White Corner Investments Ltd v Regina Waim Harro (2006) N3089

• Jurisdiction: Papua New Guinea
• Judge: Gabi J
• Judgment Date: 12 September 2006
• Citation: (2006) N3089
• Docket Number: WS No. 1340 of 2001
• Court: National Court
• Year: 2006
• Judgement Number: N3089

Full Title: WS No. 1340 of 2001; White Corner Investments Ltd v Regina Waim Harro (2006) N3089

National Court: Gabi, J

Judgment Delivered: 12 September 2006

N3089

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 1340 OF 2001

BETWEEN:

WHITE CORNER INVESTMENTS LTD

Plaintiff

AND:

REGINA WAIM HARRO

Defendant

Lae: Gabi, J

2006: 4 August &12 September

PRACTICE AND PROCEDURE – Interlocutory injunction – Undertaking as to damages – No cause of action – Application for enforcement of an undertaking is to be made in the proceedings in which the undertaking was given – Assessment of damages at the conclusion of trial – Applicable principles where injunction discharged before trial.

Cases Cited:

Papua New Guinea Cases:

Gabriel Apio Irafawe v Yawe Riyong (N1915)

Patterson Lowa, Minister for Minerals and Energy & Ors v Wapela

Akipe & Ors [1991] PNGLR 265)

PNG Forest Products Pty Ltd and Inchcape Berhad v The State and Jack Genia [1992] PNGLR 85),

Vari Gari v Motor Vehicle Insurance Limited, Unreported and Unnumbered (June 2005)

Overseas cases:

Air Express Limited v Ansett Transport Industries (Operations) Proprietary Limited [1978-1981] 146 C.L.R 249

Brimson v Rocla Concrete Pipes Ltd: Supreme Court Proceedings New South Wales Vol.2 [13.029] of 30 April 1983

Cheltanham & Gloucester Building Society v. Ricketts & Ors [1993] 1 WLR 1545

Financiera Avenida v Shiblag, The Times, 14 January; Court of Appeal (Civil Division) Transcript No. 957 of 1990

F. Hoffmann-La Roche & Co. A.G. v. Secretary of State for Trade and Industry [1975] A.C 295

Griffith v. Blake (1884) 27 Ch D. 474

Re Hailstone, Hopkinson v Carter (supra)

Re Hailstone, Hopkinson v Carter (1910) 102 L T 877

Smith v. Day (1882) 21 Ch.D. 421

Counsel:

P. Ousi, for the Plaintiff

K. Kua, for the Defendant

DECISION

12 September, 2006

Introduction

1. GABI, J: This is an application by the defendant to dismiss the proceedings pursuant to O.8 r.27 of the National Court Rules.

2. There were two (2) applications on notice before the Court; one by the plaintiff seeking an order to dispense with the defendant’s consent so as to have this matter listed for trial; and the other by the defendant to strike out the Statement of Claim for failing to disclose a cause of action, causing prejudice and embarrassment and being an abuse of process. The defendant relied on the affidavit of Kerenga Kua dated 24 May, 2006. No affidavit was filed by the plaintiff in reply. On the day of the hearing, it was agreed that the plaintiff’s application is dependent on the outcome of the application by the defendant and for that reason I heard the defendant’s application only.

Background

3. The facts are not in dispute. They are that in proceedings MC No. 6 of 1999, Elijah Harro, one of the principals and Managing Director of the plaintiff filed a petition for a dissolution of his marriage to the defendant. The defendant cross-petitioned for a divorce, custody of some of the children and for distribution of the family’s assets.

4. In September 2000, the defendant applied for an injunction to restrain the plaintiff from disbursing a sum of about K500,000 received by one of the family companies being insurance payout for a shop that was destroyed by fire at Eriku, Lae City. The defendant, in support of the application, filed an undertaking as to damages. The terms of the undertaking are:

“THE RESPONDENT undertakes to submit to such orders (if any) as the Court may consider to be just for the payment of compensation or damages as assessed by the Court or as it may direct to any person whether or not a party, affected by the operation of any interim injunction granted herein”.

5. The injunction was granted on 29 September 2000. The injunction has been amended twice, but has not been dissolved or discharged. Secondly, the proceedings MC No. 6 of 1999 is still on foot pending determination. There is an appeal on an interlocutory order arising from it which is now before the Supreme Court

6. This claim is based on that undertaking. Briefly, the plaintiff’s claim is that on 29 September 2000, the defendant improperly obtained an interlocutory injunction restraining Elijah Harro in his capacity as the principal shareholder and Managing Director of the plaintiff from dealing with any assets he has an interest in. The plaintiff claims that the injunction has caused him prejudice, loss and damage.

Submission

7. Mr. Kua of Counsel for the defendant submitted that a claim for damages against a party giving an undertaking for damages in an application for an injunction, cannot be sued for damages until the conclusion of the entire proceedings in which the undertaking has been given ( See Griffith v. Blake (1884) 27 Ch D. 474; Air Express Ltd v Ansett Transport Industries (1979) 146 CLR 249; and N.R. Burns, Injunctions – A Practical Handbook ( The Law Book Company Limited (1988), page 17 ). He argued that in this case the trial is yet to take place, the injunction is still in place, and the Court is in no position to decide if the injunction was improperly granted. A cause of action has not arisen as yet and will not arise until after the conclusion of the proceedings in MC No. 6 of 1999. Accordingly he argued that, as no cause of action is shown in the Statement of Claim no amendment can cure that defect. As such the Statement of Claim must be struck out

8. The plaintiff, on the other hand, argued that it has meritorious claim and a cause of action against the defendant so the matter must proceed to trial. It was submitted on behalf of the plaintiff that there was no good reason at law to stop or delay the matter from going to trial.

Issues

9. There are three (3) issues before the Court:

(i) Whether an undertaking as to damages gives rise to a cause of action in law?

(i) When is an undertaking enforceable?

(i) Whether an undertaking may be enforced in an action, other than the action in which such undertaking was given?

Issues (ii) and (iii) will be dealt with together.

10. I heard the defendant’s application on 4 August 2006 and reserved my ruling. On 17 August 2006, the plaintiff filed a Notice of Motion seeking an order, inter alia, that it be given leave to use and rely on the affidavit of Elijah Coco Harro sworn on 13 and filed on 17 August 2006 and for such affidavit to be considered before a decision on the defendant’s application is delivered. On 5 September 2006, the application was heard. In his affidavit, Elijah Harro deposed that the defendant does not own nor was she involved in the creation of the plaintiff. Secondly, she has no interest in the settlement monies and therefore had no basis to fear the dissipation of the settlement monies. I ruled that the matters raised in the affidavit would be considered. I, however, indicated that those matters may be relevant to the issue of whether or not an injunctive order ought to have been granted. They may not be relevant to the application for dismissal of proceedings for failing to disclose a cause of action.

The Law

11. Order 8 rule 27(1) of the National Court Rules provides:

“(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 whole or any part of the pleading be struck out.”

12. In Vari Gari v Motor Vehicle Insurance Limited, Unreported and Unnumbered (June 2005), His Honour, Justice Lay discussed the jurisdiction of the Court under Order 8 rule 27 of the National Court Rules. He said:

“The jurisdiction of the Court under O8 r27 is to see if the pleadings plead an almost incontestably bad cause of action which cannot possibly succeed, and cannot be cured by amendment (PNG Forest Products Pty Ltd and Inchcape Berhad v The State and Jack Genia [1992] PNGLR 85), assuming the truth of the facts pleaded in the statement of claim (Gabriel Apio Irafawe v Yawe Riyong (N1915)), and to a lesser extend, in the defence, as explained by any evidence adduced on the application solely for the purpose of explaining the pleadings. It is not a demurrer procedure and should not be applied where the pleading is arguable but, on the evidence, the chances of success are slight. If the pleading is arguable and not otherwise embarrassing or vexatious an application under O8 r27 ought not to succeed (Brimson v Rocla Concrete Pipes Ltd: Supreme Court Proceedings New South Wales Vol.2 [13.029] of 30 April 1983). A cause of action is a right which is given by law (the “form of action”) and which should be pleaded disclosing all of the necessary facts which give rise to the form of action (Patterson Lowa, Minister for Minerals and Energy & Ors v Wapela Akipe & Ors [1991] PNGLR 265).”

Cause of action

13. An undertaking as to damages is given to the Court, not to the other party to the proceedings. As such there is no contract between the parties and no right is conferred on a party to the proceedings to sue. However, it enables the other party to apply for compensation for loss suffered as a result...