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The Papua Club Inc v Nusaum Holdings Ltd [2002] PNGLR 42 (16 August 2002)

NATIONAL COURT OF JUSTICE

THE PAPUA CLUB INC.

v

NUSAUM HOLDINGS LIMITED;
INVESTMENT CORPORATION OF PAPUA NEW GUINEA;
THE REGISTRAR OF TITLES;
THE INDEPENDENT STATE OF PAPUA NEW GUINEA;
THE MINISTER FOR LANDS;
INVESTMENT CORPORATION OF PAPUA NEW GUINEA
- Cross-Claimant;

JIMMY MALADINA, BERNARD AVERY, DAVID LIGHTFOOD, JOHN BEATTIE & KELLY NARU trading as
CARTER NEWELL LAWYERS
- First Cross-Defendants;

and

NASAUM HOLDINGS LIMITED
- Second Cross-Defendants

Waigani: Gavara-Nanu J
15-16 August 2002

PRACTICE & PROCEDURE – Application for leave to amend pleading for the second time and at a late stage – National Court Rules, Order 8 r 50 – Proposed further amendments not raising new issues but accord with facts and evidence already before the Court – The proposed further amendments being consistent with the requirements under Order 8 r 8 of the National Court Rules.

PRACTICE & PROCEDURE – Application for leave to amend pleading – Power of the Court to grant leave is discretionary – Duty of the Court to act judicially – Apart from the powers given by Order 8 r 50, the Court may where appropriate invoke its inherent powers to grant leave, s 155(4) of the Constitution.

PRACTICE & PROCEDURE – The criteria and the guiding principles on the question of leave to amend pleading – Whether the amendment will enable the Court to determine the real questions in controversy between the parties or correct any defect or error in the proceedings – The amendments will not result in injustice and prejudice to the other party – The application is not made mala fide and that the other party will be compensated with costs for such amendments.

Facts

The plaintiff on the 3rd day of a scheduled 4 1/2 days trial applied for leave to file a proposed amendment to his statement of claim. He argued that the proposed amendments were necessary to enable the Court to fully and properly determine the issues

Held

1. The power of the Court to grant or refuse leave exists at any stage of the proceedings, O 8 r 50.

2. The Court's power under this rule is discretionary and broad and in exercising it the Court has the duty to do so judicously and on proper principles so that justice is done in the case.

3. The purpose of an amendment is to determine the real questions raised in the proceedings, it does not raise any new issues, but puts the plaintiff's case in proper perspective and marks the issues clearer.

4. The criteria and guiding principles on granting leave to amend pleadings are: Whether the amendment will enable the Court to determine the real questions in controversy between the parties or correct any defect or error in the proceedings; the amendments will not result in injustice and prejudice to the other party; the application is not made mala fide and that the other party will be compensated with costs for such amendments.

5. The application is granted.

Papua New Guinea cases cited

Garo Kei v Motor Vehicles Insurance (PNG) Trust [1992] PNGLR 195.
H.J.Heinz & Hugo Canning Company Ltd v Food Pacific Ltd & Ors unreported (1999) N1867.
Howard v Bougainville Copper Limited [1976] PNGLR 298.
K.L.Engineering & Constructions (PNG) Ltd v Damansara Forest Products (PNG) Ltd [2002] PNGLR 411.
Komboro George v Motor Vehicles Insurance (PNG) Trust [1993] PNGLR 477.
New Guinea Company Limited v Thomason [1975] PNGLR 454.

Other cases cited

Clarapede v Commercial Union Association (1883) 32 W.R.262.

Cropper v Smith [1884] UKLawRpCh 91; [1883] 26 Ch.D 700.

G.L.Baker Ltd v Medway Building & Supplies Ltd [1958] 1 W.L.R. 1216.

Hunt v Rice & Son Limited (1937) 53 TLR 931.

Shoe Machinery Co. v Cultam [1896] 1 Ch. 108.

Counsel
J Batch and B Frizzel, for the plaintiff.
J Griffin QC and M.M.Varitimos, for the first defendant.
G Egan and F.Waleilia, for the second defendant.
E Anderson, for the first cross-defendant.

16 August 2002

Gavara-nanu J. The plaintiff on 15th August, 2002, which was the third day of the scheduled four and half days trial, applied for leave to file its proposed further amendments (hereinafter referred to as 'the proposed amendments') to its Statement of Claim.

The extemporary judgment was delivered on 16 August 2002. Since then, I have done a bit more research on the laws relating to the issues raised by the application and have added more cases to the two I cited in the extemporary judgment with further exposition of the laws on the issues. I now publish the judgment.

The plaintiff through its counsel submitted that no prejudice and injustice would be done to the defendants by the proposed amendments because they do not raise any new or fresh issues. It was argued that the proposed amendments are necessary to enable the Court to fully and properly determine the issues before it. Thus, it would be proper to grant leave, even at the late stage of the proceedings.

The proposed amendments are numbered paragraphs 21A to 21K, then paragraphs 23A and 32 with particulars. The particulars to paragraphs 23A and 32 are in addition to the original paragraphs 23A and 32 in the original Statement of Claim.

The first and second defendants have vigorously opposed the plaintiff's application on the basis that if leave is granted, the amendments to the Statement of Claim at the late stage of the proceedings will cause prejudice and injustice to them.

The power of the Court to either grant or not to grant the leave sought by the plaintiff derives from O 8 r 50 of the National Court Rules. Sub-rule (1) of the rule provides that the Court may at any stage of the proceedings, on application by any party, order on terms that any documents in the proceedings be amended, or that any party have leave to amend any documents in the proceedings, in such manner as the Court thinks fit. Then sub-rule (2) provides among other things that all necessary amendments shall be made for the purposes of determining the real questions raised by or otherwise depending on the proceedings.

Order 8 r 50 is under Division 4, which deals with Amendments. It is in these terms:-

"50. General (20/1)

(1) The Court may, at any stage of any proceedings, on application by any party or of its own motion, order, on terms that any document in the proceedings be amended, or that any party have leave to amend any document in the proceedings, in either case in such manner as the Court thinks fit.

(2) All necessary amendments shall be made for the purpose of determining the real questions raised by or otherwise depending on the proceedings, or of correcting any defect or error in any proceedings, or of avoiding multiplicity of proceedings.

(3) Where there has been a mistake in the name of a party, sub- rule (1) of this Rule applies to the person intended to be made a party as if he were a party.

(4) This Rule does not apply to the amendment of a minute of a judgment or order."

The Court's power under this Rule is discretionary and broad, and in exercising that discretion, the Court has the duty to do so judicially and on proper principles, so that justice is done in the case. See, New Guinea Limited v Thomason [1975] PNGLR 454 at page 458, and, Komboro George v Motor Vehicles Insurance (PNG) Trust [1993] PNGLR 477 at p 480.

The purpose of the Court's exercise of its discretionary power to grant leave to a party to amend pleadings under O 8 r 50(1) is given in sub-rule (2), which is to determine the real questions raised in the proceedings.

The proposed amendments clearly do not raise any new issues, because the issues raised are already before the Court. The proposed amendments in my opinion, also put the plaintiff's case in perspective and thus make the issues clearer. And in that sense, the amendments would ensure justice in the case, as they may enable the Court to fully and properly determine the real issues raised before it. In other words, without the amendments, the real issues in the case may not be fully and properly determined.

Even the particulars to paragraphs 23A and 32 in the proposed amendments do not raise new issues because they relate to paragraphs 21G to 21K in the proposed amendments, which relate to the issues already before the Court. And paragraphs 19A to 19K referred to in the proposed amendments are also in the original Statement of Claim. Therefore no new issues arise out of them either.

The plaintiff has alleged fraud in its original Statement of Claim under the Land Registration Act, 1981, therefore, the alleged fraud in the proposed amendments is also not a new issue. In that regard, paragraph 21K of the proposed amendments, simply repeats the allegation of fraud already made in the original Statement of Claim. The plaintiff has also alleged that, the first and second defendants have been unconscionable in their conducts in the sale of the property. This allegation is made in the proposed amendments.

I agree that allegations of fraud and of being unconscionable against the first and second defendants in the proposed amendments are serious, however, as regards the allegation of fraud, the plaintiff has pleaded it under the relevant provision in the Land Registration Act, 1981, which deals with fraud. That to my mind is a strong additional reason why the proposed amendments should be allowed, so that the issue is determined. In any case, the plaintiff is entitled to specifically plead it as required by O 8 r 14 of the National Court Rules. See Hunt v Rice & Son Ltd (1937) 53 TLR 931. In that case, amendment was sought by the plaintiff so as to rely on an alleged breach of a statutory duty by the defendant. Lord Justice Scott at pp 934 to 935 said:

"The effect of those provisions, taken together, is that there is a public duty to carry out fencing in trenching wherever it is necessary, and a breach of that obligation is a breach of a public duty. Consequently, in my view, where a plaintiff brings to the attention of the Court a proposal to allege that a defendant has been guilty of a breach of a statutory duty in that way, it is a strong additional reason for allowing the amendment to be made; all the more so is a case where, as here, the great bulk of the evidence, and the great bulk of the questions, in the case will be identical on the issues already joined on the new issue.

For those reasons I am clear in my mind that it was an amendment which ought on principle to have been made."

As to the allegation that the first and second defendants have been unconscionable in their conduct in the sale of the property, there is evidence that Blakes Dawson Waldron Lawyers were initially solicitors for the plaintiff but later, having allegedly obtained knowledge of the plaintiff's interests in the property, acted for the first defendant in the purchase of the property from the second defendant. That would in my opinion provide some justification for the plaintiff to raise or make the allegation. And for that allegation, I am told that Mr. Phillip Payne, a partner in Blakes Dawson Waldron Lawyers, will be called to give evidence to clarify the firm's involvement in the matter. In these circumstances, although the allegations are serious, they are relevant issues which must be considered by the Court in order to fully and properly determine the substantive and real issues before it.

Furthermore, the proposed amendments are in my opinion, consistent and in compliance with O 8 r 8 of the National Court Rules, in that they serve to provide facts in respect of the plaintiff's allegations that the first and second defendant were fraudulent and unconscionable in their conducts in the sale of the property. The plaintiff of course has to prove those facts. See Garo Kei v Motor Vehicle Insurance (PNG) Trust [1992] PNGLR 195, at page 198, and, K.L Engineering & Constructions (PNG) Ltd v Damansara Forest Products (PNG) Ltd – N 2250, at page 18.

The plaintiff is the registered sub-lessee of about two thirds of the top floor of what was formerly known as the Investment Haus. It is now known as the Monian Haus. The plaintiff has held the sub-lease since 1978, and that sub-lease will expire on the day before the State Lease on the property expires in December 2005. Apart from the sub-lease, there is also a deed of lease over the property. The plaintiff claims that, under the deed and the sub-lease, there are clear and express provisions that it was to be given a new sub-lease over the property on same terms and conditions, when the State Lease expires in December 2005. In effect, the plaintiff claims that, it has the perpetual right to hold the sub-lease over the property beyond 2005. The first defendant who is the new owner of the property disputes the claim by the plaintiff. The plaintiff's claim therefore is the central issue in controversy between the parties that the Court has to determine.

In these circumstances, it is my opinion that the power of the Court to grant leave to the plaintiff to further amend its Statement of Claim does not only derive from Order 8 r 50. The Court can in such circumstances invoke its inherent powers under s 155(4) of the Constitution to grant leave.

As noted, the plaintiff's application for leave to amend its Statement of Claim is being made at the late stage of the proceedings.

Thus the question still is, if leave is granted to the plaintiff to further amend its Statement of Claim, will the defendants be prejudiced and will it do injustice to them? For the reasons I stated earlier, I am of the opinion that because the issues raised by the proposed amendments are already before the Court, no prejudice can be done to the defendants nor will they suffer injustice. A similar view was held by Woods J. in Koboro v Motor Vehicles Insurance (PNG) Trust, (supra). In that case, leave to amend pleadings was granted at the end of the trial to enable the pleadings to accord with the facts and that which were already before the Court. His Honour held that in those circumstances the defendant would not suffer any real prejudice and injustice, and the late amendment was sufficiently compensated by costs, which he awarded to the defendant. Awarding of costs to the defendant therefore overcame any prejudice or injustice the defendant may have suffered as the result of the late amendment. In Clarapede v Commercial Union Association (1883) 32 W.R 262, Brett M.R. at page 263 applied the same principle:

"However negligent or careless may have been the first omission, and however late the proposed amendment, the amendment should be allowed if it can be made without injustice to the other side. There is no injustice if the other side can be compensated by costs." (my emphasis).

When considering leave for a party to amend pleadings, especially at the late stages of the proceedings, the Court must be guided by the principle that, the amendments would be in the words of Lord Jenkins in G.L. Baker Ltd v Medway Building & Supplies Ltd [1958] W.L.R. 1216 at p 1231, - "for the purpose of determining the real question in controversy between the parties to the proceedings or of correcting any defect or error in the proceedings." (my emphasis).

The utterance by Lord Jenkins in G.L. Baker Ltd v Medway Building & Supplies Ltd (supra) was stating the principle in general, because it did not specifically address the issue of prejudice and possible injustice to the other party.

I find the exposition of the principle by Lord Bowen in Cropper v Smith [1884] UKLawRpCh 91; (1883) 26 Ch.D 700 at pp, 710-711 more succinct and appealing:

"It is a well established principle that the object of the Court is to decide the rights of the parties, and not to punish them for mistakes they make in the conduct of their cases by deciding other wise than in accordance with their rights... I know of no kind of error or mistake which, if not fraudulent or intended to overreach, the Court ought not to correct, if it can be done without injustice to the other party. Courts do not exist for the sake of discipline, but for the sake of deciding matters in controversy, and I do not regard such amendment as a matter of favour or grace ... It seems to me that as soon as it appears that the way in which a party has framed his case will not lead to a decision of the real matter in controversy, it is as much a matter of right on his part to have it corrected if it can be done without injustice, as anything else in the case is a matter of right." (my emphasis).

In the 22nd edition of Odgers' Principles of Pleading and Practice in Civil Actions in the High Court of Justice, at page 161, the learned author says:- "... Where the amendment is necessary to enable justice to be done between the parties, it will be allowed on terms even at a late stage..."

The observations by Lord Bowen in Cropper v Smith (supra) were later adopted by A.L. Smith L.J., with "emphatic agreement" in Shoe Machinery Co. v Cultam [1896] 1 Ch. 108 at page 112.

The statements made by Lord Jenkins and Lord Bowen in G.L. Baker Ltd v Medway Building & Supplies Ltd (supra) and Cropper v Smith (supra) state the same principle or criteria in O 8 r 50(2) of the National Court Rules.

These statements have been cited and adopted in this jurisdiction in a number of cases, for instance, New Guinea Company Limited v Thomason (supra), Howard v Bougainville Copper Ltd [1976] PNGLR 298, Komboro George v Motor Vehicles Insurance (PNG) Trust (supra) and H.J. Heinz & Hugo Canning Company Ltd v Food Pacific Ltd & Others N1867.

In the premises, the proposed amendments are in my opinion necessary as they will enable the Court to fully and properly determine the issues in controversy between the parties. I also do not think the defendants will suffer any prejudice and injustice from the proposed amendments.

The following principles appear to emerge from the authorities cited that should guide the Court when considering leave for a party to any proceedings to amend a pleading, even at the late stage of the proceedings:-

(a) Where the amendment is to enable the Court to determine the real question in controversy between the parties, or

(b) Where the amendment is to correct any defect or error in the proceedings, and

(c) That such amendment will not cause real prejudice or injustice to other party, and

(d) That the application for such amendment is not made mala fide, and

(e) That the other party can be fairly compensated with costs for such amendment.

I find that the application before me, does not offend against any of these principles.
I will therefore grant leave to the plaintiff to further amend its Statement of Claim.

Lawyers for the plaintiff: Warner Shand Lawyers.
Lawyers for the first defendant: Maladinas Lawyers.
Lawyers for the second defendant: Posman Kua & Aisi Lawyers.
Lawyers for the first cross defendants: Gadens Lawyers.