Hazel Lariau Schultz for Herself & On Behalf of Elkevar Eremas v Michael Wilson Trading as Warner Shand Lawyers and Others

• Jurisdiction: Papua New Guinea
• Judge: Cannings J
• Judgment Date: 04 January 2023
• Neutral Citation: N10095
• Citation: N10095, 2023-01-04
• Counsel: T Sirae, for the Plaintiffs,J Kihanges, for the Defendants
• Hearing Date: 03 November 2022,19 December 2022,04 January 2023,01 January 0003,04 January 2022
• Docket Number: WS NO 1132 OF 2017
• Court: National Court

N10095

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS NO 1132 OF 2017

Hazel Lariau Schultz for Herself & On Behalf of Elkevar Eremas, Malkavar Eremas, Misiel Eremas, Lydia Eremas & Tanisha Eremas

Plaintiffs

v.

Michael Wilson Trading as Warner Shand Lawyers

First Defendant

Michael Wilson & Robert Asa Trading as Warner Shand Lawyers Rabaul

Second Defendants

Cannings J

Kokopo: 3 November 2022

Waigani: 19^th December 2022, 4^th January 2023

LAWYERS — commencement of proceedings by clients against their lawyers — complaint of unreasonable delay by lawyers in settlement of conveyancing transaction.

PRACTICE AND PROCEDURE — requirement for civil proceedings to disclose a reasonable cause of action — difficulty in identifying cause of action pleaded in statement of claim — whether proceedings should be dismissed because of defective pleading — National Court Rules, Order 12 rule 40.

NEGLIGENCE — lawyer/client relationship — duty of care — lawyer's duty to be diligent — whether tort of negligence established.

The plaintiffs are PNG citizens who were the owners of freehold land in a provincial town. They agreed to sell the land to a non-citizen, “Johnny”, for K1 million and engaged the defendants as their lawyers, who were also engaged by Johnny, to draft a contract of sale and attend to other legal matters to settle the transaction. A contract of sale between the plaintiffs as vendors and Johnny as purchaser was executed on 13 October 2016. As it was freehold land and the purchaser was a non-citizen, it was necessary for the land to be converted to leasehold title. The defendants engaged a real estate firm to arrange the conversion. Twelve months after the execution of the contract, the conversion was not forthcoming. The plaintiffs were aggrieved by the delay and blamed the defendants for not pursuing the matter diligently. They commenced these proceedings against the defendants on 27 October 2017, claiming “damages for loss of business opportunities from the long delay in releasing the purchase price to the plaintiffs”. It transpired that the title was converted to leasehold on 22 September 2017 and the new State Lease was in the possession of the real estate firm in early October 2017; however, the real estate firm decided not to make the lease available to the plaintiffs and the defendants, due to an unresolved dispute with the plaintiffs. Settlement eventually took place on 15 December 2017. The plaintiffs received the proceeds of sale on 5 January 2018. The plaintiffs maintain that the defendants delayed completion of the transaction without reasonable excuse and the unreasonable delay has caused loss of business opportunities, and therefore the defendants are liable in damages.

Held:

(1) The statement of claim was vague and did not expressly plead any particular cause of action, which raised the issue whether, though there was no motion before it, the Court should exercise the discretion under Order 12 rule 40(1) of the National Court Rules to on its own motion order that the proceedings be dismissed.

(2) Though desirable, it is not essential that every element of every cause of action be expressly pleaded in a statement of claim. What is essential is that the statement of claim read as a whole discloses a cause of action in sufficiently clear terms to put the defendant on notice as to the claim that it has to meet. The proceedings were not summarily dismissed under Order 12 rule 40(1).

(3) To establish a cause of action in negligence a plaintiff must prove the elements of the tort: (a) the defendant owed a duty of care to the plaintiff (b) the defendant breached that duty (acted negligently), (c) the breach of duty caused damage to the plaintiff, and (d) the type of damage was not too remote.

(4) Most elements were non-contentious. The second was not, and the plaintiffs failed to prove that the defendants were negligent. The proceedings were dismissed, with costs.

Cases Cited

The following cases are cited in the judgment.

Amaiu v Yalbees (2020) SC2046

Kuman v Digicel (PNG) Ltd [2013] 1 PNGLR 97

Magiten v Tabai (2008) N3470

Martha Limitopa v The State [1988–89] PNGLR 364

Paul Tarato v Sir Tei Abel [1987] PNGLR 403

Takai Kapi v Maladinas Lawyers (2003) N2323

Vulupindi v Gideon (2006) N3925

Yakasa v Piso [2014] 1 PNGLR 90

Counsel:

T Sirae, for the Plaintiffs

J Kihanges, for the Defendants

McGregor & Associates Lawyers: Lawyers for the Plaintiffs

Inua Lawyers: Lawyers for the Defendants

4^th January, 2023

1. Cannings J: The plaintiffs are PNG citizens who were the owners of freehold land in Kokopo, Section 6 Lot 14. They agreed in 2016 to sell the land to a non-citizen known locally as “Johnny”, for K1 million and engaged the defendants, known generally as Warner Shand Lawyers, as their lawyers. The defendants were also engaged by Johnny to draft a contract of sale and attend to other legal matters to settle the transaction.

2. A contract of sale between the plaintiffs as vendors and Johnny as purchaser was executed on 13 October 2016. As it was freehold land and the purchaser was a non-citizen, it was necessary for the land to be converted to leasehold title under the Land (Ownership of Freeholds) Act 1976. The defendants engaged a local real estate firm, New Dawn, to arrange the conversion.

3. Twelve months after the execution of the contract, the conversion was not forthcoming. The plaintiffs were aggrieved by the delay and blamed the defendants for not pursuing the matter diligently. They commenced these proceedings against the defendants on 27 October 2017, claiming “damages for loss of business opportunities from the long delay in releasing the purchase price to the plaintiffs”.

4. It transpires that the title was converted to leasehold on 22 September 2017 and the new State Lease was in the possession of New Dawn in early October 2017. However, New Dawn did not make the lease immediately available to the plaintiffs and the defendants.

5. Settlement eventually took place on 15 December 2017. The plaintiffs received what was due to them (the balance of the purchase price after deduction of the defendants' fees and disbursements) on 5 January 2018.

6. The plaintiffs maintain that the defendants delayed completion of the transaction without reasonable excuse and the unreasonable delay has caused loss of business opportunities, and the defendants are liable in damages.

7. The defendants deny those claims and the matter has progressed to trial. Two issues arise:

(1) What is the cause of action and has it been adequately pleaded?

(2) Have the plaintiffs established a cause of action against the defendants?

(1) WHAT IS THE CAUSE OF ACTION AND HAS IT BEEN ADEQUATELY PLEADED?

8. This threshold question must be posed because by any objective standard the statement of claim is vague. It consists, apart from the prayer for relief, of only 12 paragraphs. That is not necessarily a bad thing. Brevity can be a virtue in a statement of claim. But it can also be proof of inadequacy. This statement of claim does not expressly plead any discrete cause of action. This raises the issue, although there is no motion before the Court to this effect, whether I should exercise the discretion under Order 12 rule 40(1) of the National Court Rules to, on the own motion of the Court, order that the proceedings be dismissed.

9. Order 12 rule 40(1) states:

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.

10. At the trial, I asked the plaintiffs' counsel Mr Sirae what the cause of action was and he did not give me a straight answer. It was only after some prodding that he mentioned the word negligence. So it is, that the cause of action said to be pleaded is the...