PNG NRL Inc. v PNG-NRLC [2017] PGNC 418; N7643 (9 October 2017)

N7643

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO. 567 OF 2017

PNG NRL INC.
First Plaintiff

GULF ISAPEA LIMITED
Second Plaintiff

GULF ISAPEA CLUB
Third Plaintiff

TNA LIONS CLUB
Fourth Plaintiff

MT HAGEN EAGLES CLUB
Fifth Plaintiff

V

PNG-NRLC
First Defendant

ANDREW CHOW - Chairman PNG-NRLC
Second Defendant

STANLEY HONDINA - Administrator PNG-NRLC
Third Defendant

PAPUA NEW GUINEA RUGBY FOOTBALL LEAGUE (the PNGRFL)
Fourth Defendant

SANDIS TSAKA - Chairman the PNGRFL
Fifth Defendant

Waigani: Kariko, J

2017: 27^th September & 9^th October

Cases cited:

Brothers Rugby Football Union Club Inc v Port Moresby Rugby Football Union Inc. (2004) N2537
Kalan Constructions v Chegg (2014) N5665
Kerry Lerro v Phillip Stagg & Ors (2006) N3050
Kiee Toap v The State (2004) N2731
Mt Hagen Urban Local Level Government v Sek No. 15 Ltd (2009) SC1007
Phillip Takori & Ors v Yagari & Ors (2008) SC905
Thomas Taiya Ambi v Exxon Mobil Ltd (2012) N4844
Tigam Malewo v Keith Faulkner (2009) SC960

Legislation:

Association Incorporation Act, Chapter No. 142
National Court Rules

Counsel:

Mr S Bonner, for the Plaintiffs
Mr R Bradshaw, for the Defendants

RULING

9^th October, 2017

1. KARIKO J: This is an application by the defendants pursuant to Order 12 Rule 40(1) National Court Rules to have this proceeding dismissed. In submissions, the defendants argued that no reasonable cause of action is disclosed, the plaintiffs’ claim cannot be sustained and is untenable, and the proceeding is an abuse of process.

2. I consider it appropriate to first identify the parties to this court action:

• First plaintiff (PNGNRL) is an incorporated association whose members comprise the franchise owners of eleven rugby league clubs that have participated in a nation-wide rugby league competition. The association has been managing and running the competition recently known as the Digicel Cup competition.
• Second plaintiff is an incorporated company and a member of the PNGNRL that owns the Gulf Isapea Club which has participates in the Digicel Cup competition.
• Third, fourth and fifth plaintiffs are rugby league clubs that have participated in the Digicel Cup competition.
• First defendant (PNG-NRLC) is a body established as the business arm of the fourth defendant and has this year taken over from the PNGNRL the responsibility of managing the Digicel Cup competition.
• Second defendant is the Chairman of the PNG-NRLC.
• Third defendant is the Administrator of the PNG-NRLC.
• Fourth defendant (PNGRFL) is the incorporated national body responsible for all matters relating to the development and management of the sport of rugby league at both domestic and international levels.
• Fifth defendant is the Chairman of PNGRFL.
  

Brief background

3. From the affidavit evidence filed by the parties the following facts do not appear to be in controversy.

4. The Board of the PNGNRL held a meeting on 26^th March, 2017 (the Meeting) when all eleven members of the Board were present except for two who attended by proxy. The members comprise the nominees of the franchise owners of the rugby league clubs that participate in the Digicel Cup competition.

5. The main agenda item discussed at the meeting related to the proposed restructure of the national competition (the Digicel Cup) contained in a Report prepared by the PNGRFL. The proposal would see the competition played under the auspices of the PNGRFL and its business arm the PNG-NRLC.

6. A number of resolutions were passed but relevantly the Board decided to transfer to the PNGRFL the responsibility of running the Digicel Cup (the Decision) after acknowledging that there were management issues with the current structure and on being informed that relevant sponsors were ready to withdraw their sponsorship of the competition if the status quo was maintained.

7. Following the Decision, the PNG-NRLC took over management of the Digicel Cup competition for 2017. That competition has accordingly been run and was completed recently with the grand final held in September.

The dispute

8. After hearing counsel and upon careful reading of the originating summons, it is clear to me that the plaintiffs are challenging the validity of the resolutions of the Board of the PNGNRL made at its meeting on 26^th March, 2017 and in particular, the Decision. The plaintiffs’ grievance is that the Constitution of the PNGNRL was not followed in the conduct of the meeting rendering the meeting and the resolutions passed therein, invalid and of no effect.

9. For that contention, the plaintiffs principally rely on Clauses 28 and 33. 4 of the PNGNRL Constitution they produced to the Court. Clause 28 deals with quorum while Clause 33.4 states that no member is permitted to vote a general meeting unless all monies it owes the association has been paid.

10. The plaintiffs seek declaratory orders that:

• The Board members and the proxies who voted at the Meeting were not entitled to vote.
• The election of the Secretary and the Treasurer of the PNGNRL at the Meeting is null and void.
• The election the second defendant as Chairman of the PNGNRL at the Meeting is null and void.
• The resolution of the Board at the Meeting to dissolve the PNGNRL is null and void.
• All resolutions of the Board of PNGNRL made at the Meeting are null and void.
  

The law

11. The relevant principles in relation to applications under Order 12 Rule 40 are well settled; see for example Kerry Lerro v Phillip Stagg & Ors (2006) N3050 and Phillip Takori & Ors v Yagari & Ors (2008) SC905. The principles include:

(1) A plaintiff should not be driven from the judgment seat in a summary manner and that the Court should be cautious and slow in exercising its discretionary power to summarily dismiss.
(2) The Court has an inherent jurisdiction to protect and safeguard its processes from abuse.
(3) The purpose of the Rule is to give the Court power to terminate actions or claims which are plainly frivolous or vexatious or untenable.
(4) A frivolous claim is one that is characterized as a claim that is plainly and obviously untenable, that cannot possibly succeed and (is) bound to fail if it proceeds to trial.

12. In the originating document, a plaintiff must demonstrate it has a cause of action. The document must clearly set out the legal elements of the claim and the facts that support each element. Only if the plaintiff does that, is there a reasonable cause of action; Kiee Toap v The State (2004) N2731; Tigam Malewo v Keith Faulkner (2009) SC960 and Mt Hagen Urban Local Level Government v Sek No. 15 Ltd (2009) SC1007.

13. If the Court finds that a plaintiff has no standing, the proceeding or claim should be dismissed as being frivolous or vexatious, an abuse of the process of the court, and for not disclosing a reasonable cause of action; Thomas Taiya Ambi v Exxon Mobil Ltd (2012) N4844. If a party lacks capacity to sue, the proceeding is a nullity and shall be dismissed; Kalan Constructions v Chegg (2014) N5665.

Consideration

14. I think it appropriate to first determine if each of the plaintiffs has standing to commence this proceeding and if so, what cause of action is pleaded against each of the defendants.

15. The first plaintiff obviously cannot challenge its own decision and there is no evidence of any resolution of the Board of the PNGNRL authorising this litigation. The first plaintiff has no standing.

16. The second plaintiff is a duly registered company and is a member of the PNGNRL who opposed the Decision. I find it has standing to bring this court action.

17. The third fourth and fifth defendants are rugby league clubs that have participated in the Digicel Cup competition. They are not registered legal entities and are simply sporting clubs. They lack the legal capacity to sue and therefore do not have standing to initiate or maintain this proceeding.

18. Gulf Isapea Limited, the second plaintiff, is the only plaintiff then that has standing to bring this court action.

19. The cause of action alleged is the unlawful and invalid convening and conduct of the PNGNRL Board meeting of 26^th March 2017. None of the defendants constituted the Board. While Adrian Chow was Chairman of that meeting, he did not do so as the Chairman of PNG-NRLC which is the capacity in which he is sued as the fourth defendant.

20. I bear in mind the legal principles, and again note that in essence Gulf Isapea Limited (the only plaintiff I have found has standing) seeks to have invalidated the Meeting including its conduct and the resolutions passed therein. That being the case, I am unable to see how the defendants, individually or severally, could be responsible or liable for the Meeting. Rather, it was the Board of PNGNRL comprising a number of members. Clearly the wrong parties have been named as defendants. Even Adrian Chow has been sued as Chairman of PNG-NRLC and not the PNGNRL. Just as in the case of a plaintiff not having standing, it is my opinion that where a defendant has been wrongly named, no reasonable cause of action is disclosed, the action is untenable and amounts to an abuse of process, and the proceeding against that defendant must be dismissed.

21. While I do not consider it necessary to then discuss the other arguments raised by the defendants in this application, I will provide a brief opinion on the plaintiff’s claim. Gulf Isapea Limited relies on Clauses 28 and 33.4 of the PNGNRL Constitution it produced. In my view, those provisions do not support the claim. The thrust of the legal dispute is that because the other members had not paid their fees for 2017, they were not eligible or qualified to vote at the Meeting. On the evidence before me, none of the concerned members had yet been invoiced for the fee which is the usual practice. That being the case, the fees were not “due and payable” as required under Clause 33.4.

22. Before concluding I refer to the judgement of his Honour Injia DCJ (as he then was) in the case of Brothers Rugby Football Union Club Inc v Port Moresby Rugby Football Union Inc. (2004) N2537 in which his Honour stressed that disputes concerning a sports organization should be resolved pursuant to the dispute settlement procedures provided for in the rules of the organization, and that recourse to the courts should be the last resort.

23. In the present case, two versions of the Constitution of the PNGNRL have been produced to me. One by the plaintiffs that does not contain a dispute settlement procedure while the version presented by the defendants does contain such procedure. As the validity of either version of the Constitution has not been properly proved pursuant to Section 29(2) Association Incorporation Act, Chapter No. 142 I am unable to conclude which is the proper Constitution.

24. It is important that disputes arising from sports between sporting bodies and their members are speedily and amicably settled to allow the competitions under the care of those bodies to be run for the enjoyment and benefit of participants, spectators and supporter including the sponsors.

25. I would therefore strongly urge Gulf Isapea Limited to meet with the relevant stakeholders and seek to amicably settle its grievances. Of course, alternative dispute resolution is always available to reach a compromise or settlement. If this action was properly before me, I would not have hesitated to refer it to mediation.

Orders

26. The orders of this Court then are:

(1) This proceeding is dismissed in its entirety for disclosing no reasonable cause of action, for being frivolous and for being an abuse of process.
(2) The plaintiffs shall pay the defendants’ costs of this proceeding, to be taxed if not otherwise agreed.
(3) Time is abridged.

_____________________________________________________________
Sam Bonner Lawyers: Lawyer for the Plaintiffs
Bradshaw Lawyers Lawyer for the Defendants