companies Act.
22. I recalled the matter on 14 March 2018 for mention and further submissions when I raised with the parties the apparent conflict in these respect:
23. As I have alluded to earlier, the name of the first plaintiff was substituted by John Wano & Siwi Kuni Co Ltd on 15 March 2018.
24. John Wano states that these proceedings have been instituted without his knowledge and consent as a director of John Wano & Siwi Kuni Investment Limited. It is on that basis that the defendant seeks to dismiss these proceedings for want of instructions and compliance with Section 138 and Schedule 4 to the Companies Act.
25. There is currently no evidence before the Court that there is a company called John Wano & Siwi Kuni Investment Limited registered under the Companies Act. In fact, that is the main reason why the name of the first plaintiff has been substituted by John Wano & Siwi Kuni Co Ltd which is a company registered under the Companies Act. Since John Wano & Siwi Kuni Investment Limited is not a registered company, the provisions of the Companies Act particularly Section 138 and Schedule 4 do not apply.
26. According to the Company Extract of John Wano & Siwi Kuni Co Ltd issued on 21 July 2017, Mokonda Reina Rema, Nepolian Rema and a John Wano are directors of the company and each of them hold a share each of the three shares issued. I assume, without any contest, that John Wano is the same person called John Wano Pepena. There is currently no evidence before the Court that John Wano Pepena has not given his consent for the first plaintiff now John Wano & Siwi Kuni Co Ltd to institute these proceedings. His complaint was only in relation to and directed to the unregistered company called John Wano & Siwi Kuni Investment Limited. Mokonda Reina Rema’s response generally was only in relation to that complaint. In the absence of any evidence to the contrary from John Wano Pepena, it is reasonable to assume that these proceedings were filed with the authority of the directors in compliance with Section 138 and Schedule 4 to the Companies Act.
27. In the result, I refuse to dismiss the proceedings for want of instructions.
CAUSE OF ACTION
Parties’ submissions
28. The defendant submits that the plaintiffs seek, amongst others, a declaration that the first plaintiff be declared the legal proprietor of the land and is entitled to full protection of the law under Section 33 of the Land Registration Act. It questions whether this relief is tenable when the copies of the title annexed to the first and second affidavits of Adam Kuli Katuna show that the defendant is the registered proprietor of the land and so it is protected by Section 32(a) of the Land Registration Act.
29. The plaintiffs submit that the onus is on the defendant to prove on the balance of probabilities that this case is unarguable so does not warrant judicial time and consideration. It was submitted that a dismissal under this rule should only be considered in the most hopeless case. This case does not fall into that category as the affidavit evidence they have adduced demonstrate that there exists a bona fide dispute as to the title to the land.
Law
30. Order 12, Rule 40(1) of the National Court Rules states:
Where in any proceedings it appears to the Court that in relation to the proceedings generally or in relation to any claim for relief
in the proceedings—
(a) no reasonable cause of action is disclosed; or
(b) the proceedings are frivolous or vexatious; or
(c) the proceedings are an abuse of the process of the Court,
the Court may order that the proceedings be stayed or dismissed generally or in relation to any claim for relief in the proceedings.
31. The Court has a discretion to stay or dismiss proceedings under any of the grounds specified under this rule.
32. Principles that apply were discussed and reaffirmed in Philip Takori v Simon Yagari (2008) SC905. They were also summarised earlier by Cannings, J in Kiee Toap v The Independent State of Papua New Guinea (2004) N2731. Proceedings will disclose no reasonable cause of action in the following circumstances:
Reasons for ruling
33. The title shows that the land was registered in the name of a company called Radio Taxis Pty Ltd by an instrument of transfer No.17785 produced before the Registrar of Titles on 3 July 1975 and entered on 14 July 1975. When the Companies Act 1997 came into force (2 March 1998), the name of companies registered then changed when the acronym “Pty” was removed by operation of law. That means the name Radio Taxis Pty Ltd would have changed to Radio Taxis Ltd. The defendant’s evidence before the Court is that the defendant was incorporated on 10 September 1996. This begs the question whether or not the defendant is the same legal entity that bought the land in or about 1975. The title shows that a number of transactions or events occurred after that including forfeiture in 1989, a transfer to a company called Mai Trading Pty Limited by instrument of transfer No.72807 in November 1990 and cancellation of entry number 72807.
34. The plaintiffs have produced a contract for the sale and purchase of the land dated 17 April 2012 entered into between the Registrar of Companies purportedly exercising his powers under Sections 372 and 373 of the Companies Act on behalf of a Mai Trading Pty Ltd, a defunct company as vendor and John Wano & Siwi Kuni Investment Limited as purchaser for the purchase price of K60,000.00. A Bank South Pacific Limited Bank Cheque No.905215 dated 13 April 2011 for K30,000.00 was paid to the Registrar of Companies pursuant to the contract. It appears from the plaintiffs’ evidence that the contract and accompanying instruments of transfer formalising transfers from Mai Trading Pty Ltd, a defunct company, to the Registrar of Companies and from the Registrar of Companies to John Wano & Siwi Kuni Investment Limited were stamped by the Stamp Duties Office. On 30 April 2012, the Registrar of Companies wrote to the Registrar of Titles requesting the latter to register the transfers.
35. Following representations by John Wano & Siwi Kuni Investment Limited, on 3 August 2015, the Registrar of Titles using his powers under Section 160(1) of the Land Registration Act summoned the defendant to deliver up the title within 14 days of the summons for the purpose of cancelling the title on the grounds that; first, the title was issued to it in error; and second, the title was wrongly obtained by the defendant as the land was registered in the name of Mai Trading Pty Limited pursuant to a court order granted in proceedings OS 168 of 1991 on or about 4 September 1991. In that summons, the Registrar of Titles also informed the defendant that its title could not be protected under Section 33 of the Land Registration Act in the circumstances. The conveyance of the land initiated by that contract is yet to be completed by registration by the Registrar of Titles.
36. It is claimed that the proprietors of John Wano & Siwi Kuni Investment Limited and the first plaintiff are the same people and the second plaintiff is one of them. As to whether that contract is valid or not when applying the relevant principles on contract, given the circumstances, I think it is a triable issue that needs proper scrutiny when all evidence is and therefore is a matter for trial.
37. The plaintiff should not be driven from the judgment seat unless the case is unarguable. I am satisfied that there exists a bona fide dispute as to the title to the land. I am satisfied that the plaintiffs have an arguable case.
38. In the result, I refuse to dismiss the proceedings. The relief claimed by the plaintiffs and the affidavit evidence they have produced demonstrate that they have a reasonable cause of action.
SUMMARY JUDGMENT
Parties’ submissions
39. The defendant submits that it has satisfied the requirements for the entry of summary judgment because the copy of the title to the land produced in evidence shows that it is the registered proprietor of the land and at paragraph 11 of the third affidavit of Adam Kuli Katuna who is a director of the defendant company, he states that the plaintiffs have no defence to the cross-claim.
40. The plaintiffs submit that the defendant will not be entitled to summary judgment where there is a serious conflict on questions of fact or law. There is substantial evidence before this Court that demonstrate that there is a serious contest as to facts relating to the sale and purchase of the land. In addition, it is submitted that the Court cannot disregard the fact that although the defendant purports to be the registered proprietor of the land, during the time of its deregistration, the plaintiff’s through John Wano & Siwi Kuni Investment Limited executed a contract with the Registrar of Companies exercising powers vested in him under the Companies Act to purchase the land.
Law
41. The jurisdictional basis for this application upon which the plaintiff relies is Order 12 Rule 38(1) of the National Court Rules. The rule states:
(1) Where, on application by the plaintiff in relation to any claim for relief or any part of any claim for relief of the plaintiff-
(a) there is evidence of the facts on which the claim or part is based; and
(b) there is evidence given by the plaintiff or by some responsible person that, in the belief of the person giving the evidence, the defendant has no defence to the claim or part, or no defence except as to the amount of any damages claimed,
the Court may, by order, direct the entry of such judgement for the plaintiff on that claim or part, as the nature of the case requires......”
42. The authorities concerning entry of summary judgment show that the Court has a discretionary power and its discretionary power may be exercised where two elements are present namely, first, there must be evidence of the facts proving the essential elements of the claim; and second, the plaintiff or some responsible person must give evidence that in his belief there is no defence: Chief Collector of Taxes v T.A. Field Pty Ltd [1975] PNGLR 144; Hornibrook Constructions Pty Ltd v Kawas Express Corporation Pty Ltd [1986] PNGLR 301; Dep International Private Ltd v Ambogo Sawmill Pty Ltd [1987] PNGLR 117; Kumul Builders Pty Ltd v Post and Telecommunication Corporation [1991] PNGLR 299; Tsang v Credit Corporation (PNG) Ltd [1993] PNGLR 112; Curtain Brothers (Qld) Pty Ltd and Kinhill Kramer Pty Ltd v The State [1993] PNGLR 285; The State v Henshi Engineering Pty Ltd [1998] PGSC51, SC594; William Duma v Eric Meier (2007) SC898; PGSC 34; Commissioner General of Internal Revenue v Bougainville Copper Ltd (2009) N3857; Severinus Ampaoi v Bougainville Copper Ltd (2012) SC1166; Ralph Augustine Saulep v ANZ Banking Group (PNG) Ltd (2016) N6395.
43. The principles relating to summary judgment applications were summarised by Lay J in Commissioner General of Internal Revenue v Bougainville Copper Ltd where at paragraphs 13 to 15 of the judgment, His Honour said:
“13. A recent Supreme Court decision setting out the principles is William Duma v Eric Meier (2007) SC898; PGSC 34, Injia DCJ, Batari and Gabi JJ where the Court said at [10]:
“The principles relating to applications for summary judgment are well settled in this jurisdiction. Summary judgment is a discretionary power and may be granted if there is evidence of facts on which the claim is based and evidence is given by some responsible person that in his belief the defendant has no defence to the claim or part of the claim (see Hornibrook Constructions Pty Ltd v Kawas Express Corporation Pty Ltd [1986] PNGLR 301 and Bruce Tsang v Credit Corporation (PNG) Limited [1993] PNGLR 112). The discretion conferred on the Court should be exercised in a clear case and with considerable care. Summary judgment should be granted only where there is no serious triable issue of fact or law. If there is no dispute as to fact and there is clear admissions of the claim or part of the claim then judgment must be entered for the plaintiff (see Chief Collector of Taxes v T.A. Field Pty Ltd [1975] PNGLR 144; Dep International Private Ltd v Ambogo Sawmill Pty Ltd [1987] PNGLR 117; Kumul Builders Pty Ltd v Post and Telecommunication Corporation [1991] PNGLR 299; and Curtain Brothers (Qld) Pty Ltd and Kinhill Kramer Pty Ltd v The State [1993] PNGLR 285).”
14. And in Bruce Tsang v Credit Corporation (PNG) Ltd [1993] PNGLR 112 at 117 and Curtain Brothers (Qld) Pty. Ltd and Kinhill Kramer Pty. Ltd v The State [1993] 285 at 288 the Supreme Court said:
“As to the second element, the plaintiff must show in the absence of any defence or evidence from the defendant, that in his belief, the defendant has no defence. If a defence is filed or evidence is given by the defendant, as in this case, the plaintiff must show that, upon the facts and / or the law, the defendant has no defence. The plaintiff will not be entitled to summary judgment if there is a serious conflict on questions of fact or law. Whether a case should go to trial on these issues will be determined on the facts of each case”.
15. The United Kingdom courts have said that the procedure should not be used to obtain an immediate trial which requires determining points of law taking hours or days and requiring the citation of many authorities: Home and Overseas Insurance Code Ltd v Mentor Insurance Co (UK) Ltd [1983] 3 All ER 74 at 77; or the judge conducting a mini trial: Swain v Hillman & Anor [1999] EWCA Crim 2251 at [20], per Lord Woolf MR.”
44. The bottom line is that summary judgment will not be granted where there are serious issues of fact and law raised either in the pleadings or evidence. In other words, the Court’s discretion in favour of an applicant should only be granted in a very clear case and with considerable care.
Reasons for ruling
45. I am satisfied that there are serious issues of fact and law demonstrated by the relief sought and the evidence. This is not a clear case.
46. The defendant’s application for summary judgment is refused.
47. In addition, the defendant relied on Order 12 Rule 58(1) of the National Court Rules to pursue this relief. No such rule exists. No application to amend was made by the defendant at the hearing. This is contrary to Order 4 Rule 49(8) of the National Court Rules which requires that all motions must contain a concise reference to the Court’s jurisdiction to grant the orders being sought and the Court may strike out the motion for being incompetent and for lack of form. The submissions do not cure this apparent defect. There is no legal foundation for moving this application.
CONTINUATION ON PLEADINGS
Parties’ submissions
48. The defendant submits that the plaintiffs’ application for the proceedings to continue on pleadings should be refused on the basis that actions for fraud can only be commenced by writ of summons and not by originating summons under Order 4 Rule 2(1)(b) of the National Court Rules. It was submitted that the continuation of the proceedings will not cure the defect. Mr Malaga relied on the Supreme Court decision in Nali Hole v Allan Mana (2016) SC1536 to support his submissions.
49. In addition, it was contended that the plaintiffs’ application must be refused as they have failed to produce a draft statement of claim for the consideration and examination by the Court and the defendant.
50. The plaintiffs submit that although fraud is not properly pleaded, there is clear evidence on the face of the records that there are irregularities in connection with the sale and transfer of the land. Hence it was necessary for the proceedings to continue on pleadings in order to plead and particularise the allegations of fraud. In light of what is claimed in the cross-claim, it was important for the matter to continue on pleadings so that the legal issues and facts become more crystallised for the purpose of determining the competing claims of the parties.
Law
51. The power of the Court to either grant or not to grant an order to continue proceedings on pleadings is derived from Order 4 Rule 35 of the National Court Rules.
52. Order 4 Rule 35 states:
(1) The Court may order that the proceedings continue on pleadings.
(2) The Court may, on or after making an order under Sub-rule (1)—
(a) order that any affidavits stand as pleadings; or
(b) make orders for the filing of a statement of claim or other pleadings.
(3) The provisions of these Rules concerning proceedings commenced by writ of summons shall, except as far as the Court otherwise orders, and except so far as the context or subject matter otherwise indicates or requires, apply to proceedings ordered under this Rule to continue on pleadings.
53. The Court’s power under this rule is discretionary.
54. It has been held that proceedings that have been commenced by originating summons which will not allow the parties to raise and rely on principles of law nor resolve issues between the parties in appropriate cases may be ordered to continue on pleadings under this rule: Simon Puraituk v The State (2007) N3204. It has also been held that continuation of the proceedings on pleadings will be allowed if the efficient disposition of the proceedings will be aided by requiring the plaintiff to file a statement of claim setting out the basis of the claim and allowing the case to proceed by pleadings so that a defendant is given an opportunity to file a defence which will go to crystallising the triable issues: Walapli v Parindali (2007) N3172, Wamena Trading Company Ltd v Civil Aviation Authority of Papua New Guinea (2006) N3058.
Reasons for ruling
55. The defendant’s submission that the flaw in the proceedings will not be cured even if they were converted to pleadings is misconceived as sub-rule (3) permits it. Nali Hole v Allan Mana reaffirms the dictates and application of Order 4 Rule 2(1)(b). In that case, reference was made to Open Bay Timber Limited & PNG Forest Authority v Hon. Lucas Dekena & Ors (2013) N5109 where Cannings, J held that allegations of fraud (actual or constructive) are better prosecuted by writ of summons and statement of claim unless the requirement is dispensed with by leave of the Court. The dispensation is specifically allowed by sub-rule (3).
56. I am not aware of any rule of practice or legal requirement that states that on an application for an order for proceedings to continue on pleadings, an applicant must annex to an affidavit in support of such an application a draft statement of claim to demonstrate to the Court and the defendant that he has a meritorious claim that needs to be pleaded in accordance with the rules relating to pleadings. It may however be a good practice to have one handy.
57. I do not see how the defendant will be prejudiced as the allegation of fraud is already raised in the plaintiffs’ affidavit evidence.
58. I am of the view that it is in the interests of the parties and more convenient for the proceedings to continue on pleadings and the filing of a statement of claim will kick-start the process.
59. In the result and in the exercise of my discretion, I would order that the proceedings continue on pleadings and direct that plaintiffs file and serve on the defendant a statement of claim within 14 days and thereafter the pleadings continue in accordance with the National Court Rules.
ADDITION OF PARTIES
Parties’ submissions
60. The plaintiffs submit that the addition of the Registrar of Titles and the Independent State of Papua New Guinea is necessary so that all matters can be properly adjudicated upon. They complied with Section 5 of the Clams By and Against the State Act prior to commencing these proceedings by giving notice of their intention to make a claim against the Registrar of Titles, Secretary for Lands & Physical Planning, Department of Lands & Physical Planning and the Independent State of Papua New Guinea in writing to the Solicitor-General: annexures “M” and “N1-N3 of the second affidavit of Mokonda Reina Rema.
61. It is submitted by the defendant that the addition of parties will not cure what appears to be a substantial defect in these proceedings, i.e., in the originating summons, the plaintiffs seek a declaration that the first plaintiff be declared as the proprietor of the land when the defendant is already endorsed on the title to the land as the registered proprietor unless a claim alleging fraud is properly mounted.
Law
62. The Courts power is derived from Order 5 Rule 8(1) of the National Court Rules which states:
(1) Where a person who is not a party—
(a) ought to have been joined as a party; or
(b) is a person whose joinder as a party is necessary to ensure that all matters in dispute in the proceedings may be effectually and completely determined and adjudicated on,
the Court, on application by him or by any party or of its own motion, may, on terms, order that he be added as a party and make orders for the further conduct of the proceedings.
63. The principles on joinder under this rule are well-established: PNG International Hotels Pty Ltd & Anor v The Registrar of Land Titles and Ors (2007) N2307, Umapi Luna Pakomeyu v James Siai Wamo (2004) N2718, AGC (Pacific) Ltd v Sir Albert Kipalan & Ors (2000) N1944, Kara v Public Curator of Papua New Guinea (2010) N4048 and PNG Deep Sea Fishing Ltd v Critten (2010) SC1126.
64. These principles are:
(a) whether the proposed party has sufficient interest in the proceedings,
65. In considering whether a proposed party has a sufficient interest in the proceedings or whether his joinder is necessary to ensure that all matters in dispute in the proceedings can be effectively and completely adjudicated upon, certain factors warrant consideration.
66. These include whether:
(a) any relief is sought against the proposed party,
(b) the plaintiff opposes the application for joinder,
(c) the proposed party will be affected if the relief sought in the proceedings is granted,
(d) the joinder of the proposed party is necessary to satisfy any orders made in the proceedings.
67. I adopt and apply these principles to the present case in the following manner.
Reasons for ruling
68. It seems that the defendant does not seriously contest the application for joinder of the proposed parties. I have already addressed the question of the title and adopt those observations in addition to these observations. Currently the plaintiffs claim no relief against the proposed parties. It is the plaintiff’s application however to join the proposed parties because since the proceedings concern State land, the proposed parties have sufficient interest in the proceedings and their joinder is necessary to ensure that all matters in dispute in the proceedings can be effectively and completely adjudicated upon. They will be affected if the relief sought in the proceedings is granted and their joinder is necessary to satisfy any orders made in the proceedings.
69. In the result, I will grant the application for leave to join the Registrar of Titles and the Independent State of Papua New Guinea as parties to the proceedings.
ORDER
70. The formal orders of the Court are:
________________________________________________________________
Kubak & Kubak : Lawyers for the Plaintiffs
Sanol Malaga : Lawyers for the Defendant
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