Nagari v Rural Development Bank [2007] PGNC 142; N3295 (16 April 2007)

N3295

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 1030 OF 2004

BETWEEN:

ANDREW NAGARI
Plaintiff / Cross-Defendant

AND:

RURAL DEVELOPMENT BANK
Defendant / Cross-Claimant

Waigani: Gavara-Nanu, J
2007: 11 & 16 April

PRACTICE AND PROCEDURE – District Court Complaint duplicating claims in a National Court proceeding – Whether District Court proceedings are bona fide – Abuse of process.

PRACTICE AND PROCEDURE – National Court – Inherent jurisdiction to summarily determine - Abuse of judicial process generally.

PRACTICE AND PROCEDURE – District Courts Act Chapter No. 40, s. 24 (1) & (2) – Transfer of proceedings to the National Court - Circumstances in which such transfer may amount to an abuse of process.

Case cited:

Karl Paul v. Aruai Kispe, N2085
PNG Forest Limited v. The State [1992] PNGLR 85

Counsel:

R. Sak for the plaintiff
R. Bradshaw for the defendant

1 Gavara-Nanu J: There are two motions before me. One is by the defendant, filed on 24 January, 2007 and the other by the plaintiff, filed on 27 March, 2007.

2. The defendant’s motion seeks orders that permanent ex-parte restraining orders obtained by the plaintiff in respect of Complaint No. 3355 of 2004, filed at the Port Moresby District Court on 11 August, 2004 (‘the Complaint’) be dismissed for abuse of process. Alternatively, the Complaint be dismissed for want of prosecution and the ex-parte orders obtained by the plaintiff at the Port Moresby District Court on 11 August, 2004, pursuant to the Complaint be set aside with costs.

3. The plaintiff’s motion on the other hand seeks orders that the Complaint be brought up to the National Court and be extended and the ex-parte orders made by the National Court in respect of these proceedings on 15 November, 2006, for time to be extended for the defendant to file its cross-claim be set aside and the defendant’s cross-claim filed on 16 November, 2006 be either dismissed or struck out for being frivolous, vexatious and having no reasonable cause of action and abuse of process. The plaintiff also seeks orders that the defendant take appropriate actions to obtain a trial date and expedite the hearing of this action.

Background

4 To put the two motions in perspective, it is appropriate that I discuss the background of the two motions. The background facts to the two motions are sufficiently set out in the plaintiff’s affidavit sworn on 27 March 2007. The facts reveal that the plaintiff was formerly employed by the defendant as its Managing Director, but was terminated before serving out his full term. The termination took effect on 3 June, 2004 and on 5 August, 2004. The plaintiff commenced these proceedings claiming damages in excess of K100, 000.00 for breach of contract.

5 While being employed by the defendant, the plaintiff purchased a motor vehicle, a Toyota Land-Cruiser (‘the vehicle’), through the defendant’s staff loan scheme. The plaintiff was still paying off the loan through fortnightly deductions from his pay when he was terminated. Thus, at the time of his termination, the loan was still outstanding. After his termination, the plaintiff was told by the new Managing Director in a letter dated 6 August, 2004, to return the vehicle. He was told that he still owed K5, 313.00 to the defendant from his loan thus the defendant had the right to repossess the vehicle under the terms of the bill of sale. He was warned in the letter that if the vehicle was not returned by 11 August, 2004, the police would impound it.

6 On 11 August, 2004, the plaintiff filed the Complaint for damages and obtained permanent ex-parte restraining orders restraining the defendant, its servants and agents, including police from impounding the vehicle.

7 It is noted that the claims pleaded by the plaintiff in the Complaint are exactly the same as the claims pleaded in the Statement of Claim in these proceedings except for the relief sought; in that, in the Complaint the plaintiff sought general damages and a permanent restraining orders whereas in these proceedings the plaintiff seeks damages in excess of K100, 000.00.

8 On 11 August, 2004, apart from obtaining the permanent ex-parte orders to restrain the defendant, its servants and argents from impounding the vehicle, the plaintiff also obtained orders for the Complaint to be transferred to the National Court to be listed together with these proceedings for hearing.

9 On 22 September, 2005, Allens Arthur Robinson Lawyers who initially acted for the defendant sought orders at the Port Moresby District Court to set aside the permanent ex-parte restraining orders obtained by the plaintiff on 11 August, 2004. The application was refused on the basis that the matter had already been transferred to the National Court.

Submissions

10 Mr Sak argued that the permanent ex-parte restraining orders granted by the Port Moresby District Court on 11 August, 2004 are valid because the defendant has not appealed them. It was argued that the orders should therefore be allowed to remain and the defendant should now take appropriate actions to expedite the hearing of these proceedings.

11 Mr Bradshaw on the other hand argued that the Complaint is a duplication of these proceedings and is an abuse of process and should be dismissed. Mr. Bradshaw argued quite forcefully that litigants should not get away with this type of practice, because if such practice is allowed, it will open flood gates for litigants to run to the District Court for orders over matters which are subject of proceedings in the National Court. He argued that the National Court has a duty to prevent its processes from being abused. He said the plaintiff should have obtained the restraining orders from the National Court and not from the District Court.

12 Mr. Sak told the Court that the plaintiff obtained the ex-parte permanent restraining orders from the District Court because he tried to secure a Judge to hear the plaintiff’s urgent application but could not find a Judge as all the Judges were busy. He therefore submitted that orders are valid. He further submitted that ex-parte National Court Orders obtained on 15 November, 2006, extending time for the defendant to file its cross-claim should be dismissed.

Reasons for decision

13 The case in my opinion turns on the central issue of whether the District Court proceedings, including the permanent ex-parte restraining orders obtained pursuant to the Complaint are an abuse of process.

14 It is not disputed that the Complaint is a duplication of the Statement of Claim in these proceedings. That being the case, the Complaint and the permanent ex-parte restraining orders obtained pursuant to that Complaints are clearly an abuse of process. The Court’s power to dismiss proceedings generally for abuse of process derives from Order 12 r 40 (c) of the National Court Rules. The Court also has the inherent jurisdiction to dismiss proceedings summarily where there is abuse of its process, as in this case. See, Karl Paul v. Aruai Kispe (2001) N2085 and PNG Forest Limited v. The State [1992] PNGLR 85.

15 The power of the District Court to transfer proceedings to the National Court is found in s. 24 of the District Court Act Chapter No. 40, and the Complaint in this case was transferred to the National Court pursuant to s. 24 (1). It is to be noted that this section speaks of the proceedings that have been commenced in the District Court. Although the section speaks of "a court", when the section is read as a whole, it becomes clear that "court" there, refers to the District Court.

16 Section 24 (2) provides that the National Court may at any time before verdict or judgment, that is, verdict or judgment of a District Court, with or without an application being made by an interested person, make an order staying proceedings before the District Court or an order that proceedings be taken before the National Court, if proceedings are such that they should have been instituted before the National Court in the first place. Thus, it is clear that application by the plaintiff asking this Court to take up the District Court Complaint is made pursuant to this section.

17 Section 24 (1) of the District Court Act also provides that when a District Court makes an order staying proceedings or transferring proceedings to the National Court, reasons for such orders "shall" be recorded. The plaintiff has not produced any record of the reasons for the orders given by the District Court on 11 August, 2004, for the Complaint to be transferred to the National Court.

18 It is also noted that s. 25 of the District Court Act, provides for a party not appearing at the time an ex-parte order was given, to apply for such ex-parte order to be set aside. This was the provision Allens Arthur Robinson Lawyers tried to invoke when they applied to have the permanent restraining orders obtained by the plaintiff at the Port Moresby District Court set aside.

19 The Court also has the inherent jurisdiction to dismiss proceedings summarily for abuse of its process. Thus the Complaint having been found to be an abuse of the process of the Court, the Court also has the power to summarily dismiss the plaintiff’s application together with the Complaint and all the orders obtained at the District Court by the plaintiff pursuant to the Complaint. The Court’s power in this regards is wide. The phrase "abuse of process" connotes that the process of the Court must be used properly and bona fide and are not to be abused. Thus, where the Court’s machinery is improperly and incorrectly used, the Court has the duty to prevent such abuse of its process. See The State v. Peter Painke [1976] PNGLR 210 and The State v. Peter Painke (No. 2) [1977] PNGLR 141.

20 The exercise of the Court’s inherent powers to prevent abuse of process is not limited to the abuse of its own process, it extends to cover abuse of judicial process generally. This power derives from the fundamental principle that this Court being a superior Court has the power to supervise proceedings in the lower courts.

21 Having regard to these principles, it is clear that the Complaint in the first place was not filed in good faith, and was not bona fide, as it relates directly to an action already commenced in this Court. It is an action that should have been taken in the National Court from the beginning. For the plaintiff to go to the District Court and lay a Complaint there in order to obtain permanent ex-parte restraining orders against the defendant in these proceedings was a clear abuse of the process of the Court and judicial process generally.

22 It is obvious from the evidence that, had the application for restraining orders been made inter-partes, either at the District Court or the National Court, it is unlikely that the plaintiff’s application would have succeeded because the vehicle was still subject to a loan agreement between the plaintiff and the defendant and the ownership of the vehicle was still under the defendant’s name. This is confirmed by the vehicle’s certificate of road worthiness and the certificate of registration, which are in evidence. Thus, the contention by the plaintiff that he was or is the owner of the vehicle has no legal basis. There are correspondences between the plaintiff and the defendant purporting to say that the plaintiff owned the vehicle but that has no legal basis. Such correspondences are incapable of conferring legal ownership of the vehicle on the plaintiff. What is of significance is that the defendant is still the registered owner of the vehicle as the ownership of the vehicle has never been transferred to the plaintiff.

23 It is clear that the purpose of the Complaint was to prevent the defendant from repossessing the vehicle, thus the Complaint was an improper use of the judicial process. For that reason, the restraining orders obtained at the Port Moresby District Court on 11 August, 2004, pursuant to the Complaint are also an abuse of process.

24 The application by the plaintiff to take up the Complaint to the National Court is clearly misconceived and is an abuse of process of the Court. The Complaint was transferred to this Court by the Port Moresby District Court on 11 August, 2004, following an application being made by the plaintiff. Therefore I cannot transfer the proceedings that have already been transferred to this Court. I also find that there is no legal basis for me to set aside the ex-parte National Court orders made on 15 November, 2006, which granted extension of time for the defendant to file its cross-claim. The plaintiff has also failed to make out the grounds for the defendant’s cross-claim to be dismissed for want of prosecution. Furthermore, I do not find the defendant’s cross-claim frivolous and vexatious and having no reasonable cause of action.

25 The Complaint was filed purposely at the Port Moresby District Court to avoid the application for restraining orders being filed and litigated in the National Court. That is also a clear abuse of judicial process.

26 The end result is that the Complaint and the permanent ex-parte restraining orders obtained by the plaintiff pursuant to the Complaint are void of having any legal effect.

27 It follows that the plaintiff’s application has no legal basis and it is dismissed with costs.

______________________________________

Korowi Lawyers: Lawyers for the Plaintiff
Bradshaw Lawyers: Lawyers for the Respondent