N6010

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 1256 OF 2012

BETWEEN:

ESSO HIGHLANDS LIMITED
Plaintiff

AND:

QUINTEN WILLIE
First Defendant

AND:

SINGHE INDUSTRIES LIMITED
Second Defendant

AND:

SATHYAGITH HEWA MUNASINGHE
Third Defendant

Waigani: Hartshorn J.
2014: 9th, 11th August
2015: 23rd April

Applications pursuant to s. 155 (4) Constitution, Order 8 Rule 
27(1)(b) and (c), and Order 14 Rule 2 National Court Rules

Cases cited:

Vari Gari v. Motor Vehicle Insurance Ltd (2005) Unreported and Unnumbered
White Corner Investments Ltd v. Haro (2006) N3089
Kerry Lero trading as Hulu Haro Investments Ltd v. Philip Stagg (2006) N3050
Philip Takori v. Simon Yagari (2008) SC905 
National Council of Young Men's Christian Association of Papua New 
Guinea (Inc) v. Firms Services Ltd (2010) N4569 
Louis Medaing v. Ramu Nico Management (MCC) Ltd (2011) SC1144
Kuman v. Digicel (PNG) Ltd (2013) SC1323

Counsel:

Mr. K. Imako, for the Plaintiff 
Mr. C. Jaminan, for the Second and Third Defendants 

23rd April, 2015

1. HARTSHORN J: This is a decision on applications by the second and third defendants and the plaintiff. The second and third defendants (Singhe defendants) apply to strike out the plaintiff's statement of claim. Alternatively their application is amongst others to set aside injunctive relief and be granted leave to file their defences and cross claims out of time. These applications are opposed by the plaintiff, Esso Highlands Ltd. Esso also has an application to file its answer to interrogatories out of time and for the Bank of South Pacific Ltd to produce certain documents. The Singhe defendants do not oppose the application by Esso to file its answer but does oppose the application for the production of documents.

Background

2. Esso commenced this proceeding on 22nd November 2012 claiming amongst others, repayment of the sum of K1,172,841.59 which Esso alleges was fraudulently paid to the second defendant, Singhe Industries Ltd as a result of collusion between the first defendant, Quinten Willie and the third defendant, Sathyagith Munasinghe. Prior to the events giving rise to this proceeding, Esso had a contractual relationship with Singhe Industries in which Singhe Industries supplied certain specified goods to Esso from time to time which were used by Esso's employees in its operations.

3. The Singhe defendants make application pursuant to Order 8 Rule 27 (1) (b) and (c) National Court Rules, s. 155 (4) Constitution and the inherent jurisdiction of this court for Esso's statement of claim to be struck out as they submit that:

a) full particulars about each alleged fraudulent payment have not been given, such as the dates when the false invoices were issued, details of Esso's forms authorising each payment, how each of the payments were fraudulently altered, and details of whether invoices paid had previously been paid and recycled, with different material descriptions and invoice numbers. Esso has only pleaded general methods of fraudulent conduct;

b) there are inconsistencies with the alleged fraudulent payments pleaded in the statement of claim and how these payments are described in the affidavit evidence of Robert Endsley and in the statement in answer to interrogatories filed on behalf of Esso;

c) there appear to be three cleared payments in the statement in answer to interrogatories. This means that the amount claimed of K1,172,841.59 in the statement of claim cannot be claimed;

d) the combination of the matters referred to in a), b) and c) above are indicative of Esso's claim being obviously and almost incontestably bad. The pleadings are embarrassing and prejudicial as the Singhe defendants have to guess what is alleged against them.

4. Esso submits that its statement of claim clearly particularises the alleged fraud in paragraphs 3 and 4 of the statement of claim. Further, the requirements of Order 8 Rule 30 National Court Rules, that a party pleading shall give particulars of any fraud on which he relies, have been met.

5. Order 8 Rule 27 (1) (b) and (c) is as follows:

"(1) Where a pleading-

 (a) ….

(b) has a tendency to cause prejudice, embarrassment or delay in the proceedings; or

(c) is otherwise an abuse of the process of the Court,

the Court may at any stage of the proceedings, on terms or otherwise, order that the whole or any part of the pleading be struck out."

6. Counsel for the Singhe defendants submits that Esso has not pleaded the particulars of the fraudulent conduct of the Singhe defendants that procured each of the alleged payments or the facts relating to the Singhe Industries' account with Westpac Bank showing the payments received. Further, the inconsistencies between what is pleaded and what is deposed to by Robert Endsley on behalf of Esso and what is contained in a spreadsheet attached to Esso's answer to interrogatories, renders Esso's pleadings as embarrassing and prejudicial to the Singhe defendants as they are left to guess what Esso is alleging against them.

7. The Singhe defendants cite the Supreme Court case of Kuman v. Digicel (PNG) Ltd (2013) SC1323. In that case the Court relied upon the Supreme Court case of Philip Takori v. Simon Yagari (2008) SC905 which approved principles explained in the National court case of Kerry Lero trading as Hulu Haro Investments Ltd v. Philip Stagg (2006) N3050. Reliance is placed by the Singhe defendants on the following passages. In Lero v. Stagg (supra) the court said:

"A statement of claim or a defence (as the case may be) must therefore clearly plead the form of action by pleading the necessary legal elements or ingredients of the action and relevant and necessary facts (not the evidence) giving rise to the form of action. It follows therefore that, where a statement of claim or a defence is so ambiguous or lacking in particularity that it does not facilitate orderly and rational pleadings, which would enable the real issues to be identified, and instead leaves it to guess work, it should be struck out."

and in Takori v. Yagari (supra), the Court said:

"Going by the arguments of the State, it is clear that, the attack on the Appellants' statement of claim is really on the insufficiency of pleadings more than a total failure to disclose a reasonable cause of action. There is provision in the Rules in particular O 8 r36, r50 and r51 to take care of and remedy these kinds of problems. It is not only a good practice but also fair and equitable for a defendant faced with such a bad pleading as might have been the case here, to request for further and better particulars from the party responsible for such poor pleadings or to amend the pleadings and plead with clarity and with all of the appropriate particulars. When such a request is not appropriately responded to or ignored, the party making the request would be entitled to apply to the Court for appropriate orders including remedial orders for any failures to comply with any such orders, at the cost of the defaulting party."

8. Esso submits that paragraphs 3 and 4 of the statement of claim pleads facts relating to the commission of the fraudulent activity and particularises the alleged fraud. Order 8 Rule 30 National Court Rules which amongst others requires a party pleading to give particulars of any fraud on which he relies, has been complied with it is submitted, and to plead any further would amount to pleading evidence which is prohibited.

9. From a perusal of paragraphs 3 and 4, it is the case that particulars of how the alleged fraud was perpetrated are given. Further, payments that were made but on alleged fraudulent invoices are listed. I am satisfied that a cause of action is disclosed, although that is not the subject of this application. As to there not being sufficient particulars, as the Supreme Court said in Takori v. Yagari (supra), if a party is of the view that there is an insufficiency in pleading, "There is provision in the Rules in particular O 8 r36, r50 and r51 to take care of and remedy these kinds of problems."

10. As to the inconsistencies about which complaint is made, they arise in evidence. In this regard and in respect of the application of the Singhe defendants pursuant to Order 8 Rule 27 (1) (b) and (c), I refer to the following passage of Lay J. in Vari Gari v. Motor Vehicle Insurance Ltd (2005) Unreported and Unnumbered, referred to in White Corner Investments Ltd v. Haro (2006) N3089, with which I respectfully agree:

"The jurisdiction of the Court under O8 r27 is to see if the pleadings plead an almost incontestably bad cause of action which cannot possibly succeed, and cannot be cured by amendment (PNG Forest Products Pty Ltd and Inchcape Berhad v The State and Jack Genia [1992] PNGLR 85), assuming the truth of the facts pleaded in the statement of claim (Gabriel Apio Irafawe v Yawe Riyong (N1915)), and to a lesser extent, in the defence, as explained by any evidence adduced on the application solely for the purpose of explaining the pleadings. It is not a demurrer procedure and should not be applied where the pleading is arguable but, on the evidence, the chances of success are slight. If the pleading is arguable and not otherwise embarrassing or vexatious an application under O8 r27 ought not to succeed (Brimson v Rocla Concrete Pipes Ltd: Supreme Court Proceedings New South Wales Vol.2 [13.029] of 30 April 1983). A cause of action is a right which is given by law (the "form of action") and which should be pleaded disclosing all of the necessary facts which give rise to the form of action (Patterson Lowa, Minister for Minerals and Energy & Ors v Wapela Akipe & Ors [1991] PNGLR 265)." 

11. I am satisfied that the statement of claim is arguable and is not embarrassing. I am not satisfied that I should exercise the discretion of this court in favour of the Singhe defendants' application pursuant to Order 8 Rule 27 (1) (b) and (c) for the above reasons. 

12. As to the reliance upon s. 155 (4) Constitution, I need do no more than reproduce the following passage from Peter Makeng & Ors v. Timbers (PNG) Ltd & Ors (2008) N3317, a decision of Injia DCJ (as he then was) in which in respect of s. 155 (4) Constitution, His Honour said that it:

"……..is not the source of primary jurisdictional power. ………
 Section 155 (4)confers jurisdiction on the Court to issue facilitative orders in aid of enforcement of a primary right conferred by law, whether such right be conferred by statute or subordinate legislation enacted under the enabling statute: SCR No. 2 of 1981 [1982] PNGLR 150 at 154, Uma More v UPNG [1985] PNGLR 401 at 402." 

13. In addition, s. 155 (4) cannot be applied to do anything contrary or inconsistent with the provisions of the National Court Rules: Louis Medaing v. Ramu Nico Management (MCC) Ltd (2011) SC1144. 

14. In regard to the reliance upon the inherent jurisdiction of the court by the Singhe defendants, as I have already determined the application under Order 8 Rule 27 (1) (b) and (c) National Court Rules, it is not appropriate in my view to consider making a different determination pursuant to this court's inherent jurisdiction. The application to strike out the statement of claim is refused.

Whether injunctive relief should be set aside

15. The Singhe defendants apply pursuant to s. 155 (4) Constitution to set aside the injunctive relief that was granted and which remains in force as:

a) Esso's claim is based on poorly pleaded facts and unsupported, exaggerated and misleading statements;

b) the evidence of Robert Endsley was designed to gain an unfair advantage over the Singhe defendants;

c) the applicable considerations for the grant of injunctive orders were not satisfied.

16. Counsel for the Singhe defendants did not rely on any authority in respect of this application. Further, this application should have been made pursuant to Order 12 Rule 2 or 3 National Court Rules. As mentioned previously, s. 155 (4) Constitution is not the source of primary jurisdictional power.

17. The law concerning whether to discharge or vary an interim injunctive order was applied by Gabi J. in National Council of Young Men's Christian Association of Papua New Guinea (Inc) v. Firms Services Ltd (2010) N4569. In that case His Honour said that:

"…..there are six considerations to take into account in deciding whether to discharge or vary an interim injunctive order (see Mainland Holdings Ltd and Others v. Stobbs and Others (2003) N2522; Mark Ekepa and Others v. William Gaupe and Others (2004) N2694; Pacific Native Timber (PNG) Ltd v. Andrew Donaldson (2005) N2933; Wamena Trading Ltd v. Civil Aviation Authority of Papua New Guinea (2006) N3058). The considerations are: First, has there been any change in circumstances since the previous orders were made, which render their continuation unnecessary or inappropriate? Second, what has been the relative conduct of the parties since the earlier orders were made? Third, are there previously undisclosed relevant facts, which have been discovered since the interim orders were made? Fourth, has it subsequently been discovered that the order was granted on an erroneous legal basis? Fifth, where the grounds relied on to support the setting aside or variation of the interim order, argued before the Court when it granted the earlier order? Or did the party wanting to discharge or vary the earlier order have the opportunity to raise those grounds? Finally, was the court misled when it issued the interim injunctive order? If yes, was that attributable to the conduct of the party which sought the interim order?"

18. As to there being any change of circumstances, no submission was made by counsel for the Singhe defendants that there had been. Similarly no submissions were made concerning the conduct of the parties since the injunctive orders were made, that there are previously undisclosed relevant facts which have been discovered, that the injunctive relief is granted on an erroneous legal basis or whether the court was misled.

19. I note further that the Singhe defendants did have the opportunity to raise grounds in support of setting aside the injunctive relief on 15th March 2013 when the injunctive relief was made interlocutory but there was no appearance on behalf of the Singhe defendants at that time. Given the above, I am not satisfied that the injunctive relief should be set aside.

Whether the Singhe defendants should be given leave to file their defences 

20. The Singhe defendants apply pursuant to s. 155 (4) Constitution to be granted leave to file and serve their defences and cross claims.

21. Esso submits that this application is an abuse of process as the Singhe defendants' have already unsuccessfully applied to file their defences and cross claims out of time, and they are unable to rely upon s. 155 (4) Constitution as they no longer have a primary right to make such an application. 

22. There is in evidence a copy of the certified transcript of my extempore ruling on 18th October 2013 in which I refused the Singhe defendants' application to file their defences out of time. It is conceded in the submissions of counsel for the Singhe defendants that such an application was unsuccessfully made. Notwithstanding this concession counsel for the Singhe defendants did not address the court as to the basis upon which such an application could be made a second time.

23. The Singhe defendants have already had this application determined. 
They do not have a primary right to have such an application heard for a second time, whether under the National Court Rules or s. 155 (4) Constitution for the reasons already given. To my mind this application is an abuse of process and should be dismissed. Given this finding, it is not necessary to consider the other submissions of counsel in respect of this application.

24. The Singhe defendants also seek relief concerning a trial date and a directions hearing. I will consider these items after I have considered Esso's application.

Leave to file a verified statement in answer to interrogatories

25. Esso seeks leave pursuant to Order 12 Rule 1 National Court Rules to file its verified statement in answer to interrogatories out of time and for its answer filed 3rd July 2014 to be accepted as filed with leave of this court. During the course of the hearing of the applications, counsel for the Singhe defendants informed the court that no issue was taken with these applications. Given this, and from the evidence filed in support of these applications, I am satisfied that the applications should be granted. 

Provision of documents by Bank South Pacific Ltd

26. Esso applies pursuant to Order 14 Rule 2 National Court Rules for Bank South Pacific Ltd to provide certain documentation. The Singhe defendants oppose this application. Esso submits that it seeks the documentation as it may have probative value to support the allegations of fraud and collusion raised in the proceeding. This is particularly important, it is submitted, given the evidence of Mr. Willie in which he admits receiving money from the Singhe defendants. Further, the evidence of Robert Endsley is that Singhe Industries Ltd paid K 50,000.00 to Mr. Willie.

27. The Singhe defendants oppose the application as amongst others, they submit that there has been delay in making the application, Esso is embarking upon a fishing expedition and if the application is granted it will delay the trial.

28. Esso applies pursuant to Order 14 Rule 2 National Court Rules which is as follows:

"The Court may, on application by a party at any stage of proceedings, make orders for the taking of any account or the making of any inquiry."

29. Neither counsel referred to any authority in regard to this Rule. Esso submits that any delay in making the application is as a result of the evidence concerning the K 50,000.00 only becoming available after the proceeding was issued. In addition, Esso has not been successful in ascertaining the whereabouts of Mr. Willie.

30. Further, submits Esso, this is not a fishing expedition but a legitimate request for documentation concerning collusion between the defendants and fraud on their part following the obtaining of evidence concerning the payment of K 50,000.00. There is no reason why such a payment should be legitimately made and if it was made it relates to the pleading of collusion and fraud.

31. As to the first set of documents that Esso seeks to be provided by Bank South Pacific Ltd, they are official bank statements in the name of Mr. Willie. There is evidence that Mr. Willie has admitted receiving monies irregularly and he was an employee of Esso. In the absence of any submission to the contrary from Mr. Willie, I see no reason why these documents should not be provided to Esso.

32. As to the second set of documents sought to be provided by Bank South Pacific Ltd, they relate to a deposit of K 50,000.00 purportedly paid by Singhe Industries Ltd. Again there are no submissions by Mr. Willie against the provision of these documents that relate to him. As to the Singhe defendants objection, if there was no payment of K50,000.00, then as Esso submits it will be to the benefit of the Singhe defendants for this fact to be elicited. 

33. As to the submission that Esso is engaging in a fishing expedition, the payment of K 50,000.00 has been referred to in evidence and the documents sought to be provided relate specifically to that payment. Given this I am not of the view that this application can be categorised as a fishing expedition. As to there being a delay in the holding of the trial if the application is granted, I am not of the view that there is any merit in the submission such that the application should not be granted.

34. In the absence of any submission that Esso is not entitled to the documents sought, as distinct from arguments concerning delay and that the application is a fishing expedition, I am satisfied that Esso is entitled to the orders that it seeks.

35. As to the applications of the Singhe defendants concerning a trial date and a directions hearing, they will be adjourned to a date to be agreed to allow Bank South Pacific Ltd to comply with the orders that will be made under Order 14 Rule 2 National Court Rules

Orders

36. The formal Orders of the Court are:

a) the relief sought in paragraphs 1, 2 (a) and (c) of the amended notice of motion of the second and third defendants filed 5th August 2014 is refused;

b) the second and third defendants shall pay the costs of the plaintiff of and incidental to the hearing of paragraphs 1, 2 (a) and (c) of the said amended notice of motion;

c) the relief sought in paragraphs 2 (d) and (e) of the said amended notice of motion are adjourned to a date to be agreed;

d) all of the relief sought in the notice of motion of the plaintiff filed 7th July 2014 is granted

____________________________________________________________
Allens Lawyers: Lawyers for the Plaintiff 
Jaminan & Associates Lawyers: Lawyers for the Second & Third Defendants