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Magini v Daimo [2021] PGNC 474; N9228 (27 August 2021)

N9228

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS No 24 OF 2020 (CC4)

BETWEEN:
WENDY WAILA MAGINI
Plaintiff

AND:
MONO DAIMO
Defendant

Waigani: Wurr AJ
2021: 25^th & 27^th August

PRACTICE AND PROCEDURE –Application by Defendant seeking leave to file a Statement of Claim to plead particulars of fraud against the Plaintiff - National Court Rules, Order 4, Rule 35 (1) and Order 4, Rule 2 (b)- Plaintiff has indefeasible title- No authorities cited to support the Defendant’s application- Defendant’s application is misconceived- Application refused.

PRACTICE AND PROCEDURE –Proceedings commenced by originating summons- Defendant to seek leave to file a cross-claim claiming fraud– Court may direct Defendant to file a statement of claim or other pleadings after leave granted for Defendant to cross-claim- National Court Rules, Order 4, Rule 34(1)(2)(3) and Order 4 Rule 35 considered.

Cases Cited

Awaincorp Limited v The Honorable Jim Kas MP (2013) N5862
Maki v Pundai [1993] PNGLR 338
Paga No.33 Limited v Eleadona (2018) SC1671
Papua Club Inc v Nasaum Holdings Ltd [2004] PGNC 178; N2603
Puaituk v Hagen [2007] PGNC 96, N3204
Soto v Our Real Estate Ltd (2018) SC1701
Special Reference by the Attorney General pursuant to Constitution, Section 19 [2016] SC1534; SC No. 7 of 2014

Counsel

B.Sinen, for the Plaintiff
E.Waeda, for the Defendant

RULING

27th August, 2021

1. WURR AJ: Before me is an application by the defendant seeking the following orders:
   
   1. The proceedings to continue on pleadings pursuant to Order 4 Rule 35 (1) of the National Court Rules;
      
   2. Leave be granted to the defendant to file the statement of claim pursuant to Order 4 Rule 2(b) of the National Court Rules.
      
2. The defendant relied on his own affidavit filed 25 May 2021 and the affidavit of Ian Dalu filed 06 July 2021 to support his application.
   
3. The plaintiff opposed the application relying on her own affidavit filed 27 January 2021.

ISSUE

4. The main issue is whether or not the defendant can rely on Order 4 Rule 2 (b) and Order 4 Rule 35 of the National Court Rules to move an application seeking leave to file a statement of claim alleging fraud, in a proceeding that has already commenced by way of an originating summons
   

BACKGROUND

5. The plaintiff filed an Originating Summons on 27 January 2020 seeking orders for vacant possession of the property described as Allotment 21, Section 202, Hohola, National Capital District (State Lease Volume 20 Folio 4938) (hereinafter referred to as “the property”). The plaintiff also seeks an order empowering officers of the Royal Papua New Guinea Constabulary to assist in the eviction exercise if the first order is granted. The plaintiff claims that she is the registered proprietor of the property.
   

PARTIES SUBMISSIONS

6. Ms. Waeda submitted that the defendant is raising allegations of fraud against the plaintiff and therefore seeks leave to file a statement of claim to plead particulars of fraud. The defendant submits that the court should grant leave to file a statement of claim under Order 4 Rule 2 (b) and Order 4 Rule 35 (2)(b) of the National Court Rules 2012.
   
7. Mr. Sinen for the plaintiff opposed the application submitting that the plaintiff has indefeasible title to the property under the Land Registration Act, Ch No. 191, and no exceptions under Section 33(1) has been shown against the plaintiff or the former registered proprietor. Counsel argued that the allegations made in the defendant’s affidavit were speculative and not sufficient to proof actual fraud.
   

THE LAW

8. Proceedings shall be commenced by writ of summons where a claim made by the plaintiff is based on an allegation of fraud (Order 4 Rule 2 (b), National Court Rules (NCR))
   
9. Order 4 Rules 23-36 of the NCR falls under Division 4 and applies only to proceedings commenced by originating summons.
   
10. Order 4, Rule 34 of the NCR provides:
    • (1) A defendant may, with leave of the Court, cross-claim for any relief which the Court may grant.
    • (2) A defendant who wishes to cross-claim shall, at as early a stage as is practicable, tell the Court the nature of the cross-claim.
    • (3) A cross-claim shall be made in such a manner as the Court may direct under Rule 31 or 35, or under Order 8 Rule 37(2).
      
11. Under Order 4 Rule 35(2)(b) of the NCR, Court may order proceedings to continue on pleadings, by making an order for filing of statement of claim or other pleadings.
    
12. However, before an order can be made under Order 4 Rule 35(2)(b), leave must be granted to the defendant to cross-claim under Order 4 Rule 34 of the NCR. (See Order 4, Rule 34 (3))
    
13. In the case of Awaincorp Limited v The Honorable Jim Kas MP (2013) N5862, the plaintiff applied by originating summons for declarations that it was the registered proprietor of two State Leases over land in the commercial business district of a provincial capital and injunctions to restrain the defendants from interfering with its development and use of the land. The plaintiff adduced evidence that State Leases had been granted to it and that the leases had been granted in accordance with procedures prescribed by the Land Act. The defendants adduced no evidence and did not file a cross-claim. However, they argued that the relief sought by the plaintiff should be refused as it had failed to discharge the onus of proving that none of the exceptions to the principle of indefeasibility of title in Section 33(1) of the Land Registration Act applied; in particular it was unable to prove that this was not a case of fraud as the evidence demonstrated that the land had been exempted from advertisement contrary to Section 69(2) of the Land Act.
    
14. In that case Justice Cannings held that:
    1. The onus of proving a case of fraud or that any of the other exceptions in Section 33(1) of the Land Registration Act applies rests with the person who challenges the title of the registered proprietor, in this case the defendants.
    2. Though they adduced no evidence, the defendants had a legitimate and sufficient interest in the proceedings and were permitted to argue a case of fraud based on the evidence adduced by the plaintiff. They were not 'mere busybodies', as contended for by the plaintiff.
    3. The evidence before the Court was sufficient on which to make findings that (a) one of the allotments of land had been exempted from advertisement contrary to Section 69(2) of the Land Act and (b) the other had not been exempted at all and (c) therefore the circumstances in which the State Leases had been granted were so unsatisfactory and irregular as to amount to constructive fraud.
    4. Despite those findings, it would be inappropriate to refuse to grant the declarations and injunctions sought, as the irregularities occurred more than three years before the State Leases were granted and no person including the defendants had taken any legal step in that time to challenge the plaintiff's title, and furthermore no steps were taken by the defendants to challenge the plaintiff's title in the five-year period after granting of the State Leases, and the defendants did not file a cross-claim in these proceedings or adduce any evidence to assist the Court (my emphasis).
       
    5. Declarations and injunctions, generally in the terms sought, were granted. Costs followed the event.
       
15. Once a land is registered, the owner attains indefeasibility of title which cannot be invalidated by any unregistered interests or mere irregularities except fraud by the registered proprietor or actual fraud, and or any other exceptions under Section 33(1) of the Land Registration Act. (Paga No.36 Ltd v Eleadona (2018) SC 1671; Soto v Our Real Estate Ltd (2018) SC 1701; Mudge v Secretary for Lands (1985) PNGLR 387;Papua Club Inc v Nasaum Holdings Ltd ( 2004) PGNC 178; Koitachi Ltd v Zhang (2007) PGSC 11; SC 870;
    
16. In the Supreme Court case of Paga No 36 Ltd v Eleadona (2018) PGSC 17; SC 1671 at paragraph 29, the Court said:
    

29. In matters involving allegations of fraud under s 33 (1) of the LRA, the onus of establishing such fraud, or that any of the exceptions in s 33(1) of the LRA apply, lies with the party challenging the title. We respectfully adopt the approach of Cannings J in Awaincorp Limited v The Honorable Jim Kas MP (2013) N5862 where His Honor rejected the argument that the plaintiff bears the onus of proof in demonstrating that it has good title. His Honor explained:

“6..... The fact that the leases have been granted to and registered in the name of the plaintiff gives rise to the presumption that it has good and indefeasible title subject only to the exceptions prescribed by Section 33(1) of the Land Registration Act (Mudge v Secretary for Lands [1985] PNGLR 387). The onus of proving a case of fraud in that any of the other exceptions in Section 33(1) applies rests with the person who challenges the title of the registered proprietor (Niugini Properties Lt v Jeffery Londari (2014) N5727). In this case it is the defendants who bear the onus of proving the plaintiff’s title is defective.

17. More recently in the Supreme Court case of Soto v Our Real Estate Ltd (2018) PGSC 55; SC 1701, the Court said this at paragraph 8:
    

8. Upon the registration of the State Leases, an indefeasible title vested in ORL as registered proprietor, subject only to the exceptions for which s 33(1) of the Land Registration Act (Ch 91) provided: Mudge v Secretary for Lands [1985] PNGLR 387; Mamun Investments Pty Ltd v Ponda [1995] PNGLR 1. Of these exceptions, only the fraud exception for which s 33(1)(a) of that Act provides was of any possible application. Contrary to the Appellants’ contention, the fraud concerned must be actual fraud by the registered proprietor in procuring registration, not constructive fraud: Papua Club Inc v Nasaum Holdings Ltd [2004] PGNC 178 (Gavara-Nanu J); recently expressly approved by the Supreme Court in Paga No 36 Ltd v Eleadona [2018] PGSC 17; SC1671 (30 May 2018). And that fraud had to be distinctly pleaded with particularity. This the Appellants did not originally, and self-evidently from the draft amended statement of claim could not, do.

18. In addition to particularizing pleadings in fraud allegations, the defendant must provide sufficient credible evidence to actually prove the allegation of fraud. Mere allegation and speculation falls short of the standard of proof required in fraud cases.
    
19. In the Supreme Court case of Paga No 36 Ltd v Eleadona (supra), the Court after considering various authorities from overseas and the Special Reference by the Attorney General pursuant to Constitution, Section 19 [2016] SC 1534 SC No. 7 of 2014 had this to say about the nature of proof:
    
    37. In our view, it was insufficient to determine the serious accusation of fraud in this matter on the balance of probabilities. The issue ought to have been considered at a higher standard of proof. The allegations in this matter were serious assertions that demanded proof commensurate to the standard required in criminal proceedings- that is, proof beyond reasonable doubt.
        

REASONS FOR RULING

20. From the evidence before the Court and submissions of counsel, I make the following findings of fact:
    
    • The defendant is the plaintiff’s brother in law- she is the wife of his brother Michael Oea Daimo, now deceased.
    • Michael Oea Daimo initially owned the property, however after he passed on, the plaintiff successfully applied for Letters of Administration at the National Court. She then applied to the Registrar of Titles at the Department of Lands and Physical Planning for transmission of the state lease of the property to her name. Her application was successful and she is currently the registered proprietor of the property.
    • The Defendant and other family members are residing on the property without her consent. She has therefore filed these proceedings seeking orders for vacant possession of the property.
    • The defendant claims that the property was once jointly owned by his parents Mrs Lagona Kila Magini and Mr Daimo Magini. His late father transferred the property to his elder brother Mr Michael Oea Daimo without his mother’s consent and approval. In support of this allegation, the Defendant produced evidence of two (2) letters from the Public Solicitors office confirming that late Mrs Lagona Kila Magini sought legal assistance from the Public Solicitors office in 2017 to reclaim the property.
21. The evidence put forth by the defendant to support this application, with respect, was speculative and hearsay. Most of what he deposed in his affidavit were assumptions. The standard of proof is high in matters where fraud is alleged. The evidence put forth by the defendant falls short.
    
22. Furthermore Order 4 Rule 2(b) of the National Court Rules states clearly in no uncertain terms that where a claim made by the plaintiff is based on an allegation of fraud, proceedings shall commence by way of a writ of summons. The defendant has not pursued this option but is attempting to challenge the plaintiff’s title through this application. However, this provision only applies to a “plaintiff” and not a defendant hence not applicable to be relied on.
    
23. Instead of seeking leave to file a cross-claim, defendant has opted to seek leave to file a statement of claim. The defendant is also relying on Order 4 Rule 35 of the NCR to do so, however has failed to invoke Order 4 Rule 34 of the NCR which provides for a defendant to seek leave to file a cross-claim. If he wishes to solely rely on Order 4 Rule 35, then the provision would not be applicable to him as a defendant; it is only applicable to a plaintiff.
    
24. As a defendant, he must first seek leave to file a cross-claim under Order 4 Rule 34, and after leave is granted then he can seek directions to plead his cross-claim in a statement of claim pursuant to Order 4 Rule 35 of the NCR.
    
25. Therefore, if Order 4 Rule 34 of the NCR was also invoked and relied upon in this application, then the application would have merits to be considered. That is not the case here. I therefore find that the defendant’s application is misconceived and or incompetent for failing to invoke the relevant provisions.
    

CONCLUSION

26. Order 4 Rule 2(1)(b) of the NCR applies to a plaintiff making a claim based on allegations of fraud to file a writ of summons. It does not apply to a defendant where proceedings have already commenced by a plaintiff against him. This provision has wrongly been invoked by the defendant to make this application.
    
27. Order 4 Rule 34 of the NCR provides that a defendant may with leave of court file a cross claim against the plaintiff in an originating summons proceeding. Sub-rule 3 of same provision provides clearly that a cross- claim shall be made in such manner as the Court may direct under Rule 31 or 35, or under Order 8, Rule 37(2).
    
28. However, the defendant is only relying on Order 4 Rule 35 of the NCR. I have already expressed my view which is that both of these provisions (rules 34 and 35) should be invoked together and relied upon by a defendant wishing to make a cross-claim by way of pleadings- either by affidavit (Order 4 Rule 35(2)(a)) or filing of statement of claim ((Order 4 Rule 35(2)(b).)
    
29. In other words, leave is sought under Order 4 rule 34, and if granted, then directions are made under Order 4 rule 35. Therefore, both provisions must be invoked when a defendant is seeking orders for leave to make a cross-claim by way of pleadings. To invoke only Order 4 Rule 35 of the rules is more or less putting the cart before the horse so to speak, because leave has not been sought and granted yet under Order 4 Rule 34 of the rules.
    
30. I therefore conclude that the defendant’s application is not only misconceived but incompetent and should be refused with costs.

Orders

31. These are the orders of the Court:
    
    1. All relief sought by the defendant in the notice of motion filed on 25 May 2021 is refused.
    2. Cost is awarded to the plaintiff on a party-party basis, to be taxed if not agreed.

________________________________________________________________
Pacific Legal Group: Lawyer for the Plaintiff
Public Solicitor: Lawyer for the Defendant