Morris v Panfilo [2017] PGNC 278; N6976 (27 October 2017)

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LAW OF CONTRACT – memorandum of understanding - parties to it - parties to the memorandum of understanding not named as parties in the proceeding - legal capacity of a clan discussed

The plaintiff alleged that his clan has a legally binding contract with the defendants concerning disposal of a land that is situated in Kokopo in East New Britain Province. He referred to a memorandum of understanding that was signed in 2012. He said the memorandum of understanding was legally binding and he requested the Court to validate the agreement and make orders for its enforcement.

Dumal Dibiaso Incorporated Land Group v. Kola Kuma (2005) SC 805
Vunaibu Incorporated Land Group v. Michael Wilson (2017) N6806
Kumai Mumu v. Haghan Co. Ltd (2005) N2827

1. ANIS AJ: This matter was tried for about four (4) days. The central dispute relates to a memorandum of understanding dated 13 December 2012 (MoU). The existence of the MoU is not disputed. The plaintiff argues that the MoU is valid and binds the parties to this proceeding. The defendants on the other hand raised preliminary as well as substantive arguments. On the preliminary issues, the defendants say that both the plaintiff and the defendants were not parties to the MoU. They also question the cause of action. As to the substantive argument, they argue that the MoU is not binding on the third defendant.

2. I heard the preliminary and substantive issues together at the trial, which commenced on 18 October 2017. Parties were given time to present their submissions on 23 October 2017. I reserved my decision thereafter to 9:30am today.

4. The plaintiff represents a clan called Tobatobon. This clan is situated in Kokopo in East New Britain Province. It is one of many clans that are situated within the Kokopo township area. The clans are recognised or identified by their wards in their respective Local Level Governments. Four (4) of the wards are affected or mentioned in this proceeding. They are (i) Ramale, (ii) Livuan, (iii) Bitagalip and (iv) Kamaleo.

5. The third defendant is the registered proprietor of a state lease within the Kokopo township area. Its state lease is described as Portion 302, Milinch Kokopo, Rabaul, East New Britain Province (state lease). The third defendant had decided in 2002 to give parcels of land from its state lease, free, to affected communities within the Kokopo township area. The proposed total land area the third defendant plans to give is 160 hectares of land. The said intention is still current and although the process has been slow, steps have been put in place to facilitate the said process. Various reasons were considered by the third defendant before it had reached its decision to give away the 160 hectares of land from its state lease. They include increase in population and the expansion of the town. In regard to the latter, the third defendant plans to give the local landowners the opportunity to participate in the economic development that is happening in the Kokopo township area. The idea has drawn a lot of attention from the landowners themselves within the area as well as from people from outside.

6. In this proceeding, the plaintiff refers to the third defendant's intention as I have described above and claims that his clan, the Tobatobon Clan, already has in place a legally binding agreement with the defendants, which is the MoU, concerning the 160 hectares of land. He commences this proceeding to confirm the validity of the MoU and he also seeks other consequential orders.

8. Let me set out the list of exhibits tendered by the parties. I have used the abbreviations "P" and "D" to connote the evidence tendered by the plaintiff and the defendants respectively.

Exhibit No.	Description	Date Filed
“P1”	Affidavit of Governor Nakikus Konga	31/08/17
“P2”	Contract for Sale of Land	08/03/13
“P3”	Affidavit of Nicholas Morris	19/12/16
“P4”	Affidavit of Peter Tirupia	04/08/17
“P5”	Affidavit of Joseph Konaliu	04/08/17
“P6”	Memorandum of Understanding 2002	04/08/17
“P7”	Affidavit of Kevin Kalubia	04/08/17
“P8”	Notice of Grant of Certificate of Recognition REG ILG NO:32 TOBATOBON LAND GROUP INCORPORATED	10/02/15
“D1”	Affidavit of Francesco Panfilo SDB	29/03/17
“D2”	Affidavit of Norbert ToKuvang	29/03/17
“D3”	Affidavit of Norbert ToKuvang	29/09/17
“D4”	Map attached to the Memorandum of Understanding of 2012	19/12/16
“D5”	Certificate of Incorporation of Business Group – Rabilika Business Group (Inc) 4-21236	13/04/16
“D6”	Affidavit of Doug Grant Tennent	29/03/17
“D7”	Affidavit of Doug Grant Tennent	16/10/17
“D8”	Affidavit of Albert Buanga	29/03/17
“D9”	Affidavit of Joe Varapit	29/03/17
“D10”	Affidavit of Christopher Tokuau	27/09/17
“D11”	Affidavit of Nick Mauta	13/10/17
“D12”	Affidavit of Afred Marazilla	16/10/17
“D13”	Affidavit of Martin Tabu	29/03/17
“D14”	Affidavit of Father Valerano Barbeo SDB	29/03/17

9. I note that at the status conference hearing, the parties agreed to argue both preliminary and substantive issues at the trial. Let me summarise them here:

(ii) Can the plaintiff invoke section 155(4) of the Constitution to seek the relief as were sought in the originating summons? (preliminary)

(iii) Subject to the above, whether the MoU is binding and whether the relief sought should be granted. (substantive)

10. The first preliminary issue is this. The defendants submit that none of the parties in the proceeding are parties to the MoU. As such, they say the proceeding is baseless and therefore must be dismissed. The MoU is in express terms and is in evidence, that is, at Annexure C to Exhibit P3. Let me set it out here:

Having acknowledged that the Roman Catholic Archdiocese of Rabaul (“RCAR”) is currently the title holder of Part Portion 302 Kinigunan (though subject to the terms of a prior Memorandum of Understanding, where the subject land is to be given away to 4 separate Wards) AND also acknowledging that Tobatobon clan is the principal customary landowner of the land in question AND further having acknowledged that RCAR has released the said land to the customary landowners as recited above.

11. The parties to the purported legally binding MoU were two (2) namely Tobatobon ILG or Tobatobon Incorporated Land Group and Livuan Ward. Counsel for the plaintiff, in reply and without any reference to statute or case law, submits that the Tobatobon ILG represents or constitutes the Tobatobon Clan. Counsel submits that the Tobatobon Clan members and representatives were actively involved in the matter in 2012. He said the clan representatives were aware and were present at the signing on 13 December 2012. Therefore, counsel submits that to name the Tobatobon Clan as a plaintiff herein is correct.

12. With respect, I find counsel's submission on point unimpressive, casual and I note that it was presented without any legal foundation. Under law, there is a clear distinction between an incorporated land group and other persons or groups. An incorporated land group is a legal person. I refer to section 11 of the Land Groups Incorporation Act Chapter No. 147. It says and I quote:

(c) may sue and be sued in its corporate name as set out in its constitution; and

(d) for the purpose of the more effective exercise and performance of its powers and functions, may do and suffer all things that a corporation may do or suffer.

13. The Supreme Court, in the case of Dumal Dibiaso Incorporated Land Group v. Kola Kuma (2005) SC 805 (see also: Vunaibu Incorporated Land Group v. Michael Wilson (2017) N6806), held and I quote in part:

In our view, the action by the Plaintiff was not against the ILGs, it was against the individuals who were putting themselves out as spokes persons of the various ILGs concerned. There is no legal basis to take their liability further to a third party, the corporate entity that each claimed he represented. There was no evidence that each one had the authority of the members of his ILG to bind his group to the liability that he had incurred with the Plaintiff or any other persons in the name of his ILG. The Court never at any time determined the authority of the members of the ILGs. The issue never arose because of the style of pleadings in the writ of summons which did not allow the ILGs to cause separate legal representation.

At the outset, the writ ought to have been struck out for ambiguity and want of certainty. The law does not assume proxy powers or powers of attorney of another upon another without written instrument of such appointment or delegation of power or authority being first produced. Without clear evidence of such authority, there really was no evidence for the court to conclude that the Defendants had the authority of the ILGs and could be sued in the way and style they were sued. To accede to the argument simply means that any one can profess himself to be acting for another in his capacity as the agent of his principal and make commitments that will bind the unsuspecting principal.

By analogy of the best plaintiff rule stipulated in section 6 of the Companies Act 1996 and section 11 of the Incorporated Land Groups Act which creates separate legal personality in the incorporated land group with the power to sue and be sued and the fact that as pleaded, the form of pleading was bad for uncertainty.

14. The Supreme Court's decision in Dumal Dibiaso is binding upon this Court. The plaintiff herein acknowledges that the Tobatobon ILG was incorporated prior to the MoU and that it was the party that had also participated in the signing on 13 December 2012. The plaintiff has also filed evidence to show that the situation may have changed because he says that there is now a new ILG being created. The defendants in reply agreed with the plaintiff that the Tobatobon ILG signed the MoU with Livuan Ward on 13 December 2012. And they say that these were the only two legal persons or parties to the MoU and not the plaintiff and the Tobatobon Clan. The defendants also submit on this point that there cannot be another new ILG created under the same name Tobatobon ILG in response to the plaintiff's claim that there is another ILG in the same name that is currently being set-up.

15. For this purpose, the MoU, in my view, is express in terms of the parties to it. They are (i) Tobatobon ILG and (ii) Livuan Ward. The plaintiff is seeking declaratory orders that are solely based on the MoU. But the plaintiff nor the Tobatobon Clan is Tobatobon ILG. The clan is not privy to the MoU. And the plaintiff is not suing on behalf of the Tobatobon ILG. On the contrary, he is expressly suing for and on behalf of the Tobatobon Clan. Tobatobon Clan is not a party to the MoU.

16. I therefore find the claim to be baseless. I find that the plaintiff nor his clan the Tobatobon Clan have standing, capacity and the right to commence the proceeding in relation to the MoU in the first place. I find that there is no privity of contract between the plaintiff and the defendants or between the plaintiff and the two named parties, in relation to the MoU. The other reason is this. The other party to the MoU namely Livuan Ward is also not a party to this proceeding. In other words, the entities who were expressed parties to the MoU were not named as parties in this proceeding. The plaintiff therefore cannot, in my view, question who else is a party or a non-party to the MoU. That includes the plaintiff's claim that the defendants were parties to the MoU and also the defendants' denial. The issue and the arguments to it, in my view, cannot be raised by the plaintiff because his clan, as I have found above, was not a party to the MoU who would be entitled to ask such a question.

17. I find that the plaintiff has failed to show how it was legally possible for him and his clan to assume authority from or replace Tobatobon ILG and bring this proceeding. Without any valid explanation, I find the proceeding baseless and an abuse of the Court process.

18. Let me address the plaintiff's clan the Tobatobon Clan. The question I have is this. Is the said clan a legal entity recognised under law? The obvious answer would be "no". A clan, unlike an incorporated land group or a company or a natural person, does not have a legal status for example to sue or be sued, or to acquire a legal interest in a property (see case: Kumai Mumu v. Haghan Co. Ltd (2005) N2827). The plaintiff represents in this proceeding, the Tobatobon Clan, which is a non-legal entity that is not recognised under law.

19. The Tobatobon Clan therefore does not have the capacity to acquire real property. So even if I were to assume that the Tobatobon Clan was a party to the MoU, the MoU would have been null & void because the Tobatobon Clan would have lacked the capacity to bind the agreement.

20. The plaintiff's position, it seems, gets from bad to worse. Let me explain. He tries to, by this proceeding purportedly under section 155(4) of the Constitution, substitute Tobatobon ILG who is a party in the MoU and replace it with a non-party to the MoU, which is a group that has no legal status that is recognised under law, that is the Tobatobon Clan. And then he also requests that this Court should order the transfer of 160 hectares of a parcel of land within the state lease or an undisclosed parcel of alienated land in the state lease, to this non-legal entity that is the Tobatobon Clan. These in themselves could amount to gross abuse of the Court process.

21. I find the proceeding baseless as well as an abuse of the Court process. Because of my findings in relation to the first preliminary issue, there is no need for the matter to proceed any further except for this Court to dismiss it.

22. Let me comment that the MoU appears to have been poorly drafted. It appears substantially flawed and defective. I note that the map that was attached to the MoU was a photocopied map from somewhere or from an undisclosed source, which had hand written scribbles or markings on it. It is obvious that the map was scribbled or marked by someone other than by a professional surveyor. It is not possible to identify from the said scribbled map what parcel of land the parties to the MoU had signed up for.

24. Cost is discretionary. I will order cost against the plaintiff on a party/party basis to which may be taxed if not agreed.

2, The plaintiff shall pay the defendants' cost of the proceeding on a party/party basis which may be taxed if not agreed.

3. Time for entry of these orders is abridged to the date of settlement by the Registrar of the National Court which shall take place forthwith.

The Court orders accordingly.
___________________________________________________________
Kusip & Associate Lawyers: Lawyers for the Plaintiff
Warner Shand Lawyer: Lawyers for the Defendants

National Court of Papua New Guinea

Morris v Panfilo [2017] PGNC 278; N6976 (27 October 2017)