Malip v Kupo [2017] PGNC 37; N6659 (27 February 2017)

N6659
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS No. 894 OF 2011 (H)

In the Matter of ORA BUSINESS GROUP INC.

BETWEEN

COUNCILLOR MATTHEW MALIP alias MESU WIN

Plaintiff

AND
PAU KUPO, WII PAU & KUMB WING
Defendants

Mt. Hagen: Murray, J
2012: 16 March 2017: 27 February

NOTICE OF MOTION - Dismissal of proceeding - Order 12 Rule 40 (1) (c) National Court Rules - Proceeding instituted in breach of ss.39, 41 & 42 Business Group Incorporated Act Chapter 144

Cases Cited:
Mark Ekepa & Ors vs. William Goupe & Ors (2004) N2694
State vs. Tom Watinga [1994] PNGLR 255
Tulom Abai & 765 Ors .vs. The State (1995) N1402

Counsel:

Mr. Kunai, for the Plaintiff
Mr. Tamutai, for the Defendants

DECISION

27^th February, 2017

1. MURRAY J: This is a decision on an application by the Defendants to

dismiss this proceeding.

Background

2. The Plaintiff and the Defendants are all members of Ora Business Group

Inc (“OBG”). It was incorporated in 1997.
On 24^th November 2011, the Plaintiff filed this proceeding seeking a number of declarations, but essentially claiming that he was a duly appointed member of the Management Committee of OBG and was wrongly removed, and further that the Defendants’ appointment as the committee members of OBG was not done in accordance with law and therefore null and void.

3. On 16^th February 2012, the Defendants filed a Notice of Motion. That Motion

seeks an order to dismiss the Plaintiff’s proceeding. The application is made pursuant to Order 12 Rule 40 (1) (a), (b), (c) of the National Court Rules, and it is opposed by the Plaintiff.

4. Order 12, Rule 40 (1) (a), (b) & (c) is in the following terms:
   

40. Frivolity, etc.

(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; or
(b) the proceedings are frivolous or vexatious; or
(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.

5. Order 12, Rule 40 (1) raises alternative grounds upon which a proceeding can be dismissed. The Defendants’ application is based on the ground of an abuse of the Court’s process. The specific rule for a dismissal of a proceeding for being an abuse of the Court’s process is Order 12, Rule 40 (1) (c) of the National Court Rules.

6. The main issue for determination by this Court is: whether or not the institution of this proceeding is an abuse of the Court process and therefore must be dismissed.

7. In support of the application the Defendants rely on the affidavit of
Mr. Tamutai filed 16^th February 2012.

8. The Defendants through their lawyer, Mr. Tamutai, argued that the proceeding filed herein must be dismissed for being an abuse of process under Order 12 Rule 40 (1) (c) for the following reasons:
Firstly, the current proceeding raises the issue of whether the Defendants are members of the Management Committee of OBG, which issue has been determined in another proceeding and is therefore res judicata.
Secondly, as the issue has been determined, the Plaintiff is estopped from raising it again.
Thirdly, the proceeding was filed in breach of certain provisions of the Business Groups Act, namely, ss. 39, 41 & 42.
Fourthly, by filing this proceeding, it amounted to multiplicity of proceedings which is not permitted and lastly, by filing this proceeding, the Plaintiff is getting a second bite of the cherry which is also not permitted.

9. In response, the Plaintiff through his lawyer, Mr. Kunai submitted: Firstly, the Defendants were never appointed by the “Financial Members” as required under the Act. Secondly, the Plaintiff was, since the incorporation of OBG in 1979, the duly appointed member of the Management Committee, as his appointment was done by the Finance committee as opposed to the Defendants who were not. Thirdly, the Defendants’ application is misconceived because the issue raised now has never been determined before the Court in OS 373 of 2003. It was further submitted the issue in that proceeding is distinct from this one. That is to say, in OS 373 of 2003, the Plaintiff (Ora Business Group) sought against the Defendant (OK Corporations Ltd) orders to direct its Directors to do certain things as directors under the Companies Act.
Ora Business Group as the Plaintiff in that proceeding did not raise the issue now raised by the Plaintiff in this proceeding.

10. To determine whether this proceeding should be dismissed for being an abuse of process, I must first determine, the following sub issues:

(1) Has this Court determined that the Defendants are members of the Management Committee of OBG?

(2) If so, is the Plaintiff estopped from raising this issue again?

(3) Does the filing of this proceeding amount to multiplicity of proceedings?

(4) Is the Plaintiff entitled to raise this matter again?

(5) Is the current proceeding filed in accordance with Sections 39, 41 & 42 of the Business Groups Act?

11. I propose to consider the sub issues in the following order starting with sub issues 1 and 2 together as they raise the principles of Res Judicata and Issue Estoppel which principles are interrelated. Then I will move on to consider sub issue number 5, then followed by sub issue number 3 and lastly sub issue number 4. The last 2 sub issues will be considered only if necessary.

Has this Court already determined that the Defendants are members of the Management Committee of OBG? If so, is the Plaintiff estopped from raising it again.

12. The first 2 sub issues involve the application of the principles of Res Judicata and Issue Estoppel. The principles of Res Judicata and Estoppel are simply stated as follows:
Firstly with respect to Res Judicata;

His Honour Justice Sheehan in the case of Tulom Abai and 765 others vs. The State (20/12/95) N1402, expressed the principle in the following simple words:

“It is simple law that a claim that has been tried in a Court of Law and a decision lawfully made on it cannot be tried again in respect of the same matters.

The legal term for this is res judicata which means “the matter is described”. That is, a final judgment by a competent Court on the merits of a claim has been made and is conclusive-final-as to the rights of the parties and those claiming through them. Such a decision is a bar to any new action involving the same claim or cause of action.

Of course, in order to succeed in a claim for res judicata there must be evidence or proof of the decision finally disposing of the matter in dispute as between the parties on its merits.”

As for Issue Estoppel, Cannings J restated the relevant principles in the case of Mark Ekepa & Ors vs. William Goupe & Ors (2004) N2694 as follows:

“The principle of issue estoppel is closely related to res judicata. It is a sub-set of res judicata. To establish the defence of issue estoppels a party only has to show that an issue of fact or law or mixed fact and law has been authoritatively and finally determined in a previous case. The cause of action does not have to be the same. Nor do the parties.”

13. As set out above, clearly, the 2 principles state that where a matter has been finalized on its merits, it cannot be raised again. This means, if someone is aggrieved by a decision that finalises a matter, that person has recourse in an appeal to the Supreme Court. He cannot come back to the same Court that dealt with the matter that brought it to a finality on its merits.
14. In this case, the Plaintiff in his Originating Summons seeks various declaratory orders, but in essence, he challenges the Defendants’ appointment as members of OBG, saying that he is the appointed member of the Management Committee and they are not.

15. The Defendants argue that they are duly appointed members of the OBG and the decision of Davani J in the proceeding OS 373 of 2003 confirmed that and has put to rest that issue.

16. To determine whether the principles of Res Judicata and Issue Estoppel apply here, I must look at the decision in OS 373 of 2003 and consider the question; Did the court in that proceeding determine that the Defendants named in this proceeding are the appointed members of the Management Committee of OBG?

17. A copy of that decision is annexed to the affidavit of Mr. Tamutai as Annexure ‘B’.

18. In paragraph 1 of the Decision, the Court set out the orders sought in the Originating Summons by the Plaintiff. The Plaintiff is OBG Inc. whilst the Defendant is OK Corporation Ltd. The orders sought by the Plaintiff, were:

(a) An order directing that the defendant’s Directors have acted in breach of

s.101 of the Companies Act 1997;

(b) An order directing the Directors and Management of OK Corporation Ltd

(‘OK’) to call an Annual General Meeting for the election of new Directors

by the shareholders;

(c) A Declaration that no Director including the Chairman, has any powers to

appoint a person to be a Director of a Company, except by the Shareholders

of the company;

(d) A Declaration that the appointment of Wii Pau and Pau Kupo as OK’s

Directors, be declared illegal and therefore void and of no effect;

(e) An order restraining OK’s Directors not to declare any dividends until the

election of full Directors for OK;

(f) Costs of the proceedings;
(g) Other orders.

19. It is interesting to note from that decision that the Plaintiff in this proceeding gave evidence in support of the Plaintiff in that proceeding, whilst, the Defendants in this proceeding gave evidence in support of the Defendant, in that proceeding and at all material times, all parties to this proceedings were members of OBG Inc.

20. Looking at the relief sought by the Plaintiff in OS 373 of 2003, I agree with Mr. Kunai that they are different to the reliefs sought in this proceeding. I also agree with Mr. Kunai that the main issue raised in this proceeding is not the same as the main issue raised in OS 373 of 2003. The main issue in that proceeding was, with respect to the appointment of Wii Pau and Pau Kupo, as Directors of OK Corporation Ltd. (emphasis mine).

21. However, Davani J has in her decision made certain statements as a matter of facts, which in my view “seemed” to determine the issue in this proceeding. I say “seemed” because nowhere in the Judgment, did the Court specifically address this issue. All there is in the judgment is reference to the first 2 Defendants as Committee Members of OBG. This can be seen at paragraphs 17 and 29 of the Judgment.

22. At paragraph 17, referring to Wii Pau and Pau Kupo the Court simply stated: “the 2 are basically executive members of OBG Inc.” There is no discussion, on how Wii Pau and Pau Kupo became executive members of OBG Inc.

23. Then at paragraph 29, the Court stated “As is the requirement under clause 3 of the Constitution the three (3) committee members are Pau Kupo, Wii Pau and Kumb Wing.”

24. By this statement, it seemed to give some recognition to Wii Pau, Pau Kupo Kumb Wing as committee members. But the question is, does that statement by the Court amount to a determination by the Court of the issue of the Defendants’ appointment as Committee Members.

25. In my view it does not because there was no determination of it on merits.

26. The principles of Res Judicata and Issue Estoppel dictate that, for these principles to apply, the issue or matter must be finalized by a competent Court on the “merits.” (emphasis mine).

27. To say that a matter is finalized or determined on the “merits”, it must, in my view involve proper and full argument supported by evidence.

28. In the present case, that did not happen. There was no argument by parties on this issue. The Court did not in its decision address this issue at all, because it was and never an issue before the Court in OS 373 of 2003.

29. As it was not an issue or matter determined on the merits, I find that the principles of Res Judicata and Issue Estoppel do not apply here.

30. I now move on to consider the next sub issue.

Should the proceedings be dismissed because of non-compliance with Sections 39, 41 & 42 of Business Group Incorporated Act.

Sections 39, 41 & 42 of the Business Group Incorporated Act are under Part V – which is titled, Dispute Settlement.

The said provisions are in the following terms:

“39. Application & Interpretations of Part V.

(1) This Part applies to disputes between-

• (a) a business group and a member of the group; or
  
• (b) members of a business group,

concerning the property or the affairs of the group, including-

(c) the distribution or disposal of any property or income of the group; and
(d) any transaction between the group and any of its members,

but, except by agreement, does not apply to any dispute between the group, or a member of the group, and a non-member.

(2) This Part also applies to disputes as in membership of, or the right to membership in, a business group.
(3) In this Part, a reference to a party or to a person interested in a dispute includes a reference to a person whose interest in the dispute is real, though not necessarily or immediately financial.”

“41. Settlement of disputes.

All disputes to which this Part applies shall be dealt with, in accordance with sections 42 and 43, by the dispute-settlement authority or a court having jurisdiction under section 42.”

“42. Jurisdiction of courts.

(1) No court has jurisdiction over a dispute to which this Part applies

unless-

(a) all parties agree that it should be referred to the court; or

(b) the constitution of the business group concerned so provides; or

(c) any relevant agreement between the business group and a party so provides; or

(d) the dispute-settlement authority thinks that-

(i) it cannot satisfactorily settle the dispute; and

(ii) the court may be able to do so.

(2) The dispute-settlement authority has jurisdiction to decide any matter

referred to in Subsection (1)(a), (b) or (c), and its decision is not open to challenge in any court.

(3) Where under Subsection (1) a dispute may be referred to a court-

• (a) the court must be a court that, apart from the effect of this Part, has jurisdiction in the matter; and
  
• (b) it shall be referred, in the prescribed manner, by the dispute- settlement authority; and
  
• (c) the dispute-settlement authority is entitled to act, and if the court or a person interested so asks shall act, as an assessor on matters of custom and as to matters of common knowledge within the group, but-
  

(i) the advice shall be given in open court and is open to challenge; and

(ii) if for good reason the court considers it proper to do otherwise it is not bound to accept the advice.”

Also relevant is Section 40 of the Act. It is in the following terms:

“40. Dispute-settlement authorities.

(1) In order to be incorporated, each business group must have at least

one dispute-settlement authority.

(2) A dispute-settlement authority may be a person or a number of

persons-

(a) specific by name; or
(b) specified by office or position; or,
(c) determined in the manner specified,

in the constitution of the group.

(3) Notwithstanding Subsection (2), the parties to a dispute to which this

Part applies may, with the consent of the group, agree on an ad hoc dispute-settlement authority in relation to the dispute.”

31. In this case, there is no doubt a dispute exists under Section 39 (1) of the Act. The Plaintiff disputes the Defendants are committee members of OBG. Section 42 provides how a dispute is dealt with. It provides that a dispute will be dealt with by either the dispute settlement authority as established under Section 40 or by the Court in accordance with Section 42.

32. Section 42 is very clear. A Court has no jurisdiction over a dispute arising under Part V of the Act unless, one of the considerations under Section 42 (1) are present.

33. In this case, Mr. Kunai submitted the composition of the Management Committee of OBG is a serious matter and therefore is appropriate for the Court to deal with and not the Dispute Settlement Authority established under Section 40.

34. I find this argument misleading. Section 42 (1) (d) is very clear. It is the Dispute Settlement Authority that will decide what dispute is appropriate to go before the Court. It is not for a party or his lawyer to decide that.

35. In this case, no evidence was adduced to show that, the Dispute Settlement Authority has made the decision that, the issue before this Court is appropriate to be dealt with by this Court.

36. In the circumstances, I dismiss the argument by Mr. Kunai and find that the proceeding was filed in breach of the provisions under Part V of the Act, in particular, ss. 39, 41 & 42.

37. As I have found that the proceeding was filed in breach of provisions under Part V of the Act, is that an abuse of the process of the Court under Order 12 Rule 40 (1) (c) of the National Court Rules?

38. Acting Justice Sawong (as he then was) in the case of State vs. Tom Watinga [1994] PNGLR 255, defined “Abuse of Process” in the following words:

“abuse of the process of Court is an expression used to describe any use of process or procedures of the Court for an improper purpose or an improper way. It encompasses a wide range of situations.”

39. Based on this definition, I find the filing of this proceeding in breach of the provisions of the Business Group Incorporated Act, means that the proceeding was filed in an improper way and is therefore an abuse of the process of Court. I am satisfied that the condition of Order 12 Rule 40 (1) (c) has been met.

40. Accordingly on this basis alone, I dismiss the proceeding filed by the Plaintiff on 24^th November 2011 for being an abuse of the process of the Court with costs to be taxed if not agreed to.

41. Given my decision above, it is now not necessary to consider the balance of the sub issues and do not consider those.

__________________________________________________________________
Kunai Lawyers: Lawyer for the Plaintiff
Tamutai Lawyers: Lawyer for the Defendants