N8180
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 1309 OF 2019 (COMM)

BETWEEN:
RONALD KAPIN OF MAKANUK CLAN “A” MAIOM VILLAGE, KAVIENG, NEW IRELAND PROVINCE
Plaintiff

AND:
REX TOBO. ROREIVA TOBO AND BARNABAS KAPIN
First Defendants

AND:
BANK SOUTH PACIFIC LIMITED
Second Defendant

Waigani: Anis J
2019: 22nd November
2020: 5th February

NOTICE OF MOTION – Dismissal of proceeding – Order 12 Rule 40 (1)(c) – National Court Rules – abuse of process –whether proceeding filed was in breach of sections 39, 41 and 42 of the Business Groups Incorporation Act 1974 – whether proceeding properly before the Court in the first instance 

Case Cited:

Malip v. Kupo [2017] N6659

Counsel:

Mr. S Malaga, for the Plaintiff
Mr. N Boas, for the First Defendant
Ms. H Masiria, for the Second Defendant

RULING

5th February, 2020

1.     	ANIS J: 	The first defendants applied to dismiss the proceeding for abuse of process.  Their notice of motion was contested.  It was heard on 22 November 2019.  I reserved my ruling thereafter to a date to be advised.

2.     	Parties have been notified so I will rule on it now.

BACKGROUND

3.    	The plaintiff and the first defendant come from the same family tree and clan.  Their clan is called the Makanuk clan.  They come from Kavieng in New Ireland Province; their traditional way or life is founded under their customary practice and law called the Tigak custom, and it is a matrilineal type society.  

4.    	In 2009, the Makanuk clan with other nearby clans were identified as owners of certain portions of land around the Kavieng Airport in New Ireland Province.  In what appeared to be a compulsory land acquisition process, the State had proceeded to acquire portions of land in Kavieng to extend the Kavieng Airport.  The total compensation paid by the State was K6, 000,000.  As for the Makanuk Clan, it was to receive a sum of K2, 143,000.  Clans were asked to set themselves up on or about 2019, that is, in preparation to receive the compensation payments.  This was when the problem started, that is, between the plaintiff and the first defendant.  Two business groups were incorporated for the Makanuk clan.  The one incorporated first in time was by the first defendants.  It is called Makanuk ‘A’ Clan Business Group Inc. (first business group).  It was incorporated on 10 May 2019.  The plaintiff set up the second business group.  It is called Makanuk Kalapok ‘A’ Business Group Inc. (second business group).  It was incorporated on 17 May 2019.

5.   	The compensation payment by the State to the clans is to be effected through the New Ireland Provincial Government (the provincial government).  The provincial government shall then pay the clans through their respective business incorporated groups.  In this case, the first business group opened an account with the second defendant, that is, purposely to receive the compensation payment from the State.  The provincial government, as it appeared, recognized the first group as the legitimate group of the Makanuk clan.  As such and on 11 October 2019, it paid the first group the K2, 143,000 which was the compensation money that had been released by the State.  On 16 October 2019, the first group paid its clan members a total sum of K1, 622,725.  The plaintiff learnt of that, and on 18 October 2019, he filed this proceeding.  On 30 October 2019, the plaintiff obtained ex-parte restraining orders against the defendants.  I would refer to the order for its full terms but in summary, the defendants were prevented from making any further payments on the account of the first defendant until further orders of the Court.

6.    	In the substantive proceeding, the plaintiff asserts the custom of the Tigat Society and seeks, amongst others, damages for its breach and damages for conversion.

MOTION 

7.     	The notice of motion was filed 13 November 2019.  It is made under Order 12 Rule 40(1)(c) of the National Court Rules.  The said rule states, and I quote in part:

 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…… 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.

8.    	The first defendants’ basis for dismissal are based on allegations of breaches or non-compliances of sections 39, 41 and 42 of the Business Groups Incorporated Act 1974 (BGI Act).  

ISSUE

9.   	In my view, the main issue is this.  Whether the dispute is one which is identified under the BGI Act and if so, whether the plaintiff has abused the Court process by filing the present proceeding?

THE BGI ACT

10.   	The relevant provisions for this purpose, are sections 39, 40, 41 and 42.  They read and I quote: 

39.  Application and interpretation of Part V.

(1)	This Part applies to disputes between—
(2)	
(a)	a business group and a member of the group; or
(b)	members of a business group,
concerning the property or the affairs of the group, including—
(c)	the distribution or disposal of any property or income of the group; and
(d)	any transaction between the group and any of its members,
but, except by agreement, does not apply to any dispute between the group, or a member of the group, and a non-member.
(2) 	This Part also applies to disputes as in membership of, or the right to membership in, a business group.
(3) 	In this Part, a reference to a party or to a person interested in a dispute includes a reference to a person whose interest in the dispute is real, though not necessarily or immediately financial.

40.  Dispute-settlement authorities.

(1) 	In order to be incorporated, each business group must have at least one dispute-settlement authority.
(2)	A dispute-settlement authority may be a person or a number of persons—

(a)	specified by name; or
(b)	specified by office or position; or
(c)	determined in the manner specified,
in the constitution of the group.

(3)	Notwithstanding Subsection (2), the parties to a dispute to which this Part applies may, with the consent of the group, agree on an ad hoc dispute-settlement authority in relation to the dispute.

41.  Settlement of disputes.

All disputes to which this Part applies shall be dealt with, in accordance with Sections 42 and 43, by the dispute-settlement authority or a court having jurisdiction under Section 42.

42.  Jurisdiction of courts.

(1) 	No court has jurisdiction over a dispute to which this Part applies unless—
(a)	all parties agree that it should be referred to the court; or
(b)	the constitution of the business group concerned so provides; or
(c)	any relevant agreement between the business group and a party so provides; or
(d)	the dispute-settlement authority thinks that—
(i)	it cannot satisfactorily settle the dispute; and
(ii)	the court may be able to do so.
(2) 	The dispute-settlement authority has jurisdiction to decide any matter referred to in Subsection (1)(a), (b) or (c), and its decision is not open to challenge in any court.
(3) 	Where under Subsection (1) a dispute may be referred to a court—
(a)	the court must be a court that, apart from the effect of this Part, has jurisdiction in the matter; and
(b)	it shall be referred, in the prescribed manner, by the dispute-settlement authority; and
(c)	the dispute-settlement authority is entitled to act, and if the court or a person interested so asks shall act, as an assessor on matters of custom and as to matters of common knowledge within the group, but—
(i)	the advice shall be given in open court and is open to challenge; and
(ii)	if for good reason the court considers it proper to do otherwise it is not bound to accept the advice.

PLAINTIFF’S DISPUTE

11.   	I think the best way to begin is to ask myself this.  Why is the plaintiff here in Court?  What is it that he is aggrieved of?  The answer to that is obvious.

12.   	The dispute stems from the distribution of the compensation money for the Makanuk clan.  The essence of the plaintiff’s claim is that he is a clan elder and he was not consulted before moneys were distributed by the first business group.  He denies knowledge of existence of the first business group, and claims that the second business group, which he himself has incorporated, as the legitimate business group of the Makanuk clan, and according to him, monies should have been paid into the second business group and he should have played a role in its distribution, to the clan members.  On these bases, he claims that a substantial portion of the monies had been wrongly paid to the first business group and that it had been distributed without his participation as a clan elder.  I note that he had also made out these arguments at the ex-parte hearing of the interim orders and before the filing of his amended statement of claim.

13.     	I have considered the evidence of the plaintiff and the first defendants.  To me, I find overwhelming evidence adduced by the first defendants as follows.  Firstly, contrary to the plaintiff’s claim that he is not aware of the first business group, there is evidence which shows that the plaintiff was well aware of the first business group.  Affidavit evidence of Toreiva Tova, Martha Tobo, Margaret Kapin and Rex Tobo, all filed on 13 November 2019, show that the plaintiff had participated in the meeting that was conducted by the first business group to appoint the office bearers.  The meeting was held on 26 April 2019 at Maiom village in Kavieng, New Ireland.  Those present included the plaintiff.  He was nominated for the post of chairman by Martha Tobo and it was seconded by Ivet Peni.  A vote had followed and Rex Tobo was appointed as the chairman for the first business group.  

14.    	The plaintiff was dissatisfied and, it seems, had gone ahead to set up the second business group.  The plaintiff and the first defendants do not dispute the fact that they all come from Makanuk clan.  Evidence shows that the plaintiff is also a member of the first business group.  A material proof of that is evidence by the first defendant that they have paid him, from the compensation money, a sum of K110,000.  But that aside and even if I am to assume that the plaintiff is only a member of the second business group, it does not, in my view, exempt him from qualifying under section 39.  Whether it be a dispute under the first business group or the second business group, the plaintiff and the first defendant are members of the Makanuk clan.  As such, the dispute is between members of the business group whether it be between members of the first business group or between members of the second business group, concerning property or money.  In this case, it is money that has been acquired by the first business group.  

15.    	To me, this means that the parties are bound by section 39(1)(a)(b)(c) and (d) of the BGI Act.  I am satisfied that the dispute herein between the plaintiff and the first defendants:

(a)	may be regarded as a dispute between the first business group and the plaintiff as its member; or
(b)	it may also be regarded as a dispute between the second business group and the first defendants (whereby the first defendants may be regarded) as its members; or 
(c)	it may also be regarded as a dispute between the plaintiff and the first defendants as members of the first business group; or
(d)	it may also be regarded as a dispute between the plaintiff and the first defendants as members of the second business group,
concerning the compensation payments made or the affairs of the group whether it be the first or the second business group, including,
(a)	the distribution or disposal of the compensation payment of K2, 143,000 to its members; and
(b)	any transaction between the group and any of its members.

SECTIONS 41 & 42

16.     	I refer to the BGI Act and its provisions, namely, sections 41, 42 and 43.  I will say this.  Because of my finding above that the dispute falls under section 39 of the BGI Act, section 41, in mandatory terms, requires the plaintiff’s dispute to be dealt with under sections 42 and 43.  The dispute in this case shall be dealt with by the dispute settlement authority or by the National Court subject to the stated conditions.  The case on point would be the case of Malip v. Kupo [2017] N6659.  Justice Murray, stated, and I quote:

32.	Section 42 is very clear.  A Court has no jurisdiction over a dispute arising under Part V of the Act unless, one of the considerations under Section 42 (1) are present.
33.	In this case, Mr. Kunai submitted the composition of the Management Committee of OBG is a serious matter and therefore is appropriate for the Court to deal with and not the Dispute Settlement Authority established under Section 40.
34.	I find this argument misleading.  Section 42 (1) (d) is very clear.  It is the Dispute Settlement Authority that will decide what dispute is appropriate to go before the Court.  It is not for a party or his lawyer to decide that.

17.   	The situations where the National Court may intervene without the matter being dealt with by the dispute settlement authority are, and I quote in part from section 42(1) of the BGI Act: 

(a)	all parties agree that it should be referred to the court; or
(b)	the constitution of the business group concerned so provides; or
(c)	any relevant agreement between the business group and a party so provides; or
(d)	the dispute-settlement authority thinks that—
(i)	it cannot satisfactorily settle the dispute; and
(ii)	the court may be able to do so.

18.   	I have considered the evidence and submissions of the plaintiff and the first defendant.  It is clear that none of these 4 conditions existed or had been met by the plaintiff before he filed this proceeding. The plaintiff, through counsel, has not explained with supportive evidence that one or more of these requirements had been met before the plaintiff filed this proceeding.  I find that the plaintiff has failed in that regard.

SUMMARY

19.   	In summary, I uphold the first defendant’s submission.  I find that the proceeding has been commenced without due regard to or without compliance with the relevant provisions of the BGI Act and in particular, sections 39, 41, 42 and 43.
20.  	I find commencement of this proceeding to be an abuse of the court process.  I also find that this Court has no jurisdiction in the first instance to deal with the dispute; that the plaintiff has failed to show that one or more of the 4 pre-conditions under section 42(1) has or have been met.  

21.   	I will therefore dismiss the proceeding.

COST

22.    	Cost award is discretionary.  In this instance, I will order cost to follow the event.  I will order cost of the proceeding to be paid by the plaintiff Ronald Kapin to the defendants, on a party to party basis which may be taxed if not agreed.

ORDERS OF THE COURT

23.  	I make the following orders: 

1.	Pursuant to Order 12 Rule 40(1)(c) of the National Court Rules, the entire proceeding is dismissed for being an abuse of process.  The proceeding is also dismissed for want of jurisdiction.

2.	The plaintiff Ronald Kapin shall pay the defendants’ costs of the proceeding on a party to party basis which may be taxed if not agreed.

3.	Time for entry of these orders is abridged to the date of settlement by the Registrar of the National Court which shall take place forthwith.

The Court orders accordingly.
________________________________________________________________Soi & Associates Lawyers: 	Lawyers for the Plaintiff
Kuman Lawyers: 	Lawyers for the First Defendant
In House Lawyers: 	Lawyers for the Second Defendant