N8310
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 431 OF 2019

BETWEEN:
WAMBUNAWA HOLDINGS LIMITED
Plaintiff

AND:
AUSTRALIA AND NEW ZEALAND BANKING GROUP (PNG) LIMITED
Defendant

Lae: Dowa AJ
2020:  2nd & 12th March

PRACTICE AND PROCEDURE – application by defendant to dismiss proceedings – grounds of - Plaintiffs proceedings has no reasonable cause of action, cannot be sustained or even allowed to proceed to trial - whether the pleadings fail to disclose a reasonable cause of action - whether proceedings are so frivolous or vexations, that it is untenable – consideration of – plaintiffs proceedings cannot be sustained, plaintiffs have no reasonable cause of action – proceedings dismissed

Cases Cited:

National Provident Fund Board v Maladina & Others (2003) N2486
PNG Forest Products v State (1992) PNGLR84-85
PNG Harbours Board v Breni Kora (2005) N2834
Ronny Wabia v BP Exploration Co. Ltd (1998) PNGLR 8
Wabia vs BP Petroleum (2009) N4337

Counsel:

J. Aku, for the Plaintiff
E. Noki, for the Defendant

JUDGMENT
11th March 2020

1.	DOWA AJ:	This is a ruling on an interlocutory application brought by the Defendant by way of Notice of Motion. The application is made pursuant to Order 12 Rule 40(1) and Order 8 Rule 27(1) of the National Court Rules.

2.	The defendant relied on the Notice of Motion filed 05th December 2019 and Affidavit in Support by Eunice Noki also filed on 05th December 2019.

3.	The Notice of Motion seeks the following orders:

“1.	Pursuant to Order 12 Rule 40(1) of the National Court Rules and this Honourable Court’s inherent jurisdiction to control proceedings before it, the proceedings herein be dismissed.

1.	   In the alternative to 1 above, pursuant to Order 8 Rule 27(1) of the National Court Rules and this Honourable Court’s inherent jurisdiction to control proceedings before it, the whole of the Statement of Claim filed in the proceedings herein be struck-out.

2.	   The Plaintiff pay the Defendant’s costs of and incidental to the proceedings on full indemnity basis

3.	   Such further or other orders as this Honourable Court deems appropriate.”

RELEVANT LAW

4.	(a)  Order 8 Rule 27(1)

“Embarrassment, etc. (15/26)

(1)	Where a pleading-

(a)	Discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading; or 

(b)	Has a tendency to cause prejudice, embarrassment or delay in the proceedings; or

(c)	Is otherwise an abuse of the process of the Court,

the Court may at any stage of the proceedings, on terms or otherwise, order that the whole or any part of the pleading be struck out.”

b)  Order 12 Rule 40 (1)

“Frivolity, etc.(13/5)

(1)	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.”

FACTS IN THE PLEADINGS

5.	The Plaintiff is a local company operating in the Morobe Province.  At the relevant time the Plaintiff was operating an account with the Defendant Bank, Account No: 11279608 under account name Yotamin Holdings Ltd. The Plaintiff filed the proceedings against the defendant on 23 April 2019.  The Plaintiff initially stated in the statement of claim that the Defendant has unlawfully placed a hold/freeze on their Accounts.  As a result the Plaintiffs could not operate their account and conduct business.  On 30th September 2019, the Plaintiffs filed an Amended Statement of Claim alleging that the Defendant was negligent in its fiduciary duty by placing a restriction on their account for no good reason or legal basis.

6.	The defendants filed a Defence on 14th June 2019 denying the claim, and in particular stated that the operation of the Plaintiffs accounts were restricted for two reasons; and these reasons were pleaded in paragraph 4 of the Defence which I set out below:

“4.  In answer to paragraph 8 of the Plaintiff’s Statement of Claim, the Defendant says that:

(a)	 Sometime in October 2017, in proceedings styled DC (SW) No. 174 of 2017: Russel Egimbari v. The Manager, ANZ Bank, Lae, Morobe Province:

(i)	One Russel Egimbari Detective Inspector, Criminal Investigation Division, Lae obtained a search warrant (the Warrant) from the District court in Lae and served on the Defendant’s Lae Market Branch;

(ii)	The Warrant was obtained by way of Information, Notice of motion and Affidavit in Support dated 19 October 2017 seeking, amongst other orders, an order to place a stop or freeze on ANZ Account No. 11279604 Account name, Yotamin Holdings Limited (the Account).

(b)	On or about 22 May 2018, in proceedings styled OS No. 284 of 2018:  Gengewe Gazik and Others v. Nowaruwe Yambat, Enare Bana, Batne Binzunang and Yotamin Holdings Limited:

(i)	Parties obtained consent orders that ordered, among other things, the first defendants, who were and are also signatories to the Account, be restrained from dealing with the affairs or operations of YHL pending determination of the proceedings.

(ii)	The above-mentioned orders were then served on the ANZ Lae Market Branch where compliance with the orders required that a restriction be placed on the account pending determination of the proceeding.

Upon receipt of the Orders the Defendant conducted its own due diligence, following which it placed a restriction on the account.”

7.	The Plaintiff did not file a reply to the Defence, traversing the issues raised in paragraph 4 of the Defence.  In my view this is important telling factor.  Once a Defence on an important issue is raised it is incumbent on the Plaintiff to respond, putting in issue the Defence. 

8.	The facts emerge from the pleadings and evidence of Ms Noki of counsel for the Defendant is summarised as follows:

(1)	As a result of a dispute of an ongoing dispute between the directors and management of the Plaintiff Company known then as Yotamin Holdings Limited, proceedings were issued by one group, against the Company in OS No. 284 of 2018.
	
(2)	At a hearing of the Notice of Motion filed 7thMay 2018 the Parties in that proceeding, including the present Plaintiff, by consent, obtained a restraining order on 22nd May 2018.  

(3)	On or about June 2018, the consent restraining orders issued 22 May 2018 were served on the ANZ Bank, the Defendant;

(4)	On 14th June 2018, the Notice of Motion filed 7th May 2018 was part heard,

(5)	On 3rd July 2018, the Notice of Motion was heard and decision reserved;

(6)	On 2nd September 2019, the Plaintiffs Notice of Motion filed 7th May 2018 was dismissed.

OS 284 of 2018 – GENGEWE GANIK AS DIRECTOR FOR YOTAMIN HOLDINGS LTD & OTHERS V NOWAROWE YABAT & YOTAMIN HOLDINGS LTD

9.	In order to arrive at a just conclusion, I now, set out from the Court file notations of the orders and directions given in the proceedings in OS 284 of 2018 where the Plaintiff was involved as a Party in chronological order;

(a)	Order of 22May 2018

On 22nd May 2018, Murray J made the following orders:

“ORDER

BY CONSENT OF the parties in the interim, the court hereby orders that:

1.	 The Defendants be restrained from dealing with, in any manner of form, the affairs and/or operations of Yotamin Holdings Limited, pending determination of these proceedings.

2.	An Order that the properties and assets of Yotamin Holdings, inclusive of motor vehicles described as Toyota Coaster Bus registration number LBT 854 and Toyota Land Cruiser Ute registration number LBT 853, or any other property/goods or items purchase by the Defendants, through the use of funds from Yotamin Holdings Limited and/or funds derived from assets, properties and investments of Yotamin Holdings Limited, be seized and surrendered under the protection and custody of the Police in Lae Morobe Provincial Headquarters Office of the Chief Metropolitan Superintendent (Anthony Wagambie Jnr), pending the determination of these proceedings.

3.	Plaintiffs, their servants and agents are restrained from interfering in any manner or form with the company itself, its properties and further restrained from intimidating the Directors of the Company in any matter or form.

4.	The orders made herein are interim and will return on 29th May 2018 at 9:30 am for full argument.”

(b)	Order of 14 June 2018

On 14th June 2018, the Court made the following orders:

1.	“This matter is part heard, pending the production of the extract from IPA regarding the shareholders of Yotamin Holdings Limited by both counsel.
2.	This matter is adjourned to Thursday 21st June 2018 at 9:30 am for continuation of hearing.”

(c)	Order of 3rd July 2018

On 3rd July 2018, the Court heard the motion and reserved the ruling:

“Decision reserved.  The parties will be informed once a decision is ready.”

(d)	Order of 2nd September 2019

On 2nd September 2019, the Court made a ruling ordering:

1.	“First Defendant’s notice of motion filed 30th May 2018 is fixed for 7th October 2019 for hearing.
2.	Plaintiff’s notice of motion filed 7th May 2018 is dismissed with costs.”

10.	The defendants submitted that between 22nd May 2018, to the time when the freeze was uplifted, the defendant was only complying with the Restraining Orders issued by the consent of the parties.

11.	For the above reasons, the Defendant submitted that the Plaintiffs proceedings has no reasonable cause of action and the proceedings cannot be sustained or even allowed to proceed to trial.  The Pleadings did not clearly show what wrong the Defendant has done to the Plaintiff.  They relied on various case authorities which include Ronny Wabia v BP Exploration Co. Ltd (1998) PNGLR 8; Louis Lucian Siu v Wasime Land Group Inc (2011) SC1107; PNG Harbours Board v Breni Kora (2005) N2834.

12.	Mr Aku of Counsel for the Plaintiff submitted that the Plaintiff has a reasonable cause of action.  That the Plaintiffs case is based on negligence.  The Defendant as a bank, had a fiduciary duty of care which they did not discharge.  He submitted that the consent orders lapsed on 29th May 2018 and were no longer in force.  The Defendant did not do due diligence check to establish whether consent orders were still in force.  He submitted the proceedings should not be prematurely terminated.  He submitted that the issue of whether a restraining order was placed on the bank, or whether the defendant had good reasons to restrict the account is a matter for evidence and trial proper.  I note from the Statement of claim that the facts raised by Mr Aku were not pleaded in the Statement of Claim.  I will refer to them later in my ruling.

13.	The issues for considerations are:

•	whether the pleadings fail to disclose a reasonable cause of action and secondly whether the proceedings are so frivolous or vexations, that it is untenable.

14.	The defendant made a strong case.  However, I ask the question, should the Court then terminate the proceedings prematurely or should the Plaintiffs be given the opportunity to improve their pleadings and have their day at trial.

15.	In the case, PNG Forest Products v State (1992) PNG LR84-85 the Court adopting some English Court phrases stated that a court be slow and cautious in entertaining applications for dismissal of proceedings on the grounds of a party disclosing no reasonable cause of action. A Plaintiff should not be driven from the judgment seat unless the case is “unarguable” or the cause of action is “obviously and almost incontestably bad, or plainly untenable.   In that case, the Court also said the Court has a discretionary power to dismiss if the proceedings are an abuse of the Court process.

16.	On the other hand, there are other string of cases that developed the principle that, where the case is vexatious or frivolous and that it is unlikely to succeed, the case can be summarily determined.  Ronny Wabia v BP Exploration Co. Ltd (1998) PNGLR 8, and Wabia v BP Petroleum (2009) N4337 and National Provident Fund Board v Maladina & Others (2003) N2486.  In NPF v Maladina, Kandakasi J, (as he then was) said:

“The law on pleadings generally is settled in our jurisdiction. A clearest statement of the law is by the Supreme Court in Motor Vehicles Insurance (PNG) Trust v. John Etape, in these terms:

"‘besides requiring that certain matters be pleaded specifically, the rules also contain a number of provisions which require a party to furnish in or with his pleadings, particulars of his claim or defence or other matter pleaded. The function of particulars is ‘to let (a party) know what case he will have to meet and to enable him to know what evidence he ought to be prepared with’. The object is ‘to ensure as far as is practicable, that proceedings between parties would result in a determination of the rights of the parties according to law and to limit if not eradicate the number of cases in which technologies can cause the proceedings to miscarry. Generally speaking justice will be more readily and speedily attained if each party is fully aware of the precise nature of the allegations made by the other’.

Particulars are in fact an extension of the pleadings — they control the generality of the pleadings. In Pilato -v- Metropolitan Water Sewerage and Drainange Board, McClemens J said at 365 – ‘Pleadings define the issues in general terms. Particulars control the generality of the pleadings and restrict the evidence to be led by the parties at the trial and give the other party such information as may enable him to know what case he will be met with at the trial and prevent surprise. Evidence enables the tribunal within the ambit of the general definition of the issues, affected by the pleadings and limited by the particulars, to decide where the truth lies’."

17.	I have carefully studied the pleadings, that is the Writ of Summons filed 23rd April 2019, the Defendants Defence filed 14th June 2019 and the Plaintiffs Amended Statement of Claim filed 30th September 2019.

18.	It is clear to me that the Plaintiff is mounting his claim on the basis that the Defendant had wronged them by placing a restriction on the account, without reason.  The Plaintiff alleges further that, they neglected to handle the Plaintiffs accounts with due diligence.  The Plaintiff did not make mention of the terms of the orders made on 22nd May 2018 in their pleadings.  In paragraph 8 of the Statement of Claim, the Plaintiff pleads that they did not know why the bank restricted the operation of the account.  Paragraph 8 reads:

“On or around June 2018, the Defendant, for reasons only known to it, freezed the Plaintiff’s company account held with the Defendant.”	

19.	I am of the view that paragraph 8 of the Statement of Claim amounts to an embarrassment in the pleadings.  The defendant placed a restriction on the Plaintiffs account under its previous company name Kotamin Holdings Ltd when served with a consent order containing Restraining Orders.  These orders were consented to by the Plaintiff, who was a party to the proceedings.  The Plaintiff would have known of the existence of the consent orders of 22nd May 2018.

20.	The proceedings in OS 284 of 2018 was between the directors, shareholders and management of the Plaintiff company.  The defendant was not a party.  The defendant was only complying with an order of Court.  Apparently, the Restraining Orders were in force for an indefinite period.

21.	The defendant then uplifted the restriction once served with an order of Court in May 2019 in the current proceedings (WS No. 431 of  2019).

22.	To say that, the defendant ‘should have’ or ‘could have’ done due diligence on the existence or non-existence of the Restraining Orders would be speculative.

23.	On the same token, why couldn’t the Plaintiff apply to the Court to set aside the Restraining Orders after learning of the restrictions on the account. What stopped the Plaintiff from opening new account with other commercial banks.  

24.	The uncontested facts from the Court records in OS 284 of 2018 shows the restraining orders remained in force until final decision on 3rd September 2019.  The Plaintiffs would have been aware of the existence of the orders yet they chose to ignore them and institute the current proceedings against the Defendant.

25.	The restriction was the Plaintiff, it’s Management and Directors own doing.  The blame cannot be shifted to the Defendant. When this matter proceeds to trial, this evidence is likely to be presented, and in my view the Plaintiff is unlikely to succeed.  (Refer Wabia v BP Exploration).

26.	For these reasons, I uphold the Defendant’s application and the orders sought in terms 1 & 2 of the Notice of Motion, is granted. The formal orders of the Court are:

1.	Pursuant to Order 12 Rule 40(1) and Order 8 Rule 27 of the National Court Rules, the proceedings be dismissed.

2.	The Plaintiff pay the Defendant’s costs of and incidental to the proceedings to be taxed, if not agreed.

________________________________________________________________
Manase & Co. Lawyers: Lawyers for the Plaintiff
Bradshaw Lawyers: Lawyers for the Defendant