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

• Jurisdiction: Papua New Guinea
• Citation: [1992] PNGLR 275
• Date: 19 February 1992
• Court: National Court
• Year: 1992

National Court: Brown J

Judgment Delivered: 19 February 1992

1 Practice and procedure—National Court—declaratory orders—jurisdiction to make—discretionary nature—necessity in the first instance to find a dispute between the parties—Constitution s155(4)

2 Practice and procedure—motions—applications to strike out originating summons—where no reasonable cause of action disclosed—National Court Rules O12 r40—where not statement of claim filed—whether compliance with National Court Rules Division 4 O4 necessary—whether conduct of proceedings can be by way of affidavit—National Court Rules O12 r7, r23, r24, r25, r26, r27, r28, r29, r30, r31

3 Dent v Kavali [1981] PNGLR 488, Kevin Masive v Iambakey Okuk [1985] PNGLR 105, National Housing Commission v Queensland Insurance (PNG) Ltd [1988–89] PNGLR 474, Rediffusion (Hong Kong) Ltd v Attorney–General of Hong Kong [1970] AC 1136, Re IG Farbenindustrie AG Agreement [1944] 1 Ch 41 and Wood Hall Limited v The Pipeline Authority (1979) 141 CLR 443 referred to

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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 ET Taylor Constructions Pty Ltd (hereafter ET 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 ET Taylor, which included, as he said, "two guarantees issued by the first named defendant to the Public Officers Superannuation Board". In April 1991, ET 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 ET 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 ET 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 have referred. (Copies were annexed to the affidavit of Mr Coady sworn on 18 December 1991.) Mr Needham further stated that, to the best of his knowledge, neither the second nor the third defendant had ever entered into any contractual relationship with the plaintiff. Further the third defendant is now the principal under the agreement in respect of the project. On 8 March 1991, Mr David Wardley was appointed provincial liquidator of the contractor. On 12 April 1991, Mr Wardley was appointed by the Court as liquidator. Further, Mr Needham says that Mr Michael Sheehy has been appointed as agent for the mortgagee over the assets of the contractor.

Mr Needham was sworn in Court and affirmed the contents of his affidavit of 4 February 1992. He was then made available for cross–examination by Mr Coady. He confirmed that the contract for the work between the Public Officers Superannuation Board and the contractor was signed prior to 1 January 1991. He further confirmed that the third defendant, the State Services and Statutory Authorities Superannuation Fund Board, was not a party to that building contract. He stated that the 2 bank guarantees of 7 November 1990 had been hand delivered by an officer of the contractor.

Mr Payne then called Mr Charles Christopher McKeown, the chief lending officer of the Bank in Port Moresby. At the relevant period, Mr McKeown was the manager of...