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National Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
OS NO. 46 OF 2014
BETWEEN:
DALMINE ENTERPRISES LIMITED
Plaintiff/Respondent
AND:
FINANCE CORPORATION LIMITED
Defendant/Applicant
Kokopo: Oli, AJ
2014: March 3rd & April 8th.
CIVIL PRACTICE & PROCEDURES – CIVIL JURISDICTION -Application by defendant/applicant to dismiss the proceedings as plaintiff/respondent has no cause of action at law – Or in the alternative the proceedings be dismiss as the action is frivolous or vexatious and abuse of process – Considered plaintiff/respondent has commercial loan agreement with the defendant/applicant does give rise to legal cause of action - Hence action is not frivolous or vexatious and nor its abuse of process.
CIVIL PRACTICE & PROCEDURES – CIVIL JURISDICTION -Application by defendant/applicant, in the alternative seeking to transfer this proceeding to Waigani to be consolidated with related proceedings like WS (Comm.) No 16 of 2014 –Applicant Show Urgent and Extra-ordinary reasons warranting a transfer to Waigani – Court grant the application and cost be in the cause.
Cases Cited:
Yayabu – v – Lawyers Statutory Committee [2005] PGNC 51; N2906 (4th August 2005) - applied.
Bruno Saiho – v – Anna Solomon- Secretary Dept. of Community Development and two Others (WS No. 494 of 2013 NCPNG) (26th November 2013) Unpublished - distinguished
Counsel
Mr Robert Asa, for the Plaintiff/Respondent
Mr Daniel Bidar, for the Defendant/Applicant
RULING
8th April, 2014
4.1 Hyundai Excavator Tractor (BCZ 527);
4.2 Hyundai Excavator Tractor (LBH 046);
4.3 Hyundai Excavator Loader Tractor (LAR 915);
4.4 John Deere Backhoe Tractor (LAX 091);
4.5 Komatsu Motor Grader Tractor (LBH 373);
4.6 Komatsu Bulldozer Tractor (LBI 905);
4.7 Komatsu Bulldozer Tractor (LBH 372);
4.8 Toyota Land Cruiser (RAM 536);
4.9 Toyota Land Cruiser (RAM 252);
4.10 Toyota Land Cruiser (RAL 788);
4.11 Toyota Hilux (RAI 551)
4.12 Toyota Hilux (RAM 374)
4.13 Toyota Hilux (RAL 053)
4.14 Nissan Dump Truck (RAM 753)
4.15 Caterpillar Hydraulic Excavator (BDF 003)
4.16 Caterpillar Hydraulic Excavator (BDF 004)
4. Be surrendered by plaintiff/respondent in a whole and operable state without removal of any parts, including the keys and batteries, to a secure storage facility (or police station) until these proceedings or the related proceedings in WS (Comm.) No. 16 of 2014are heard and determined, or until further order of the Court.
5. For the purpose of compliance with Order 4 above:
5.1 All Machines and Vehicles situated in East New Britain Province shall be immediately surrendered by the plaintiff/respondent to Poroman Security Services in Seaview, Kokopo in East New Britain Province;
5.2 All Machines and Vehicles situated in East New Britain Province shall be immediately surrendered by the plaintiff/respondent to the local police station or another independent secure storage facility; and
5.3 The plaintiff/respondent shall notify the National Court at Waigani in the related proceedings in WS (Comm.) No. 16 of 2014 of the location of each surrendered Machine or Vehicle.
6. Pursuant to Order 12 Rule 1 of the National Court Rules, the defendant/applicant is at liberty to proceed to sale of the John Deere Backhoe Tractor (LAX 091) and Toyota Land Cruiser (RAM 252) and apply the proceeds towards reduction of the plaintiff/respondent's loan, as the title to this Machines and Vehicles has already passed to a third party on 7th February 2014.
7. The defendant/applicants costs of and incidental to this Application be paid by the plaintiff/respondent's on a lawyer/client or indemnity basis.
8. Time for entry of these orders be abridged to the time of settlement by the Registrar which shall take place forthwith.
9. Such further Orders as this Honourable Court deems fit.
4. The defendant/respondents motion is supported by an affidavit of Mr Andrew Field the Head of Credit of Finance Corporation Limited ("Fincorp") who is the custodian of information and records Finance Corporation Limited keeps and he has personal knowledge of the facts surrounding this matter, the subject of this proceedings. The second supplementary affidavit by Mr Michael Goodwin, who provided the supporting evidence of plaintiff/respondents Contract status on Road Works Contracts with New Ireland Works Department towards the end of year 2013. However, the plaintiff/respondents in support of their previous motion were supported by an affidavit from Mr Herman Toisiat, a Director of the plaintiff/respondent company where interim Restraining orders were issued of which the subject of the defendant/applicants motion is on foot now.
FACTS
5. The brief facts surrounding the circumstances of this case is that the plaintiff/respondent took out a normal commercial business loan with the defendant/applicant in July 2011 and also in March 2013, the plaintiff/respondent entered into a total of nine Loan Agreement with the defendant/applicant pursuant to which the defendant/applicant advanced loan funds in the sum of K3,375,241.95 (principal only) to the plaintiff/respondent, by purchasing and leasing, mortgaging or entering into securities for sixteen Machines and vehicles ("the Vehicles") to the plaintiff/respondent. The Loan Agreement is comprised of the following written documents:
(i) Master lease Agreement;
(ii) Chattel Mortgages;
(iii) Bills of Sale;
(iv) Registered Fixed and Floating Charge;
(v) Terms Sheets;
(vi) Deed of Guarantee and Indemnity.
6. The defendant/applicant files this motion to have this proceeding transfer to Waigani, if other alternative reliefs of dismissal and set aside are not granted by the Court.
LAW
7. The defendant/applicant files the motion and work on a three prone strategic legal procedural move to terminate the case from proceeding any further, or in the alternative to have the Orders issued on 10th January 2014 be set aside or varied, and or have this proceedings transfered to Waigani. The first move is under Order 12 Rule 40 (1) of the National Court Rules and seek remedies under this rule where O12 r 40 (1) reads:
40. Frivolity, etc. (13/5)
(1) 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) nsonable cause of actioaction is disclosed; or
(b) the proceedings are frivolous or vexatious; or
(c) the proceedings n abuseabuse of the processhe Court,(underline is nine nine)
the Court may order that the proceedings be stayed or dismissed generally or in ron to any claim for relief in the proceedings.
(2) The Court may receiveence once on the hearing of an application for an order under Sub-rule (1).
8. The defendant/applicant also seeks in this motion as the second fack position to have the Orders of 10th February 2014 be sebe set aside or varied under Order 12 Rule 8 of the National Court Rules which reads:
Order 12 Rules 8. Setting aside or varying judgement or order. (40/9)
(1) The Court may, on terms, set aside or vary a direction for entry of judgement where notice of motion for the setting aside or variation is filed before entry of the judgement.
(2) ....
(3) The Court may, on terms, set aside or vary an order:—
(a) where the order has made iade in the absence of a party, whether or not the absent party is in default of giving a notice of intention to defend or otherwise in default, and whethenot the absent party had notice of motion for the order; orr; or
(b) where notice of motion for the setting aside or variation is filed before entry of the order. (underline is mine)
(4) ....
(5) ....
9. In view of the interim relief sought under fall-back position number two, if in the event that the Court grant the relief sought under Order 12 Rule 8 of the National Court Rules the Court is empowered under Order 12 Rule 1 of the National Court Rules to set aside or vary the Order as the case may be under the direction of the Court pursuant to Order 12 Rule 1of the National Court Rules and it reads:
Order 12 Division 1.—General.
1. General relief. (40/1)
The Court may, at any stage of any proceedings, on the application of any party, direct the entry of such judgement or make such order as the nature of the case requires, notwithstanding that the applicant does not make a claim for relief extending to that judgement or order in any originating process.
10. The defendant/applicant also mount the third and final fall-back position to have this proceedings transferred to Waigani to be consolidated with the similar proceedings as between the same parties WS (Comm.) No 16 of 2014 under Order 10 Rule 2 and Order 12 Rule 1National Court Rules. The Order 12 Rule 1 is reflected above, however, Order 10 Rule 2 of the National Court Rules reads:
2. Place and mode of trial. (33/2 and 3)
(1) Subject to Sub-rule (2) the trial of proceedings shall take place at such place within Papua New Guinea as is stated in the notice filed pursuant to Rule 4.
(2) Notwithstanding the provisions of Sub-rule (1) the Court may, on the application of a party or of its own motion, appoint some other place within Papua New Guinea for the trial of any proceeding.
(3) Unless the Court otherwise orders the trial shall be by a single Judge.
ISSUE(S)
11. It appears from the outset in this matter that there are two issues:
(i) The first issue is whether the plaintiff/respondent has a legal cause of action against the defendant/applicant.
(ii) The second issue is whether the defendant/applicant application to transfer this matter to Waigani to be consolidated with WS (Comm.) 16 of 2014 has any merit or is justifiable in the circumstances of this matter.
APPLICATION OF FACTS TO THE LAW
12. I now deal with these two issues separately now:
(1) The first issue is whether the plaintiff/respondent has a legal cause of action against the defendant/applicant.
13. The defendant/applicant seek remedies pursuant to Order 12 Rule 40 (1) of the National Court Rules that empowers this Court to dismiss proceedings which discloses no reasonable cause of action, for being frivolous and vexatious and for being an abuse of the Court process. The Counsel Mr Bidar refer me to the case of Ronny Wabia – v – BP Exploration Operating Co. Ltd and The State [1998] PNGLR 8, His Honour Sevua J held that:
"Pursuant to Order 12 Rule 40 of the National Court Rules and Court's own inherent powers, the Court has duty to protect its own processes by ensuring vexatious litigants do not abuse the Court's processes by instituting frivolous or vexatious suits. If proceedings are considered an abuse of the Court's process, the Court has a duty to protect its dignity and integrity and can use its inherent powers to dismiss such frivolity, vexatious or abuse."
The Court went on to say:
"Frivolity" by its ordinary meaning means "not worth serious attention or manifestly futile". Proceedings which disclose no reasonable cause of action as well as proceedings which are otherwise unstainable are frivolous in this sense.
"Vexatious" by its ordinary meaning means "causing vexatious or harassment." It is used to describe harassment of a defendant being put through the trouble and expense of defending proceedings which are either a mere sham, or which cannot possibly succeed".
14. Whilst Defendant/Applicant has painted the Plaintiff/Respondent's image as a bad debtor who has defaulted in its loan repayment obligation in every sense of the word.
15. However, it is my humble view, that this is not about a party who does not have an equitable nor legal interest over the properties which are subject of repossession whilst substantive recovery proceedings are still on foot instituted by Plaintiff/Applicants. The Plaintiff/Applicant have filed their intention to defend the action and filed their defence in due cause. It is therefore proper and fair that since the Defendant/Applicants have filed substantive recovery action, it would be fair for the parties to allow the due process through the Court to determine the outcome before any repossession exercise is carried out by the Defendant/Applicants.
16. I therefore do have the contrary view to this legal proposition by the Defendant/Applicant's Counsel Mr Bidar that the Plaintiff/Applicant, when they took out the interim Restraining Order against the Defendant/Applicant, they were in fact doing it in good faith, hence their cause of action does not amount to frivolity, is vexatious or an abuse of due process. Whilst the Plaintiff/Respondents may have defaulted in their loan repayment, they however, still have the capacity and ability to recoup moneys owing to them from their previous contract work done, and they appear to have very good and promising prospects of entering into new road contracts with New Ireland Works Department and Lihir Mining according to the Director Mr Herman Toisiat of Plaintiff/Respondent Company.
17. There is no dispute that parties enter into legal contractual commercial agreement to make business in New Ireland Province - Kavieng. The plaintiff/respondent seek financial assistance from the defendant/applicant's Financial Corporation Ltd in July 2011 and also in March 2013, and in particular the plaintiff/respondent entered into a total of nine Loan Agreements with the defendant/applicant pursuant to which the defendant/applicant advanced loan funds in the sum of K3,375,241.95 (principal only) to the plaintiff/respondent, by purchasing and leasing, mortgaging or entering into securities over fleet of sixteen heavy duty machines ("the Machines") and support vehicles ("the Vehicles") to the plaintiff/respondent. The Loan Agreement comprised of the following written accountable related loan documents namely:
(i) Master lease Agreement;
(ii) Chattel Mortgages;
(iii) Bills of Sale;
(iv) Registered Fixed and Floating Charge;
(v) Terms Sheets;
(vi) Deed of Guarantee and Indemnity.
18. Under this commercial business relationship's the plaintiff/respondent do have a legal cause of action at law to protect and defend its legal interest in the above six legal contractual transactions with the defendant/applicant in this case. Hence, the plaintiff/respondent felt that the defendant/applicant has not been fair to them when they commenced and instituted the legal recovery action under WS (Comm.) 16 of 2014 and the plaintiff/respondents have filed their intention to defend the action; the defendant/applicant at the same time went into physical recovery mode on repossessing properties under mortgage over sixteen Machines and vehicles as collateral securities to the loan obtain by the plaintiff/respondent. This is quite apart from other recovery options available under other five legal written documents on recovery avenues available to the defendant/applicant at its disposal. I am therefore satisfied and of the view that the plaintiff/respondent's action to seek interim restraining order against the defendant/applicant is not frivolous or vexatious nor is it abuse of process.
(1) The second issue is whether the defendant/applicant application to transfer this matter to Waigani to be consolidated with WS (Comm.) 16 of 2014 has any merit or justifiable in the circumstances of this matter.
19. The brief history of the defendant/applicant's proceedings on recovery action against the Plaintiff/Applicant was commenced in the matter WS (Comm.) 16 of 2014 which was instituted at Waigani Commercial track on 7th January 2014. The defendants/applicant when instituting the above recovery action at the same time exercised its legal right under Chattel Mortgages over fleet Machines and Vehicles held as collateral securities over loan agreement, in the event of default on regular loan repayment, and impounded two properties, a machine and vehicle from the plaintiff/respondents custody. This action triggered the proceedings instituted by the plaintiff/respondent here at Kokopo to restrain the defendant/applicant from taking the remaining fourteen Machines and Vehicles from the plaintiff/respondents custody until the matter is finally determine by the Court.
20. The defendant/applicant when served with the interim Restraining Order by the plaintiff/respondent did file a Motion to seek leave of the Court in Waigani to have this proceeding from Kokopo transferred to Waigani but the application was refused and the defendant/applicants were directed by the Court that such application should be filed before National Court in Kokopo, hence this application.
21. The defendant/applicant files this motion to have this proceeding transferred to Waigani, if the main alternative relief of dismissal of this proceeding is not successful apart from the setting aside or stay relief sought.
22. The present application by the defendant/applicant can be treated, in effect, as an application to transfer the place of trial of the substantive matter from Kokopo to Waigani. This is covered under Order 10 rule 2 (place and mode of trial) and Order 10 rule 11 (Time and place of trial). These rules provide that upon application by a party or the Court of its own motion, may "appoint other places within Papua New Guinea for the trial of any proceedings" or "the Court may make such order as it think fit for fixing the time and place of trial."
23. The transfer of proceedings to a different provincial location is now governed and regulated by the latest issue on Practice Direction No. 1 of 1992 issued on 21st January 1992. This Practice Direction modifies Practice Direction Gen No. 7 of 1991. These Practice Direction is now published in the Book entitled Practice Direction & Notes (issued by Registrar between 1983 – 2004) NJSS Publication, 31st December 2004. What Practice Direction No. 1 of 1992 says in no uncertain terms that "No Matter will be transferred to another National Court location except upon Court Order."
24. In the case of Yayabu – v – Lawyers Statutory Committee [2005] PGNC 51; N2906 (4th August 2005) by (Injia DCJ as he then was). His Honour held:
"that an application is made by notice of motion must be supported by affidavit showing "urgent and extra ordinary reasons warranting a transfer". His Honour in exercising his discretionary power confirm that the applicant did established and pass the test that there was indeed an "urgent and extra ordinary reasons warranting a transfer" in her case and did grant the motion in favour of the applicant."
25. The brief history in the above case of Yayabu – v – Lawyers Statutory Committee [2005] PGNC 51; N2906 (4th August 2005) is that the applicant files a motion to transfer her case from Waigani National Court to Lae National Court where she is based after her legal counsel cease to act on her behalf at Waigani National Court. She was a sole private legal practioner in Lae and she found it not only very expensive to travel to Port Moresby and return for her case in Waigani National Court but her private law practice based in Lae was badly affected due to her continuous travel to Port Moresby to prosecute her appeal at Waigani National Court.
26. The above authority was referred to in this case of mine in the matter of Bruno Saiho – v – Anna Solomon - Secretary Dept of Community Development and 2 Ors (WS No. 494 of 2013 NCPNG) Unpublished – "where I held and distinguished this case with Yayabu case and rule that applicant could not establish and pass the test that it did constitute an urgent and extra ordinary reason warranting transfer from Kokopo to Waigani". However, in this case on foot, I do find that the defendant/applicant establishes and passes the test that it does have an urgent and extra ordinary event warranting transfer of this proceeding from Kokopo to Waigani.
27. The defendant/applicant's special circumstances in this case did demonstrate that the defendant/applicant does have a substantiative action on foot that relate to this matter. Therefore that in itself is a special circumstance that constitutes an urgent and extra ordinary reason warranting a transfer of this proceeding to Waigani to have both matters with related proceedings be consolidated with WS (Comm.) No. 16 of 2014 in the Commercial track that will deal with the matter as one stop shop in the same proceedings.
28. The obvious unavoidable cost impact consideration is huge on the part of the plaintiff/respondent; however, it is unavoidable as all the Commercial Loan Agreement between the plaintiff/respondent and the defendant/applicant were all done and concluded in Port Moresby. The defendant/applicants recovery action was instituted first on 7th January 2014, much earlier than this action here at Kokopo, hence it is proper and logical that the application under Order 10 Rule 2 (2) of the National Court Rules be granted so the parties in this proceedings and other related proceedings can be dealt with and determine their finality at the same time.
CONCLUSION
29. Since the defendant/applicant has filed substantive recovery action in Waigani Commercial Civil Track Court, it is only proper that these related cases that deal with the same Machines and Vehicles as part of the defendant/applicant's collateral loan securities in the substantive matter in WS (Comm.) No. 16 of 2014 can be further progressed and dealt with at the same time in consolidating this proceeding OS No. 46 of 2014 with WS (Comm.) No. 16 of 2014 in Waigani and can be dealt with there and then. Hence, the Court makes the following rulings that:
(i) The Defendant/Applicant's application pursuant to Order 12 Rule 40 (1) of the National Court Rules, to dismiss the proceedings for disclosing no reasonable cause of action, for being frivolous and vexatious, and/or for being an abuse of process is refused.
(ii) The Defendant/Applicant's application in addition and in the alternative, pursuant to Order 12 Rule 8 (3) (a) and Order 12 Rule 1 of the National Court Rules, the Orders of 10th February 2014 in these proceedings be set aside is refused.
(iii) The Defendant/Applicant did impound two properties, namely; a Machine John Deere Backhoe Tractor (LAX 091) and a Vehicle, Toyota Land Cruiser (RAM 252) were disposed to a third party to recover funds to pay and reduce Plaintiff/Respondents outstanding loan, well before the Restraining Orders of 10th February 2014 was served on the Defendant/Applicant issue by this Court. These two properties are excluded now from the current Restraining Order of 10th February 2014 respectively.
(iv) The Defendant/Applicant's application alternatively, pursuant to Order 10 Rule 2 and Order 12 Rule 1 of the National Court Rules, these proceedings be transferred to Waigani and be heard together with the related proceedings WS (Comm.) No. 16 of 2014, Finance Corporation Limited – v – Dalmine Enterprises Limited, Herman Toisiat and Joseph Baras (WS (Comm.) No. 16 of 2014 is granted.
(v) The Plaintiff/Respondent obtained Restraining Order on 10th February 2014 against the Defendant/Applicant is extended and subject to review on the return date of this proceeding before the Waigani Commercial Civil Court track on 25th April 2014 at 9.30am for listing.
(vi) The Court Orders accordingly.
ORDER
30. The Court accordingly makes the following Orders that:
(1) This proceeding OS No. 46 of 2014 Between: Dalmine Limited (Plaintiff/Respondent) – v – Financial Corporation Limited (Defendant/Applicant) be transfer to Waigani National Court – Commercial Civil Track for listing on 25th April 2014 at 9.30am.
(2) The Plaintiff/Respondent's Restraining Order obtained on 10th February 2014 against the Defendant/Applicant is extended subject to review before the Waigani Commercial Civil Court track on 25th April 2014 at 9.30am for listing.
(3) The Plaintiff/Respondent's Restraining Order obtained on 10th February 2014 against the Defendant/Applicant from here on excluded the two properties namely; a Machine John Deere Backhoe Tractor (LAX 091) and a Vehicle, Toyota Land Cruiser (RAM 252) were disposed to a third party by the Defendant/Applicant before Plaintiff/Respondent obtained Restraining Orders against the Defendant/Applicant on 10th February 2014.
(4) Time for entry of these orders be abridged to the time of settlement by the Registrar which shall take place forthwith.
(5) The Cost be in the cause.
_______________________________________________________________
Warner Shand Lawyers: Lawyer for the Plaintiff
O'Briens Lawyers: Lawyer for the Defendant
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URL: http://www.paclii.org/pg/cases/PGNC/2014/82.html