Kupai v Million Plus Corporation Ltd [2017] PGNC 41; N6669 (22 March 2017)

N6669

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO. 692 OF 2016

BETWEEN:

TOTIL KUPAI as Chief and BENEDICT MICHAEL as Chairman for and on behalf of KABAIDALIM CLAN
Plaintiffs

AND:
MILLION PLUS CORPORATION LIMITED
First Defendant

AND:
JAMES PAIS AND JUDAH PAIS OF SORWAIPAP CLAN
Second Defendant

AND:
LAKA FOREST DEVELOPMENT LIMITED
Third Defendant

AND:
WALTER FARMERS ASSOCIATION LIMITED
Fourth Defendant

Kokopo: Anis AJ

2017: 17 & 22 March

MOTION TO DISMISS PROCEEDING – Order 12 Rule 40(1) of the National Court Rules - no reasonable cause of action - frivolous and vexatious - abuse of process

MOTION SEEKING SUBSTANTIVE RELIEF – Section 155(4) of the Constitution and Order 12 Rule 1 of the National Court Rules - plaintiffs seek declaratory relief sought in the originating summons

Cases cited:
Gabriel Yer v. Peter Yama (2009) SC996
John Momis v. Attorney-General [2000] PNGLR 109
NCDC v. Yama Security Services (2003) SC707
PNG Aviation Services Pty Ltd v. Geob Karri (2009) SC1002
Reforestation Company Pty Limited (2011) N4674
Rus Mongogl v. MVIT [1985] PNGLR 300
Tigam Malewo v. Keith Faulkner (2009) SC960
Wilfred Mamkuni & 80 Ors v. Mr Ly Cuong-Long and Jant Limited and Gogol

Overseas case:
Bowler v. Mollem Co. Ltd [1954] 3 All ER at pg. 556

Counsel:

Mr S Daniels, for the Plaintiffs
Mr P Tabuchi, for the 1^st, 2^nd, 3^rd& 4^thDefendants

RULING

22^nd March, 2017

1. ANIS AJ: I have before me two motions. The plaintiffs filed their notice motion on 17 October 2016 and the defendants filed theirs on 25 October 2016. The Court heard them together on 17 March 2017. I then reserved my ruling to 9:30am this morning.

2. This is my ruling.

PRELIMINARY

3. At the start of the hearing, the plaintiffs submitted that the Court had already dealt with their motion. Upon checking the court file, I noticed that both motions had returned before his Honour Justice Higgins on 4 November 2016. The court record showed that both motions were not dealt with then but were adjourned, and the Court at that time in addition to the adjournment issued an interim restraining order. I was satisfied and ruled that both motions were properly before the Court for hearing.

PLAINTIFFS' MOTION

4. Let me start with the plaintiff's' notice of motion because I think it was discovered early during the course of submissions by the parties that the motion was substantially flawed. Let me explain. The motion seeks identical relief as those sought in the originating summons. Counsel for the plaintiffs did not dispute this fact. I recall putting to counsel whether he concedes to the fact that the motion seeks substantive relief to which counsel replied "yes".

5. I will not spend too much time on this except to perhaps point firstly to the court rules and case law on point. Order 4 Rule 49(9) of the National Court Rules states that Motions shall be for the relief on interlocutory matters only and not for the substantive relief claimed in the originating process. The case law simply recognises this rule. The late Chief Justice Sir Mari Kapi who then was the Deputy Chief Justice held in the case of John Momis v. Attorney-General [2000] PNGLR 109 that it is an abuse of process to seek orders in a notice of motion which is aimed at determining the issues in the originating summons [ see also cases: NCDC v. Yama Security Services (2003) SC707 and Gabriel Yer v. Yama (2009) SC996].

6. I uphold the defendants' submission in this regard. I dismiss the plaintiffs' notice of motion because it infringes Order 4 Rule 49(9) of the National Court Rules. The plaintiffs' notice of motion is aimed at determining the issues in the originating summons as the relief therein are identical to the relief in the originating summons. I find that the plaintiffs' notice of motion amounts to abuse of the Court's process.

DEFENDANTS' MOTION

7. I turn to the defendants' notice of motion. Relief two (2) therein seeks to dismiss the proceeding under Order 12 Rule 40(1) of the National Court Rules. The defendants seek to dismiss the proceeding for want of reasonable cause of action, frivolity and abuse of court process. Now, I note that the defendants essentially presented two arguments. Firstly, they argue that the proceeding is substantially flawed or defective because they say the plaintiffs have failed to obtain the consent and authority of those persons they claim to represent. Secondly, the defendants argue that the relief sought are vague without proper basis or pleading to substantiate them. They say that based on the originating summons's present form, it is not possible for the Court to make a proper judicial determination against the defendants.

8. Let me address them separately.

CLASS /REPRESENTATIVE ACTION

9. In the originating summons, the two (2) plaintiffs named and described themselves as TOTIL KUPAI as Chief and BENEDICT MICHAEL as Chairman for and on behalf of KABAIDALIM CLAN. These two persons are suing under their respective titles, that is, one as the 'Chief' and the other as the 'Chairman', for and on behalf of a clan known as Kabaidalim. I am satisfied that this is a class or representative action.

10. During the hearing, I asked the plaintiffs' counsel to clarify the use of the title "Chairman" by the plaintiff Benedict Michael. Counsel said the title 'Chairman' was used generally to merely depict Benedict Michael as a leader of the clan. Counsel confirmed that Benedict Michael was not the Chairman of any legal organisation or group.

11. The defendants strongly contend that the proceeding must be dismissed because they say the originating summons was filed contrary to the mandatory requirements for bring a class/representative action.

12. Let me firstly look at the National Court Rules. I firstly refer to Order 5 Rule 8(2), which says A person shall not be added as plaintiff without his consent. Secondly, I refer to Order 13 Rules (1) & (4). Rule (1) says Where numerous persons have the same interest in any proceedings the proceedings may be commenced, and, unless the Court otherwise orders, continued, by or against any one or more of them as representing all or as representing all except one or more of them. And Rule (4) says A judgment entered or order made in proceedings pursuant to this Rule shall be binding on all the persons as representing whom the plaintiffs sue or the defendants are sued, as the case may be, but shall not be enforced against any person not a party to the proceedings except with the leave of the Court. From my reading of the two rules, firstly, the Court may allow a person or persons to act for more plaintiffs in a Court proceeding and the Court's power to allow for that is discretionary (see cases: Wilfred Mamkuni & 80 Ors v. Mr Ly Cuong-Long and Jant Limited and Gogol Reforestation Company Pty Limited (2011) N4674). Secondly, a plaintiff cannot be added or joined to a proceeding without his or her consent.

13. The case law is settled on this point. The Supreme Court has made compliances mandatory. It sets out in the case of Tigam Malewo v Keith Faulkner (2009) SC960 three (3) fundamental requirements. Firstly, all the intended plaintiffs must be named in the originating process. Secondly, every intended plaintiff must give specific instructions (evidence in writing) to his or her lawyer to act for him or her. And thirdly, persons, for example like the two (2) named plaintiffs herein who claim to represent others, must produce an authority or authorities to the Court to show that they were duly authorised by these intended plaintiffs to file proceedings as a class or representative action.

14. I note during the hearing that the parties, particularly the plaintiffs, have accepted the law on this point. But the plaintiffs, in reply, said they have actually complied with the requirements. Mr Daniels drew the Court's attention to Annexure "G" to the Affidavit of Totil Kupai, which was filed on 17 October 2016. The defendants in reply submitted that the said document did not meet the strict requirements under the rules and case law. I have had the benefit of considering the said Annexure "G" in Mr Kupai's Affidavit. It appears to be a letter, which is dated 28 September 2016. It was prepared and signed off by the two (2) named plaintiffs herein plus 144 persons who claim to be members of the Kabaidalim clan. The letter is addressed to the Managing Director of the Papua New Guinea Forest Authority. Its purpose was to make out a case to the Papua New Guinea Forest Authority that the two (2) plaintiffs and the 144 persons who counter-signed in the letter did not give permission to the first, third and fourth defendants to operate on a site to harvest logs. Now, it is obvious that that letter or Annexure "G" was used as evidence for a different purpose as I have pointed out above. It seems clear that the plaintiffs have nothing to show for to prove that they have complied with the three (3) mandatory requirements, as I have set out above in my ruling, for commencing a representative action. It also seems clear that the plaintiffs have attempted to address the issue by hastily referring the Court to Annexure "G" in Mr Kupai's Affidavit, which as I have already stated has no relevance. I deliberately used the term 'hastily' because despite the fact that this issue was a significant one, it was not addressed anywhere in the plaintiffs' written submission that was handed up in Court on 17 March 2017. Counsel, as it seems, only reacted to the issue after hearing submissions from the defendants as well as after the Court had inquired with questions during the hearing.

15. I therefore refuse the plaintiffs' submission that Annexure "G" consists of evidence that meets the strict requirements set out under Order 5 Rule 8(2) and Order 13 Rules (1) & (4) of the National Court Rules and also those set out by the Supreme Court in the case Tigam Malewo v Keith Faulkner (supra). I find as a fact no evidence which shows that the two (2) plaintiffs have obtained any authorities whatsoever from a person or group of individuals requesting the two (2) plaintiffs to represent them in this now purported class action. I find as a matter of fact no attached scheduled to the originating summons, which should have contained the names of the intended plaintiffs. I find as a matter of fact no evidence which shows any permission whatsoever given by a group of persons to the two (2) plaintiffs to engage a lawyer for them or permission by a group of persons directly to Daniels & Associates Lawyers authorising the said firm to act for these persons and file the court proceeding. I find in conclusion that there are no proper plaintiffs in this proceeding.

16. Having made the above findings, I would have to ask myself this. Whether the failures as highlighted above in my ruling, would be termed as a fundamental flaw to the proceeding currently on foot, or whether it can be cured through for example amendments. In this case, I would say and find the failures fatal to the proceeding. Having reached the decision, there is one more finding of fact I wish to add here before concluding. When I look at the heading in the originating summons, the two (2) plaintiffs state themselves as suing "for and on behalf of Kabaidalim Clan." They are not suing for example "for themselves and for and on behalf of Kabaidalim Clan." What this means is that the two (2) plaintiffs, themselves, did not exercise or assert any of their own primary rights in this proceeding. Had they done that, the Court proceedings could have survived under the names of the two (2) plaintiffs minus the names of the persons whom they had no authority to represent. This is however not the case. I am therefore satisfied that the proceeding is void ab initio. Let me summarise my ruling on point by quoting Lord Denning in the case Bowler v Mollem Co. Ltd [1954] 3 All ER at pg. 556 (which was also cited by Pratt .J in Rus Mongogl v. MVIT [1985] PNGLR 300) where he said “the thing which cannot be cured is the bringing of an action in a representative capacity when that capacity does not exist.”

17. The originating summons must therefore be dismissed.

SUMMARY

18. Because of my findings above, I am of the view that it is sufficient for the Court to dismiss the proceeding. As such, I intend to do so without proceeding further to consider the other submissions or the defendants' second argument in relation to their notice of motion.

REMARKS

19. I do not think that the Court's findings against the plaintiffs, or should I say the two (2) plaintiffs, is because of their doing. This is a case where it seems that lawyers are at fault. The requirements in law for class or representative actions are settled and have been in place for years now in this jurisdiction. It is not a case where one can say that a lawyer is acting on instructions. It is actually the step before that. Let me make a remark that in class or representative actions, lawyers or law firms should not file court proceedings for a representative or plaintiffs unless these persons produce clear evidence that they are the duly appointed representatives. Similarly, lawyers or law firms should not file court proceedings for a group of intended plaintiffs unless the intended plaintiffs themselves as individuals disclose evidence of their signatures, consents and authorities to them to act. Lawyers or law firms who file court proceedings without such regard, must note that in so doing they will commit both the Court and the defendants to incur costs and time. When that happens, Courts' time and resources are wasted. They commit defendants to defend to the court action. If ex-parte orders are obtained, the defendants will be the ones who will stand to suffer. But I think the real concern for my remark is this. When such a proceeding is dismissed because of failure by a plaintiff or plaintiffs to observe the three (3) requirements as held in Tigam Malewo v Keith Faulkner (supra), there is no guarantee that the plaintiff or plaintiffs will pay the defendant's costs as it may still be arguable later whether the plaintiffs consented or gave their authorities in the first place to file the court proceeding. So it may become a critical issue at the end of a Court's ruling dismissing a proceeding under these circumstances, that is, who should be ordered to pay for costs of the proceedings or for other damages that may have been suffered under the circumstances of the case. I would remark that the lawyer or law firm responsible for filing the proceeding in the first place, should be the ones who should explain why costs should not be awarded against them personally.

20. The second remark I wish to make is this. The dismissal of this proceeding does not extinguish the rights of persons who are still interested in pursuing the matter. These persons are at liberty to commence fresh proceedings in the future if they so wish.

COSTS

21. The defendants submit that costs should be awarded on a solicitor/ client basis against the plaintiffs, that is, pursuant to Order 22 Rule 35 of the National Court Rules. The defendants refer to Annexure PT-1 in the Affidavit of Philip Tabuchi which was sworn and filed on 25 October 2016 to make their argument on this point. The defendants say they have put the plaintiffs on notice earlier that they will be seeing costs on a solicitor /client basis. The plaintiffs' counsel in reply said he did not have a copy of Mr Tabuchi's Affidavit. Counsel did not elaborate further with submissions to explain what he meant by that. My view at that time was that counsel did not have a copy of the said Affidavit with him in Court. Nevertheless, I note that there is proof of service of the defendants' application documents including the Affidavit of Mr Tabuchi that contains the said letter with the said warning. I refer to the Affidavit of Bessie Morea, which was sworn on 27 October 2016 and filed on 31 October 2016. Ms Morea deposes that on 26 October 2016, she had caused to be posted two (2) letters, one of which is the letter by the defendants' lawyers dated 24 October 2016, which contains the said warning regarding costs. She also deposes posting another letter dated 26 October 2016. That letter attaches the defendants' notice of motion and Mr Tabuchi's Affidavit.

22. I am therefore satisfied and find, as a matter of fact that the plaintiffs have been forewarned that the defendants would be seeking costs against them on a solicitor /client basis if the proceeding was to be dismissed.

23. An award of costs by the Court is discretionary. This includes an award of costs on a solicitor/client basis as sought by the defendants herein. The case authorities on this point are many, both in the National and Supreme Courts. Now, I have considered a good number of these cases. The one that stands out and which I prefer to adopt and apply herein is the case of PNG Aviation Services Pty Ltd v. Geob Karri (2009) SC1002. The Supreme Court held and I read:

The situations in which it may be appropriate to award costs on a solicitor-client basis cannot be confined by any definition. What can be said, however, is that it may be appropriate to make such a costs order (1) when there has been a rejection of a settlement which would, if accepted, have resulted in a better outcome than that which was obtained; (2) where the conduct of a party, either before or during the proceedings, can be said to warrant such an order; or (3) where there are special or unusual circumstances. The discretion in relation to an order for costs must be exercised judicially: having regard to the principles of natural justice by providing an opportunity for the party against whom the order has been sought to be heard and by making a decision which is supported by reasons.

24. I adopt and apply the above decision of the Supreme Court herein. For the present case, I think it is good enough, given the Court's findings and ruling to dismiss the proceeding, to say that the matter should not have been commenced in the first place. The plaintiffs or should I say their counsel ought to have known of the requirements for commencing class or representative actions. I think the most adverse finding by the Court was that the intended plaintiffs, whom the two (2) plaintiffs claim to represent, were unknown or did not exist in law. Yet, this proceeding, from the time it was commenced on 17 October 2016, continued whereby these unknown or ghost plaintiffs, so to speak, have obtained from the Court ex-parte or interim orders against the defendants on various occasions. The defendants would have obviously suffered damages as a result of the actions of these again unknown plaintiffs.

25 I am satisfied that this case easily meets the requirements for the Court to exercise its discretion and award costs on a solicitor/client basis. Now, given the unusual nature of this claim whereby the intended plaintiffs cannot be identified, I am not inclined to simply make a general order for the plaintiffs to pay the defendants' costs of the proceedings. To do so, in my view, would be careless or inconsiderate towards the defendants. I also note that I cannot consider awarding costs against the plaintiffs' lawyers because that was not sought in the defendants' notice of motion. I note that the only persons who can be identified for the plaintiffs are the two named so-called plaintiffs' representatives namely Totil Kupai and Benedict Michael.

26. I will exercise my discretionary power and order costs against these two men.

THE ORDERS OF THE COURT

I make the following orders:

1. The proceeding is dismissed forthwith.
   
2. The plaintiffs' representatives namely Totil Kupai and Benedict Michael shall equally or severally pay the defendants' costs of the proceeding, which shall be assessed on a solicitor/client basis to be taxed if not agreed.
   

3. Time is abridged.

The Court orders accordingly.

_______________________________________________________
Daniels & Associates Lawyers: Lawyers for the Plaintiffs
Young & Williams Lawyers: Lawyers for the 1st, 2^nd, 3^rd& 4^thDefendants