B Fortunaso Ltd v Bank of South Pacific Ltd, Public Officers Superannuation Board, State Services and Statutory Authorities Superannuation Fund

• Jurisdiction: Papua New Guinea
• Judge: Brown J
• Judgment Date: 19 February 1992
• Citation: [1992] PNGLR 275
• Court: National Court
• Year: 1992
• Judgement Number: N1050

National Court: Brown J

Judgment Delivered: 19 February 1992

N1050

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

B FORTUNASO LIMITED

V

BANK OF SOUTH PACIFIC LIMITED,

PUBLIC OFFICERS SUPERANNUATION BOARD,

STATE SERVICES AND STATUTORY AUTHORITIES SUPERANNUATION FUND BOARD

Waigani

Brown J

17 February 1992

19 February 1992

JUDGMENT AND ORDERS — Motions — Application to strike out originating summons — Where no reasonable cause of action disclosed — National Court Rules O 12 r 40 — Where no statement of claim is filed — Whether compliance with National Court Rules Division 4 Order 4 necessary — Whether conduct of proceedings can be by way of affidavit — National Court Rules O 4 r 7, rr 23-31.

PRACTICE AND PROCEDURE — National Court — Declaratory orders — Jurisdiction to make — Discretionary nature of — Necessary in the first instance to find a dispute — Constitution s 155 (4).

Facts

The plaintiff sought relief from the possibility of a claim by the first defendant, the Bank of South Pacific Limited, under a third party guarantee given by the plaintiff to the bank to cover debts of a contractor, E T Taylor Constructions Pty Ltd, which is not a party to the proceeding and has since gone into liquidation. The second defendant was a body in whose favour the bank had issued guarantees to protect the Superannuation Board from the default of the contractor. The third defendant was the successor by statute to the second defendant. Upon failure of the contractor, the plaintiff claimed the bank should be estopped from making payment to the third defendant of moneys due under the guarantee by the bank given to the second defendant on the basis that, although the third defendant (State Services and Statutory Authorities Superannuation Fund Board) was successor to the second defendant (Public Officers Superannuation Board), it did not succeed to the benefits of the guarantee in question.

On 18 December 1991, the plaintiff sought and obtained ex parte interlocutory injunctive orders on motion by originating summons restraining the first defendant, the Bank of South Pacific Limited, from making payment under two guarantees issued by it in favour of the Public Officers Superannuation Board on behalf of E T Taylor Constructions Pty Ltd and further interlocutory injunction restraining the second and third defendants from presenting for payment such guarantees on the basis of an affidavit deposed by the lawyer setting out the facts on which the plaintiff relied upon. There were no pleadings. In these proceedings, the second and third defendant applied by motion to strike out the plaintiffs originating summons, alleging that the plaintiff has no standing and, consequently, the interlocutory injunctive orders should be discharged. There was no appearance of the first defendant.

On the question of whether the plaintiff has standing or a cause of action to have obtained the interlocutory injunctions against the defendants,

Held

1. The National Court's power to make declaratory orders is derived from s 155 (4) of the Constitution. But the court must have jurisdiction to entertain the action. Dent v Kavali [1981] PNGLR 488 referred to.

2. The National Court, having granted ex parte interlocutory injunctive orders on originating summons seeking declaration of rights affecting defendants, is under a duty to affirmatively find jurisdiction before proceeding further with the hearing of such summons in the absence of pleadings. In the circumstances of this case, since the first defendant chose not to argue the matter, the Court finds no dispute between the plaintiff and the named defendants; hence, the National Court has no jurisdiction to entertain the proceedings for a declaration. Accordingly, the plaintiff has no cause of action.

"I cannot see any jurisdiction in the Court to entertain the plaintiff's claim. There is no dispute between the plaintiff and the second and third defendants. The defendant Bank has chosen not to argue at all. The plaintiff's argument really relates to anticipatory breaches of an obligation the Bank owes the second defendant.... The plaintiff's interest at the very most is commercial, no legal rights having been demonstrated. Consequently, there is no jurisdiction in the Court to entertain declaratory relief" p 276. Re I G Farbenindustrie A G Agreement [1944] 1 Ch 41 cited. Rediffusion (Hong Kong) Ltd v Attorney-General of Hong Kong [1970] AC 1136 referred to.

"Again this anticipatory problem foreseen by the plaintiff is not such that the Court should exercise a discretion" p 285.

3. Accordingly, in the exercise of the Court's powers under Order 12 r 40, plaintiff's originating summons is struck out and the interlocutory injunctive orders of 18 December 1991 are discharged.

4. It is necessary that the National Court Rules (O 4 r 7) in relation to the requirements of originating summons be complied with and a statement of claim be filed so as to enable the Court to properly consider and then direct the parties to define the issues where appropriate. Masive v Okuk [1985] PNGLR 105 cited.

Cases Cited

Papua New Guinea cases cited

Dent v Kavali [1981] PNGLR 488.

Masive v Okuk [1985] PNGLR 105.

National Housing Commission v Queensland Insurance [1988-89] PNGLR 474.

Other cases cited

Rediffusion (Hong Kong) Ltd v Attorney-General of Hong Kong [1970] AC 1136.

Re I G Farbenindustrie A G Agreement [1944] 1 Ch 41.

Wood Hall Limited v The Pipeline Authority (1979) 141 CLR 443.

Counsel

C Coady, for the plaintiff.

P Payne, for the applicant/second and third defendants.

No appearance for the first defendant.

19 February 1992

BROWN J: On 18 December 1991 following an ex parte application, my brother Konilio J granted an interlocutory injunction at the request of the plaintiff restraining the Bank of South Pacific Limited (hereafter Bank) from making payment under two guarantees issued by the Bank in favour of the Public Officers Superannuation Board on behalf of E T Taylor Constructions Pty Ltd (hereafter E T Taylor). A further interlocutory injunction directed to the second and third named defendants restrained both defendants from presenting for payment such guarantees.

The original application was by motion on originating summons. That summons set out the relief claimed in similar form to the notice of motion seeking the interlocutory injunctive orders which accompanied it and, as well, sought declaratory relief to the effect that such guarantees were a nullity. There were no pleadings. The motion was supported by an affidavit by Mr Coady, that affidavit setting out the facts on which the plaintiff relied. Mr Coady said that he was the lawyer for the plaintiff and a director of that company pro tem for the purpose of executing the damages undertaken. He further stated he had the authority of the plaintiff to make the affidavit, which was made from his own knowledge and belief unless otherwise stated. Mr Coady then recited the fact that the plaintiff granted to the Bank a third party guarantee securing, inter alia, the contingent liabilities of E T Taylor, which included, as he said, "two guarantees issued by the first named defendant to the Public Officers Superannuation Bord". In April 1991, E T Taylor was placed in liquidation. Mr Coady asserted that the assets of the company in liquidation and held by the Bank are insufficient to meet the contingent liabilities of the company. The plaintiff also gave the Bank a guarantee in respect of loan and accommodation given by the Bank to E T Taylor. Mr Coady deposed to the fact that he had extensive discussions with two officers of the Bank immediately prior to his affidavit and that "I am informed by the aforesaid and verily believed that the first named defendant will make payment on the guarantees of 19 December 1991 unless sooner restrained". On the strength of that affidavit, the interlocutory injunctive orders were made, affecting the rights, if any, in the second and third defendants to claim moneys under those two guarantees issued by the Bank to the Public Officers Superannuation Board.

PRESENT PROCEEDINGS TO STRIKE OUT BY THE DEFENDANTS

The second and third defendants, by notice of motion of 5 February 1992 now seek discharge of those interlocutory orders and this Court's order dismissing the originating summons as well as orders for costs.

The second and third defendants say that the plaintiff has no standing, and no cause of action is disclosed.

In support of its motion, the plaintiff read an affidavit of Mr Lawrence Needham, the property manager employed by the third defendant.

He deposed to the fact that, whilst employed as the property manager for the second defendant, on 23 March 1990, the Public Officers Superannuation Board, as principal, entered into a contract for the construction of 2 houses in Markham Road, Lae, with E T Taylor as contractor. Pursuant to that agreement for construction, the contractor provided to the Public Officers Superannuation Board 2 bank guarantees dated 7 November 1990, to which I...