B Fortunaso Ltd v Bank of South Pacific Ltd [1992] PGNC 74; [1992] PNGLR 275; N1050 (19 February 1992)

N1050

PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]

B FORTUNASO LIMITED

V

BANK OF SOUTH PACIFIC LIMITED, PUBLIC OFFICERS SUPERANNUATION BOARD,
STATE SERVICES AND STATUTORY AUTHORITIES SUPERANNUATION FUND BOARD

Waigani
Brown J

17 February 1992
19 February 1992

JUDGMENT AND ORDERS - Motions - Application to strike out originating summons - Where no reasonable cause of action disclosed - National Court Rules O 12 r 40 - Where no statement of claim is filed - Whether compliance with National Court Rules Division 4 Order 4 necessary - Whether conduct of proceedings can be by way of affidavit - National Court Rules O 4 r 7, rr 23-31.

PRACTICE AND PROCEDURE - National Court - Declaratory orders - Jurisdiction to make - Discretionary nature of - Necessary in the first instance to find a dispute - Constitution s 155(4).

Facts

The plaintiff sought relief from the possibility of a claim by the first defendant, the Bank of South Pacific Limited, under a third party guarantee given by the plaintiff to the bank to cover debts of a contractor, E T Taylor Constructions Pty Ltd, which is not a party to the proceeding and has since gone into liquidation. The second defendant was a body in whose favour the bank had issued guarantees to protect the Superannuation Board from the default of the contractor. The third defendant was the successor by statute to the second defendant. Upon failure of the contractor, the plaintiff claimed the bank should be estopped from making payment to the third defendant of moneys due under the guarantee by the bank given to the second defendant on the basis that, although the third defendant (State Services and Statutory Authorities Superannuation Fund Board) was successor to the second defendant (Public Officers Superannuation Board), it did not succeed to the benefits of the guarantee in question.

On 18 December 1991, the plaintiff sought and obtained ex parte interlocutory injunctive orders on motion by originating summons restraining the first defendant, the Bank of South Pacific Limited, from making payment under two guarantees issued by it in favour of the Public Officers Superannuation Board on behalf of E T Taylor Constructions Pty Ltd and further interlocutory injunction restraining the second and third defendants from presenting for payment such guarantees on the basis of an affidavit deposed by the lawyer setting out the facts on which the plaintiff relied upon. There were no pleadings. In these proceedings, the second and third defendant applied by motion to strike out the plaintiffs originating summons, alleging that the plaintiff has no standing and, consequently, the interlocutory injunctive orders should be discharged. There was no appearance of the first defendant.

On the question of whether the plaintiff has standing or a cause of action to have obtained the interlocutory injunctions against the defendants,

Held

1. The National Court's power to make declaratory orders is derived from s 155(4) of the Constitution. But the court must have jurisdiction to entertain the action. Dent v Kavali [1981] PNGLR 488 referred to.

2. The National Court, having granted ex parte interlocutory injunctive orders on originating summons seeking declaration of rights affecting defendants, is under a duty to affirmatively find jurisdiction before proceeding further with the hearing of such summons in the absence of pleadings. In the circumstances of this case, since the first defendant chose not to argue the matter, the Court finds no dispute between the plaintiff and the named defendants; hence, the National Court has no jurisdiction to entertain the proceedings for a declaration. Accordingly, the plaintiff has no cause of action.

"I cannot see any jurisdiction in the Court to entertain the plaintiffs claim. There is no dispute between the plaintiff and the second and third defendants. The defendant Bank has chosen not to argue at all. The plaintiffs argument really relates to anticipatory breaches of an obligation the Bank owes the second defendant.... The plaintiffs interest at the very most is commercial, no legal rights having been demonstrated. Consequently, there is no jurisdiction in the Court to entertain declaratory relief" p 276. Re I G Farbenindustrie A G Agreement [1944] 1 Ch 41 cited. Rediffusion (Hong Kong) Ltd v Attorney-General of Hong Kong [1970] UKPC 12; [1970] AC 1136 referred to.

"Again this anticipatory problem foreseen by the plaintiff is not such that the Court should exercise a discretion" p 285.

3. Accordingly, in the exercise of the Court's powers under Order 12 r 40, plaintiffs originating summons is struck out and the interlocutory injunctive orders of 18 December 1991 are discharged.

4. It is necessary that the National Court Rules (O 4 r 7) in relation to the requirements of originating summons be complied with and a statement of claim be filed so as to enable the Court to properly consider and then direct the parties to define the issues where appropriate. Masive v Okuk [1985] PNGLR 105 cited.

Cases Cited

Papua New Guinea cases cited

Dent v Kavali [1981] PNGLR 488.
Masive v Okuk [1985] PNGLR 105.
National Housing Commission v Queensland Insurance [1988-89] PNGLR 474.

Other cases cited

Rediffusion (Hong Kong) Ltd v Attorney-General of Hong Kong [1970] UKPC 12; [1970] AC 1136.
Re I G Farbenindustrie A G Agreement [1944] 1 Ch 41.
Wood Hall Limited v The Pipeline Authority [1979] HCA 21; (1979) 141 CLR 443.

Counsel

C Coady, for the plaintiff.
P Payne, for the applicant/second and third defendants.
No appearance for the first defendant.

19 February 1992

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 E T Taylor Constructions Pty Ltd (hereafter E T 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 E T Taylor, which included, as he said, "two guarantees issued by the first named defendant to the Public Officers Superannuation Board". In April 1991, E T 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 E T 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 E T 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 the Port Moresby Branch. On 7 November 1990, the chief manager, Mr Ian Tenor, had executed the 2 bank guarantees referred to in Mr Coady's affidavit of 18 December 1991. Mr McKeown identified Mr Tenor's signature to those documents shown him in Mr Coady's affidavit.

There was no cross examination. Mr Willy Lingerie Marum, the legal officer of the Bank, was called and shown a power of attorney evidencing the grant of powers by the Bank to its attorney, so described as the chief manager of the Bank. Mr Marum confirmed that the power shown was the relevant power authorising the chief manager, now the managing director, to execute documents on behalf of the Bank. That power of attorney became exhibit "A", registered as it was in accordance with legal requirements.

That was the evidence of the second and third defendants to strike out the proceedings and discharge the interlocutory injunctions.

Mr Coady for the respondent/plaintiff then read an affidavit of James Murdo Fraser, sworn on 11 February 1992. Mr Fraser is the First Legislative Counsel and responsible for maintaining records of legislation for the whole of Papua New Guinea. Despite objection, I allowed par 2 of his affidavit to be read. That par says "I refer to Chapter 66 of the Revised Laws of Papua New Guinea, the Public Officers Superannuation Act. At the time that the Public Officers Superannuation Act was repealed on 1 January 1991 by the State Services and Statutory Authorities Superannuation Act 1990, the Public Officers Superannuation Fund consisted of those elements set out in s 13 Ch 66, as amended by Act No 61 of 1983. There were no amendments to s 13 of ch 66 between Acts No 61 of 1983 and the repeal of Ch 66 on 1 January 1991".

Having regard to the published state of the laws in Papua New Guinea, I proposed taking judicial notice of the First Legislative Counsel's statement.

Mr Coady then read his own affidavit of 18 December 1991 despite objections, which were overruled. Mr Coady read the whole of the affidavit apart from the last sentence in par 3. Mr Coady then read his affidavit of 13 February 1992 and, despite objections, again overruled, the whole of that affidavit was read. Again, Mr Coady stated that he was the lawyer for the plaintiff and had its authority to make that affidavit. He recited the fact he had numerous telephone conversations between 1 and 20 December 1992 with Mr Chris McKeown, the branch manager of Port Moresby Bank of the South Pacific Limited, and Mr Chris Benning, whom Mr Coady understood to be the deputy general manager of the Bank in Papua New Guinea. Mr Coady then recited facts which he verily believed related to the indebtedness of E T Taylor to the Bank for (a) salary advances to E T Taylor (b) contingent liabilities, being guarantees issued by the Bank, inter alia, to the Public Officers Superannuation Fund Board and others totalling K365,134 (c) the fact that the Bank is currently in possession of some K158,400 being the balance of moneys recovered from the sale of properties belonging to the E T Taylor and for which the Bank held registered mortgages and (d) that the Bank intended to cash the Public Officers Superannuation Board guarantees unless restrained by this Court.

Mr Coady then called Mr Charles McKeown and questioned him about the existence of the guarantee document accepted by the Bank at the request of the guarantor, the plaintiff company, in consideration of the Bank providing loans, advances, and banking accommodation to the customer, E T Taylor. Mr McKeown identified the guarantee and indemnity document which became exhibit "1" of the plaintiffs exhibits. He was asked whether he was aware of any other documents supporting the guarantee, and Mr McKeown acknowledged he was aware of a real property mortgage which was not in Court. He was asked whether he was aware if there were other security linking letters in existence, and he stated that there were not to his knowledge. Subsequently, the Bank's original copy of a letter of demand of 20 December 1991 was tendered as exhibit "2" for the plaintiff. That letter, under hand of the Bank's managing director, addressed to the Secretary, B. Fortunaso Pty Ltd demanded payment by the company of its indebtedness to the Bank under the guarantee in respect of the account of E T Taylor in a sum of K486,241.63 as at 16 December 1991.

Mr McKeown also identified both guarantees (forming part of the Mr Coady's earlier affidavit) as those given by the Bank to the Public Officers Superannuation Board on behalf of E T Taylor in the sum of K116,846 respectively, and confirmed that the face value of those guarantees were included in a claim for K365,134 which, together with moneys advanced by the Bank pursuant to the contractor's wages account and interest, made up the K486,241.63 total referred to in the letter of demand addressed to the plaintiff.

Mr Coady then asked Mr McKeown questions relating to the sale of the property of E T Taylor whereby, apparently, some K158,000 was held by the Bank. Mr McKeown said that, whilst the Bank holds that sum, the properties in fact were sold by the liquidator, not the Bank, and that the money was on deposit with the Bank for the liquidator. Mr Coady pressed the question concerning the sale of the contractor property by the liquidator as agent of the Bank. Mr McKeown said that he did not know the difference, but there were no contractual arrangements between the liquidator and the Bank so far as he was aware. Mr Coady sought to have Mr McKeown treated as a hostile witness, but I refused the request. Mr Coady put the question again, that the sale of the contractor's properties was pursuant to the Bank's mortgages, but Mr McKeown stated that, so far as he was aware, the properties had been sold by the liquidator, not under the mortgagee's power. He answered the question in the negative. Mr Coady sought to pursue his questions in relation to the sale without objection, although the questions clearly went to documentation. He was asked, "Is it the case, the Bank released funds after the debts were cleared?" Mr McKeown said on sale of 2 properties at settlement "the liquidator gave us a cheque to clear indebtedness and the balance of the fund he holds on term deposits". Mr Coady asked, "Is it the case the whole of funds from the sale are available to the Bank under the terms of its mortgages?" Mr McKeown answered, "In normal course, it probably is. The Bank also holds a letter from the liquidator, funds can only be used to clear guarantees as called up or wages account". Mr Coady asked, "Is that an arrangement the Bank has with the liquidator?" The answer: "I guess so". Eventually, after further questioning along these lines, Mr Payne objected and Mr Coady's question seeking an affirmative answer to the Bank's open recourse to the funds (with the liquidator to discharge wages account) was ruled inadmissible. There was no further examination-in-chief nor cross-examination, and Mr Coady closed the plaintiffs case.

PLAINTIFFS CLAIM FOR RELIEF

Mr Coady's argument addressed these aspects. He firstly said that the procedure relating to originating summons in Papua New Guinea permitted claims in the form used in his summons and notice of motion of December last, and did not require pleading as commonly understood. Order 4 r 7 of the National Court Rules requires a statement of the relief claimed pursuant to O 4 to be endorsed on the summons, but not the facts. The facts are set out in the accompanying affidavit, the affidavits which I allowed to be read on 17 February. Mr Coady referred me to Masive v Okuk [1985] PNGLR 105 in support of the plaintiffs contention that the procedure adopted by the plaintiff by way of originating summons was quite proper in the circumstances. Mr Coady said it then lies with the Court to decide whether, on the authority of the Masive's case, the procedure may be sufficient where facts are not in dispute or, alternatively, a statement of claim and appropriate pleadings may be required of the plaintiff, as provided for by the rules. Mr Coady argued that the course adopted by the plaintiff is proper in these circumstances, for the matters requiring the Court's consideration raise issues of interpretation of statutes. The facts relating to the guarantees and demand by the Bank are unlikely to be in dispute.

It can be seen from the contents of the originating summons, which I touched on at the commencement of my reasons, that there is no statement of claim but rather a bold claim for relief. I have also recited the facts from the various affidavits given in evidence and the additional evidence of the various witnesses, but I will deal later in my judgment with the facts which I find necessary to decide for these reasons. Failure to comply with the provisions of Division 4, Order 4 has given rise to the lengthy hearing time afforded the plaintiff, no appointment hearing having taken place, when directions would have been made, defining the issues between the parties in the absence of pleadings.

Mr Coady then went on to say that the issue for the Court was a proper construction of the Public Officers Superannuation Act Ch 66 as affected by the State Services and Statutory Authorities Superannuation Act 1990 No 31 of 1990. Having regard to those acts, were guarantees given by the Bank on 7 November 1990 to the Public Officers Superannuation Board available to the State Services and Statutory Authorities Superannuation Fund Board for cashing? He said that the guarantees had been given in favour of the Public Officers Superannuation Board, but on a proper construction of the various Acts, there is nothing to conclude a valid assignment of the capital of the 2 guarantees to the new board. Consequently, the State Services & Statutory Authorities Superannuation Fund Board has no standing to move its motion. Mr Coady went on to argue that there was no doubt that the Bank had a present intention to cash the guarantees, thus debit the account illegally of E T Taylor and, thereupon, claim that money from the plaintiff. Mr Coady said that the evidence in relation to an amount of K158,000 on deposit with the Bank was troubling and that there was implicit in the banking arrangements a fudiciary relationship between the plaintiff and the defendant Bank. He said that the Bank alleges, whilst it has the mortgages, that it has not applied moneys from the sale of the contractor's property to the debts of the contractor, but rather the money is in custody of the liquidator. However, the Bank has recourse to those funds to meet debts. If the plaintiff was not able to come to Court for relief by way of these injunctions, then the Bank is able to set up the plaintiff under its guarantee and recover some K486,000 while releasing K158,000 to the liquidator. Mr Coady point to those supposed courses as an anticipatory breach of a fudiciary relationship.

He further argued that the assets of the Public Officers Superannuation Board were not effectively transferred to the new superannuation fund board, for the new legislation failed to take up all the assets and property of the former board. Mr Coady pursued an argument in relation to the "former fund", defined by s 16 of the new act, under which the fund established under s 13(1) of the old act was transferred to the new fund to be dealt with pursuant to the 1990 Act. Mr Coady argued that the fund does not comprise the investments, for instance, purchased investments; rather, only income and contributions (with the State's contribution) make up the new "fund". Thus, so far as the Lae premises are concerned, whilst rental income may form part of the fund, and be transferred, the buildings have not been and do not form part of the new "fund". Consequently, the third defendant, the State Services and Statutory Authorities Superannuation Fund Board, not having a proprietary interest in the guarantees (for they form no part of the "fund"), has no standing.

DEFENDANT'S MOTION TO STRIKE OUT

Mr Payne made written submissions and addressed me further on some aspects. He pointed out correctly there is no contractual relationship between the plaintiff and the second and third defendants. The interlocutory injunctive orders of 18 December 1991 affect the second and third defendants, for they restrain the Bank from any payment to those parties. The originating summons seeks declarations that the guarantees given the Bank in favour of the Public Officers Superannuation Board are a nullity. This materially affects both the second and third defendants. Mr Payne says the basis of the originating summons are the guarantees of 7 November 1990. These are guarantees between the bank and second defendant. The guarantees make reference to E T Taylor Constructions Pty Limited, but that company is not a party to these proceedings. The plaintiff is not named in the guarantees.

The plaintiffs statement of facts in the affidavit of Mr Coady of 18 December touches on a third party guarantee given by the plaintiff, which was exhibit "1".

But the plaintiff seeks no relief in respect of the guarantee between it and the Bank. Rather the plaintiff seeks to be relieved against what it says is the corollary effect of the Bank cashing guarantees of 7 November 1990. Yet, the plaintiff is a stranger to those guarantees.

The plaintiffs exhibit "1" called Guarantee and Indemnity by Deed, provides:

"In consideration of the bank at the request of the guarantor making loans and advances or providing banking accommodation to the customer whether a loan or jointly or in conjunction with any other person and/or in consideration of the bank, at the request of the guarantor hereby made, forbearing to enforce immediate payment of the moneys (if any) now due and owing by the customer to the bank the guarantor (jointly and severally if more than one) agrees with and guarantees to and indemnifies the bank and shall keep the bank indemnified, as follows:

(1) the guarantor will pay to the bank on demand (whether the customer is then in default or not) the moneys hereby secured.

(2) ... etc."

The guarantor is the plaintiff. E T Taylor (the contractor) is the customer.

The deed of guarantee recites a basic liability of K720,000. The Bank's letter of demand of 20 December 1991, unnecessarily in my view, in par 1 recites the fact that the customer E T Taylor has failed upon demand to satisfy its liability upon such "guarantee and indemnity" account. The Bank then demands payment from the plaintiff of the plaintiff company's indebtedness to the Bank under or by virtue of the said guarantee. The letter of demand then recites the outstanding amount due under the "guarantee and indemnity" account of E T Taylor. I am satisfied that the deed of guarantee is of unconditional nature, enabling the Bank to claim payment of money on demand to the amount of the basic liability read in conjunction with the terms of the deed. Mr Payne referred me to National Housing Commission v Queensland Insurance Ltd [1988-89] PNGLR 474 and Wood Hall Limited v The Pipeline Authority [1979] HCA 21; (1979) 141 CLR 443, where both the National Court and the High Court of Australia dealt with a guarantee in similar form to the bank guarantee the Court deals with in this case. Mr Payne said I should follow those decisions. I agree. This guarantee is an unconditional bond to pay money on demand by the Bank without reference to the contractor.

Mr Payne referred me to O 12 r 40, which gives the Court power to stay or dismiss proceedings where no reasonable cause of action is disclosed. Mr Coady, of course, said a cause of action is apparent on the facts in the various affidavits and evidence given in this Court. Mr Payne said no reasonable cause of action is disclosed because the plaintiff is not a party to the guarantees of 7 November 1990 and, thus, cannot base a cause of action on matters which do not concern it. Further, the guarantees are unconditional promises to pay without reference to any other party or documents on the authority of the National Housing Commission v Queensland Insurance and Wood Hall Limited's case. These guarantees given by the Bank to the Public Officers Superannuation Board cannot be impugned on the facts before the Court, if I follow these decisions.

Mr Coady later agreed with the second defendant's proposition that the guarantees were unconditional, but he argued that the Bank could only pay the Public Officers Superannuation Board and not the substitute board. Mr Coady, thus, argued there was no owner who can now demand payment. The plaintiff said that it is not suing on these guarantees of 7 November 1990 but, rather, it has standing to sue because of its relationship with the Bank. The plaintiff is attempting to restrain the Bank from creating a situation where the plaintiff company is forced to pay in circumstances where it would otherwise not be required to pay. Presumably, if the Bank pays out under the guarantees of 7 November 1990, it will then seek to be recouped for its losses. Mr Coady said because the Bank cannot pay to the second named defendant, it having been abolished by statute and there being no legally substituted body or authority with a subsisting entitlement to the rights of the Public Officers Superannuation Board to the benefit of the guarantees of 7 November 1990, were these interlocutory orders not continued in force and if payment is made by the Bank, such payment would be made illegally or by a mistake of fact. The plaintiff consequently, on the evidence, claims a right to come to seek redress even though, as Mr Coady said, the plaintiff is half a step in front by asking the Court to prevent the earlier guarantees being cashed since they threatened the proprietary right of Fortunaso.

FINDINGS AND REASONS

I do not understand the proprietary rights, but I can see the plaintiffs commercial interest threatened irrespective of any threat to cash the later guarantees. Those later guarantees, as I say, are also unconditional bonds to pay money on demand to the second defendant in a maximum amount.

What then are these proprietary rights? Mr Coady said the Bank should not charge the plaintiff with money the bank does not have to pay out under the 2 guarantees. But the plaintiffs deed of guarantee of 6 April 1990 is not one collateral to those 2 guarantees given the second defendant on 7 November 1990. Nor is the plaintiff, on the evidence, a party to those guarantees in any event. Mr McKeown said that he knew of no other supporting documents in existence (apart from the contractor's mortgages) nor security linking letter in existence. The 2 guarantees given the Bank to second defendant, then, stand alone. So what are these proprietary rights? Mr Coady conceded also that the plaintiff is not grounding its cause of action on the 2 guarantees. It does not plead its own guarantee in some way, as the basis for its claim to declarations affecting these other 2 guarantees. Nor does the plaintiff have, on the evidence, any contractual arrangements with either the second and third defendant. So no proprietary rights can arise there. Mr Coady has not shown me any proprietary rights, as he puts it, which can in any way be categorised as a legal claim which requires protection by declaration or injunction.

In Re I G Farbenindustrie A G Agreement [1944] 1 Ch 41, the Court was asked to consider, on appeal, an order for joinder of parties in originating summons proceedings where a commercial, but no legal, interest had been shown. The facts gave rise to a conclusion by the Master of the Rolls, Lord Green, at p 42: "It is argued by Mr Valentine Holmes that in view of the language of the Patents, &c. (Emergency Act) 1939, Boots [the successful applicant in the Court of first instance and respondent on appeal] have a legal interest in the subject-matter of the summons to which they seek to be added as a party. He confessed himself, however, unable to find any words which could appropriately describe the nature of that legal interest and I share his difficulty".

The plaintiff, here, claims such a right or legal interest, but any interest only extends to an inquisitorial enquiry of the Bank as to its intended attitude towards these 2 guarantees given the second defendant. It wishes to intermeddle, for it is concerned that payments made pursuant to these guarantees may be unlawful or made by mistake. If such payments are made, then the plaintiff further says it may be adversely affected to the extent of the unlawful or mistaken payment, therefore the Court should intervene. Now there may be a commercial interest, but I can find no legal one. The Master of the Rolls stated that "the Court has no jurisdiction to add as a party to proceedings a person who has only a commercial interest to those proceedings, even though his interest may be affected by the result of proceedings".

Here, it is the plaintiff who has instituted the proceedings, with only a commercial interest at best. Quite frankly, I cannot see any jurisdiction in the Court to entertain the plaintiffs claim. There is no dispute between the plaintiff and the second and third defendants. The defendant Bank has chosen not to argue at all. The plaintiffs argument really relates to anticipatory breaches of an obligation the Bank owes the second defendant.

The National Court's power to make declaratory orders derives from the Constitution s 155(4). The National Court Rules relating to practice and procedure in these matters were stated in O 4 r 11 of the Rules of the Supreme Court (Queensland, Adopted) as follows:

"An action or proceeding shall not be open to objection on the ground that a merely declaratory judgment or order is sought thereby; and the Court may make binding declarations of right in an action or other proceeding properly brought, whether any consequential relief is or could be claimed therein or not."

My erstwhile brother Bredmeyer J in Dent v Kavali [1981] PNGLR 488 canvassed this Court's power to entertain declaratory orders, but there must be jurisdiction in the Court to entertain the action. Can the plaintiff satisfy me there is a dispute between these named parties, especially where the first defendant here, the Bank, has no interest in arguing the matter? So I look carefully at the material before me to elicit a dispute between the plaintiff and these defendants, otherwise I am of the view that the Court has no jurisdiction to entertain the action.

The plaintiffs interest at the very most is commercial, no legal rights having been demonstrated. Consequently, there is no jurisdiction in the Court to entertain declaratory relief.

Again, this anticipatory problem foreseen by the plaintiff is not such that the Court should exercise a discretion. There is no need for me to look to the facts beyond those which may afford the plaintiff support for his legal right or proprietary interest to claim. I adopt Mr Payne's argument on the point, as I have already explained. The Court has no jurisdiction (see Rediffusion (Hong Kong) Ltd v Attorney-General [1970] UKPC 12; [1970] AC 1136). In my opinion, on the facts, I would not exercise any discretion to entertain the action.

Enquiring further into the facts gives rise, in my view, to the exercise of a discretion and, consequently, recognises jurisdiction. I only deal with the facts for the express purpose of assisting another Court if I am shown to be wrong on the jurisdiction point.

In exercise of my powers under O 12 r 40, I strike out the plaintiffs originating summons and discharge the interlocutory orders of 18 December 1991. The second and third defendants shall have their costs of the motion. I abridge time.

________________

Lawyer for plaintiff: C Coady & Associates.
Lawyer for applicant/second and third defendants: B D Waldron.
Lawyer for first defendant: No appearance.