National Housing Corporation v Paul Asakusa, as Suspended Managing Director, National Housing Corporation and Francis Pumbu (2012) SC1165

• Jurisdiction: Papua New Guinea
• Court: Supreme Court
• Judge: Cannings, Manuhu & Kassman JJ
• Judgment Date: 01 March 2012
• Citation: (2012) SC1165
• Judgment Number: SC1165
• Year: 2012
• Docket Number: SCA NO 84 0F 2010

Full Title: SCA NO 84 0F 2010; National Housing Corporation v Paul Asakusa, as Suspended Managing Director, National Housing Corporation and Francis Pumbu (2012) SC1165

Supreme Court: Cannings, Manuhu & Kassman JJ

Judgment Delivered: 1 March 2012

SC1165

PAPUA NEW GUINEA

[IN THE SUPREME COURT OF JUSTICE]

SCA NO 84 0F 2010

NATIONAL HOUSING CORPORATION

Appellant

V

PAUL ASAKUSA, AS SUSPENDED MANAGING DIRECTOR,

NATIONAL HOUSING CORPORATION

First Respondent

FRANCIS PUMBU

Second Respondent

Waigani: Cannings, Manuhu & Kassman JJ

2011: 27 October,

2012: 1 March

PRACTICE AND PROCEDURE – summary dismissal – issue estoppel – whether issue estoppel must be pleaded as a defence – prerequisites for operation of issue estoppel – whether previous proceedings relied on to argue issue estoppel required to be between same parties.

The National Court upheld a motion by the respondent for dismissal of proceedings commenced by the appellant on the ground that the doctrine of issue estoppel applied. It was held that, as the central issue in the proceedings concerned ownership of land and that issue had been determined in prior judicial proceedings, the appellant was estopped (precluded) from challenging the respondent’s title in the land. The appellant (which had been the plaintiff in the National Court) appealed on two grounds: (1) that issue estoppel had not been pleaded as a defence and could not be relied on as a ground for summary disposal of proceedings; and (2) issue estoppel did not apply as it was not a party to the prior proceedings.

Held:

(1) The question of whether issue estoppel should be pleaded as a defence is a matter of discretion for the primary Judge. If it appears obvious that issue estoppel should apply it will usually be unnecessary to require it to be pleaded. If it appears to be only an arguable proposition the desirable course of action would be a direction that it be pleaded.

(2) In the present case the issue of issue estoppel was open to be raised and determined without requiring that it be pleaded and the primary Judge made no error of law in not requiring it to be pleaded. The first ground of appeal was dismissed.

(3) There are three prerequisites to operation of the doctrine of issue estoppel: (a) the issue raised in the second proceedings is the same issue as that raised in prior proceedings; (b) the issue was finally determined in the prior proceedings; and (c) the parties in the two proceedings are the same or, if they are not the same, the party against whom the issue estoppel is sought to be applied was a privy of a party to the prior proceedings and reasonably expected to be aware of the prior proceedings and entitled to be joined but failed without explanation to do so.

(4) Here: (a) the issue raised by the second proceedings was whether the second respondent had become registered proprietor of the subject land in a case of fraud, which was not at issue in the prior proceedings; (b) there was no final determination of that issue; but (c) though the parties in the two proceedings were different, the rule about privies applied.

(5) As two prerequisites to operation of issue estoppel were absent the second ground of appeal was upheld.

(6) The appeal was allowed and the order dismissing the proceedings quashed and the matter remitted to the National Court.

Cases cited

The following cases are cited in the judgment:

AGC (Pacific) Ltd v Registrar of Titles (2009) N3807

Allan Alfred Daniel v Pak Domoi Ltd (2009) SC970

Boni v Tolukuma Gold Mines Ltd (2009) SC1005

Bougainville Copper Ltd v Commissioner General of Internal Revenue (2008) N3331

Dale Christopher Smith v Minister for Lands & Ors (2009) SC973

Emas Estate Development Pty Ltd v John Mea & Ors [1993] PNGLR 215

Helifix Group of Companies Ltd v PNG Land Board & Ors (2012) SC1150

Isidore Kaseng v Rabbie Namaliu & The State (No 1) [1995] PNGLR 481

Koitachi Ltd v Walter Schnaubelt (2007) SC870

Mark Ekepa v William Gaupe (2004) N2694

Mision Asiki v Manasupe Zurenuoc & Morobe Provincial Government (2005) SC797

Telikom PNG Ltd v ICCC & Digicel (PNG) Ltd (2008) SC906

Telikom PNG Ltd v ICCC (2007) N3144

Titi Christian v Rabbie Namaliu & The State OS No 2 of 1995, 18.07.96

West New Britain Provincial Government v Pepi S Kimas & Ors (2009) N3834

APPEAL

This was an appeal from the summary dismissal of proceedings by the National Court.

Counsel

M I Saka, for the appellant

M Pokia, for the second respondent

1 March, 2012

1. BY THE COURT: This is an appeal against the dismissal by Justice Kandakasi of proceedings in the National Court, which had been commenced by the appellant, the National Housing Corporation (NHC), against the respondents, Paul Asakusa as suspended managing director of the NHC, and Francis Pumbu.

2. At the centre of those proceedings (OS No 302 of 2009) was a block of land in Port Moresby, Allotment 31, Section 19, Hohola, on which there had been a block of four residential flats occupied by NHC tenants, ownership of which had been transferred from the NHC to Mr Pumbu at a time when Mr Asakusa was managing director. The NHC sought declarations and orders that would nullify the transfer to Mr Pumbu, claiming fraud and illegality in the transfer to him and breaches by Mr Asakusa of fiduciary and legal duties to the NHC which allegedly amounted to a conspiracy between him and Mr Pumbu to defraud the NHC. It was claimed amongst other things that Mr Asakusa had agreed to transfer the land to Mr Pumbu without NHC Board approval at a significantly undervalued price of K140,937.50, it being alleged that the actual market value was nine times that sum.

3. His Honour on 23 June 2010 heard and upheld a motion by Mr Pumbu for dismissal of the proceedings, relying on the doctrine of issue estoppel. His Honour held that as the central issue in the proceedings concerned ownership of land and that issue had been determined in prior judicial proceedings the doctrine of issue estoppel applied and the NHC was precluded from claiming the relief that it was seeking. The prior proceedings were OS No 742 of 2008 which Mr Pumbu as plaintiff had commenced against the NHC tenants who had remained living on the land despite its transfer, seeking a declaration that he was the registered proprietor and an order for eviction of the NHC tenants. On 8 April 2009 those proceedings were concluded by the National Court declaring that Mr Pumbu was indeed the registered proprietor and ordering that the NHC tenants had two months to vacate.

4. The NHC has appealed against the dismissal of OS No 302 of 2009 on two grounds:

(1) that issue estoppel had not been pleaded as a defence and could not be relied on as a ground for summary disposal of proceedings; and

(2) that issue estoppel did not apply as it was not a party to the prior proceedings.

GROUND 1: ISSUE ESTOPPEL NOT PLEADED

5. The appellant argues that the primary Judge erred by entertaining the motion for dismissal and dismissing the proceedings when issue estoppel had not been pleaded as a defence. To appreciate this argument it is necessary to set out the background of the National Court proceedings.

6. The NHC commenced OS No 302 of 2009 on 12 June 2009 and subsequently filed a motion seeking an interim injunction that would amongst other things restrain Mr Pumbu from developing the land, pending trial. On 9 October 2009 the National Court refused that motion and directed that the NHC file a statement of claim and the proceedings continue by way of pleadings.

7. On 20 November 2009 the NHC filed an amended statement of claim in accordance with the Court’s directions but neither Mr Asakusa nor Mr Pumbu filed a defence. Instead, on 16 March 2010 Mr Pumbu filed a motion under Order 12, Rule 1 of the National Court Rules (which allows the Court on the application of a party to amongst other things direct the entry of such judgment “as the nature of the case requires”) seeking an order for dismissal of proceedings on the ground of issue estoppel. That motion was heard and upheld by granting of the order for dismissal on 23 June 2010.

8. Mr Saka, for NHC, submits that it was wrong in law for the primary Judge to have entertained the issue estoppel argument, let alone relied on it as the basis of dismissal of the proceedings, when it had not been pleaded as a defence. The departure from acceptable practice and procedure was acute in this instance, Mr Saka submits, as Mr Pumbu had not filed any defence in response to the NHC’s amended statement of claim. In support of those propositions he relies on the judgment of Sir Salamo Injia in Telikom PNG Ltd v ICCC & Digicel (PNG) Ltd (2008) SC906, in which his Honour expressed the view that issue estoppel and the related doctrine of res judicata should be pleaded in a defence. Only by pleading such defences would the court and the parties be properly informed of the legal and factual bases on which the defence is grounded. Otherwise there is the risk of great injustice if arguments are rushed at a preliminary hearing due to an application for summary dismissal of the proceedings.

9. That view was...