Negliw No 57 Ltd and Heva Jones Rarua v Tiare No 26 Ltd and Tiare No 27 Ltd and Curtain Bros (PNG) Properties Ltd and Ballimore No 39 Ltd and Alex Tongayu, as Registrar of Companies (2019) N8364

• Jurisdiction: Papua New Guinea
• Judge: Hartshorn J.
• Judgment Date: 11 February 2019
• Court: National Court
• Citation: (2019) N8364
• Docket Number: OS 734 of 2017
• Year: 2019
• Judgement Number: N8364

Full Title: OS 734 of 2017; Negliw No 57 Ltd and Heva Jones Rarua v Tiare No 26 Ltd and Tiare No 27 Ltd and Curtain Bros (PNG) Properties Ltd and Ballimore No 39 Ltd and Alex Tongayu, as Registrar of Companies (2019) N8364

National Court: Hartshorn J.

Judgment Delivered: 11 February 2019

N8364

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

OS 734 OF 2017

BETWEEN:

NEGLIW No. 57 LIMITED

First Plaintiff

AND:

HEVA JONES RARUA

Second Plaintiff

AND:

TIARE No. 26 LIMITED

First Defendant

AND:

TIARE No. 27 LIMITED

Second Defendant

AND:

CURTAIN BROS (PNG) PROPERTIES LIMITED

Third Defendant

AND:

BALLIMORE No. 39 LIMITED

Fourth Defendant

AND:

ALEX TONGAYU, as Registrar of Companies

Fifth Defendant

Waigani: Hartshorn J.

2019: 11th February

PRACTICE AND PROCEDURE - Application to dismiss proceeding for being time barred – defendants alleged plaintiffs’ action is founded on fraud and its cause of action is in fraud and alleged fraudulent act was either in 1998 or 2003 – whether proceeding is an abuse of process - second plaintiff contends proceeding should not be dismissed as there are serious conflicts as to facts, necessitating that this proceeding should be allowed to proceed to trial -clear case of a proceeding being statute or time barred - no reasonable cause of action disclosed in the statement of claim - defendants have properly made out their claim for the proceeding to be dismissed - Order 12 Rule 40 National Court Rules, s. 16(1)(a) Frauds and Limitations Act

Cases Cited:

Papua New Guinea Cases

Kerry Lerro v. Stagg & Ors (2006) N3050

Takori v. Yagari & Ors (2008) SC905

Mt Hagen Urban Local Level Government v. Sek No. 15 (2009) SC1007

Oil Search Ltd v. Mineral Resource Development Corporation Ltd (2010) SC1022

Siu v. Wasime Land Group Incorporated (2011) SC1107

Pololi v. Wyborn (2013) N5253

Mamun Investment Ltd v. Onda Koim (2015) SC1409

Overseas Cases

Derry v. Peek (1888) LR 14 App Cas 337

Hubbuck & Sons, Ltd v. Wilkinson, Heywood & Clarke, Ltd [1899] 1 Q.B. 86

Magill v. Magill [2006] HCA 51

Counsel

Mr. Heva Jones Rarua, the Second Plaintiff in Person

Mr. M.M. Varitimos QC and Mr. P. Tabuchi, for the First, Second, Third and Fourth Defendants

11th February, 2019

1. HARTSHORN J. This is a decision on a contested application to dismiss this proceeding made pursuant to Order 12 Rule 40 National Court Rules and alternatively, for the statement of claim to be struck out pursuant to Order 8 Rule 27 National Court Rules.

2. I allowed the application to proceed in the absence of representation of the plaintiffs, apart from the second plaintiff appearing in person, as I was satisfied that the lawyers for the plaintiffs’ had been served with the requisite documents and had been notified of the time and date of the hearing of the notice of motion.

Background

3. The plaintiffs’ filed an originating summons in which they sought orders amongst others, concerning the shareholding of Negliw No. 57 Ltd in Tiare No. 26 Ltd.

4. This court ordered that this proceeding continue on pleadings and that the plaintiffs’ file and serve a statement of claim. A statement of claim has been filed. It seeks the same relief as was sought in the originating summons but there are differences in some of the defendants named.

5. In the statement of claim it is pleaded amongst others, that certain shares were illegally transferred by a Ms. Colleen McCarthy, an employee of the first, second, third and fourth defendants (defendants). Further, purported particulars of fraud are set out. In those particulars the date that Ms. McCarthy submitted a form 13 authorising the share transfer is 28th June 2003.

This application

6. The defendants submit that this proceeding should be dismissed as amongst others:

a) the plaintiffs’ action is founded on fraud and its cause of action is in fraud;

b) the alleged fraudulent act was either in 1998 or 2003. This proceeding was commenced on 28th August 2017, more than six years after the plaintiff’s cause of action accrued, and so is statute barred;

c) this proceeding is an abuse of process.

7. The second plaintiff submits that the proceeding should not be dismissed as there are serious conflicts as to facts, necessitating that this proceeding should be allowed to proceed to trial.

Law

Order 12 Rule 40 National Court Rules

8. In regard to Order 12 Rule 40 National Court Rules upon which the defendants rely, there are numerous authorities in respect of the principles to be considered. I make reference to the following cases: Kerry Lerro v. Stagg &Ors (2006) N3050, Takoriv.Yagari & Ors (2008) SC905, Mt Hagen Urban Local Level Government v. Sek No. 15 (2009) SC1007 and Siu v. Wasime Land Group Incorporated (2011) SC1107. The Court in Mount Hagen v. Sek (supra) in paragraphs 27 to 30 conveniently sets out the requirements of Order 12 Rule 40 (1) (a), (b) and (c) as follows:

“27. The terms “vexatious”, “frivolous”, “abuse of the process of the Court” and “reasonable cause of action” under O.12 r.40 of the National Court Rules have been judicially considered, defined and expounded in a number of decisions in both the National and Supreme Courts. These cases include Ronny Wabia v. BP Exploration Co. Limited & 2 Others [1998] PNGLR 8 (N1697); PNG Forest Products Pty Ltd and Another v. The State and Genia [1992] PNGLR 85; Gabriel Apio Irafawe v. Yauwe Riyong (1996) N1915; Eliakim Laki and 167 Others v. Maurice Alulaku and Others (2002) N2001; Kiee Toap v. The Independent State of Papua New Guinea & Another (2004) N2766; Kerry Lerro trading as Hulu Hara Investments Limited v. Philip Stagg, Valentine Kambori& The State (2006) N3050; Philip Takori & Others v. Simon Yagari & 2 Others (2008) SC 905. These cases say the same thing.

28. The law with regard to an application for dismissal of proceedings based on O.12 r.40 is settled in our jurisdiction. We note that the principles are succinctly set out in Kerry Lerro’s case (supra) and which has more recently been approved and applied by the Supreme Court in Philip Takori’s case (supra).

29. The phrase ‘disclosing a reasonable cause of action’ consists of two parts; cause of action and form of action. A cause of action is defined as a legal right or form of action known to law whereby a plaintiff in a statement of claim must plead all necessary facts and legal elements or ingredients to establish or prove his claim. The principles stated by these cases can be summarized as follows:

(i) A plaintiff or claimant should not be driven from the judgment seat in a summary manner and that the Court should be cautious and slow in exercising its discretionary power.

(ii) The Court has an inherent jurisdiction to protect and safeguard its processes from abuse.

(iii) The purpose of O.12 r.40, is to give the Court power to terminate actions or claims which are plainly frivolous or vexatious or untenable.

(iv) A frivolous claim is one that is characterized as a claim that is plainly and obviously untenable, that cannot possibly succeed and bound to fail if it proceeds to trial.

(v) A vexatious claim is one that is said to be a sham and cannot succeed where it seeks to merely harass the opposing party and put that party to unnecessary trouble and expense in defending or proving the claim.

30. In an application under O.12 r.40 of the NCR, the Court may dismiss a proceeding or action where it is satisfied that the pleading in the statement of claim is seriously wanting where a necessary fact or legal element has not been pleaded.”

9. Further, notwithstanding all of the various judicial pronouncements since, the position is succinctly summarised in Hubbuck & Sons, Ltd v. Wilkinson, Heywood & Clarke, Ltd [1899] 1 Q.B. 86. At 90-91 the Court of Appeal said:

“The second and more summary procedure is only appropriate to cases which are plain and obvious, so that any master or judge can say at once that the statement of claim as it stands, is insufficient, even if proved, to entitle the plaintiff to what he asks.”

Frauds and Limitations Act

10. Section 16 (1) and (3) Frauds and Limitations Act are as follows:

“(1) Subject to Sections 17 and 18, an action—

(a) that is founded on simple contract or on tort; or

(b) to enforce a recognisance; or

(c) to enforce an award, where the submission is not by an instrument under seal; or

(d) to recover any sum recoverable by virtue of any enactment, other than a penalty or forfeiture or sum by way of penalty or forfeiture,

shall not be brought after the expiration of six years commencing on the date on which the cause of action accrued.

(2) ……..

(3) Subject to Subsection (4), an action upon a specialty shall not be brought after the expiration of twelve years commencing on the date when the cause of action accrued.”

11. Sections 17 and 18 Frauds and Limitations Act are not relevant in this instance.

Consideration

12. I consider whether this proceeding is statute barred first.

13. The defendant submits that the plaintiffs’ claim is statute barred. This is because their claim alleges fraud, is founded on tort and has been brought after the expiration of...