N8760
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO 570 OF 2014

LOBENIA GALATIA, KIMAT MATTHEW, TONY TAWINA, 
HERRY SAKIO, KEMP POATE, LINDA TAWINA & ANNAH JOEL FOR THEMSELVES & ON BEHALF OF MEMBERS OF THE SECOND & FOURTH DEFENDANTS HEREIN WHOSE NAMES ARE ENDORSED ON THE SCHEDULE HEREIN 
First Plaintiff

DOREEN MARK FOR HERSELF & ON BEHALF OF MEMBERS OF THE SIUNG ASSOCIATION INC WHO ARE BENEFICIARY TO THE MISIMA TRUST FUND AND OIL SEARCH EQUITY SHARE
Second Plaintiff

SINEINA TOSALI FOR HERSELF & ON BEHALF OF MEMBERS OF THE MISIMA NORTH COAST SOCIETY LIMITED WHO ARE BENEFICIARY TO THE MISIMA TRUST FUND 
AND OIL SEARCH EQUITY SHARE
Third Plaintiff

DAVID EALODONA FOR HIMSELF & ON BEHALF OF MEMBERS OF THE MISIMA TOWOHO SIUNG ASSOCIATION INC WHO ARE BENEFICIARY TO THE MISIMA TRUST FUND 
AND EQUITY BENEFITS
Fourth Plaintiff

V

JOHN TULO, CHAIRMAN, MAGAMEGA ASSOCIATION INC & ISAAC JACK, SECRETARY AND REST OF THE EXECUTIVES 
First Defendant

MAGAMEGA ASSOCIATION INC 
Second Defendant

ELIJAH GWAMA & HIS EXECUTIVES 
Third Defendant

MISIMA TOWOHO SIUNG ASSOCIATION INC 
Fourth Defendant

MINERAL RESOURCES DEVELOPMENT COMPANY LIMITED
Fifth Defendant

WESTPAC BANK BRANCH & WESTPAC MISIMA AGENCY
Sixth Defendant

DAGORA GWAMA, CHAIRMAN, SIUNG ASSOCIATION 
& HIS EXECUTIVES 
Seventh Defendant

SIUNG ASSOCIATION INC 
Eighth Defendant

RICHARD SAMANO, CHAIRMAN, NORTH MISIMA COOPERATIVE SOCIETY LIMITED & HIS EXECUTIVES 
Ninth Defendant

NORTH MISIMA COOPERATIVE SOCIETY LIMITED 
Tenth Defendant

ANZ/KINA BANKS LIMITED
Eleventh Defendant

BANK SOUTH PACIFIC LIMITED
Twelfth Defendant

TIMOTHY MAIZ, TRUSTEE, MISIMA TRUST FUND INVESTMENT ADVISORY COMMITTEE
Thirteenth Defendant

DAIRI VELE, SECRETARY, DEPARTMENT OF TREASURY & CHAIRMAN, BOARD OF DIRECTORS OF MISIMA TRUST FUND
Fourteenth Defendant

DR KEN NGANGAN, SECRETARY, DEPARTMENT OF FINANCE
Fifteenth Defendant

GARRY JERRY, MANAGING DIRECTOR,
 MINERAL RESOURCES AUTHORITY
Sixteenth Defendant

MINERAL RESOURCES AUTHORITY 
Seventeenth Defendant

HON JOHNSON TUKE, MINISTER FOR MINING 
Eighteenth Defendant

THE STATE
Nineteenth Defendant

HON SIR JOHN LUKE CRITTEN, GOVERNOR, 
MILNE BAY PROVINCE
Twentieth Defendant

ASA NUMA, ADMINISTRATOR, MILNE BAY PROVINCE
Twenty-first Defendant

MILNE BAY PROVINCIAL GOVERNMENT 
Twenty-second Defendant

Waigani: Cannings J
2021: 3rd, 8th, 9th, 17th February

PRACTICE AND PROCEDURE – whether proceedings should be dismissed on various grounds – failure to comply with Claims By and Against the State Act, Section 5 – lack of standing – failure to disclose reasonable cause of action  – being frivolous or vexatious – abuse of process – National Court Rules, Order 12, Rule 40 – preliminary issues: whether a defendant’s failure to file and serve a defence and/or a notice of intention to defend within the times required by the Rules is a bar to moving a motion for dismissal of proceedings – whether Order 12, Rule 40 applies to proceedings that include a claim based on an allegation of fraud. 

The plaintiffs commenced proceedings by originating summons against six defendants in 2014, primarily claiming declarations as to control of two incorporated landowner associations. There was no trial before 2020 when the Court granted leave to the plaintiffs to file a statement of claim and ordered that the proceedings continue on pleadings. The plaintiffs then filed a statement of claim, joining 16 additional defendants (including the State) and pleading various causes of action, including fraud, not mentioned in the originating summons, and substantially extending the relief sought, including a claim for damages of K434 million. The 14th defendant, the Secretary for the Department of Treasury, filed a notice of motion seeking dismissal of the entire proceedings on three alternative grounds: failure to comply with s 5 of the Claims By and Against the State Act, lack of standing and dismissal under Order 12, Rule 40(1) of the National Court Rules for disclosing no reasonable cause of action, being frivolous and vexatious and being an abuse of process. The 1st, 2nd, 3rd, 4th, 7th & 8th defendants supported the motion for dismissal. The plaintiffs opposed the motion on its merits and raised two preliminary issues: the motion should be dismissed as the 14th defendant had not obtained the leave of the Court to move the motion and leave was required as he was late in filing and serving a notice of intention to defend and further, Order 12, Rule 40(1) could not be relied on as the proceedings included claims by the plaintiffs based on allegations of fraud and in such proceedings Order 12, Rule 37(b) dictates that Order 12, Rule 40(1) has no application. 

Held:

(1)	There was insufficient evidence that the 14th defendant was late in filing and serving a notice of intention to defend but even if he was late he did not require the leave of the Court to move a motion for dismissal. 

(2)	The statement of claim included claims based on allegations of fraud which meant that by virtue of Order 12, Rule 37(b), Order 12, Rule 40(1) could not be relied on as a jurisdictional basis for dismissal of the proceedings. The application for dismissal, in so far as it relies on Order 12, Rule 40(1), was therefore refused. 

(3)	Proceedings ought only be dismissed under s 5 of the Claims By and Against the State Act when there is clear evidence that the obligations imposed on plaintiffs by s 5 have been breached. Here there was no evidence that the plaintiffs had not given notice within the time required by s 5. The application for dismissal, in so far as it relies on s 5, was therefore refused. 

(4)	The argument that the plaintiffs lacked standing lacked merit as all plaintiffs have, through their apparent and uncontested membership of at least one of the incorporated landowner associations included as defendants in the proceedings, a sufficient interest in the proceedings. The application for dismissal, in so far as it relies on lack of standing, was therefore refused. 

(5)	As all grounds of dismissal were refused, and notwithstanding that the motion for dismissal raised valid points that could result in summary dismissal of proceedings if based on other provisions of the National Court Rules, eg Order 8, Rule 27, the application for dismissal was refused, with costs. 

Cases Cited

The following cases are cited in the judgment:

Badastal Ltd v Dr Puka Temu (2011) SC1092
Kappo No 5 Pty Ltd v James Chi Kung Wong (1997) SC520
Lord & Company Ltd v Timothy Inapero (2014) SC1624
MVIL v Sossie Joe (2007) SC863
Rhonda Chris v Dim Win Kaeo (2019) N8163
Waim No 85 Ltd v The State (2015) SC1405

NOTICE OF MOTION

This is a ruling on a motion for summary dismissal of proceedings.

Counsel

L Putupen, for the Plaintiff
B Samiat, for the First, Second, Third, Fourth, Seventh & Eight Defendants
H Maliso, for the Fourteenth Defendant

17th February, 2021

1.      CANNINGS J: The plaintiffs commenced proceedings by originating summons against six defendants in 2014, primarily claiming declarations as to control of two incorporated landowner associations, who were the primary parties due to receive money due to landowners from the now-closed Misima Gold Mine project in Milne Bay Province.  There was no trial before 2020 when the Court granted leave to the plaintiffs to file a statement of claim and ordered that the proceedings continue on pleadings. The plaintiffs then filed a statement of claim, joining 16 additional defendants (including the State) and pleading various causes of action, including fraud, not mentioned in the originating summons, and substantially extending the relief sought, including a claim for damages of K434 million. 

2.      The 14th defendant, the Secretary for the Department of Treasury, on 20 January 2021, filed an amended notice of motion seeking dismissal of the entire proceedings. It is that motion on which I now rule. It is based on three alternative grounds: 

•	failure to comply with s 5 of the Claims By and Against the State Act;

•	lack of standing; and 

•	dismissal under Order 12, Rule 40(1) of the National Court Rules for disclosing no reasonable cause of action, being frivolous and vexatious and being an abuse of process. 

3.      The 1st, 2nd, 3rd, 4th, 7th & 8th defendants support the motion for dismissal. The plaintiffs oppose the motion on its merits and raise two preliminary issues. They argue the motion should be dismissed because:

•	the 14th defendant has not obtained the leave of the Court to move the motion and leave is required as he was late in filing and serving a notice of intention to defend, and 

•	Order 12, Rule 40(1) cannot be relied on as the proceedings include claims by the plaintiffs based on allegations of fraud and in such proceedings Order 12, Rule 37(b) dictates that Order 12, Rule 40(1) has no application. 

4.     I will deal first with the preliminary points. 

DID THE 14TH DEFENDANT NEED THE LEAVE OF THE COURT BEFORE MOVING THE MOTION FOR DISMISSAL? 

5.     The plaintiffs’ argument that the 14th defendant needed the leave of the Court before moving the motion for dismissal is based on Order 7, Rule 6(2) of the National Court Rules. It is important to put this sub-rule in the context of the whole of Order 7, Rule 6, which states:

(1)	A defendant may give notice of intention to defend at any time without leave.

(2)	Where a defendant gives a notice after the time limited for doing so, he shall not, unless the Court otherwise orders, be entitled to file a defence or do any other thing later than if he had given a notice of intention to defend within that time.

6.     The argument is that the motion seeking dismissal of the proceedings should not be entertained as the 14th defendant has not sought or been granted the leave of the Court to take any step in the proceedings and such leave is necessary as the notice of intention to defend was given after the time limited for doing so. 

7.     I reject this argument as it involves a misconstruction of the provision. Rule 6(2) does not say that a defendant who gives a late notice of intention to defend cannot do any thing or take any step, such as filing a motion for dismissal, without the leave (by order) of the Court. It simply says that where the Rules limit the time for taking some step, such as filing a defence, the time is not extended by virtue of having filed a late notice of intention to defend. That this is the effect of Rule 6(2) is made clear by the Supreme Court decisions in MVIL v Sossie Joe (2007) SC863 and Waim No 85 Ltd v The State (2015) SC1405. 

8.      The effect of filing and serving a notice of intention to defend was to confer on the 14th defendant the right to take any step in the proceedings, provided the step was taken in compliance with the Rules and in particular within time limits imposed by the Rules (Badastal Ltd v Dr Puka Temu (2011) SC1092). Neither the National Court Rules nor any other law imposes a time limit on a defendant filing a motion for dismissal of proceedings. The 14th defendant therefore did not need the leave of the Court before moving the motion for dismissal. 

CAN ORDER 12, RULE 40(1) BE RELIED ON TO DISMISS THE PROCEEDINGS?

9.     The 14th defendant’s motion seeks dismissal of the proceedings under Order 12, Rule 40(1) of the National Court Rules, which 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.

10.    Proceedings may be dismissed under this provision if it appears to the Court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings: 

•	no reasonable cause of action is disclosed (Rule 40(1)(a)); or
•	the proceedings are frivolous (Rule 40(1)(b)); or
•	the proceedings are vexatious (Rule 40(1)(b)); or
•	the proceedings are an abuse of the process of the Court (Rule 40(1)(c)).

11.     The 14th defendant has an array of arguments that the present proceedings ought to be dismissed on each of those grounds. The problem with relying on them has, however, been exposed by the submissions of Mr Putupen for the plaintiffs. Order 12, Rule 37 (application of Division 4) limits the ability of a defendant to rely on Order 12, Rule 40 in cases where the proceedings include a claim based on allegations of fraud. Order 12, Rule 37 states:

This Division applies to all proceedings except proceedings which include: 

(a)	a claim by the plaintiff for libel, slander, malicious prosecution, false imprisonment, seduction or breach of promise of marriage; or 

(b)	a claim by the plaintiff based on an allegation of fraud; or 

(c)	a claim for damages arising in respect of the death of any person or in respect of personal injuries to any person.

12.     The Division referred to in the opening words of Rule 37 is Division 4, headed “Summary Disposal”, consisting of Rules 37 to 43. The effect of Rule 37 is that Rule 40 cannot be relied on as a source of jurisdiction to dismiss proceedings if the proceedings include a claim based on an allegation of fraud. The statement of claim includes claims based on allegations of fraud. Mr Putupen’s submission has merit. It is supported by two Supreme Court decisions, Kappo No 5 Pty Ltd v James Chi Kung Wong (1997) SC520 and Lord & Company Ltd v Timothy Inapero (2014) SC1624 and the recent decision of Shepherd J in the National Court in Rhonda Chris v Dim Win Kaeo (2019) N8163.

13.    I find that none of the grounds for dismissal set out in Order 12, Rule 40 can be relied on by the 14th defendant. 

SHOULD THE PROCEEDINGS BE DISMISSED FOR FAILURE TO COMPLY WITH SECTION 5 OF THE CLAIMS BY AND AGAINST THE STATE ACT?

14.    Section 5 (notice of claims against the State) provides that notice in writing of an intention to make a claim against the State must be given in the prescribed manner before commencing proceedings. The 14th defendant argues that there is no evidence of any such notice being given within six months after the occurrence out of which the plaintiffs’ claim arose, and in this case the primary occurrence referred to in the originating summons was a purported mediated agreement amongst Misima landowners executed in January 2012. Notice should have been given within six months after execution of the agreement, but it wasn’t, therefore the proceedings should be dismissed. 

15.      There are two problems with this argument. First, it is an argument that should be made by the State, but the State has not to date been represented in the proceedings. Secondly, and more importantly, there is no evidence to support the argument: there is no evidence that the records of the Office of Solicitor-General have been checked and that the check has revealed that no notice was given within the key period. Mr Maliso for the 14th defendant pointed out that there was evidence that a s 5 notice was given in November 2020, which gives rise to an inference that no notice was given before that. I am not so sure about that. Just because a notice of some sort was given in November 2020, it does not mean that there was no notice given in 2012. It might be circumstantial evidence but it is not evidence to show that on the balance of probabilities no notice was given within the time required, in 2012.

16.     I refuse the argument that the proceedings ought to be dismissed for failure to comply with s 5 of the Act. 

SHOULD THE PROCEEDINGS BE DISMISSED BECAUSE THE PLAINTIFFS LACK STANDING?

17.     Mr Maliso contended that the actions of the plaintiffs in commencing the proceedings are unauthorised by the incorporated landowner associations of which they are members. This, the evidence suggests, is correct. However, it does not deprive them of the opportunity to bring their grievances to Court. There are clearly conflicts within each of the primary associations. That is not a good reason to deprive those members with grievances, the opportunity to agitate their grievances through proceedings such as the present. The 14th defendant’s standing argument is dismissed. 

CONCLUSION

18.     All grounds of dismissal have been refused. Notwithstanding that the motion for dismissal has raised valid points that could well have resulted in summary dismissal of proceedings if based on other provisions of the National Court Rules, eg Order 8, Rule 27, the application for dismissal must be refused, with costs. 

ORDER

19.     The Court orders in relation to the 14th defendant’s amended notice of motion, filed 20 January 2021, that:

(1)	The application for dismissal of the proceedings is refused.

(2)	The 14th defendant shall pay the plaintiffs’ costs of and incidental to the hearing and determination of the fourteenth defendant’s amended notice of motion, filed 20 January 2021, on a party-party basis, which shall, if not agreed, be taxed.

Ordered accordingly.
________________________________________________________________Lyons Putupen & Associates: Lawyers for the Plaintiffs 			
Holingu Lawyers: Lawyers for the First, Second, Third, Fourth, Seventh & Eight Defendants	
Twivey Lawyers: Lawyers for the Fourteenth Defendant