N10495

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO 473 OF 2021 (IECMS)

BETWEEN:
RODNEY POKAPIN TRADING AS POMWAN SECURITY SOLUTION FORMERLY UNDER POKAPIN SECURITY SERVICES
Plaintiff

V

PALADIN SOLUTIONS (PNG) LTD
First Defendant

AND
POMWAN PALADIN SECURITY LTD
Second Defendant

AND
DAVID SAUL AS MANAGING DIRECTOR OF THE FIRST AND SECOND DEFENDANT
Third Defendant

Waigani: Anis J
2023: 22nd September, 6th October

NOTICE OF MOTION TO DISMISS PROCEEDING – Order 12 Rule 40(a), (b) and (c), Order 12 Rule 1, Order 10 Rule 9A(15)(1)(a) and (2)(d), Order 10A Rules 15, 16 and 25 – National Court Rules – Consideration – want of evidence to support plaintiff’s response to the application to dismiss – defendant’s claim and evidence uncontested – whether claim vague, unfounded, frivolous and an abuse of process – exercise of discretion

Cases Cited:

Sabatica Pty Ltd v. Battle Mountain Canada Ltd (2003) SC709
In the Matter of Canopus No. 101 Ltd (2022) N9651
Gigira Development Corporation Ltd and Ors v. Stanis Talu and Ors (2021) N8852
Anthoney Hamaka and Ors v. Martin Kombri and Ors (2022) N9916
Motor Vehicles Insurance (PNG) Trust v. James Pupune [1993] PNGLR 370
PNGBC v. Jeff Tole (2002) SC694

Counsel:

M Sole, for the Plaintiff
D H Katter with counsel assisting E Heagi, for the Defendants

DECISION

6th October 2023

1.	ANIS J:  What returned before me was the defendants’ notice of motion filed 9 August 2023 (NoM/application).  The defendants sought to dismiss the proceeding for want of merit, frivolity, and abuse of process.

2.	The application was contested.

3.	I reserved my ruling thereafter to a date to be advised.  Parties have been notified so I will rule on it now.

BACKGROUND

4.	Briefly, the plaintiff sues the defendants premised on alleged verbal and written agreements that he says he had with the first defendant on 10 March 2014 and 1 May 2014 respectively (the 2 agreements).  These are pleaded in his writ of summons and statement of claim filed 15 October 2021 (Writ/SoC).  According to the SoC, the plaintiff says he entered into a joint venture agreement (JVA) with the first defendant on 10 March 2014.  Premised on the JVA, the plaintiff alleges, a vehicle company would be created, which is the second defendant, to provide security services or solutions to their business venture.  According to the plaintiff and premised on the JVA, the second defendant was created where it provided security services in Manus Province, that is, in regard to the asylum seekers and the facilities that were established for that purpose (i.e., the asylum processing facilities or center).  The asylum seekers were kept there premised on a Memorandum of Understanding that was signed between the Australian Government and the Papua New Guinea Government in September of 2012.  It was agreed between the two governments that persons seeking asylum to Australia or elsewhere who were located out at sea would be brought directly to Manus Island into the processing center for processing.

5.	The plaintiff is aggrieved because he claims the defendants have breached the terms and conditions of the two agreements.  As such, he seeks various damages including default judgment, specific performance, special damages, general damages, and loss of earnings. 

6.	The defendants oppose the claim.  They first claim that the pleadings in the SoC including the capacity of the parties have not been adequately or sufficiently pleaded.  They also claim that the pleadings are so bad or confusing that they cannot be cured by amendments.  They also deny liability to the claim in general.  And in summary, they claim that the cause of action is without merit, frivolous and an abuse of the court process, which is why they filed the NoM.

NOTICE OF MOTION

7.	The main relief sought in the NoM is pleaded as relief two which is this:

2.	Pursuant to Order 12 Rule 40(1)(a), (b) and/or (c) and /or Order 8 Rule 27(1)(a), (b), and /or (c) and /or Order 12 Rule 1 and/or Order 10 Rule 9A(15)(1)(a) and (2)(d) of the National Court Rules and Order 10A Rules 15, 16 and 25 of the National Court (Commercial List) Rules, the Plaintiff’s Statement of Claim be struck out and the entire proceedings be dismissed.

EVIDENCE

8.	In support, the defendants rely on 2 affidavits, namely, (i), the Affidavit of Craig Trupp filed 2 August 2020, and (ii), affidavit of Ethel Heagi filed 9 August 2023.

9.	The plaintiff had sought leave to rely on counsel’s affidavit filed 21 September 2023.  The affidavit was intended to be relied upon to support a cross-motion that was filed by the plaintiff.  Leave was objected to by the defendant, and after hearing submissions from the parties, I refused leave to allow the said evidence by the plaintiff.  I would refer to the transcript of the proceeding for my reasonings.

10.	Counsel also tried to refer to other evidence filed to assist without making any detailed references to them.  Unlike the defendants, no proper notices to rely on any affidavit materials were given under the Evidence Act to the defendants in that regard.  Counsel tried to refer to an affidavit sworn by the plaintiff in December of 2021.  Counsel informed the Court that he did not bring his copy from his office and therefore was unable to assist the Court with clarity.  The plaintiff therefore did not read into Court any evidence in support of its defence to the NoM.  I note that the want of evidence by the plaintiff may prove fatal to his claim, that is, if I am satisfied that the defendants have established their claims in the NoM and the burden of proof shifts to the plaintiff to prove otherwise.  But of course, that remains to be seen or considered.

SOURCE

11.	The defendants cited many sources to invoke the Court’s jurisdiction in their NoM.  I will refer the common source which is Order 12 Rule 40(1)(a), (b) and (c) of the National Court Rules (NCR) to address the matter.  It reads: 

40. Frivolity, etc. (13/5)

(1)  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.

(2)  The Court may receive evidence on the hearing of an application for an order under Sub-rule (1).

ISSUES

12.	The issues in my view are (i), whether the defendants are relevant or necessary parties, (ii), whether the defendants are properly named or have capacities in the manner as they are named (iii), whether the claim is duly pleaded and is not without merit; that it is not frivolous or an abuse of court process.

NAMING AND CAPACITIES

13.	In regard to the claim, misnaming of the first defendant, I note that the error appears minor, that is, the initials PNG was put in brackets when it should not be, as revealed in Mr Trupp’s affidavit.  That in itself, in my view, cannot be a good reason for me to dismiss the proceeding.  The first defendant does not generally deny knowledge of the matters as pleaded and such a minor error may easily be cured by amendment.

14.	I turn to the second argument on the matter which is this.  The defendants claim that the plaintiff’s business name Pomwas Security Solution had been registered at the material time on 3 November 2016, but that it is now deregistered.  I find the argument inconsequential given that the plaintiff is also named in person in the proceeding.  The business name of the plaintiff does not have or possess a ‘legal person’ status thus its registration status is immaterial in so far as naming a legal person to the proceeding is concerned.  In the present case, it is sufficient in my view to name the plaintiff in his own name and style.  I therefore reject the defendants’ argument on this matter.

NECESSARY PARTY

15.	The defendants dispute the capacity and status of the third defendant as alleged by the plaintiff in the proceeding.  Their evidence as provided in Mr Trupp’s affidavit on the matter is not contested.

16.	I find that the third defendant is not the managing director or shareholder of the first and second defendants as alleged.  I accept Mr Trupp’s evidence in that regard.  Consequently, there is no basis for the plaintiff to retain any action against the third defendant.  I uphold the defendants’ submissions in this regard.

17.	In so doing, I dismiss the proceeding that is commenced against the third defendant.

WANT OF MERIT, FRIVOLITY & ABUSE

18.	I note the submissions from the parties on whether the cause of action has merit or whether it is frivolous and an abuse of court process.  

19.	With respect, I note that counsel for the plaintiff did not respond directly to the claims and the main issues.  The plaintiff’s response relates to specific factors or matters that are outside or are of less significance to the material issues.  But in regard to the question of whether the pleadings were sufficient or vague, Mr Sole submitted that these may be cured by amendments under Order 8 Rule 50 of the NCR.  Counsel also submitted that at the time of filing the proceeding, the plaintiff did not have all the materials or evidence beforehand thus was only able to plead what he knew at that time. 

20.	At this juncture and based on the said submission by the plaintiff, I note the plaintiff appears to concede that the pleadings may not be in order; that it may be vague or inaccurate.  However, the plaintiff is saying that such deficiencies in the pleadings may be cured by amendments under Order 8 Rule 50.

21.	In consideration, I note that the proceeding was filed on 15 October 2021.  The defendants filed their defence on 3 December 2021, and the Plaintiff filed his Reply on 18 January 2022.  The plaintiff had been put on notice of the disarray state of his pleadings by the defendants’ defence on or about 3 December 2021.  Although Court record has shown that the plaintiff had been taking active steps in the matter over the years, including issuing of summonses upon the defendants, he made no attempts to amend his pleadings for the past 1 and a half years.  This situation has not changed. I find this factor to go against the plaintiff.

22.	The next thing I consider is the mode of proceeding by the plaintiff against the second defendant.  It is not disputed that the plaintiff is a director and shareholder of the second defendant.  Premised on the cause of action and the type of relief that is being sought, I note that there are processes under the Companies Act 1997 (CA) that provide for actions of this nature.  See cases:  Sabatica Pty Ltd v. Battle Mountain Canada Ltd (2003) SC709, In the Matter of Canopus No. 101 Ltd (2022) N9651 and Gigira Development Corporation Ltd and Ors v. Stanis Talu and Ors (2021) N8852.  I set some of the relevant provisions of the CA as follows:

148.  ACTIONS BY SHAREHOLDERS TO REQUIRE DIRECTORS TO ACT.

Notwithstanding Section 147, the Court may, on the application of a shareholder of a company, where it is satisfied it is just and equitable to do so, make an order requiring a director of the company to take any action that is required to be taken by the directors under the constitution of the company or this Act and, on making the order, the Court may grant such other consequential relief as it thinks fit.

149. PERSONAL ACTIONS BY SHAREHOLDERS AGAINST COMPANY.

A shareholder of a company may bring an action against the company for breach of a duty owed by the company to him as a shareholder.

150. ACTIONS BY SHAREHOLDERS TO REQUIRE COMPANY TO ACT.

Notwithstanding Section 149, the Court may, on the application of a shareholder of a company, where it is satisfied that it is just and equitable to do so, make an order requiring the board of the company to take any action that is required to be taken by the constitution of the company or this Act and, on making the order, the Court may grant such other consequential relief as it thinks fit.

151. REPRESENTATIVE ACTIONS.

Where a shareholder of a company brings proceedings against the company or a director, and other shareholders have the same or substantially the same interest in relation to the subject-matter of the proceedings, the Court may appoint that shareholder to represent all or some of the shareholders having the same or substantially the same interest, and may, for that purpose, make such order as it thinks fit including, without limiting the generality of this section, an order–

(a) as to the control and conduct of the proceedings; and
(b) as to the costs of the proceedings; and
(c) directing the distribution of any amount ordered to be paid by a defendant in the proceedings among the shareholders represented.

152. PREJUDICED SHAREHOLDERS.

(1)  A shareholder or former shareholder of a company, or any other entitled person, who considers that the affairs of a company have been, or are being, or are likely to be, conducted in a manner that is, or any act or acts of the company have been, or are, or are likely to be, oppressive, unfairly discriminatory, or unfairly prejudicial to him in that capacity or in any other capacity, may apply to the Court for an order under this section.

(2)  Where, on an application under this section, the Court considers that it is just and equitable to do so, it may make such order as it thinks fit including, without limiting the generality of this subsection, an order–

(a) requiring the company or any other person to acquire the shareholder’s shares; or
(b) requiring the company or any other person to pay compensation to a person; or
(c) regulating the future conduct of the company’s affairs; or
(d) altering or adding to the company’s constitution; or
(e) appointing a receiver of the company; or
(f) directing the rectification of the records of the company; or
(g) putting the company into liquidation; or
(h) setting aside action taken by the company or the board in breach of this Act or the constitution of the company.

(3)  No order may be made against the company or any other person under Subsection (2) unless the company or that person is a party to the proceedings in which the application is made.

(4)  Failure to comply with any of the following sections is conduct which is unfairly prejudicial for the purposes of this section:–

(a) Section 45;
(b) Section 47;
(c) Section 51;
(d) Section 57;
(e) Section 63;
(f) Section 98;
(g) Section 110.

(5)  The signing by the directors of a company of a certificate required by this Act without reasonable grounds existing for an opinion set out in it is conduct that is unfairly prejudicial for the purposes of this section.

23.	I find that the plaintiff has adopted an inappropriate or incorrect mode of proceeding to sue the second defendant.  Pursuing the claim against the second defending in this manner appears to amount to an abuse of the Court process.  This consideration would act against the plaintiff in the NoM.  I am also minded to strike out the SoC for this very reason.

24.	The next consideration under this sub-heading concerns the pleadings in general and the evidence that is relied upon by the defendants to make out their case that the proceeding is vague, without merit and an abuse of court process.  They rely on their evidence, which is the affidavit of Mr Trupp.  The plaintiff, on the other hand, has not filed any evidence in rebuttal.  I understand that this is not the trial of the matter thus if the matter proceeds to that length, the parties will be expected to adduce their evidence at the hearing.  However, given the serious extent of the defendants’ NoM, which is to dismiss the proceeding, and given that it has been fixed for hearing, the Court expects the parties to come prepared to argue with sufficient evidence put forward.  As for the plaintiff, he is required to bring his evidence to argue or support his pleaded facts, to an extent that the Court may look at it and say, there are some evidence that supports the allegations raised or the merit of the claim thus refuse to summarily dismiss or end the proceeding.  The plaintiff’s counsel appears unprepared and makes little or no submissions to address the merits of the NoM, and I note that no evidence was read into Court in support of the plaintiff’s case.  Not only that, but the plaintiff did not give notice to the defendants on which evidence his client would be relying on to oppose the NoM.  Counsel was given that opportunity in Court, however, counsel appeared unprepared and was not able to assist the Court.  This is not a good excuse.  As I have stated on numerous occasions in the past, lawyers are not only answerable to their clients, but they are officers of the Court and thus are required to assist in that regard.  See case:  Anthoney Hamaka and Ors v. Martin Kombri and Ors (2022) N9916

25.	The defendants’ evidence is therefore unopposed.  I find this to be in their favour against the plaintiff.  Some of the material facts disposed to by Mr Trupp are as follows (and I paraphrase and summaris):

•	Mr Trupp is an Australian citizen;
•	He founded the Paladin Group of Companies in 2007;
•	His business services are in security, information, communication, logistics and medical service;
•	In July 2013, Decmil Australia Pty Ltd (Decmil) signed a contract with the Australian Department of Immigration and Citizenship for the construction of the East Lorengau Refugee Transit Centre (ELRTC) on Manus Island.
•	On 4 December 2013, Paladin received a contract from Decmil to provide Security Services for the ELRTC;
•	The contract was awarded to Paladin based on its own reputation for service delivery, and its relationship with the Manus Island Landowners Consortium (MILOC) and the Peren Clan;
•	On 9 March 2014, the plaintiff agreed to work with Paladin on Paladin’s contract with Decmil;
•	Paladine acknowledges a Memorandum of Understanding (MOU) between Paladin and the plaintiff on or about 24 March 2014 as a start to agree on a joint venture to be entered between the plaintiff and Paladin;
•	On 1 March 2014, the plaintiff’s security business Pokapin Security Services and Paladin signed the MOU;
•	On 9 July 2014, the joint venture company, which was the second defendant, was created (JV company);
•	Decmil was not privy to the contractual arrangements between Paladin and the plaintiff and the plaintiff’s businesses;
•	Decmil completed its construction of the ELRTC in December of 2014;
•	Paladin was directly responsible for the training, building and expansion of the JV company;
•	Paladin trained 150 security personnel or guards for the JV company;
•	The plaintiff provided no input into the training processes in the JV company;
•	On 11 November 2014, the JV company signed a sub-contract with a company called Wilson Security to provide security over the ELRTC;
•	Wilson Security never offered any contracts directly to the plaintiff or to any of his businesses;
•	On 21 September 2017, Paladin received from the Australian Government, a letter of intent, which was for Paladin to provide Garrison Support Services on Manus Island on an interim basis, and later, on a given period;
•	On 28 February 2018, Paladin secured a contract with the Australian Department of Home Affairs called Papua New Guinea Service Contract;
•	The JV company was a sub-contractor to the service contract;
•	The service contracted ended in October of 2019;
•	From June 2014 to October 2019, the plaintiff received a minimum of K12,305,919.
•	It is very difficult to understand the plaintiff’s complaint or claim;
•	The plaintiff’s conduct has generally been disruptive rather then co-operative during the tenure of his relationship with Paladin in Manus Province;
•	On 30 June 2021, the JV company ceased its operation;
•	On 1 July 2021, the board of directors passed a resolution to remove the company from the register.

26.	Premised on the facts and evidence that have been deposed to by Mr Trupp, some of which have been summarised above, the pleadings in the SoC cannot be sustained, that is, in the absence of any evidence that is relied upon by the plaintiff in response to the NoM.  See cases:  Motor Vehicles Insurance (PNG) Trust v. James Pupune [1993] PNGLR 370 and PNGBC v. Jeff Tole (2002) SC 694.  In James Pupune, the Supreme Court stated which I adopt herein as follows:

It is well established that pleadings and particulars have the following functions:

1.	they furnish a statement of the case sufficiently clear to allow the other party a fair opportunity to meet it;

2.	they define the issues for decision in the litigation and, thereby, enable the relevance and admissibility of evidence to be determined at the trial; and

3.	they give a defendant an understanding of a plaintiff's claim in aid of the defendant's right to make a payment into court. See Dare v Pulham (1982) 148 CLR 658 at 664.

27.	The SoC filed herein appears vague, is unsubstantiated and falls below the requirements of a sufficiently pleaded cause of action.  Further to that, when I consider the relief that are being sought such as (i), default judgment, (ii), specific performance, (iii), special damages, (iv), general damages and (v), loss of earnings, they appear as relief that are unfounded, misconceived, and frivolous, that is, when comparing their natures to the foundation of the claim as pleaded in the SoC.  The relief sought appear unattainable and this only adds to the already existing disarrayed or defective pleadings that is on foot as determined herein.

28.	I also accept Mr Trupp’s evidence as good evidence that is before the Court.  Having considered that, I make the following observations which I will summarise herein:

•	The plaintiff and his businesses had little or no input in regard to contracts that had been secured by Paladin PNG, which is the first defendant, and its parent company that is Paladin Group of Companies;
•	The plaintiff and his businesses interests and involvement in the major contracts with Paladin were always at the level of a sub-contractor or sub-sub-contractor;
•	The plaintiff did not have or appear to lack a clear understanding or knowledge of the various commercial transactions or arrangements between Paladin, Paladin’s parent company, third parties, the JV company and his businesses at the material time;
•	The plaintiff did not have and lacked a clear understanding of the complexity of the negotiations and dealings that were involved that had occurred between the various parties involved at the material time;
•	Consequently, these are reflected in the SoC which is poorly drafted;
•	The SoC is vague and confusing;
•	The relief sought are unfounded, misconceived and consequently unattainable;
•	The SoC is bound to fail;
•	The SoC does not meet the pleading requirements of a properly formulated pleading which is supported with prima facie evidence.
•	The plaintiff had been put on notice to rectify his pleadings for over 1 and a half years ago by the defendants but has failed to do so;
•	The plaintiff has not provided any explanation in evidence to say why he has not taken corrective measures to date.

SUMMARY

29.	In summary, I am therefore minded to grant the NoM filed by the defendants in general.

30.	I will therefore strike out the plaintiff’s SoC on the basis that it is without merit, frivolous and an abuse of the Court process.

COST

31.	An order for cost in this instance is discretionary.  I will order cost to follow the event on a party/party basis to be taxed if not agreed.

ORDERS OF THE COURT

32.	I make the following orders:

1.	The plaintiff’s Statement of Claim that filed together with the Writ of Summons on 15 October 2021, is struck out.

2.	Consequently, the proceeding herein is dismissed.

3.	The plaintiff shall pay the defendants’ costs of the proceedings on a party/party basis which may be taxed if not agreed.

4.	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.

The Court orders accordingly
________________________________________________________________
Twivey: Lawyers for the Plaintiff
Ashurst PNG: Lawyers for the Defendants