SC2251

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA 146 OF 2021

BETWEEN:
NOU NOU
AND OTHERS
Applicants

AND
RICHARD PUARA
AND OTHERS
Respondents

Waigani: Logan J
2022: 14th March

PRACTICE & PROCEDURE – leave to appeal interlocutory decision of the National Court – where National Court refused leave to amend defence and cross-claim – where proposed defence and cross-claim purported to allege fraud on the part of registered proprietor – where primary judge concluded that proposed defence and cross-claim was disingenuous – where applicants did not provide evidence of alleged fraud in support of application to amend – where primary judge entitled to reach conclusion that proposed pleading was disingenuous – application for leave to appeal dismissed

Facts

The applicants are the third and fourth defendants in proceedings commenced in the National Court. The applicants sought leave of the National Court to amend their defence and cross-claim to make an allegation of fraud against the plaintiff, who was the registered proprietor of the property at issue in those proceedings. The reason for amendment was that the allegations sought to be included in the proposed amended defence and cross-claim had not occurred to the legal representatives for the applicants who had originally drawn those documents. 

The learned primary judge dismissed the applications on the basis that the proposed allegations of fraud in the foreshadowed amended defence and cross-claim were disingenuous. The applicants sought leave to appeal the National Court’s decision. 

Held:

1.	The considerations relevant to an application for leave to appeal are:
(a)	Is there an arguable or prima facie case or has it been demonstrated that the primary judge was wrong?
(b)	Does the appellant have other recourse in the original jurisdiction?
(c)	Was the ruling within the discretion of the judge constituting the original jurisdiction?  If so, has it been shown that the exercise of that discretion was manifestly unreasonable exercised on the wrong principle or a mistake of fact?  
Oberia v Charlie [2005] PGSC 26; SC801 applied.  
2.	A tight rein must be kept on allowing leave to appeal from decisions of the National Court in relation to exercises of discretion concerning matters of practice and procedure: Mewayo v Sakai [2008] PGSC 90; SC1747; Rex Manga Wapalin Holdings Ltd v Levi [2019] PGSC 79; SC1837; Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 and Re Will of F.B. Gilbert (dec’d) (1946) 46 SR (NSW) 318 referred to. 
3.	An allegation of fraud is a serious matter that requires sufficient particularization: Maki v Pundia and PNG Motors [1993] PNGLR 337; N1137 referred to. Where leave to amend a pleading to include an allegation of fraud is sought, such an application ought to be supported by affidavit which deposes to the truth of the allegations. 

Cases Cited:
Papua New Guinean Cases

Maki v Pundia and PNG Motors [1993] PNGLR 337; N1137
Mewayo v Sakai [2008] PGSC 90; SC1747
Mudge and Mudge v Secretary for Lands, The State and Delta Developments Pty Ltd [1985] PNGLR 387; SC308
Oberia v Charlie [2005] PGSC 26; SC801
Puara v Andagali [2021] PGNC 446; N9210
Rex Manga Wapalin Holdings Ltd v Levi [2019] PGSC 79; SC1837

Overseas Cases:

Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170
Assets Co Ltd v Mere Roihi [1905] AC 176
Breskvar v Wall (1971) 126 CLR 376
Frazer v Walker [1967] 1 AC 569
Re Will of F.B. Gilbert (dec’d) (1946) 46 SR (NSW) 318
Waimiha Sawmilling Co Ltd (In liq) v Waiane Timber Co Ltd [1926] AC 101
Wicks v Bennett (1921) 30 CLR 80

Legislation: 

Land Registration Act 1981

Counsel:

Mr. P Pato, for the Applicant
Mr. N Yalo, for the Respondents

Oral decision delivered on
14th March 2022

1.      LOGAN J: On 1 October 2021, in proceeding WS number 1402 of 2019 between Mr Richard Puara and Mr Larry Andagali and other named defendants, the National Court ordered that an application by the third and fourth defendants filed on 25 September 2020, seeking leave to file and serve an amended defence and cross-claim be refused.  The court further ordered that the third and fourth defendants pay the plaintiff’s (Mr Puara’s) costs of and incidental to that application, to be taxed if not agreed. 
2.	The third and fourth defendants in the National Court proceedings are respectively Mr Nounou, and Kaevaga Incorporated Land Group (Kaevaga).  Mr Nounou and Kaevaga have applied for leave to appeal against the refusal of their application for leave to file and serve an amended defence and cross-claim with costs.  Leave to appeal is necessary because the judgment concerned is an interlocutory one. Moreover, it is not just any interlocutory judgment.  It is an interlocutory judgment in respect of matters of practice and procedure.  
3.	In Oberia v Charlie [2005] PGSC 26; SC801, Lay J offers a most comprehensive review indeed of authorities pertinent to the question of whether to grant leave to appeal on particular facts. From this the following relevant considerations may be derived: 
(a)	Is there an arguable or prima facie case or has it been demonstrated that the primary judge was wrong?
(b)	Does the appellant have other recourse in the original jurisdiction?
(c)	Was the ruling within the discretion of the judge constituting the original jurisdiction?  If so, has it been shown that the exercise of that discretion was manifestly unreasonable exercised on the wrong principle or a mistake of fact?  
4.	As Hartshorn J considered in Mewayo v Sakai [2008] PGSC 90; SC1747 and Rex Manga Wapalin Holdings Ltd v Levi [2019] PGSC 79; SC1837, I consider that observations made by Jordan CJ in Re Will of F.B. Gilbert (dec’d) (1946) 46 SR (NSW) 318 at 323, cited with approval by the High Court of Australia in Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 177, are pertinent. What Jordan CJ stated was: 
“. . . I am of opinion that . . . there is a material difference between an exercise of discretion on a point of practice or procedure and an exercise of discretion which determines substantive rights. In the former class of case, if a tight rein were not kept upon interference with the orders of Judges of first instance, the result would be disastrous to the proper administration of justice. The disposal of cases could be delayed interminably, and costs heaped up indefinitely, if a litigant with a long purse or a litigious disposition could, at will, in effect transfer all exercises of discretion in interlocutory applications from a Judge in Chambers to a Court of Appeal.”
5.	In Papua New Guinea, those statements have even greater resonance given the very great demands on the time of judges in respect of constituting the Supreme Court for the purpose of hearing and determining appeals and reviews.  It is necessary to keep a very tight rein indeed on challenges to discretionary value judgments made in the exercise of a judicial discretion concerning matters of practice and procedure. 
6.	Here, in fairness to counsel for the applicants, these principles were well recognised.  It was put that there was indeed an error of principle entailed in the refusal by the learned primary judge of leave to amend the defence and cross-claim. That error of principle was said to be that there had in effect been an adjudication in respect of a particular issue which was one which was fit only to be adjudicated at trial.  At the heart of the proposed amendment lay an allegation of fraud.  That allegation was frankly professed to be one which had not occurred in terms of legal analysis at the time when, in March 2020, the original defence and cross-claim was drawn, filed and served.  The allegation of fraud was considered to be necessary upon reflection because that is one of the very few exceptions to indefeasibility of title conferred upon registration under the Torrens system of title by registration found in the Land Registration Act 1981 s 33(1)(a).  As to fraud being entailing proof of actual fraud: see Mudge and Mudge v Secretary for Lands, The State and Delta Developments Pty Ltd [1985] PNGLR 387; SC308; Assets Co Ltd v Mere Roihi [1905] AC 176, at 210; Breskvar v Wall (1971) 126 CLR 376 at 384; Wicks v Bennett (1921) 30 CLR 80, at 91; Waimiha Sawmilling Co Ltd (In liq) v Waiane Timber Co Ltd [1926] AC 101; Frazer v Walker [1967] 1 AC 569, at 580, 585.  Mr Puara, the plaintiff in the National Court proceedings, has the status of a registered proprietor.  
7.	The broader background to the application for leave to amend by the third and fourth defendants is set out at length in the reasons for judgment of the learned primary judge at paragraphs [35] through to and including [60]: see Puara v Andagali [2021] PGNC 446; N9210.  It is a noteworthy feature of the evidence before the learned primary judge in respect of the application for leave to amend that, although Mr Nounou swore an affidavit in support, nowhere in that affidavit does he depose to the truth of the facts sought to be alleged in the amendments proposed to the defence and cross-claim.  
8.	The analysis of the evidence of the other evidence of the learned primary judge led his Honour to conclude in his meticulously detailed reasons that there was a disingenuous quality in the proposed amended defence and counter claim.  It would do less than justice to that to his Honour’s reasoning were I not to incorporate by reference all of that reasoning as it appears in his Honour’s reasons for judgment in between the paragraphs which I have identified. I incorporate these by reference without reproducing those reasons again.  
9.	In Maki v Pundia and PNG Motors [1993] PNGLR 337; N1137, Woods J offered a salutary reminder about the seriousness of pleading an allegation of fraud and the need for particularisation of any allegation of fraud.  It is important that the practicing profession take to heart his Honour’s observations, which were most emphatically not idiosyncratic, but rather completely congruent with accepted practice in comparable jurisdictions overseas.  
10.	It might be expected, in respect of an application for leave to amend of the present kind, that it would be supported by an affidavit which deposed to the truth of particular allegations sought to be made by amendment.  Of course, in the ordinary course of events, issues for trial are just that but one does not create a controversy for trial just by a pleading without any apparent supporting evidentiary foundation in a case where fraud is alleged.  It behoved the third and fourth defendants to put such evidence before the court in support of the application for leave to amend.  That Mr Nounou made an affidavit which is silent on that subject is eloquent.  
11.	The learned primary judge was, in my view, perfectly entitled to reach a view that the proposed amended defence and cross-claim was, as his Honour put it, disingenuous.  Of course, that entailed reaching a conclusion in relation to whether there was any triable issue.  His Honour did that by reference to the evidence which he had before him, as is so evident from his reasons.  His Honour did that solely for the purpose of deciding whether or not there was any quality of disingenuousness in the proposed amended pleading.  He was entitled to do that in my view.  
12.	That being the case, for this reason alone, there is in my view no sufficient case warranting the grant of leave to appeal.  Truly, what was entailed in the order sought to be challenged was a discretionary value judgment on a matter of practice and procedure, the reasons for which were more than reasonably open.  His Honour’s reasons disclosed that he approached the question of whether to grant leave to amend by reference to relevant principle.  
13.	There is another reason as well which intrudes in relation to whether to grant leave to appeal.  That is that the trial in respect of the proceeding in the National Court is fixed to commence as soon as 24 March this year.  It was common ground that having regard to the volume of business before the Supreme Court and allowing time for the appeal to be listed in the ordinary course of business if leave were granted and determined that the practical effect of a grant of leave to appeal would be to postpone the commencement of the trial in the National Court for some 18 months.  Truly, the prospects of any appeal are so meager as not to warrant the imposition of such a delay in respect of a proceeding commenced as long ago as 2019.  Justice delayed is indeed justice denied.  That is not to say where there is an error of principle that leave to appeal nonetheless ought to be granted, only that where there is no apparent error of principle it is an additional reason why leave to appeal should be refused.  
14.	The present case, in my view, offers a paradigm example of that the type of case to which Jordan CJ referred in the passage which I have quoted.  For these reasons then the application for leave to appeal is dismissed.  
15.	I note that the other responding parties, the State and the Land Titles Commission, did not take an active interest in the application, although they were served.  So the order then in respect of costs is that the first and second applicants pay the first respondent’s costs of and incidental to the application for leave to appeal to be taxed if not agreed. 

Orders

1.)	The application for leave to appeal be dismissed. 
2.)	The first and second applicants pay the first respondent’s costs of and incidental to the application for leave to appeal, to be taxed if not agreed.
__________________________________________________________________
Parker Legal: Lawyers for the Applicants	
Nemo Yalo Lawyers: Lawyers for the Respondents