Pacific Construction Group Ltd v Assemblies of God Boroko Association Inc [2017] PGNC 354; N7060 (29 November 2017)

N7060

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS No.245 of 2016

BETWEEN:
PACIFIC CONSTRUCTION GROUP LIMITED
Plaintiff

AND:
ASSEMBLIES OF GOD BOROKO ASSOCIATION INC.
First Defendant

AND:
ASSEMBLIES OF GOD PAPUA NEW GUINEA INCORPORATED
Second Defendant

AND:
DYNAMIC DEVELOPMENT LIMITED
Third Defendant

AND:
TRINCO NO.6 LIMITED
Fourth Defendant

Waigani: David, J

2017: 20 & 29 November

PRACTICE AND PROCEDURE – application to dismiss proceedings - for not disclosing a reasonable cause of action or for being vexatious or frivolous or for being an abuse of the process of the Court – National Court Rules Order 12 Rule 40(1).

INJUNCTIONS – interim injunction – application for continuation of interim injunction - principles governing grant or refusal of injunction – hearing inter partes – application refused.

Cases Cited:

Associated Plumbing Installation Ltd v Air Niugini (2011) SC1127
Chief Collector of Taxes v Bougainville Copper Ltd (2007) SC853
Kerry Lerro v Philip Stagg (2006) N3050
Philip Takori v Simon Yagari (2008) SC905
Robinson v National Airlines Commission [1983] PNGLR 476

Counsel:

Simon Dewe, for the Plaintiff
Martin Kombri, for the first Defendant
Herbert Best Wally, for the Second Defendant
Bill Frizzell, for the Third and Fourth Defendant

RULING

29^th November, 2017

1. DAVID, J: INTRODUCTION: The proceedings commenced by the plaintiff against the defendants by writ of summons endorsed with a statement of claim filed on 22 March 2016 and subsequently amended by amended writ of summons filed on 5 May 2016 (the writ) concern land described as; Allotment 3 Section 389 Hohola in the National Capital District, State Lease Volume 28 Folio 69; Allotment 4 Section 389 Hohola in the National Capital District, State Lease Volume 28 Folio 70; Allotment 5 Section 389 Hohola in the National Capital District, State Lease Volume 28 Folio 71; and Allotment 6 Section 389 Hohola in the National Capital District, State Lease Volume 28 Folio 72 (the properties). In the substantive proceedings, the plaintiff claims orders in the nature of negative and mandatory injunctions, declarations and in the alternative, an order for specific performance of a contract for sale and purchase of two of the allotments comprising the properties namely Allotments 3 and 4 at the purchase price of K3,865,000.00 entered into between the first defendant as vendor and the plaintiff as purchaser dated 19 February 2010 (the contract) and to take all steps necessary to transfer the titles to those allotments including obtaining Ministerial approval of the contract. The first defendant filed its defence by way of an amended defence on 21 April 2016. The second defendant filed its defence on 20 November 2017. The third and fourth defendants filed their defence on 1 September 2016. This is a ruling on three motions moved by the plaintiff, first defendant and the third and fourth defendants.
   
2. The plaintiff’s application returned for hearing inter partes in which it seeks an order for the continuation of the interim orders made by the Court on 23 March 2016 (the ex parte orders) which were obtained upon the plaintiff moving its notice of motion filed on 22 March 2016 ex parte. In that motion, the plaintiff relying on Order 12 Rule 1 of the National Court Rules and Section 155(4) of the Constitution seeks interim restraining orders against the first and second defendants who were the only defendants at the time, the Registrar of Titles and the PNG Land Board and all their agents or servants from deliberating on the dealing with State Leases described as Volume 28 Folio 70, Section 389 Hohola and Volume 28 Folio 69 Allotment 4 Section 389 Hohola in any manner or form whatsoever pending the determination of these proceedings or until further orders of the Court.
   
3. In support of the plaintiff’s motion, it relied on the following materials:
   
   1. Affidavit of Kenneth Korakali sworn on 21 March 2016 and filed on 22 March 2016; and
   2. Undertaking as to Damages provided by the plaintiff executed by Kenneth Korakali, Managing Director of the plaintiff executed under the common seal of the plaintiff dated 21 March 2016 and filed on 22 March 2016.
      
4. The first defendant’s application was moved pursuant to a notice of motion dated 13 September 2016 and filed on 14 September 2016. It essentially seeks an order to set aside the ex parte orders relying on Order 12 Rule 8(4) of the National Court Rules.
   
5. In support of the first defendant’s application, it relied on the:
   
   1. Affidavit of Ps. Phanuel Woyengu sworn and filed on 5 May 2016 (first affidavit);
   2. Affidavit of Ps. Phanuel Woyengu sworn on 13 September 2016 and filed on 19 September 2016 (second affidavit); and
   3. Affidavit of Ps. Phanuel Woyengu sworn and filed on 21 September 2016 (third affidavit).
      
6. The third and fourth defendants’ application was moved pursuant to a notice of motion filed on 11 November 2016 seeking an order to dismiss the amended statement of claim as against the third and fourth defendants relying on all the grounds specified under Order 12 Rule 40(1) and/or under Order 10 Rule 9A(15)(2)(d) of the National Court Rules.
   
7. In support of the third and fourth defendants’ application, they relied on the:
   
   1. Affidavit of Ching Hieng Ho sworn on 10 November 2016 and filed on 11 November 2016 (first affidavit);
   2. Affidavit of Teck Kong Lee filed on 11 November 2016 (first affidavit);
   3. Affidavit of Ching Hieng Ho sworn and filed on 22 November 2016 (second affidavit); and
   4. Affidavit of Teck Kong Lee sworn and filed on 22 November 2016 (second affidavit).
      
8. The second defendant did not rely on any affidavit.
   
9. The applications were contested.
   

SUMMARY OF PLAINTIFF’S EVIDENCE

10. Kenneth Korakali is the Managing Director of the plaintiff company, a company registered pursuant to the Companies Act: annexure KK1. He is an elder and member of the second defendant, Assemblies of God Papua New Guinea Incorporated.
    
11. The first defendant is a member of the second defendant and it is located within the Boroko area.
    
12. The second defendant is the national body that represents the Assemblies of God church and has a Constitution: annexure KK2. Under Article 17 of the Constitution of the second defendant, all land and properties including those registered under member Assemblies including the first defendant are vested in the second defendant.
    
13. The first defendant was granted 99 year State Leases over the properties all commencing on 23 October 2003 and ending on 22 October 2102: annexure KK3. At the time of their grant, the first defendant was not a registered legal entity. It was only registered under the Associations Incorporation Act on 29 October 2008. By necessary implication or inference, since 23 October 2003, the properties were and are vested in the second defendant by virtue of Articles 5 and 15 of the second defendant’s Constitution.
    
14. By a letter of offer dated 27 November 2009, he wrote to the General Superintendent of the Assemblies of God Church of PNG (the AOG Church) offering to purchase two of the allotments comprising the properties namely, Allotments 3 and 4 (the disputed land). By a letter of acceptance dated 19 January 2010, the AOG Church informed him about the acceptance of his offer to purchase the disputed land for K3,865,000.00 and to formalise the transaction with a contract: annexure KK4.
    
15. On 19 February 2010, the first defendant and the plaintiff executed the contract: part of annexure KK5. The second defendant sanctioned the execution of the contract. The plaintiff then paid the 10% deposit of K386,500.00. A copy of the instrument of transfer for allotment 4 is annexed as forming part of annexure KK5. Since the execution of the contract, the first and second defendants have failed to take all necessary steps to attain completion and their conduct is dilatory.
    
16. He believes that the first defendant through its agents and servants has made various attempts to sell the disputed land to other persons.
    
17. He is also aware that the first defendant has instituted an action for judicial review against the State and others including the third and fourth defendants by OS No.41 of 2011 for the alleged forfeiture of the State Leases over the properties inclusive of the dispute land by the Department of Lands & Physical Planning and the subsequent granting of State Leases to the third and fourth defendants: annexures KK6 to KK9.
    
    18. He is aware that applications made under Section 119 of the Land Act for variation of purpose and relaxation of covenants lodged by the third and fourth defendants in connection with Urban Development Leases specified in State Leases granted over the disputed land were listed as Items 171 and 172 in National Gazette No.80 dated 24 February 2016 for deliberation by the Papua New Guinea Land Board at its meeting No.02/2016 scheduled to be held at the Department of Lands & Physical Planning Conference Room, Eda Tano House, Waigani on 23 March 2016: annexure KK10 and KK11.
        
    19. If the defendants are not restrained, these proceedings will be of no utility.
        

SUMMARY OF FIRST DEFENDANT’S EVIDENCE

20. Phanuel Woyengu is the pastor of the Assemblies of God Boroko Church and Chairman of the first defendant.
    
21. He is not aware of any State Lease described as “Volume 28 Folio 69 Lot 4 Section 389 Hohola” and “Volume 28 Folio 70, Section 389 Hohola” as stated in the plaintiff’s notice of motion and order 1 of the ex parte orders. He however is aware of State Leases “Volume 28 Folio 69, Allotment 3 Section 389 Hohola, NCD” and “Volume 28 Folio 70, Allotment 4, Section 389 Hohola, NCD”: annexures “A” and “B” of Phanuel Woyengu’s first affidavit.
    
22. By National Gazette No.G80 dated 24 February 2016, two applications under Section 119 of the Land Act for variation of purpose and relaxation of covenants of Urban Development Leases specified in State Lease Volume 43 Folio 50 over Allotment 4 Section 389 Hohola, National Capital District lodged by the third defendant and State Lease Volume 43 Folio 49 over Allotment 7 Section 389 Hohola, National Capital District by the fourth defendant were listed as Items 171 and 172 respectively for hearing by the Papua New Guinea Land Board at a meeting scheduled to be conducted at the Department of Lands & Physical Planning Conference Room, Eda Tano House, Waigani from 14 March 2016 to 18 March 2016 and from 22 March 2016 to 25 March 2016: annexure C of Phanuel Woyengu’s first affidavit.
    
23. The first defendant commenced proceedings in the National Court by OS No.41 of 2011 challenging the forfeiture of Mission Leases granted to the first defendant and granting new leases to the third and fourth defendants. The plaintiff unsuccessfully applied to be joined as a party to those proceedings by its notice of motion filed on 15 May 2012 which was refused by Justice Sawong on 12 September 2012: annexures PPW1 and PPW2 of Phanuel Woyengu’s third affidavit.
    
24. A John Apami, Church Executive Officer of the second defendant expressed dissatisfaction over the purported sale of the disputed land in two letters both dated 19 February 2010; one sent to Rev. Tony Dalaka, General Superintendent of the second defendant and the other to Mr. Korakali, Managing Director of the plaintiff: annexures PPW3 and PPW4 of Phanuel Woyengu’s third affidavit.
    
25. By a letter dated 23 February 2010, the Board members of the First Defendant wrote to Rev. Tony Dalaka, General Superintendent of the second defendant expressing the Board’s disapproval of the purported deal entered into with the plaintiff involving the disputed land: annexure PPW5 of Phanuel Woyengu’s third affidavit.
    

SUMMARY OF THIRD AND FOURTH DEFENDANTS’ EVIDENCE

26. Teck Kong Lee is a director of the third defendant.
    
27. Ching Hieng Ho is the manager of the fourth defendant.
    
28. On 3 November 2003, the first defendant was granted the State Leases over the properties: annexures A of the first affidavits of Teck Kong Lee and Ching Hieng Ho.
    
29. An online search of the register of Incorporated Associations was conducted which showed that the first defendant was incorporated on 29 October 2008: annexures B of the first affidavits of Teck Kong Lee and Ching Hieng Ho.
    
30. On 18 September 2008, a notice was published in National Gazette No.G168 forfeiting the State Leases over the properties: annexures C of the first affidavits of Teck Kong Lee and Ching Hieng Ho.
    
31. On 24 June 2010, by notice in the National Gazette No.G138, tenders were invited for Urban Development Lease in respect of Allotment 4 Section 389 Hohola containing an area of 1.1090 hectares (UDL lot 4) and Allotment 7 Section 389 Hohola containing an area of 6.2800 hectares (UDL lot 7). For UDL lot 4, applications were received from 18 tenderers including the third defendant and for UDL 7 applications were received from 24 tenderers whose names were published on 9 September 2010 in National Gazette No.G199: annexures D of the first affidavits of Teck Kong Lee and Ching Hieng Ho.
    
32. The tenders for UDL lot 4 and UDL lot 7 were considered by the Papua New Guinea Land Board at its Meeting No.05/2010 and on 26 January 2011 in National Gazette No.G21, the third defendant and the fourth defendant were gazetted as the successful tenderers: annexures E of the first affidavits of Teck Kong Lee and Ching Hieng Ho. On 28 January 2011; the third defendant was granted State Lease Volume 43 Folio 50 for UDL lot 4 for a term of 5 years commencing on 26 January 2011 and ending on 25 January 2016 and the fourth defendant was granted State Lease Volume 43 Folio 49 for UDL lot 7 for a term of 5 years commencing on 26 January 2011 and ending on 25 January 2016: annexures E of the first affidavits of Teck Kong Lee and Ching Hieng Ho.
    
33. On 10 February 2011, the first defendant commenced judicial review proceedings in the National Court by OS No.41 of 2011 challenging the forfeiture of the State Leases over the properties.
    
34. On 27 May 2011, a corrigendum was published in National Gazette No.G136 revoking the forfeiture of State Leases over the disputed land. The special reason given for the revocation was that those leases were erroneously forfeited without taking into consideration that the lessee was not given ample time to show cause why the leases should not be forfeited: annexures F of the first affidavits of Teck Kong Lee and Ching Hieng Ho.
    
35. By notice published in the National Gazette No.G170 on 30 June 2011, the corrigendum published in the National Gazette No.G136 on 27 May 2011 was revoked: annexures F of the first affidavits of Teck Kong Lee and Ching Hieng Ho.
    
36. No leave to apply for judicial review of the forfeiture of the State Leases over the properties was obtained in OS No.41 of 2011 and those proceedings were subsequently discontinued on 2 November 2015: annexures G of the first affidavits of Teck Kong Lee and Ching Hieng Ho.
    
37. In or about January 2016, the third defendant and the fourth defendant lodged applications seeking variation of the purpose and relaxation of covenants in respect of UDL lot 4 and UDL lot 7. By National Gazette No.G80 dated 24 February 2016, notice was given for the applications to be heard by the Papua New Guinea Land Board at its Meeting No.02/2016: annexures H of the first affidavits of Teck Kong Lee and Ching Hieng Ho.
    
38. By National Gazette No.G421 dated 1 July 2016, notice was given that the applications were successful: annexures H of the first affidavits of Teck Kong Lee and Ching Hieng Ho.
    
39. The forfeited State Leases over which the first defendant was the registered proprietor are delineated in registered survey plan CAT No.49/2185. Upon their forfeiture, the area contained in them was resurveyed and registered in survey plan CAT No.M/49/2186 and this superseded the previous registered survey plan for the same area. As a result, CAT No.M49/2186 is the registered survey plan that describes the surveyed area for UDL lot 4 and UDL lot 7 of which the third defendant and fourth defendant are the registered proprietors respectively.
    
40. At no time was the land contained in the forfeited State Leases or a combination of any of them the subject of an application for consolidation. This is because those State Leases were forfeited on 18 September 2008.
    
41. The third defendant was issued State Lease Volume 72 Folio 14 over UDL lot 4 for a term of 5 years commencing on 1 July 2016 and ending on 1 July 2021: annexure A of Teck Kong Lee’s second affidavit.
    
42. The fourth defendant was issued State Lease Volume 72 Folio 15 over UDL lot 7 for a term of 5 years commencing on 1 July 2016 and ending on 1 July 2021: annexure A of Ching Hieng Ho’s affidavit. The application and the gazettal notices and the hearing conducted by the Papua New Guinea Land Board all concerned the fourth defendant, but the State Lease for UDL lot 7 was issued to “Trinco Ltd”. An application has been made by the fourth defendant to the Registrar to rectify the error in the State Lease for UDL lot 7 such that it correctly refers to “Trinco No.6 Ltd”.
    

UNDISPUTED FACTS

43. From all the evidence before the Court, I find that the following principal facts are not disputed:
    
    1. The first defendant was the registered proprietor of the properties which all had 99 year State Leases for terms commencing on 23 October 2003 and ending on 22 October 2102.
    2. The first defendant was registered under the Associations Incorporation Act on 29 October 2008.
    3. The State Leases over the properties were forfeited on 18 September 2008.
    4. On 19 February 2010, the first defendant as vendor and the plaintiff as purchaser executed the contract for the sale and purchase of the disputed land for K3,865,000.00).
    5. The plaintiff paid the 10% deposit of K386,500.00.
    6. Since the execution of the contract, it has not been completed.
    7. On 24 June 2010, by notice in the National Gazette No.G138, tenders were invited for UDL lot 4 and UDL lot 7.
    8. For UDL lot 4, applications were received from 18 tenderers including the third defendant whose names were published on 9 September 2010 in National Gazette No.G199.
    9. For UDL lot 7, applications were received from 24 tenderers whose names were published on 9 September 2010 in National Gazette No.G199.
    10. The tenders for UDL lot 4 and UDL lot 7 were considered by the Papua New Guinea Land Board at its Meeting No.05/2010.
    11. On 26 January 2011 in National Gazette No.G21, the third defendant and the fourth defendant were gazetted as the successful tenderers.
    12. On 28 January 2011, the third defendant was granted State Lease Volume 43 Folio 50 for UDL lot 4 for a term of 5 years commencing on 26 January 2011 and ending on 25 January 2016.
    13. On 28 January 2011, the fourth defendant was granted State Lease Volume 43 Folio 49 for UDL lot 7 for a term of 5 years commencing on 26 January 2011 and ending on 25 January 2016.
    14. On 10 February 2011, the first defendant commenced judicial review proceedings in the National Court by OS No.41 of 2011 challenging the forfeiture of the State Leases over the properties.
    15. On 27 May 2011, a corrigendum was published in National Gazette No.G136 revoking the forfeiture of State Leases over the disputed land on the basis that those leases were erroneously forfeited without taking into consideration that the lessee was not given ample time to show cause why the leases should not be forfeited.
    16. By notice published in the National Gazette No.G170 on 30 June 2011, the corrigendum published in the National Gazette No.G136 on 27 May 2011 was revoked.
    17. On 15 May 2012, the plaintiff applied to be joined as a party in OS No.41 of 2011 as second plaintiff and the application was refused on 12 September 2012.
    18. On 2 November 2015, the judicial review proceedings in OS No.41 of 2011 were discontinued.
    19. In or about January 2016, the third defendant and the fourth defendant lodged applications seeking variation of the purpose and relaxation of covenants in respect of UDL lot 4 and UDL lot 7.
    20. By National Gazette No.G80 dated 24 February 2016, notice was given for the applications of the third defendant and the fourth defendant to be heard by the Papua New Guinea Land Board at its Meeting No.02/2016.
    21. By National Gazette No.G421 dated 1 July 2016, notice was given that the applications of the third defendant and the fourth defendant were successful.
    22. The forfeited State Leases over which the first defendant was the registered proprietor are delineated in registered survey plan CAT No.M/49/2185.
    23. Upon the forfeiture of the State Leases over the properties, the area contained in them was resurveyed and registered in survey plan CAT No.M/49/2186 and this superseded the previous registered survey plan for the same area.
    24. As a result, CAT No.M/49/2186 is the registered survey plan that describes the surveyed area for UDL lot 4 and UDL lot 7 of which the third defendant and fourth defendant are the registered proprietors respectively.
    25. At no time was the land contained in the forfeited State Leases or a combination of any of them the subject of an application for consolidation.
    26. The third defendant was later issued State Lease Volume 72 Folio 14 over UDL lot 4 for a term of 5 years commencing on 1 July 2016 and ending on 1 July 2021.
27. The fourth defendant was later issued State Lease Volume 72 Folio 15 over UDL lot 7 for a term of 5 years commencing on 1 July 2016 and ending on 1 July 2021.
28. State Lease Volume 72 Folio 15 over UDL lot 7 was erroneously issued to “Trinco Ltd” as the application and the gazettal notices and the hearing conducted by the Papua New Guinea Land Board all concerned the fourth defendant so an application has been made by the fourth defendant to the Registrar to rectify the error in the State Lease such that it correctly refers to “Trinco No.6 Ltd”.
    

DISPUTED FACTS

44. From all the evidence before the Court, I find that the following principal facts are disputed:
    
    1. The contract is valid and should be enforced.
    2. The forfeiture of the State Leases over the properties was unlawful.
    3. The grant of State Leases over UDL lot 4 and UDL lot 7 to the third and fourth defendants respectively was unlawful.
    4. It is necessary for the hearing and determination of the applications made under Section 119 of the Land Act for variation of purpose and relaxation of covenants lodged by the third and fourth defendants in

connection with the State Leases for UDL lot 4 and UDL lot 7 which are currently before the Papua New Guinea Land Board and listed as Items 171 and 172 in the National Gazette No.G80 dated 24 February 2016 to be restrained pending the determination of these proceedings or until further order of the Court as without that the proceedings will serve no utility.
ISSUES

45. Two main issues that arise from these applications that I need to decide are:
    
    1. Whether the interim injunction granted ex parte on 23 March 2016 should continue?
    2. Whether the proceedings should be dismissed as against the third and fourth defendants on the basis that they do not disclose any reasonable cause of action against them or that they are frivolous or vexatious or that they are an abuse of the process of the Court?
       
46. I will address the second issue first.
    

WHETHER THE PROCEEDINGS SHOULD BE DISMISSED AS AGAINST THE THIRD AND FOURTH DEFENDANTS ON THE BASIS THAT THEY DO NOT DISCLOSE ANY REASONABLE CAUSE OF ACTION AGAINST THEM OR THAT THEY ARE FRIVOLOUS OR VEXATIOUS OR THAT THEY ARE AN ABUSE OF THE PROCESS OF THE COURT?

Parties’ submissions

47. The third and fourth defendants through Mr. Frizzell of counsel submit that the proceedings be dismissed for the following reasons:
    
    1. The statement of claim pleads no cause of action against either the third or fourth defendants or any substantive relief.
    2. All assertions in the statement of claim essentially are against the first and second defendants based on an allegation that the forfeiture of the State Leases of the first defendant was, by corrigendum in May 2011, revoked.
    3. The corrigendum in May 2011 was revoked in June 2011.
4. The corrigenda of May 2011 and June 2011 are void because the area of land described in the forfeited State Leases was the subject of public tender for Urban Development Leases Allotments 4 and 7 of which the third and fourth defendants were gazetted as successful tenderers in January 2011 and in the same month were granted those State Leases.
   
48. In addition, it was submitted that not only are the pleadings nonsensical as against the third and fourth defendants and thereby ambiguous or leave the defendants guessing as to what the plaintiff’s allegations are, there is a fundamental flaw in the whole statement of claim on the basis that the State Leases upon which it relies were forfeited in September 2008 and remain so.
    
49. The plaintiff through Mr Dewe of counsel submits that the third and fourth defendants should remain as parties to the proceedings and their application be refused on the basis that the land the subject of these proceedings were granted to them.
    
50. The second defendant supports the plaintiff’s submission.
    
51. The first defendant neither supports nor opposes the application.
    

The law

52. Under Order 10 Rule 9A(15)(1)(a) and (2)(d), Order 8 Rule 27(1) and Order 12 Rule 40(1) of the National Court Rules, proceedings may be dismissed or pleadings struck out if they; do not disclose a reasonable cause of action; are frivolous and vexatious; or are an abuse of the process of the court.
    
53. Order 10 Rule 9A(15)(1) and (2)(d) of the National Court Rules states:
    

“15. SUMMARY DISPOSAL.
(1) The Court may summarily determine a matter:

a. on application by a party; or

b. on its own initiative; or

c. upon referral by the Registrar under (3) below.

(2) The Court may summarily dispose of a matter in the following situations:

1. for want of prosecution since filing the proceedings or since the last activity on the file; or
2. for a failure to appear at any of the listing or directions hearing by a party or his lawyer; or

100. for non-compliance of any order or directions previously made or issued by the Court at any of the listing processes.

4. under any of the grounds set out in Order 12 Rule 40 and Order 8 Rule 27 of the National Court Rules.
5. on any competency ground relating to non-compliance with the National Court Rules or any other relevant rules of Court......”
   

54. Order 8 Rule 27 of the National Court Rules states:
    

“27. Embarrassment, etc. (15/26) (1)
(1) Where a pleading —

(a) discloses no reasonable cause of action or defence or other case appropriate to the nature of the pleading; or

(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.

(2) The Court may receive evidence on the hearing of an application for an order under Sub-rule (1).”

55. Order 12 Rule 40 of the National Court Rules states:
    

“(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) No reasonable cause of action is disclosed;

(b the proceedings are frivolous or vexatious;

(c) the proceedings are an abuse of the process of the Court.

the court may order that the proceedings be stayed or dismissed generally or in relation to any claim for relief in the proceedings.

(2) The court may receive evidence on the hearing of an application for an order under sub-rule (1).”

56. The Court’s power to strike out pleadings or stay or dismiss proceedings under any of the grounds specified in Order 8 Rule 27 (1) and Order 12 Rule 40 (1) is discretionary and also by its inherent jurisdiction, it has power to protect and safeguard any abuse of its processes.
    
57. Order 8 Rule 27 is very similar to Order 12 Rule 40. The principles to apply are therefore similar except that the outcomes are different. Under Order 8 Rule 27, the Court may at any stage of the proceedings, on terms or otherwise, strike out the whole or any part of a pleading. Under Order 12 Rule 40, the Court may stay the proceedings or dismiss the proceedings, either generally or in relation to any claim for relief in the proceedings. Evidence may be received by the Court on the hearing of an application for an order under both rules.
    
58. Those principles were summarised by Kandakasi, J in Kerry Lerro v Philip Stagg (2006) N3050 and endorsed by the Supreme Court in Philip Takori v Simon Yagari (2008) SC905 and they are set out below:
    

“1. Our judicial system should never permit a plaintiff or a defendant to be “driven from the judgment seat” in a summary way, “without a Court having considered his right to be heard.” A party has a right to have his case heard, as guaranteed by the Constitution and the laws of the land. The Rules are designed to enhance those rights and to ensure the prompt and fair disposal of matters coming before the Court. That right cannot be lightly set aside.

2. At the same time however, the law such as the Rules under consideration provide for and the Court has an inherent jurisdiction to protect and safeguard against any possible abuse of the processes of the Court.
3. The object of these rules are therefore “to stop cases which ought not to be launched — cases which are obviously frivolous or vexatious or obviously unsustainable.” In other words “the object of the rule was to get rid of frivolous actions.”
4. A claim may be frivolous if it can be characterized as so obviously untenable that it cannot possibly succeed or that the claim or defence is bound to fail if it proceeds to trial.
5. A claim or defence may be vexatious if the case amounts to a sham or one which cannot succeed and is one that amounts to harassment of the opposing party who is unnecessarily put to the trouble and expenses of defending or proving the claim.
6. With regard to the issue of disclosing a reasonable cause of action or defence, the Court must be clear that there are two (2) parts to the phrase “cause of action”. First, it entails a right given by law such as an entitlement to reasonable damages for breach of human rights under s.58 of the Constitution, commonly referred to as the “form of action”. Secondly, it entails the pleadings disclosing all the necessary facts which give rise to the form of action.
7. The phrase “cause of action” could thus be defined in terms of a legal right or form of action known to law with:

“every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the court. It does not comprise of every piece of evidence which is necessary to prove each fact, but every fact is necessary to be proved.”

8. 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.
9. These rules provide a summary judgment procedure or remedy which is available to a plaintiff or a defendant, and one which vests and calls for an exercise of a discretion by the Court.
10. The discretion must be exercised sparingly and only in a case where the statement of claim or the defence (as the case might be) is “obviously and almost incontestably bad.” In other words this discretion can be exercised only in cases that “are plain and obvious so that the master or Judge can say at once that the statement of claim [or defence] as it stands, is insufficient, even if proved, to entitle the plaintiff [defendant] to what he asks for.
    
59. To these principles, His Honour added:
    

“[T]he pleadings must be so bad and or vague and is not a case of lack of particulars or a lack of better pleading which cannot be cured by a request and or orders for further and better particulars and or amendment respectively under O.8, rr. 36, 50 or 51 of the Rules. Lack of particulars or lack of better pleadings is distinctly separate from a failure to disclose a reasonable cause of action or an action that is frivolous, vexatious or harassment. As such, clear and separate consequences follow. There is provision under the rules for requesting and or orders for further and better particulars or better pleadings as opposed to a right in a defendant or an opposing party to apply for a dismissal straightaway. A party must be careful not to ask for and the Court must stop to ensure that it is not being asked to dismiss a claim because of lack of particulars or lack of proper pleading which can be cured by appropriate amendments to the pleadings. Regard must also be had to the fact that the Rules are not an end in themselves but a means to an end and by reason of which a strict compliance of the Rules can be dispensed in the interest of doing justice in accordance with O.1, r.7 of the Rules in appropriate cases.”

Reasons for ruling

60. The pleadings in the statement of claim in particular at paragraphs 27 and 28 do not disclose all the necessary facts which give rise to a cause of action against the third and fourth defendants particularly on the grant of State Leases for UDL lot 4 and UDL lot 7 to the third and fourth defendants respectively following the alleged forfeiture of State Leases over the properties. In the prayer for relief, no relief is sought challenging the alleged forfeiture of the State Leases over the properties or the subsequent grant of State Leases over UDL lot 4 and UDL lot 7 to the third and fourth defendants respectively. Without a challenge as to the legality or not of those processes, the third defendant and fourth defendant would be protected by the principle of indefeasibility of title. This will in turn adversely affect the plaintiff’s claim for enforcement of the contract against the first and second defendants for the obvious reason that the State Leases over the properties were forfeited on 18 September 2008 and remain so.
    
61. I therefore agree with the third and fourth defendants’ submissions. The statement of claim does not disclose any reasonable cause of action against either the third or fourth defendants or any substantive relief against them. The proceedings are therefore frivolous or vexatious and amount to an abuse of process against the third and fourth defendants.
    

WHETHER THE INTERIM INJUNCTION GRANTED ON 23 MARCH 2016 SHOULD CONTINUE?

Parties’ submissions

62. The plaintiff submitted that it has satisfied all the necessary requirements for the grant of an injunction in its favour so the interim injunction granted ex parte on 23 March 2016 should continue.
    
63. The plaintiff contended that it has demonstrated that there is a serious question to be tried in that the substantive proceedings was founded on the breach of the contract which the first and second defendants have failed to complete and the relief sought in the substantive proceedings is to compel enforcement of the contract.
    
64. In addition, it was submitted that the balance of convenience favoured the continuation of the interim injunction on the basis that it was necessary for the hearing and determination of the applications made under Section 119 of the Land Act for variation of purpose and relaxation of covenants lodged by the third and fourth defendants in connection with Urban Development Leases UDL lot 4 and UDL lot 7 which are currently before the Papua New Guinea Land Board and listed as Items 171 and 172 in the National Gazette No.G80 dated 24 February 2016 to be restrained pending the determination of these proceedings or until further order of the Court as without that, the proceedings will serve no utility.
    
65. It was also submitted that; damages was not an appropriate remedy; and that an undertaking as to damages executed by the plaintiff was filed on 22 March 2016.
    
66. The second defendant supports the plaintiff’s submissions.
    
67. The first defendant opposed the application on the basis that the contract purportedly entered between the plaintiff and the first defendant and sanctioned by the second defendant was unenforceable as the transaction was tainted by allegations of fraud generally supported by evidence of strong opposition to the transaction including that from the Church Chief Executive. In addition, it was submitted that the second defendant ought to have no involvement in the sale of the land in question including affixing of its seal when the first defendant was the registered proprietor of the land in question and had indefeasible titles to those pieces of land. It was also submitted that not all relevant facts were brought before the Court in order for the Court to make an informed decision so the Court was misled in some material particular and that the plaintiff was not coming to Court with clean hands.
    
68. The third and fourth defendants support the first defendant’s submissions.

Law

69. The grant of an interlocutory relief is an equitable remedy and it is a discretionary matter. The purpose of an interlocutory injunction is to preserve the status quo until the determination of the substantive action. That position was succinctly put in Robinson v National Airlines Commission [1983] PNGLR 476 where at p. 480, Andrew, J held:
    

“The purpose of an interlocutory injunction is to preserve the status quo until the hearing of the main action “where other factors appear to be evenly balanced it is a counsel of prudence to take such measures as are calculated to preserve the status quo”, per Frost C.J. in Mt Hagen Airport Hotel Pty Ltd v Gibbs and Anor [1976] PNGLR. 316. No real principles can be laid down as to when they should or should not be granted except they are granted when “just or convenient” and what falls within that description must differ substantially from case to case. As Lord Denning M.R. said in Hubbard v Vosper [1972] 2 W.R.L. 389 at 396:

“In considering whether to grant an interlocutory injunction, the right course for a judge is to look at the whole case. He must have regard not only to the strength of claim but also to the strength of the defence and then decide what is best to be done. Sometimes it is best to grant an injunction so as to maintain the status quo until the trial. At other times it is best not to impose a restraint upon the defendant but leave him free to go ahead... The remedy by interlocutory injunction is so useful that it should be kept flexible and discretionary. It must not be made the subject of strict rules.”

70. The relevant principles governing applications for the grant of interim injunctions in this jurisdiction are well settled and these were restated and reaffirmed by the Supreme Court in Chief Collector of Taxes v Bougainville Copper Ltd (2007) SC853. So in order for an injunction to be granted, it is incumbent upon an applicant to demonstrate that:
    

1. there is a serious question to be determined (either of law or fact) in the substantive proceedings;

2. the balance of convenience favours the grant or continuity of the injunction;

3. damages is not an appropriate remedy if the injunction is not granted; and

4. an undertaking as to damages has been given by the applicant.
   
71. It is settled law in our jurisdiction that where a party applies for ex parte injunctive orders, it must fully disclose all material facts to enable the Court to make an informed decision: Associated Plumbing Installation Ltd v Air Niugini (2011) SC1127.
    

Application of the principles to the present case

Is there a serious question to be determined (either of law or fact) in the substantive proceedings?

72. From the evidence before the Court, the State Leases over the properties were forfeited and notice of such forfeiture was published in the National Gazette No.G168 on 18 September 2008. On 27 May 2011, a corrigendum was published in National Gazette No.G136 revoking the forfeiture of State Leases over the disputed land on the basis that those leases were erroneously forfeited without taking into consideration that the lessee was not given ample time to show cause why the leases should not be forfeited. However, by notice published in the National Gazette No.G170 on 30 June 2011, the corrigendum published in the National Gazette No.G136 on 27 May 2011 was revoked.
    
73. In any event, the corrigenda published in the National Gazette on 27 May 2011 and later on 30 June 2011 concerning the forfeiture of the State Leases over the properties would be void and of no effect by operation of Section 123(1) of the Land Act. That provision relevantly states:
    

“Where a State Lease (hereafter called “the revoked lease”) has been forfeited under Section 122 by mistake, and provided that a notice under Section 75 has not been published in the National Gazette in respect of another applicant, the Departmental Head may, by notice published in the National Gazette, revoke the notice of forfeiture.”

74. Section 75 of the Land Act provides that as soon as practicable after the publication of the notice of successful applicants of State Leases in the National Gazette under Section 74 of the Land Act, the Departmental Head shall forward a Letter of Grant to each successful applicant.
    
75. The contract between the first defendant and the plaintiff was executed after the forfeiture on 19 February 2010. Proceedings instituted by the first defendant by OS No.41 of 2011 challenging the forfeiture of the State Leases over the properties were discontinued on 2 November 2015. The third defendant and the fourth defendants are now the registered proprietors or entitled to be registered as proprietors of UDL lot 4 and UDL lot 7 and remain so. They were granted the relevant State Leases in January 2011.
    
76. The applications by the third and fourth defendants for variation of purpose and relaxation of covenants in respect of UDL lot 4 and UDL lot 7 were heard by the Papua New Guinea Land Board at its Meeting No.02/2016 and in National Gazette No.G421 dated 1 July 2016, they were published as the successful applicants in respect of their respective applications. The action sought to be restrained has already occurred.
    
77. I also concur with the first defendant that not all relevant facts about the sale of the disputed land and the judicial review proceedings commenced by OS No.41 of 2011 were placed before the Court when the application to obtain the ex parte orders was made. The fact that there was opposition to the sale of the disputed land despite the existence of the contract having being made known to Mr Korakali as he was written to by Mr Apami, Church Executive Officer by his letter dated 19 February 2010 informing him of his dissatisfaction over the purported sale of the disputed land was not disclosed to the Court. The fact that the plaintiff’s application to be joined as a party to the judicial review proceedings as second plaintiff was refused on 12 September 2012 and the reason for refusal were also not disclosed to the Court.
    
78. I adopt my reasons for dismissing the proceedings against the third and fourth defendants and apply them here in support of these reasons.
    
79. Whilst the allegation of breach of the contract is a serious matter between the plaintiff and the first and second defendant, I am not satisfied that the plaintiff has demonstrated that there is a serious question to be determined (either of law or fact) in the substantive proceedings. This consideration does not favour the plaintiff.
    

Does the balance of convenience favour the grant or continuity of the injunction?

80. No, for reasons stated above.
    

Are damages not an appropriate remedy if the injunction is not granted?

81. Damages would not be an adequate remedy. I adopt and apply the reasons for addressing the first consideration here as well.
    

Has the plaintiff given an undertaking as to damages?

82. Yes. An Undertaking as to Damages executed by Kenneth Korakali, Managing Director of the plaintiff under the common seal of the plaintiff dated 21 March 2016 was filed on 22 March 2016. There is no challenge to its integrity or value.
    

Conclusion

83. Not all the four requirements or considerations have been met by, or considered in favour of, the plaintiff. For all the foregoing reasons, the plaintiff’s application for the continuation of the ex parte orders is refused and they are discharged.
    

ORDERS

84. The formal orders of the Court are:
    
    1. The application by the third defendant and fourth defendant to dismiss the proceedings against them moved pursuant to a notice of motion filed on 11 November 2016 is granted.
    2. The application by the plaintiff to continue the ex parte orders granted by the Court on 23 March 2016 moved pursuant to a notice of motion filed on 22 March 2016 and sought to be set aside by the first defendant by its notice of motion dated 13 September 2016 and filed on 14 September 2016 is refused.
    3. The ex parte orders granted by the Court on 23 March 2016 are discharged.
    4. The plaintiff shall bear the costs of the first, third and fourth defendants.
    5. The second defendant having supported the plaintiff shall bear its own costs.
       

Ordered accordingly.
________________________________________________________________
Jema Lawyers: Lawyers for the Plaintiff
Kombri & Associates: Lawyers for the First Defendant
HBest Wally: Lawyers for the Second Defendant
Warner Shand: Lawyers for the Third & Fourth Defendants