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Maser v Salin [2021] PGSC 49; SC2119 (8 June 2021)

SC2119

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA NO. 167 OF 2018

BETWEEN
JOACHIM MASER
First Appellant

AND
BONNIE BRUNO
Second Appellant

AND
HENRY SALIN AND EPHRAIM NASO
Respondents

Waigani: David J, Anis J and Berrigan J
2020: 26^th May and 8^th June

SUPREME COURT – APPEAL – Discretion to set aside a consent order in the interests of justice – Appeal against refusal – No error – Appeal dismissed.

Cases Cited:
Papua New Guinea Cases

Simon Mali v. The State (2002) SC690
Griffin v Westpac Bank [1993] PNGLR 534
Paul Torato v Sir Tei Abal [1997] PNGLR 403
Coecon Ltd v The National Fisheries Authority of Papua New Guinea (2002) N2182
Joseph Kupo v Stephen Raphael, Secretary for the Department of Defence Force (2004) SC 751
Network Construction Ltd v Independent State of Papua New Guinea (2010) N4045

Overseas Cases

Marsden v Marsden [1972] 2 All ER 1162

References cited:

Section 155(4) Constitution
Section 14(2) of the Supreme Court Act Chapter 37
Order 2 R 35 and 40 of the National Court Rules

Counsel

R Habuka, for the Appellants
R Asa, for the Respondents

DECISION ON APPEAL

8^th June, 2021

1. BY THE COURT: This is an appeal against the decision of the National Court, Higgins J, made on 7 September 2018 in proceedings OS No 633 of 2017, whereby he refused the Appellants’ application to set aside a consent order entered on 1 August 2018.
   
2. The notice of appeal contained five grounds of appeal challenging the learned trial judge’s refusal. All but the following ground were abandoned at the hearing before us. The Appellants contend that:
   

“His Honour erred in fact and in law when he refused to set aside the Consent Order of 1 August 2018, corrected and endorsed by him, in that ... the said Consent Order was fraudulently obtained as it was consented to and signed by Epita Paisat for and on behalf of the Appellants (who were Defendants in the National Court proceedings) when he did not have authority to consent to such Consent Order and to act for them.”

3. In particular, it is submitted that the learned trial judge erred in relying on Order 2 Rules 35 and 40 of the National Court Rules to dismiss the application to set aside the consent order in the face of evidence that the Appellants withdrew instructions, thus resulting in a miscarriage of justice.
   

Background

4. There is an association called the Simberi Mining Area Association Incorporated (the Association). It is a body corporate under the Associations Incorporations Act. In 2017 proceedings were commenced in the lower court by two members of the association, Henry Salin and Ephraim Naso, the Respondents in this appeal, against Joachim Maser, Chairman of the Association, and Ronnie Bruno, its Treasurer, the Appellants, together with the Association itself and the local Branch Manager of Bank South Pacific Limited.
   
5. The proceedings had been commenced against the Appellants over their financial management of the Association’s monies. The proceedings sought a declaration that the Appellants had misappropriated the Association’s monies, an interim injunction preventing the Appellants from further dealing with the Association’s monies, and an order to acquit and repatriate all monies taken in breach of trust.
   
6. On 1 August 2018, a consent order was presented to the learned trial judge. The order was signed by Robert Asa of Warner Shand for the Respondents, and by Epita Paisat, Town Agent for Mane Lawyers, for the Appellants. In consultation with the parties in court, suggested changes were made and agreed to, and an amended consent order was entered by the Court.
   
7. The order was in the following terms:
   

“By consent of the parties, the Honourable Court hereby Orders that:

1. The parties shall give Notice to all landowners and call a meeting of all landowner representatives and members of the Third Defendant and surrounding clans affected by the mining lease within the Simberi Island within 10 days from today for the purposes of electing new Directors and Officers of the Simberi Mining Area Association Inc. (SMAA Inc.);
2. The Plaintiffs’ group shall be allowed to nominate 7 Directors and the Defendants’ group shall be allowed to nominate 6 Directors of their choice;
3. From the newly appointed Directors, the Chairman shall be nominated by the Plaintiffs and the Vice Chairman shall be nominated by the Defendants, both of whom shall be appointed by the Landowners.
4. The Chairman shall be a mandatory signatory to all SMMA Inc. Bank Accounts;
5. The Interim Injunctive Orders of the 4^th August, 2017 shall be discharged within 14 days from today.
6. The Third Defendant’s Bank Accounts at Bank South Pacific shall only be operated or transacted by the new Directors and Executives with new signatories;
7. The Plaintiff shall discontinue the proceedings within 14 days upon compliance of the above Orders;
8. The Third Defendant shall pay for all the Plaintiffs’ costs of and incidental to the proceedings to be taxed if not agreed.”
8. The Respondents placed notices of the “special court ordered meeting” in public areas of Simberi Island together with a sealed copy of the order stating that the meeting would take place on 12 August 2018 to elect new directors and executives of the Association. The meeting was conducted as scheduled by officers from the Electoral Commission and new directors were appointed to the board.
   
9. On 7 September 2018, Titus Lawyers appeared on behalf of the Appellants and the Association, and moved a motion before His Honour Higgins J to have the consent order set aside on the basis it was obtained by fraud and for serious irregularities. Titus Lawyers relied on a number of affidavits.
   
10. Engleberth Taus, leader of one of the four clans owning the pits in the gold mine, and director of the Association said that on 1 April 2018 he and three other directors, Joe Lasum, Vincent Maris and Vice President, Bruno Leto, hand delivered a letter to Miskus Maraleu at his office, terminating the services of Mane Isana Lawyers in the proceedings and all other civil and criminal cases they had carriage of, and that Mr Maraleu opened the letter, read it and accepted it. Ronnie Bruno, the Second Appellant, gave an affidavit confirming that he was present when the letter was delivered. Melceh Pengeh gave an affidavit as Acting President of the Association denying that instructions were given to Mr Maraleu or Mr Paisat to settle the matter. Michael Titus swore an affidavit producing a copy of the letter referred to above, together with a letter dated 3 April 2018 appointing Titus Lawyers to act on behalf of the Association in its civil case and the criminal cases against its executives in Kavieng. It is signed by Vincent Maris as Executive Chairman.
    
11. Miskus Maraleu, however, swore an affidavit that he was never served with a termination letter and he was not aware that Michael Titus was the new lawyer for the Appellants and the Association. He was not served with a notice of change of lawyers at any time and he was not verbally or otherwise informed by the Appellants of the withdrawal of instructions to act. Mr Paisat swore an affidavit confirming that he was Town Agent for Mane Isana and that at no time did he receive any letter, notice or phone call from Mr Titus or anyone else advising of a change in lawyer.
    
12. The learned trial judge dismissed the motion and confirmed the order on the basis that: although there was a notice of change of lawyers filed on 5 April 2018, there was no evidence that it had been served as required under Order 2 Rule 40 of the National Court Rules; there was no evidence put forward to establish that the instructions of Mr Maraleu had been property terminated by a person who had authority to do so; and the orders were made in court with both parties represented. Furthermore, the meeting was held, there was nothing to suggest that the meeting was not properly conducted by the Electoral Commission, there was evidence that certain parties who had sworn affidavits to set aside the consent order had attended the meeting but chosen not to participate other than to a limited extent, and there was no evidence that the executive committee as it was currently constituted was invalidly constituted or otherwise defective. His Honour found no evidence of fraud or deceit on the part of Mr Paisat or Mr Maraleu.
    

Law

13. The Appellants in this case did not appeal against the consent order itself but against the trial judge’s decision refusing to set aside the order. Section 14(2) of the Supreme Court Act provides that “appeal does not lie from an order of the National Court made by consent of the parties”. Regardless of that, it is well established that:
    

“[S] 14(2) Supreme Court Act (supra) is not an absolute ban on questioning or challenging judgments or orders that are entered by consent of the parties. They are not beyond challenge or impeachment through the judicial process by virtue only of the fact that these are orders intended to express the consent, the agreement, of the parties themselves, and demonstrative of their intention to finally bring to an end their legal dispute(s). Case law recognizes a host of situations whereby these orders or judgments can be properly questioned or reviewed through the normal appeal and review processes: fraud, mistake, or on any other ground that can invalidate what may appear to be a consensus”: Simon Mali v. The State (2002) SC690.

14. Both the Supreme Court and the National Court have an inherent power under Section 155(4) Constitution to make, in such circumstances as seen to them proper orders in the nature of prerogative writs and such other orders as are necessary to do justice in the circumstances of a particular case: Simon Mali (supra).
    

"This power can be exercised in at least two situations and they are; firstly, where there are errors on the face of the Court’s record; and secondly, where it is evident that there were procedural irregularities associated with the obtaining of the consent orders.”

15. Moreover, it is settled law that consent orders or judgments should not be set aside easily by the Court which made them because of the manner in which the consent orders or judgments were ordered and entered in the first place and that the Court before which such applications are brought must always exercise caution: see Marsden v Marsden [1972] 2 All ER 1162; Paul Torato v Sir Tei Abal [1997] PNGLR 403; Coecon Ltd v The National Fisheries Authority of Papua New Guinea (2002) N2182; Joseph Kupo v Stephen Raphael, Secretary for the Department of Defence Force (2004) SC 751; and Network Construction Ltd v Independent State of Papua New Guinea (2010) N4045.
    
16. As the Supreme Court explained in Griffin v Westpac Bank [1993] PNGLR 534:
    

“It is clear law that any lawyer admitted to practice law cannot act in a matter unless he has instructions to act in the matter... It is simply not just to allow a consent order to stand in these circumstances. If this is not corrected, lawyers could do things on behalf of people who did not give any instructions. To leave the matter in the circumstances of this case would be unjust to the applicant.”

17. It is also useful to note here the terms of Order 2 Rules 35 and 40:
    

“35.Change of solicitor. (66/3)

(1) Where a solicitor acts for a party in any proceedings, the party may change his solicitor.

(2) Where a party changes his solicitor, he shall file notice of the change and serve the notice on the other parties and, where practicable, his former solicitor...

40. Effects of change. (66/8)

A change of which notice is required or permitted to be filed under any of Rules 35, 36, 37, 38 and 39 shall not have effect as between a party or solicitor to which the change relates on the one hand and the Court or any other party on the other hand until notice of the change is filed and, as regards any other party, served on that other party.” (Underlining ours)

Consideration

18. We agree with His Honour that the fact that the notice of change of lawyers had not been served rendered it of no effect. On its own, however, that would not be determinative as to whether or not the consent order should be set aside.
    
19. A lawyer cannot settle a matter on behalf of a client unless he has clear and recent instructions to do so. We agree with the learned trial judge, however, that there was no clear evidence that the person who signed the letter withdrawing instructions had authority to act on behalf of the Association. As His Honour observed, the person who signed the letter described himself as the “Executive Chairman” of the Association but there was no evidence that the Constitution of the Association provided for such an office bearer. Furthermore, neither of the Appellants signed the letter personally withdrawing instructions to act on their behalf. The First Appellant gave no evidence on the issue. Whilst the Second Appellant said in his affidavit that he was present at the time the letter was served on Mr Maraleu, he does not appear to be referred to in the affidavit of Engleberth Taus. We also find no error in His Honour’s finding that there was no fraud or impropriety on the part of Mr Maraleu or Mr Pasait. Both gave evidence that no one had advised them by letter, notice, telephone call or otherwise, that instructions had been withdrawn. There was no evidence that Mr Titus sought to communicate with them, or obtain a copy of the file. Their evidence is consistent with Mr Asa’s evidence, who acted for the Respondents in the court below, who also received no communication from Mr Titus to the effect that he was now acting for the Appellants.
    
20. Moreover, the Appellants failed to establish any prejudice suffered as a result of the consent order.
    
21. The order simply required a public meeting to be called, with ample notice to all those affected, for the purpose of electing new officer bearers to the Association, which was intended to operate for the benefit of all those with an interest in the mine. The Appellants were given an opportunity to attend and did attend the meeting, albeit that they may have not fully participated. That was a matter for them. The meeting was conducted by the Electoral Commission and there was no evidence that the new officer bearers were not duly elected. The Appellants were not entitled to hold on to their positions in the Association indefinitely if members of the Association chose otherwise. The consent order simply gave the members of the Association the opportunity to elect the board of their choosing, upon which it must be said, the proceedings against the Appellants seeking a declaration that they had misappropriated the Association’s monies and requiring them to account for those monies were to be discontinued, with their costs on the proceedings to be met by the Association. There was no prejudice to the Appellants as a result of those orders.
    
22. Having regard to the above, the Appellants have failed to establish any error of fact or law in the exercise of discretion by the learned trial judge. There was no miscarriage of justice in the judge’s refusal to set aside the consent order.
    
23. The appeal will therefore be dismissed.
    
24. Costs will follow the event, that is, the Appellants shall pay the Respondents’ costs of and incidental to the appeal on a party/party basis to be taxed if not agreed.

Orders

25. Having regard to the above, we make the following orders:
    
    • (1) The appeal is dismissed in its entirety.
    • (2) For avoidance of doubt, the interim stay order granted in this appeal on 21 October 2020 and the ex parte injunctive orders made in the National Court on 4 August 2017, are discharged forthwith.
    • (3) The Appellants shall pay the Respondents costs of and incidental to the appeal on a party/party basis to be taxed if not agreed.

_______________________________________________________________
Pacific Horizons Legal Services: Lawyer for the Appellants
Warner Shand Lawyers: Lawyer for the Respondents