N9286
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 64 OF 2021

BETWEEN:
LAHONE HASU 
Plaintiff

AND:
MOSES VENAPO 
First Defendant

AND:
WINI KAKASO 
Second Defendant

Goroka: Mugugia, AJ 
2021: 13th & 21st September, 11th October

PRACTICE AND PROCEDURE – application for dismissal of proceedings – abuse of process – being frivolous and vexatious – whether proceedings should be dismissed, National Court Rules, Order 12 Rule 40.
PRACTICE AND PROCEDURE - motion states in general terms Court's jurisdiction to grant orders sought – motions must contain concise reference to courts jurisdiction to grant orders sought - court has discretionary powers to dismiss incompetent motions – motion not so incompetent.
PRACTICE AND PROCEDURE – application for dismissal of proceedings – Whether Order 12 Rule 40 of the National Court Rules applies to proceedings that include a claim based on an allegation of fraud - summary disposal of a proceeding cannot be obtained in an action where fraud has been pleaded – Order 12 Rule 37 of the National Court Rules.
Cases Cited:
Chris v Kaeo (2019) N8163
PNG Ports Corporation Ltd. v. Starships (PNG) Ltd, (2011) N4213
Kappo No. 5 Pty Ltd v James Chi Kong Wong (1997) SC520
Wamabiang v Palme (2012) N4715
Galatia v Tulo (2021) N8760

Counsel:
N. Amoiha, for the Plaintiff
K. Pilisa, for the Defendants 

RULING

11th October, 2021
1. MUGUGIA, AJ: The matter returned before me on 13 September 2021 for the hearing of two motions. 
2. The first one was the Plaintiff’s Notice of Motion filed on 16 June 2021, seeking orders to have the Defendants’ Defence filed on 17 May 2021 to be struck out for being an abuse of process, and, for default judgment to be entered in favour of the Plaintiff to the amount of K70,377.00.
3. The second motion was the Defendants’ Notice of Cross Motion filed on 2 September 2021, seeking an order pursuant to Order 12 Rule 40 of the National Court Rules to have the proceedings dismissed for being an abuse of process, and for being frivolous and vexatious. 
4. The Plaintiff’s lawyer sought leave to file an amended notice of motion. The reason being that there were defects with the jurisdiction and the orders sought in the motion, and the affidavits in support did not substantiate those particular orders sought. Leave was granted to the Plaintiff to withdraw the motion filed on 16 June 2021. Costs was awarded to the Defendants. 

BACKGROUND

5. The Plaintiff claims that on 4 October 2009, he entered into a loan agreement with the First Defendant. The loan amount was K45,000.00, and the loan repayment amount was K69,377.00. On 22 November 2011, he purchased a vehicle described as Toyota Hiace Bus Registration No. PO 5321, and started operating a PMV business to facilitate the loan. He claims that he completed the loan repayment. However, he realized that he had repaid the loan to K70,377.00 which was an over payment. He alleges that in 2012, the First Defendant organized to have the vehicle repossessed by force, and on 4 September 2014, the First Defendant sold the vehicle to the Second Defendant. On 14 May 2015, the District Court in DC No. 06 of 2015, Lahone Hasu v. Moses Venapo, ordered the First Defendant to return the vehicle to the Plaintiff, and pay K6,000.00 as damages to the Plaintiff. The First Defendant paid the K6,000.00 but did not return the vehicle. The Plaintiff alleges that the First Defendant knowingly illegally sold the vehicle to the Second Defendant which was fraudulent. The Second Defendant sold the vehicle to another person. Allegations of fraud are pleaded at paragraph 12 in the Writ of Summons and Statement of Claim filed on 4 March 2021. In the Prayer for Relief, the Plaintiff claims the amount of K70,377.00 (which is the amount that he paid for the vehicle), general damages, exemplary damages, interest and costs.   

MOTION 

6. The Defendants moved on the motion filed on 2 September 2021, seeking dismissal of the proceedings for being an abuse of process and for being frivolous and vexatious. The jurisdictional basis relied on is Order 12 Rule 40 of the National Court Rules.  

7. In support of the motion, the Defendants relied on the Affidavit of Moses Venapo filed on 30 August 2021, and the Supplementary Affidavit of Moses Venapo filed on 1 September 2021. 

8. The motion was contested by the Plaintiff. 

9. After hearing the parties’ submissions, I raised this issue: “Whether Order 12 Rule 40 of the National Court Rules applies to proceedings that include a claim based on an allegation of fraud.” I adjourned the matter for a week to 21 September 2021 to give the parties’ lawyers an opportunity to come up with submissions to address the Court.   

ISSUES 

10. The primary issues for determination are:

1. whether the proceedings should be dismissed for being an abuse of process, and for being frivolous and vexatious; and

2. whether Order 12 Rule 40 of the National Court Rules applies to proceedings that include a claim based on an allegation of fraud.

PARTIES’ SUBMISSIONS

Defendants’ Submissions 

11. In summary, the Defendants’ lawyer’s submissions on whether the proceedings should be dismissed pursuant to Order 12 Rule 40 of the National Court Rules were: 

•	The matters pleaded in the statement of claim have been dealt with by the District Court in proceedings DC No. 06 of 2015, Lahone Hasu v. Moses Venapo, hence, the issues are res judicata. The District Court proceeding concerned the same dispute that is before the National Court proceeding. The Defendants do not have the District Court complaint and summons in evidence but the District Court Order of 14 May 2015 concerns the same vehicle and the same parties, and the vehicle described in the District Court order is the same vehicle that is described in this proceeding. The case has been determined. 
•	The ground of abuse of process pleaded in the motion covers res judicata. 
•	The Plaintiff’s claim for fraud is statute barred since 2014.
•	No cause of action arose on 14 May 2015. 
•	The cause of action in the initial proceeding (District Court) was converted into a judgment.
•	The National Court proceeding is an abuse of process.

Plaintiff’s Submissions

12. As for the Plaintiff, his lawyer’s submissions on the first issue were as follows:

•	The subject matter in the District Court proceeding and the National Court proceeding is the same. The issues are similar.
•	The Plaintiff’s claim in the National Court is for enforcement of the District Court Order made on 14 May 2015. 
•	The Plaintiff’s cause of action arose on 14 May 2015. The Writ of Summons was filed on 4 March 2021. The Plaintiff’s claim is not statute barred.
•	The amount claimed by the Plaintiff in the National Court proceeding should be returned to him to satisfy the judgment order made in the District Court.

CONSIDERATION

Preliminary Point 
13. I noted at the outset that the Defendants’ motion stated in general terms the Court's jurisdiction to grant the orders sought. The jurisdictional basis (as cited in their motion) is Order 12 Rule 40. The motion did not specify the sub paragraph of Order 12, Rule 40(1) that the Defendants were relying on.
14. When I asked the Defendants’ lawyer why the specific grounds under Rule 40(1) were not specifically pleaded in his clients’ motion, he submitted that the Court can proceed on the general jurisdictional basis (Order 12 Rule 40) that is cited in the notice of motion, and the Court has discretion to allow them to proceed. He also submitted that the other party is aware of what the application is, and it will not cause any prejudice.
15. Order 4, Rule 49(8) of the National Court Rules require all Motions to contain a concise reference to a Court’s jurisdiction to grant the orders sought. A Motion that does not state the jurisdictional basis for the relief sought will be in breach of Rule 8 of the Motions (Amendment) Rules 2005. The motion is incompetent. 

16. In Chris v Kaeo (2019) N8163, Shepherd J dismissed the First Defendant’s notice of motion for failing to specifically plead which of the alternative grounds under Order 12 Rule 40(1) of the National Court Rules were relied on by the First Defendant for her application for dismissal. His Honour stated at paragraphs 24, 25, 26, 27 and 29, and I quote:

“24. There is a further reason why the first defendant’s application for dismissal of 	this proceeding is flawed and should not be allowed to succeed. The defendant’s notice of motion is defective because term 1 simply seeks an order that the entire proceeding be dismissed pursuant to O.12 r.40(1) NCR. The notice of motion does not specify which of the alternative grounds set out in O.12 r.40(1) could be said to apply to this proceeding.

25. This failure by the first defendant to identify in her notice of motion whether she seeks dismissal of this proceeding on the ground that no reasonable cause of action is disclosed [O.12 r.40(1)(a)], or that the proceeding is frivolous or vexatious [O.12 r.40(1)(b)], or that the proceeding is an abuse of Court process [O.12 r.40(1)(c)], or that dismissal is sought on each of these alternative grounds, offends against the overriding rule of pleading for motions, namely O.4 r.49(8) NCR.” 

26. A motion that does not state the jurisdictional basis for the relief sought is in breach of O.4 r.49(8). It is incompetent and should be dismissed, especially where substantive relief such as summary disposal is sought in the motion: Yaluma v State (2010) N 4088, Sawong. J.

27. In ANZ Bank (PNG) Ltd v Maita Yawi (2014) N5663 the defendant sought orders for dismissal of the proceeding, relying generally on O.12 r.40(1) without specifying the basis on which he relied. Sawong J said:

The defendant has sought to dismiss the proceedings either as an abuse of Court process, [as] vexatious and frivolous or as showing no reasonable cause of action. It is not clear to me exactly what basis the defendant relies on. In my view, the way the principal relief is formulated creates confusion and ambiguity. The reliefs in Order 12 Rule 40 are set out in alternatives, that is a party must choose which of the grounds in that particular rule it wishes to rely on. To invoke or attempt to rely on all the grounds as is pleaded in this case in my view creates confusion and lacks clarity. It does not plead precisely the relief it seeks to rely on.
	…
29. I accordingly find in the present instance that as the first defendant’s notice of motion failed to specifically plead which of the alternative grounds under O. 12 r. 40(1) NCR are relied on by her for the application for dismissal, this is an additional reason why the motion should itself be dismissed.”

17. In PNG Ports Corporation Ltd. v. Starships (PNG) Ltd, (2011) N4213, the defendants sought an order by motion that the application be dismissed for disclosing no reasonable cause of action, for being frivolous and vexatious and for being an abuse of the court’s process pursuant to Order 12 Rule 40 of the National Court Rules. The motion stated in general terms the Court’s jurisdiction to grant the orders sought. Sawong J refused to strike out the motion as being incompetent. His Honour held that:

	“Although the application did not contain a concise statement of the jurisdiction of the court, the motion is not so incompetent that it should be summarily determined.”
18. In the present case, summary disposal is sought by the Defendants. Their motion did not specify the sub paragraph of Order 12, Rule 40(1) that the Defendants were relying on. Should I dismiss the Defendants’ notice of cross motion filed on 2 September 2021 for failing to specifically plead which of the alternative grounds under Order 12 Rule 40(1) of the National Court Rules they are relying on? 
19. The Court may strike out the motion for being incompetent and for lack of form. Order 4, Rule 49(8) vests a judge with a discretion to hear a motion that is non compliant with this rule. It was clear to me that the Defendants relied on the grounds of abuse of process and frivolous and vexatious. It was also clear that both parties understood the nature of the application before the Court, and the grounds relied on by the Defendants. The Plaintiff’s lawyer did not raise any objection on the deficiency in the pleading of the jurisdictional basis relied on by the Defendants. It lay within my discretion to hear and determine the motion. Therefore, I heard the motion as I was of the view that it was not so incompetent to be summarily determined.    

Determination of the two primary issues 

20. I will determine the second issue first. If it is found that Order 12 Rule 40 of the National Court Rules does not apply to proceedings based on fraud then it will not be necessary for me to consider the other submissions by the parties. 

21. The second issue is whether Order 12 Rule 40 of the National Court Rules applies to proceedings that include a claim based on an allegation of fraud.

PARTIES’ SUBMISSIONS 

Defendants’ Submissions 

22. The part-heard hearing of the Defendants’ motion proceeded on 21 September 2021. The Defendants’ lawyer’s submissions were that nothing in case law or statute precludes parties seeking to dismiss proceedings based on fraud from using and relying on Order 12 Rule 40 of the National Court Rules. He referred to the case of Kepo v. Dowa, (2011) N4228, and submitted that the Court used Order 12 Rule 40 in this case, and there is nothing stopping his clients from using Order 12 Rule 40 and Order 8 Rule 30. He also referred to the Supreme Court case of Kappo No 5 Pty Ltd v James Chi Kung Wong (1997) SC520.

Plaintiff’s Submissions 

23. The Plaintiff’s lawyer relied on his written submissions. He referred to Order 12 Rule 37 of the National Court Rules, and submitted that this provision gives the general application of Division 4 of Order 12 of the National Court Rules. It specifically states at sub-rule (b) that any rules under Division 4 applies to all proceedings except an allegation of fraud. Order 12 Rule 40 in which the Defendants are relying on to dismiss this proceedings falls under Division 4 of Order 12. As such, the Defendants application to dismiss the proceedings under Order 12 Rule 40 is defective and should be dismissed. 

24. Rule 37 of Order 12 reads: 

	"37. Application of Division 4. 

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."
	[underlining supplied]
25. I considered relevant past cases where applications for summary dismissal of proceedings were filed pursuant to Order 12 Rule 40. Fraud was pleaded in these cases, and the statutory prohibition under Order 12 Rule 37(b) was taken into account. 

26. In Kappo No. 5 Pty Ltd v James Chi Kong Wong (1997) SC520, Kapi DCJ, Los J and  Salika J (as he then was) said, with reference to Order 12 Rule 37:
“This rule clearly states that where there is a claim based on fraud, summary procedure is not available. It is clearly intended that such allegations must be dealt 	with at the substantive trial.” 

27. In Wamabiang v Palme (2012) N4715, the Plaintiff's claim was primarily based on fraud. The First and Second Defendants filed a motion and sought an order for dismissal of the proceedings for being frivolous or vexatious, disclosing no reasonable cause of action and for being an abuse of process. The application was made pursuant to Order 12 Rule 40(1) of the National Court Rules. David J stated at paragraphs 22 and 23, and I quote:

“22. Order 12 Rule 37 in no uncertain terms prohibits a claim based on an allegation of fraud to be dealt with summarily under Division 12.4 of the National Court Rules: see for example; Kappo No 5 Pty Limited v Wong [1998] PNGLR 544; Porgera 	Freighters Limited v Bank of South Pacific Limited (2004) N2662; and Alfred Alan Daniel v Pak Domoi Ltd (2009) SC970. Thus, as the instant case involves one of the 	claims identified in Order 12 Rule 37 of the National Court Rules, Order 12 Rule 40 of the National Court Rules is clearly inapplicable.

23. Even if Order 12 Rule 40 of the National Court Rules were applicable, I would still have found that the proceedings do disclose a reasonable cause of action based on an allegation of fraud and they are not frivolous or vexatious or are an abuse of the process of the Court. I concur with the plaintiff that this is not a clear case for the Court to summarily dismiss the proceedings.”
28. In Chris v Kaeo (supra), the Plaintiff alleged constructive fraud against the National Housing Corporation. Particulars of that fraud were pleaded in paragraph 14 of her statement of claim. The First Defendant filed a motion seeking dismissal of the proceeding pursuant to Order 12 Rule 40(1) of the National Court Rules. Shepherd J, stated that Order 12 Rule 40(1) is subject to Order 12 Rule 37. His Honour stated at paragraphs 21 and 23, and I quote:   
“21. Summary disposal of a proceeding cannot be obtained in a case which includes allegations of fraud: Kappo No. 5 Pty Ltd v James Chi Kong Wong (1997) SC520, Kapi DCJ, Los J, Salika J. 

	…

23. As the plaintiff’s claim includes a claim against both defendants which is based on fraud, no matter how loosely pleaded it may be, it is obvious that the first defendant is precluded by operation of O.12 r. 37(b) from bringing any application for summary disposal of this proceeding on any of the grounds set out in O.12 r.40. The defendant’s application for dismissal is misconceived and it can and should be dismissed as being an abuse of the process of the Court for this reason alone.”
29. In Galatia v Tulo (2021) N8760, the Plaintiffs filed a statement of claim pleading various causes of action, including fraud. The fourteenth defendant filed a notice of motion seeking dismissal of the entire proceedings on three alternative grounds, one for 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 plaintiffs opposed the motion and argued that 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. Cannings J held that:
“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.”
30. His Honour, stated at paragraphs 11, 12 and 13, and I quote:
“11. … 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. …

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. … 
	
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.”

31. I adopt the statements made by the learned judges in Wamabiang v Palme (2012) N4715, Chris v Kaeo (2019) N8163 and Galatia v Tulo (2021) N8760 (supra), and make them as my own. 

32. The case of Kepo v. Dowa (2011) N4228 that the Defendants referred to is irrelevant because the issue of whether Order 12 Rule 40 applies to proceedings that include a claim based on an allegation of fraud did not arise in this case. 

33. The Plaintiff’s claim is primarily based on fraud. Order 12 Rule 40(1) is subject to Order 12 Rule 37. Order 12 Rule 40 cannot be relied on by the Defendants as a source of jurisdiction to dismiss this proceedings because of the statutory prohibition under Order 12, Rule 37(b). The Defendants are precluded by operation of Order 12 Rule 37(b) from bringing the application for summary disposal of this proceeding on any of the grounds set out in Order 12 Rule 40. The reliance by the Defendants upon Order 12 Rule 40 is without merit. Their submissions are misconceived. 
 
34. I find that Order 12 Rule 40 does not apply to this proceedings as it is based on fraud.  It is therefore not necessary for me to consider the other submissions made by the parties, especially the Defendants’ submissions in support of their application to dismiss the proceedings.

CONCLUSION 
35. I refuse the relief sought by the Defendants in their motion for dismissal filed on 2 September 2021. 

FORMAL ORDERS
36. The formal orders of the Court are:
(1) The Defendants' notice of cross motion filed on 2 September 2021 to dismiss the proceedings for abuse of process, and for being frivolous and vexatious under Order 12 Rule 40 of the National Court Rules is refused.

(2) The Defendants shall pay the Plaintiff’s costs for defending the application, on a party/party basis to be taxed if not agreed.

(3) Time for entry of these orders is abridged to the date and time of settlement by the Registrar of the National Court which shall take place forthwith.
 
________________________________________________________________
N. Amoiha: Lawyer for the Plaintiff
K. Pilisa: Lawyer for the Defendants