N8427

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

CIA NO. 132 OF 2019

BETWEEN:
JAMES KAUNJI
Appellant

AND:
DAVID RAIM
Respondent

Madang: Narokobi J
2020	: 24th & 27th July

DISMISSAL OF PROCEEDINGS – application to dismiss for non-compliance with Section 226 and 227 of the District Court Act – whether requirements mandatory – considerations for exercise of discretion – application refused.

PRACTICE AND PROCEDURE – application to dismiss for disclosing no reasonable cause of action pursuant to Order 12 Rule 40(1) of the National Court Rules – principles to consider for exercise of discretion – application refused. 

An appeal was lodged against the decision of the learned District Court magistrate granting an order to evict the appellant from the property he is residing in. The Respondent filed an application to dismiss the appeal on two grounds – firstly, for not non-compliance with Sections 226 and 227 of the District Court Act, Chapter 40 in that the notice of appeal, entry of appeal and recognizance of appeal were filed simultaneously; and secondly that the appeal discloses no reasonable cause of action as the respondent was the registered proprietor of the property. 

Held:

(1)	The National Court is granted power pursuant to Section 231 of the District Court Act to waive strict compliance with Part XI of the District Court Act, which includes Sections 226 and 227,upon being satisfied that there is reasonable explanation provided, grounds of appeal are arguable and there is no prejudice suffered by the respondent: Kiiark v Luio (2020) SC1964 followed.

(2)	If anything, since the non-compliance demonstrated diligence on the part of the appellant to prosecute the appeal, and that there is an arguable case, this is an appropriate case for the National Court to exercise the court’s discretion under Section 231 of the District Court Act and allow the appeal to proceed: Handii Mahn Investment Ltd v Kiwiki Enterprise Ltd (2018) N7265 distinguished.

(3)	The appeal pleads the appellant’s equitable interest in the property and due to the growing body of case law on the non-application of the Summary Ejectment Act, Chapter 202 to a person who has demonstrated an equitable interest in property, the appellant has shown an arguable case for substantive hearing and the application to dismiss for disclosing no reasonable cause of action should also be refused.

Cases Cited:

The following cases are cited in the judgment:

Amos Bai as Representative of Lae Squatter Settlements v Morobe Provincial Government and The State [1992] PNGLR 150
Gawi v png Ready Mixed Concrete Pty Ltd [1981] PNGLR 396
Gawi v png Ready Mixed Concrete Pty Ltd [1984] PNGLR 74
HandiiMahn Investment Ltd v Kiwiki Enterprise Ltd (2018) N7265
Kiiark v Luio (2020) SC1964
Koang No 47 Limited v Monodo Merchants Limited and Melpa Properties Limited (2001) SC675
Koitaki Farms Ltd v Kemoko Kenge and Other Squatters at Itikinumu Plantation (2001) N2143
PNG Forest Products Pty Ltd v Independent State of Papua New Guinea [1992] PNGLR 85
SisoNaso v National Housing Corporation (1999) N1947
Takori v Yagari (2007) SC905
Yagon v Nowra No 59 Ltd [2008] PGNC 82; N3375

Counsel:

Mr. S. Mark, for the Respondent
Mr. S. Asivo, with leave of the court for the Appellant

RULING
27th July, 2020

1.	NAROKOBI, J: Before me is a motion by the Respondent to dismiss an appeal from a District Court decision for non-compliance with Sections 226 and 227of the District Court Act, Chapter 40 and for disclosing no reasonable cause of action pursuant to Order 12 Rule 40(1)(a) of the National Court Rules. The application is opposed, and I reserved my ruling to today.

A	BACKGROUND AND ISSUES

2.	The proceeding is an appeal from the District Court in relation to a summary ejectment done pursuant to the Summary Ejectment Act, Chapter 252.  The defendant in the District Court is aggrieved by the decision of that court and has appealed to the National Court.

3.	The issues are as submitted by the Respondent, and they are:

•	Whether the appeal should be dismissed for non-compliance with Sections 226 and 227 of the District Court Act, Chapter 40; and

•	In the alternative, whether the appeal should be dismissed for disclosing no reasonable cause of action pursuant to Order 12 Rule 40(1)(a) of the National Court Rules?

4.	I address the two issues separately. Resolving each of the issue in favour of the Respondent will have the effect of terminating the proceedings.

B	THE LAW AND APPLICATION OF THE LAW TO THE ISSUES

1)	First Issue

5.	In relation to the first issue, Section 226 of the District Court Act is in the following terms:

“226. AppellantTo Set Down Appealand Give Notice.

(1) Within 40 days after the institution of an appeal, the appellant shall enter the appeal for hearing on a date to be fixed by the Registrar of the National Court.

(2) An entry shall be made by delivering to the Registrar of the National Court a memorandum in the prescribed form, signed by the appellant or by his lawyer and containing the prescribed particulars.”

6.	The respondent says that the provisions of Section 226(1) makes it clear that Entry of Appeal must be filed after the institution of an appeal, and not simultaneously with the appeal.

7.	Section 227 of the District Court Act than follows by stating that within 40 days, the appellant should enter the appeal for hearing:

“227. Failure to Enter Appeal for Hearing.

If, within 40 days after the institution of an appeal, the appellant does not enter the appeal for hearing, a Court or Magistrate has the same authority to enforce the conviction, order or adjudication as if it had not been appealed against.”

8.	Sections 226 and 227 are read together to provide that if entry of appeal is not entered after 40 days of entry of appeal, the District Court order appealed from takes effect.

9.	The respondent relies on the National Court case of Handii Mahn Investment Ltd v Kiwiki Enterprise Ltd (2018) N7265 where his Honour Liosi J held at para 29:

“Section 266 (sic) clearly states that with 40 days after institution of an appeal the appellant “shall’’ enter the appeal for hearing. Note the use of ‘’shall’’ which is mandatory. In my view therefore the entry of appeal can only be filed within 40 days after filing the notice of appeal. Clearly then this means that the entry of appeal cannot be filed together with the notice of appeal and the recognizance of appeal. Consequently, Section 226 was breached when the Entry of Appeal was simultaneously filed with the Notice of Appeal and the Recognizance of Appeal on 8th February 2018.”

10.	After reading that decision, I see that the court did not address its mind to Section 231 of the District Court Act. Section 231 states:

“231. Dispensing with Conditions Precedent.

The National Court may–

(a)	dispense with compliance with a condition precedent to the right of appeal prescribed by this Act, if, in its opinion, the appellant has done whatever is reasonably practicable to comply with the provisions of this Act; and

(b) on application made ex parte by the party appealing–extend the time for compliance with a condition precedent to the right of appeal prescribed by this Act.”

11.	Section 231 of the District Court Act was considered by the Supreme Court in Kiiark v Luio (2020) SC1964, where the Court held:

“Section 231 of the District Courts Act confers judicial discretion on the National Court to waive compliance with the conditions precedent prescribed in Part XI of the Act to appeal from the District Court to the National Court if the primary judge can be satisfied that (1) there is reasonable explanation for delay (2) the ground(s) of appeal are arguable, and (3) there is no prejudice to the respondent.”

12.	The Supreme Court went on to explain the National Court’s decision of Kandakasi J (as he then was) in Moses v Magiten (2000) N2023 that the requirements of Part XI of the District Court Act, which includes Sections 226 and 227 should be complied with, but does not prevent the National Court from exercising its discretion to consider the appeal if a reasonable explanation is provided for the non-compliance. The Supreme Court said at para 63:

“We observe that nowhere in the Moses case does Kandakasi J use the word “mandatory” or enunciate any principle of law to the effect that an appellate court has no discretion to waive compliance with any of those provisions in Part XI of the Act which deal with the appeal process. What His Honour was saying is that strict observance of the procedural sections in Part XI of the Act which govern an appeal is required and that an appeal should be dismissed by the National Court unless an appellant can satisfy the Court that he has a reasonable explanation for any delay in prosecuting the appeal.”

13.	How does Handii Mahn Investment Ltd v Kiwiki Enterprise Ltd stand in relation to the Supreme Court decision referred to above? In my view it did not consider the discretionary power of the National Court as conferred by Section 231 of the District Court Act. In Handii Mahn Investment Ltd v Kiwiki Enterprise Ltd non-compliance with Section 226 was not the only breach, there were other breaches as well – Sections 220 and 221. I see no prejudice suffered by the respondent from the non-compliance with Sections 226 and 227 of the District Court Act by the simultaneous filing of the entry of appeal with the other documents. 

14.	There was no improper motive in the non-compliance, and if anything, the appellant has demonstrated diligence in prosecuting the appeal. The consideration of whether there is an arguable case is dealt with in the second issue. My view therefore is that this is not an appropriate case to dismiss for non-compliance with Sections 226 and 227 of the District Court Act.

2)	Second Issue

15.	On the second issue, I bear in mind the National Court’s ruling in the often-cited case of PNG Forest Products Pty Ltd v Independent State of Papua New Guinea [1992] PNGLR 85, where the court held that the procedure for dismissal for disclosing no reasonable cause of action should be confined to cases where the cause of action is obviously and almost incontestably bad. The plaintiff should not be driven from the judgement seat unless the case is unarguable.

16.	A leading authority on Order 12 Rule 40 of the National Court Rules is the case of Kerry Lerro trading as Hulu Hara Investments Ltd v. Philip Stagg, Valentine Kambori and The Independent State of Papua New Guinea (2006) N3950 which was cited with approval in the Supreme Court case of Takori v Yagari (2007) SC905. This is the relevant part of Kerry Lerro trading as Hulu Hara Investments Ltd v. Philip Stagg, Valentine Kambori and The Independent State of Papua New Guinea that was cited with approval in the Supreme Court:

"1. Our judicial system should never permit a plaintiff or a defendant to be ''driven from the judgment seat'' in a summary way, ''without a Court having considered his right to be heard.'' [7] A party has a right to have his case heard, as guaranteed by the Constitution and the laws of the land. The Rules are designed to enhance those rights and to ensure the prompt and fair disposal of matters coming before the Court. That right cannot be lightly set aside.[8]	
2.At the same time however, the law, such as the Rules under consideration, provide for andthe Court has an inherent jurisdiction to protect and safeguard against any possible abuse ofthe processes of the Court.
3.The object of these rules are therefore ''to stop cases which ought not to be launched — cases which are obviously frivolous or vexatious or obviously unsustainable.''[9] In other words ''the object of the rule was to get rid of frivolous actions.''[10]
4.A claim may be frivolous if it can be characterized as so obviously untenable that, it cannot possibly succeed or that, the claim or defence is bound to fail, if it proceeds to trial.
5.A claim or defence may be vexatious, if the case amounts to a sham or one which, cannot succeed and is one that amounts to harassment of the opposing party who is unnecessarily put to the trouble and expenses of defending or proving the claim.[11]
6.With regard to the issue of disclosing a reasonable cause of action or defence, the Court must be clear that, there are two parts to the phrase ''cause of action''. First, it entails a right given by law, such as an entitlement to reasonable damages for breach of human rights under s. 58 of the Constitution, commonly referred to as, the ''form of action''. Secondly, it entails the pleadings disclosing all the necessary facts which give rise to the form of action.[12]
7.The phrase 'cause of action'' could thus be defined in terms of a legal right or form of action known to law with:

''every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the court. It does not comprise of every piece of evidence which is necessary to prove each fact, but every fact is necessary to be proved.''[13]

17.	I turn to the grounds of appeal to determine whether they disclose a reasonable cause of action – that is whether there is a “right” in law capable of being enforced by the court. Since the subsequent grounds are premised on the first ground, I consider that ground, and if it discloses a reasonable cause of action or a “right” known in law, then the appeal survives and it will go to substantive hearing. The first ground is pleaded as follows:

“The learned magistrate erred in fact and by not taking into consideration the fact that the Appellant has equitable interest over the property by virtue of the fact that he had lived for a very long period of time and had developed it, with the approval of the Department of Lands and Physical Planning, the same authority that had transferred the lease to a Mr Philip Anamni who then sold it.”

18.	The ground of appeal therefore refers to the fact that the appellant has an equitable interest in the property and the learned magistrate erred in fact by not giving any consideration to that fact.

19.	Turning to the law as it stands on equitable interest, I note that there is a growing body of case law that asserts and protects the rights and interest of persons with equitable interest to property. These are some of the cases: Amos Bai as Representative of Lae Squatter Settlements v Morobe Provincial Government and The State [1992] PNGLR 150, Gawi v png Ready Mix Concrete Pty Ltd [1981] PNGLR 396, Gawi v png Ready Mixed Concrete Pty Ltd [1984] PNGLR 74, Koang No 47 Limited v Monodo Merchants Limited and Melpa Properties Limited (2001) SC675, Koitaki Farms Ltd v Kemoko Kenge and Other Squatters at Itikinumu Plantation (2001) N2143, SisoNaso v National Housing Corporation (1999) N1947 and Yagon v Nowra No 59 Ltd [2008] PGNC 82; N3375 (16 May 2008).

20.	As to what exactly amounts to equitable interest and what it translates to, appears to have been determined on a case by case basis. For example in Yagon v Nowra No 59 Ltd, the National Court held that Section 6 of the Summary Ejectment Act does not apply to a case where a person has demonstrated that they have an equitable interest, which translates to a licence to occupy. These are matters for the appeal court to delve into further at the hearing of the appeal.

21.	It may turn out that the appellant does not have an equitable interest in the property. But that it is an issue for the substantive hearing, when the appeal book is considered in detail and the court hears full submission on the issue. As it is, it is premature to consider the issue in detail.

22.	Following the Supreme Court ruling in Takori v Yagari, my respectful view is that it is not appropriate to drive the appellant away from the judgment seat and deny him hearing, which is a constitutional right, when there appears to be an arguable case. This is not to say that the appeal will succeed in the end, but it is to say that they should be afforded an opportunity to be heard. 

23.	Since this is a case where the appellant’s appeal is premised on equitable interest, I have formed the view that it does disclose a reasonable cause of action, and therefore the application to dismiss should also be refused for this reason.

C	CONCLUSION AND ORDERS

24.	In consideration of the law and the circumstances of this case, I order as follows:

1)	Application to dismiss for non-compliance with Sections 226 and 227 of the District Court Act, Chapter 40 and for disclosing no reasonable cause of action pursuant to Order 12 Rule 40(1)(a) of the National Court Rules is refused;
2)	Each party will bear its own costs; and
3)	Time is abridged.
Kipoi Lawyers: Lawyer for the Respondent