Smith Alvi & 127 Others v Andake Tepoka and Max Umbu Puli and The Independent State of Papua New Guinea (2006) SC1151

• Jurisdiction: Papua New Guinea
• Judge: Injia DCJ, Lenalia & Cannings JJ
• Judgment Date: 01 September 2006
• Court: Supreme Court
• Citation: (2006) SC1151
• Docket Number: SCA NO 16 0F 2006
• Year: 2006
• Judgement Number: SC1151

Full Title: SCA NO 16 0F 2006; Smith Alvi & 127 Others v Andake Tepoka and Max Umbu Puli and The Independent State of Papua New Guinea (2006) SC1151

Supreme Court: Injia DCJ, Lenalia & Cannings JJ

Judgment Delivered: 1 September 2006

SC1151

PAPUA NEW GUINEA

[IN THE SUPREME COURT OF JUSTICE]

SCA NO 16 0F 2006

BETWEEN:

SMITH ALVI & 127 OTHERS

Appellants

AND:

ANDAKE TEPOKA

First Respondent

MAX UMBU PULI

Second Respondent

THE INDEPENDENT STATE OF PAPUA NEW GUINEA

Third Respondent

Waigani: Injia DCJ, Lenalia & Cannings JJ

2006: 28 August, 1 September

LAWYERS – nature of lawyer/client relationship – severing of retainer – duty of lawyers to act only on instructions

PRACTICE AND PROCEDURE – names of parties used to institute proceedings without instructions or authority – circumstances in which proceedings become a sham – abuse of process

The National Court made orders requiring a law firm’s trust account to be audited. The orders were made on application by clients of the firm, who had previously given instructions to the firm to recover money due to them in a class action arising from an unlawful police raid of their village. The money had been recovered and deposited into the firm’s trust account but the clients contended that they did not receive the money. The law firm filed an application for leave to appeal to the Supreme Court against the National Court’s orders; and filed the application in the names of the clients in whose favour the National Court made the orders. The clients then filed an application in the Supreme Court, seeking dismissal of the application for leave on the ground that they never gave instructions for their names to be used as parties nor did any other person authorise the use of their names.

Held:

(1) It is a basic principle of the administration of justice and of a proper lawyer/client relationship that lawyers act only on instructions of their clients.

(2) Instructions may be express or implied, oral or in writing; but there must be instructions in place. If there are no instructions, whatever the lawyer does must be regarded as being in excess of authority.

(3) For a lawyer to institute proceedings in any court in the name of a person without obtaining instructions from that person is an abuse of the processes of the court and renders the proceedings a sham.

(4) In the circumstances, the Supreme Court was satisfied that the application for leave to appeal against the judgment of the National Court was filed using the names of persons who had given no instructions. The application for leave to appeal was therefore a sham and an abuse of process and was dismissed.

(5) This was an appropriate case in which to order the law firm that instituted the proceedings to pay the costs of its former clients on a solicitor-client basis.

Cases cited

The following cases are cited in the judgment:

Andake Tepoka and 129 Others v Chief Inspector Leo Kabilo and The State, Nos 33 – 163 of 1997

Council of Legal Education v Awaita [1987] PNGLR 38

Eton Pakui v The State (2006) N3001

Frank A Griffin v Westpac Bank (PNG) Ltd [1993] PNGLR 352

Joseph Kupo v Steven Raphael (2004) SC751

Kopen Yanda and Others v Apostolic Church Properties Association of PNG Inc (2006) N3042

MVIT v Viel Kampu (1998) SC587

POSFB v Paul Paraka trading as Paul Paraka Lawyers (2004) N2791

Roselyn Cecil Kusa v MVIT (2003) N2328

APPLICATION

This was an application to dismiss an application for leave to appeal against a decision of the National Court.

Counsel

P Kingal, for the applicants

N Tame, for the respondents

1 September, 2006

1. BY THE COURT: At the heart of this case is the principle that lawyers must act only in accordance with the instructions of their clients. It is contended that that principle has been breached and that proceedings in this Court have been instituted without instructions and therefore the proceedings should be dismissed.

2. The contentious proceedings are an application for leave to appeal against a decision of the National Court. There is a group of people who have applied to have the application for leave dismissed, as they contend it was instituted in their names by a law firm without their instructions or authority.

3. The event that led to these proceedings was a Police raid of a village in the Baiyer River District of Western Highlands Province in the 1990s. In 1997, 130 villagers commenced individual civil actions in the District Court in Mt Hagen in proceedings known as Complaint Nos 33-163 of 1997: Andake Tepoka and 129 Others v Chief Inspector Leo Kabilo and The State. They were successful and the District Court granted individual damages awards totalling K968,215.49 (excluding interest of K417,841.49). However, for some reason the money did not find its way to the intended recipients. One Hundred and twenty-eight(128) of the 130 complainants alleged that two of their group – Andake Tepoka and Max Umbu Pulu – misappropriated the money in 2001, in league with their then lawyer. It is not clear who the lawyer was but it was not any of the lawyers mentioned elsewhere in this judgment. So the group of 128, led by their mausman, Smith Alvi, sought and obtained orders in the National Court at Mt Hagen, stoping payment of the interest component of K417,841.49. That order was obtained in 2002 and Mr Alvi’s group retained Kunai & Co Lawyers of Mt Hagen to act for them.

4. In 2003 Mr Alvi’s group decided to follow a slightly different legal strategy. They approached Paul Paraka Lawyers of Port Moresby to act for them and gave instructions for them to commence fresh proceedings in the National Court aimed at retrieving the original sum of K968,215.49 and getting the K417,841.49 interest component paid into the Paul Paraka Lawyers trust account, so that it could be distributed to the rightful recipients. Paul Paraka Lawyers duly filed proceedings in the National Court at Waigani in OS No 407 of 2003. The parties were:

· Smith Alvi & 127 Others – plaintiffs;

· Andake Tepoka – first defendant (he was one of the original group of 130 complainants alleged to have defalcated the damages awarded by the District Court);

· Max Umbu Puli – second defendant (he was the other member of the original group of 130 complainants alleged to have defalcated the damages awarded by the District Court);

· The State – third defendant (it was joined as the plaintiffs were claiming that if the first and second defendants were not liable, the State would have to pay, presumably because it was claimed that the State had negligently paid out the money to the wrong people).

5. It will be observed that those parties are replicated in the proceedings in the Supreme Court: the plaintiffs have become the appellants; and the defendants have been joined as respondents.

6. On 7 October 2003 the National Court, in OS No 407 of 2003, made orders on application by the plaintiffs, through their lawyers Paul Paraka Lawyers, that:

· prevented payment of the interest component K417,841.49 to the first and second defendants; and

· required that money to be paid into the Paul Paraka Lawyers trust account.

7. During 2004 the Department of Finance paid two amounts (which in fact totalled more than the prescribed amount) into the Paul Paraka Lawyers trust account. A sum of K250,000.00 was paid on 22 June 2004 and K200,000.00 was paid on 8 December 2004. In the meantime, Paul Paraka Lawyers were given a letter purporting to be signed by Mr Alvi, saying that he and 126 others of this group were appointing another member of their group – Simon Nanoa – to act on their behalf from then on and authorising him to collect the money owing to them: K417,841.49. According to an affidavit tendered by a Paul Paraka Lawyers employee in the National Court, the money in the trust account was distributed as follows:

· K325,000.00 went to Simon Nanoa in two instalments, on the instructions of Mr Alvi and the 126 others;

· K125,000.00 went to Paul Paraka Lawyers, for their legal fees.

8. After Simon Nanoa received the second instalment, a sub-group of 48 of the plaintiffs cried foul. They were led by Pora Trokasi and Rote Rapura. They secured a different law firm, Pius Kingal & Associates, to act for them. They filed a notice of motion in June 2005, still under the same file – OS No 407 of 2003 – seeking, amongst other things, orders that the Paul Paraka Lawyers trust account be audited. In August 2005 Mr Alvi joined the Trokasi-Rapura sub-group. He swore an affidavit that he had not received any of the money distributed from the Paul Paraka Lawyers trust account. He swore that he did not authorise anyone else to uplift any money from the trust account.

9. The Trokasi-Rapura motion went before Davani J in the National Court on 23 December 2005. Mr Kingal appeared for the Trokasi-Rapura sub-group, supported by Mr Alvi. Mr Ranewa of Paul Paraka Lawyers also appeared, it seems, for the rest of the other plaintiffs and perhaps for Paul Paraka Lawyers. On 18 January 2006 Davani J delivered a written judgment, upholding key aspects of the Trokasi-Rapura motion. Her Honour concluded that there were serious...