Lawrence Mango and Joseph Salang v Peter Chow Po Khoon and Peter and PNG Group Limited (2005) N2907

• Jurisdiction: Papua New Guinea
• Judge: Cannings J
• Judgment Date: 14 October 2005
• Court: National Court
• Citation: (2005) N2907
• Docket Number: WS No 1132 of 2004
• Year: 2005
• Judgement Number: N2907

Full Title: WS No 1132 of 2004; Lawrence Mango and Joseph Salang v Peter Chow Po Khoon and Peter and PNG Group Limited (2005) N2907

National Court: Cannings J

Judgment Delivered: 14 October 2005

N2907

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS NOS 1132 OF 2004

LAWRENCE MANGO AND JOSEPH SALANG

Plaintiffs

V PETER CHOW PO KHOON

First Defendant

PETER AND PNG GROUP LIMITED

Second Defendant

KIMBE : CANNINGS J 5,

14 OCTOBER 2005

Practice and procedure – application for summary disposal of proceedings – whether statement of claim, or proceedings generally, disclosed no reasonable cause of action – whether proceedings frivolous or vexatious – National Court Rules, Order 8, Rule 27 (embarrassment etc); Order 12, Rule 40 (frivolity etc) – tests to apply.

The plaintiffs claimed to be directors and shareholders of the second defendant, a company that carries on business at Kandrian. The first defendant is the manager of the company. The plaintiffs brought proceedings against the defendants, claiming that the first defendant had excluded them from involvement in the management and affairs of the company and that the company had not paid any dividends to shareholders for three years. The plaintiffs claimed that they were entitled to a sum of money, representing the value of their shares in the company, and damages. The defendants brought a motion to strike out the statement of claim and generally dismiss the proceedings on the ground that no reasonable cause of action was disclosed and that the proceedings were frivolous and vexatious.

Held:

(1) Whenever a plaintiff brings a case to court, the originating document must demonstrate that the plaintiff has a cause of action. The document must clearly set out the legal ingredients or the elements of the claim and the facts that support

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each element of the claim. Failure to do so means no reasonable cause of action is disclosed.

(2) Other tests to be applied include: whether it is plain and obvious that the statement of claim, even if proved, will not entitle the plaintiff to what is being sought; whether the statement of claim is so ambiguous or lacking in particularity that it does not facilitate orderly and rational pleadings; and whether the statement of claim just leaves a defendant guessing as to what the plaintiff’s allegations are.

(3) If a pleading or a proceeding can be categorised in any of those ways, it will not disclose a reasonable cause of action and the court will have a discretion whether to strike out the pleading or dismiss the entire proceedings.

(4) Proceedings are frivolous if the plaintiff’s claim is so obviously untenable that it cannot possibly succeed or if the plaintiff would be bound to fail if the matter went to trial.

(5) Proceedings are vexatious where the case amounts to harassment of the defendant or the defendant is being put to the trouble and expense of defending proceedings which are either a sham or which cannot possibly succeed.

(6) In the present case, the statement of claim, and the proceedings generally, were properly categorised as above, thus no reasonable cause of action was disclosed and the pleading and the proceedings were ripe to be struck out and dismissed. The proceedings were also frivolous and vexatious.

(7) There being no appearance by the plaintiffs, the defendants satisfied the court that it should exercise its discretion to summarily dispose of the proceedings; and the proceedings were dismissed, generally.

Cases cited

The following cases are cited in the judgment:

AttorneyGeneral of the Duchy of Lancaster v London and North Western Railway Co [1892] 3 Ch 274 Kiee Toap v The Independent State of Papua New Guinea, Electoral Commission of Papua New Guinea and Returning Officer/Assistant Returning Officer for Mendi Open Electorate (2004) N2731 Mt Hagen Airport Hotel Pty Ltd v Gibbes and Another [1976] PNGLR 216 Ronny Wabia v BP Exploration Co Ltd and Others [1998] PNGLR 8

NOTICE OF MOTION

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This was an application on notice seeking orders to strike out a statement of claim and to dismiss the proceedings commenced by the plaintiffs.

Counsel

No appearance for the plaintiffs

D Poka for the defendants

RULING ON MOTION

CANNINGS J:

INTRODUCTION

This is a ruling on an application by the defendants to strike out a statement of claim and dismiss the proceedings, on the grounds that no reasonable cause of action was disclosed and that the proceedings were frivolous and vexatious.

BACKGROUND

This case is about a company called ‘Peter and PNG Group Ltd’, which operates a retail business at Kandrian, West New Britain Province. This company is the second defendant.

The plaintiffs, Lawrence Mango and Joseph Salang, say that they and the first defendant, Peter Chow Po Khoon, are directors and shareholders of the company. The first defendant is also the manager of the company.

On 27 August 2004 Norbert Kubak & Co, Solicitors and Barristers of Boroko, filed a writ of summons and statement of claim. This claimed that the first defendant had excluded the plaintiffs from involvement in the management and affairs of the company and that the company had not paid any dividends to shareholders for three years. The plaintiffs claimed that they were entitled to a sum of money, representing the value of their shares in the company, and damages.

Since filing the writ the plaintiffs have, it appears, done nothing to prosecute their claim. There is no affidavit of service of the writ on the court file. All

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the remaining documents have been filed by the defendants’ lawyers, Pryke & Bray, of Lae.

On 8 October 2004 the defendants filed a notice of intention to defend and on 26 October 2004 they filed a defence.

On 16 November 2004 the defendants filed a notice of the motion now before the court, which is to dismiss the proceedings on the ground of failure to disclose a reasonable cause of action. The defendants rely on Order 8, Rule 27 and Order 12, Rule 40 of the National Court Rules. In support of the motion are two affidavits. One is by David Poka, a lawyer acting for the defendants, deposing to the various courses of action available to the plaintiffs under the Companies Act which could be used if they are not happy with the way the company’s business was being conducted. The other is by the first defendant, who deposes, amongst other things, that the company’s financial problems are due in large part to interference by the shareholders, particularly the first plaintiff, Lawrence Mango.

On 8 September 2005 the motion came before the court for the first time but I refused to entertain it. Mr Poka, for the defendants, could not satisfy me that the plaintiffs were properly served, especially as notice of the motion had been filed almost nine months previously.

The motion returned on 5 October 2005 and on this occasion I was satisfied the plaintiffs had been given proper notice.

NATIONAL COURT RULES

Order 8, Rule 27 (embarrassment etc) of the National Court Rules states:

(1) Where a pleading—

(a) discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading; or

(b) has a tendency to cause prejudice, embarrassment or delay in the proceedings; or

(c) is otherwise an abuse of the process of the Court, the Court may at any stage of the proceedings, on terms or otherwise, order that the whole or any part of the pleading be struck out.

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

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Order 12, Rule 40 (frivolity etc) states:

(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 Subrule (1).

The two rules are very similar. The first is found in Order 8 (pleadings) and Division 8.1 (preliminary). Rule 1 provides that the rules in Division 8.1 (Rules 1 to 28) apply to proceedings commenced by writ of summons but, subject to the Rules, not to proceedings commenced by originating summons. Rule 27 applies to the present case as the proceedings have been commenced by writ of summons. Under Rule 27 it is a pleading that can be struck out, and not necessarily the whole proceeding. The second rule at the centre of this motion is found in Order 12 (judgments and orders) and specifically within Division 12.4 (summary disposal). Rule 27 states that Division 12.4, which consists of Rules 37 to 43, applies to all proceedings (whether commenced by writ of summons or originating summons) except for proceedings involving a claim by the plaintiff for libel, slander, malicious prosecution, false imprisonment, seduction, breach of promise of marriage, fraud or a claim for damages arising from death or personal injury. The present case involves none of those sorts of claims so Rule 40 is clearly capable of applying. Rule 40 gives the court discretion to stay the proceedings or dismiss the proceedings, either generally or in relation to any claim for relief.

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THE DEFENDANTS’ SUBMISSIONS

The defendants are the applicants for the purposes of this motion. Mr Poka, for the defendants,...