Nett Holdings Ltd v Hanpan No. 1 Ltd [2018] PGNC 541; N7661 (12 June 2018)

N7661

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 493 OF 2016

NETT HOLDINGS LIMITED
Plaintiff

-V-

HANPAN NO. 1 LIMITED
Defendant

Waigani: Kariko, J
2018: 17^th April & 12^th June

PRACTICE & PROCEDURE – summonses for production and give evidence – application to set aside – whether an abuse of process

Cases Cited

ETS Nominees (PNG) Pty Ltd v Catholic Archdiocese of Port Moresby Board of Trustees [1997] PNGLR 670
Kenn Norae Mondiai & Anor v Minister for Forests & Ors (2009) Unreported National Court Judgement dated 16^th April, 2009
Michael Wilson v Clement Kuburam (2016) SC1489
Peter Dixon Donigi v Base Resources Ltd [1992] PNGLR 110
Rex Paki v MVIL (2010) SC1015
The State v Peter Painke [1976] PNGLR 210

Legislation:

National Court Rules

Counsel:

Mr M Nale, for the Plaintiff
Mr N Kopunye, for the Applicant
Mrs T Nonggorr & Mr J Sioni, for the Defendant/Respondent

DECISION

12^th June, 2018

1. KARIKO, J: This is an application by counsel for the plaintiff Mr McRonald Nale for the Summons for Production and to Give Evidence issued to him by the Registrar on 28^th March 2018 (the Summons) to be set aside.
   

Evidence

2. In support of the application, Mr Nale relies on his affidavit in support filed with his motion on 8^th April 2018.
   
3. The defendant did not file any affidavits in response to the motion but merely relies on the following affidavits filed for the substantive trial:
   
   • (1) the affidavit of Andrew Cannock filed 26th October 2016;
   • (2) the affidavit of Desmond Kipa filed 9^th November 2016; and
   • (3) the Affidavit of Desmond Kipa filed 11^th November 2016.
     
4. In his affidavit Mr Nale presents the grounds for his application while the affidavits for the defendant relate to its defence in the substantive proceeding.
   

Background facts

5. From the named affidavits, the pleadings and court records, I summarize the relevant background facts leading to Mr Nale’s application. These facts appear not to be in dispute.
   
6. The plaintiff Nett Holdings Limited (Nett) agreed to sell to the defendant Hanpan No. 1 Limited (Hanpan) two unimproved and un-serviced allotments at 7 Mile in the National Capital District (the Land) for K400,000 pursuant to a contract of sale dated 27^th July, 2012 (the Contract).
   
7. It was agreed that payment of the purchase price be staged as follows:
   
   • K40,000 (10%) – as deposit
   • K120,000 (30%) – after connection of water and power to the property
   • K120,000 (30%) – after completion of roads and curbing
   • K120,000 (30%) – at completion of the sale.
     
8. Hanpan was allowed early possession of the Land after the deposit was paid.
   
9. After taking possession of the Land, Hanpan developed it for dog kennels and leased it to The Corps (PNG) Limited (Corps) commencing August 2012 for K19, 500.00 per month as rent.
   
10. In March 2015, the plaintiff sought to settle the sale by issuing a Notice to Complete but that was challenged by the defendant who argued that Nett had not discharged its contractual obligations to connect services and complete road works. In response, Nett issued Hanpan a Notice of Termination of the Contract.
    
11. On 13^th May 2015, Hanpan filed proceeding OS No. 259 of 2015 – Hanpan No. 1 Limited v Nett Holdings Limited (OS 259) seeking to have the Notice of Termination declared null and void and an order for specific performance of the Contract.
    
12. In the week before the hearing of that proceeding, Nett filed WS No. 1420 of 2015 – Nett Holdings Limited v Hanpan No. 1 Limited (WS 1420) alleging Hanpan was in breach of the Contract for leasing the Land to Corps, and claimed as damages all the rentals paid by Corps to Hanpan from August 2012 to June 2014.
    
13. When OS 259 returned to Court on 19^th October 2015, the Court issued directions including a direction that parties consider mediation/settlement of the issues in both pending proceedings.
    
14. Through their respective Directors (Jeffrey Kennedy for Nett and Andrew Cannock for Hanpan), the parties then pursued negotiations for possible settlement of the court actions.
    
15. On 23^rd October 2015, Messrs Kennedy and Cannock met to discuss and settle draft consent orders for resolving both OS 259 and WS 1420. Present also was Mr Desmond Kipa, then counsel for Hanpan. After discussions, the consent orders were settled.
    
16. On 27^th October, 2015 the Court endorsed the consent orders (the Consent Orders), which read:
    
    1. Hanpan No. 1 Ltd discontinues this proceeding against Nett Holdings Ltd re OS 259 of 2015 Hanpan No. 1 Ltd v. Nett Holdings Ltd and take all steps necessary to complete the Contract dated 27^th April 2015.
    2. Nett Holdings Ltd will instruct its lawyers, Jema Lawyers and withdraw its letters of 18^th March 2015 and 13^th April 2015 to Twivey Lawyers, lawyers for Hanpan No. 1 Ltd, re “Notice to Complete”.
    3. Nett Holdings Ltd will further instruct its lawyers, Jema Lawyers and withdraw its letter of 27^th April 2015 constituting a Notice of Termination of Contract of Sale of the land, the subject of this proceeding and take all steps necessary to complete the Contract.
    4. Hanpan No. 1 Ltd and or Nett Holdings Ltd will not claim and or commence any proceeding in future re the Contract of Sale and the subject land, after all steps necessary to complete the Contract are taken by either party.
    5. Andrew Canock of Hanpan No. 1 Ltd will not take issue with any steps taken by Jeffery Kennedy of Nett Holdings Ltd to recover rentals from The Corps Ltd for the occupation and use of the property from the date of the purported termination of the subject contract up to the date of settlement.
    6. Each party will meet their own legal costs.
    7. Time for entry of these orders be abridged to the date of entry by the Court which shall take place forthwith.

17. Pursuant to those orders:
    
    • OS 259 was effectively discontinued by virtue of Order 1 of the Consent Orders.
    • Nett withdrew the Notice to Complete and the Notice of Termination it had issued in respect of the sale of the Land.
    • Nett filed a notice of discontinuance in WS 1420 on 30^th October, 2015.
    • Nett commenced charging and collecting rent from Corps for lease of the Land, backdated to April, 2015 (the date when it sought to terminate the Contract).
    • Hanpan paid a further K240,000 of the purchase price on 25^th November, 2015.
      
18. Twivey Lawyers, representing Hanpan, then lodged the Contract documents with the Department of Lands for ministerial approval. The duly approved documents were collected on 22^nd January, 2016 and Twivey Lawyers requested a settlement statement from Jema Lawyers acting for Nett.
    
19. In Nett’s reply through its lawyers, it alleged that Mr Cannock had by misrepresentation induced Mr Kennedy into agreeing to the Consent Order when he (Mr Cannock) expressly denied that neither he nor Hanpan had received or benefitted from any rent paid by Corps in respect of the Land.
    
20. Hanpan countered that Nett was in breach of the Consent Order and the Contract and insisted on settlement of the sale of the Land.
    
21. There was no settlement and on 31^st March, 2016 Hanpan filed contempt proceedings against Nett and Mr Kenndey for breaching the Consent Orders by failing to complete the sale of the Land.
    
22. On 17^th May 2016, Nett filed this proceeding WS No. 493 of 2016 – Nett Holdings Limited v Hanpan No. 1 Limited (WS 493) to set aside the Consent Orders based on the alleged misrepresentation by Mr Cannock.
    
23. The contempt application has been adjourned until after determination of the current proceeding.
    
24. After directions hearing including pre-trial conference, the case was set down for trial. It has actually been fixed for trial on three different dates - 20^th September, 2017, 18^th October, 2017 and 14^th April, 2018 - but all those dates were vacated due mainly to witness issues.
    
25. On 28^th March, 2018 the Defendant filed and served the Summons which Mr. Nale now challenges.
    

The Summons

26. Relevant provisions of the National Court Rules in relation to the present application are Order 11 Rules 5(1) and Rule 7(1) which read:
    
    5. Issue. (37/6)

(1) On request by a party, the Registrar shall, unless the Court otherwise orders, issue a summons to give evidence or a summons for production or a summons both to given evidence and for production.

..............

7. Setting aside. (37/8)

(1) The Court may, on motion by the person named in summons, set aside the summons wholly or in part.

27. The Summons requires the applicant to produce Jema Lawyers’ file for WS 1420 “including but not limited to instructions, advice, file notes, drafts, correspondence to and from any person or entity, emails, documents from any source, court documents and bills.”
    

Submissions

28. The plaintiff argues that the following grounds individually or in combination amount to an abuse of process and justifies the setting aside of the Summons:
    
    • (1) A number of documents, and in particular court documents, would already be in the possession of the defendant;
    • (2) Some of the evidence would be subject to professional privilege;
    • (3) The Summons is being used as a substitute for the process of discovery which the defendant failed to utilize;
    • (4) The Summons was issued contrary to the directional order of the Court regarding presentation of evidence for the trial; and
    • (5) The evidence (documentary or oral) subject of the Summons is in vague and general terms, rendering the Summons a “fishing expedition”.
      
29. In response, the defendant submitted that:
    
    • (1) The proper time to object to evidence based on privilege or justification is at the trial when that evidence is sought to be adduced during examination of the witness summoned.
    • (2) It was only when Mrs Nonggorr took over carriage of the case that she was able to, with “fresh eyes”, realize the necessity for the Summons.
    • (3) There was no court order that prohibited the issue of the Summons, and if decided otherwise, the interest of justice justified the Summons.
    • (4) Even though the Summons is in general terms, it is not a “fishing expedition” because it is for the specific purpose of adducing evidence going to Mr Kennedy’s knowledge of the payment of rent by Corps for use of the Land, a matter that is relevant to the issue on trial.
      

Consideration

30. The parties agree that a summons may be set aside for being an abuse of process. It is trite law that the categories of abuse of process are not closed and the Court is constantly on guard against any abuse of its processes.
    
31. I consider the following remarks of O’Leary AJ in The State v Peter Painke [1976] PNGLR 210 are useful to note:
    

“There is no doubt that this Court, as a superior court of record, has inherent jurisdiction to take steps to prevent any abuse of its process. It is a power that extends to all situations where the justice of the case requires it to be exercised, and it is not confined to any closed categories of cases.”

32. And as Gavara-Nanu, J observed in Michael Wilson v Clement Kuburam (2016) SC1489 at [25]:
    

“The types of abuses of process may vary from case to case but to establish an abuse of process there must be evidence showing that the processes of the court have been improperly used; or have been used for an improper purpose; or have been used in an improper way; or that such abuse of process have resulted in the right of the other party being denied, defeated or prejudiced: National Executive Council v. Public Employees Association [1993] PNGLR 264 and The State v. Peter Painke [1976] PNGLR 210.”

33. Having considered the submissions, I make the following determinations.
    

Privilege

34. First, I agree with the defendant’s contention that the appropriate time for a witness under a summons to raise objection to adducing evidence on the basis of privilege or some other ground should be during the trial when the witness is called and asked to give the evidence.
    
35. However in my view, that proposition as held in the case of Kenn Norae Mondiai & Anor v Minister for Forests & Ors (2009) Unreported National Court Judgement dated 16^th April, 2009 applies only in cases such as the present where the summons is in general terms. If a summons instead lists the exact documents to be produced or the precise nature of the oral evidence sought from the person summoned, objections to the evidence may be properly argued on an application to set aside the summons. Given my ruling on this point, I think it unnecessary to refer to or discuss the case authorities on privilege submitted by Mrs Nonggorr.
    

Failure to use discovery

36. In relation to the defendant’s failure to use the discovery process, I am not satisfied with the explanation offered by the defendant, which I hasten to add came by way of evidence from the bar table. In fact, there is no evidence properly before me offering the reason or reasons why the Summons was requested. The submission by the defendant on this point necessarily implies that Mr Kipa simply overlooked the need for discovery when he had carriage of the case for the defendant. The Courts have stated on many occasions such as in the case of Peter Dixon Donigi v Base Resources Ltd [1992] PNGLR 110 that the failure or negligence of a lawyer is not an acceptable excuse for non-compliance. While most of those cases involve failure to take procedural steps within prescribed time limits, I deem the principle applicable to the present circumstances.
    
37. To have a summons issued under Order 11 in order to remedy the failure to obtain documents in the usual discovery process, is tantamount to an abuse of process; ETS Nominees (PNG) Pty Ltd v Catholic Archdiocese of Port Moresby Board of Trustees [1997] PNGLR 670. It is noted that in the Mondiai case (supra), the application to set aside a summons was refused despite the discovery process not being utilized by the party who obtained the summons. The reason for that was that the relevant documents were not in the possession of opposing parties but rather with a party that was not a party to the proceedings. That is not the case here.
    

Order against summons

38. It is my reading of Order 11 Rule 5(1) that the Registrar may issue of a summons subject to there being no Court order to the contrary. It cannot be disputed that on 3^rd August, 2017 when the Court initially set the matter down for trial, it directed that trial be by way of affidavit evidence, subject to proper notices under the Evidence Act.
    
39. The Listing Rules 2005 introduced into the National Court Rules the practice and procedure for directions hearings to expedite a civil case to listing for trial in the National Court. The Rules provide three main stages in processing a civil case in readiness for trial:
    
    • Mention/Directions hearing (Order 10 Rules 7 and 8)
    • Pre-trial conference (Order 10 Rule 9)
    • Status conference (Order 10 Rule 10)
      
40. Directions are issued for parties to prepare their respective cases for trial and pre-trial conferences allow parties to confirm whether previous directions have been complied with, and settle relevant matters concerning the trial (including number of witnesses and mode of evidence), before a trial date is obtained. A status conference is held prior to the trial date to confirm whether or not a case is indeed ready for trial as scheduled. The whole process enables the Court to supervise parties in preparing their cases for trial so that a case is dealt with in an efficient and timely manner.
    
41. Both Nett and Hanpan have been aware since 3^rd August, 2017 that the evidence for the trial shall comprise the affidavits that each party has given notice it would be relying on, subject to any notice by the opposing party raising objection to the use of an affidavit or requiring the production of a deponent for cross-examination. The defendant did not at any stage during the listing process apply to vary the directional order regarding the presentation of evidence at the trial.
    
42. One of the matters that is relevant to consider during the listing process is the issue of summons; see Order 10 Rules 9A(7)(p) and 9A(9)(2)(g). Again, the defendant did not raise the need to summons any witness at any stage during the listing process and particularly during pre-trial conference.
    
43. Despite knowing that the Court had issued a directional order regarding the mode of evidence for the trial, the defendant obtained the Summons just before trial date. Clearly, leave of the Court was first required. Add that factor to my other findings, and I am unable to agree that the interest of justice nevertheless warrants the Summons. It is my opinion that the obtaining of the Summons without the requisite leave of the Court constitutes an abuse of process.
    

Fishing expedition

44. Mrs Nonggorr agrees that the terms of the Summons in respect of the documents to be produced are in general terms but submits that evidence sought to be adduced by the Summons would go to show Mr Kennedy’s knowledge at the time WS 1420 was filed, in relation to the payment of rent by Corps for use of the Land, a matter that is relevant to the main issue on trial – whether or not Mr Cannock induced Mr Kennedy into the signing of the Consent Order through misrepresentation. Again, there is no evidence properly before me confirming this to be the main reason for the request for the Summons to issue.
    
45. The submission by Mrs Nonggorr is based on the fact that the Statement of Claim in WS 1420 specifically pleads the rent paid by Corps to Hanpan, including the dates and amounts. It is therefore suggested that the plaintiff, through Mr Kennedy, must have and would have known about the rental payments to plead those particulars. It is further argued that the production of the Jema Lawyers’ file and the oral evidence of Mr Nale will confirm the source documents upon which the claims were based in WS 1420.
    
46. One must start with the premise that a claim filed by a lawyer is founded on the instructions of a client. If Jema Lawyers filed WS 1420 claiming rental payments for the Land, one must assume that the claim was based on instructions given by Mr Kennedy on behalf of Nett. There is not an iota of evidence to suggest that it was otherwise, contrary to what Mrs Nonggorr appears to state in her submissions when she insinuates that Mr Nale with his client have acted dishonestly and have committed a fraud on justice. Such an allegation is very serious matter and should only be raised when there is proper basis for it.
    
47. It is obvious that what would be relevant is what Mr Kennedy knew before WS 1420 was filed and before signing the Consent Order. Mr Kennedy is to be called as a witness for the plaintiff and he has filed his affidavit which, Mrs Nonggorr points out, contains copies of the invoices of rent due to Hanpan from Corps. The defendant has served the appropriate notice for Mr Kennedy to be cross-examined on his affidavit. Hanpan is therefore at liberty to ask Mr Kennedy for those source documents and properly quiz him regarding his knowledge of the rent payments.
    
48. This case can be distinguished from the Mondiai case (supra) where the issue of the summons was found to be proper as the only relevant person who could be summoned to give the required evidence was the lawyer in question.
    
49. To my mind, the Summons in the present case is unnecessary, oppressive and is clearly a “fishing expedition”.
    

Conclusion

50. I find that proper grounds have been made out in favour of the application.
    
51. I also hold that costs are to be awarded against the defendant. The applicant has asked the Court to award costs on a solicitor/client basis. Awarding costs is a discretionary matter, and costs on a solicitor/client basis may be awarded against a party whose conduct has been improper, unreasonable and blameworthy; Rex Paki v MVIL (2010) SC1015. The defendant was put on notice that the applicant would apply for costs on an indemnity basis unless the Summons was withdrawn for reasons advanced in this application.
    
52. I am satisfied it is proper to order costs on a solicitor-client basis as submitted by the applicant.
    

Order

53. For the foregoing reasons, I make the following orders:
    
    • (1) The Summons for Production and to Give Evidence issued to Mr. McRonald Nale on 28^th March 2018 is set aside.
    • (2) Mr. Nale’s and the plaintiff’s costs of and incidental to this application is to be paid by Twivey Lawyers on a solicitor-client basis.
    • (3) The trial of this case is now set for two days commencing at 9.30am on 17^th July, 2018.
    • (4) A status conference shall be held at 1.30pm on 3^rd July, 2018.
    • (5) Time for entry of these orders is abridged to the time for settlement by the Registrar which shall take place forthwith.

______________________________________________________________
Kopunye Lawyers: Lawyer for the Applicant
Jema Lawyers: Lawyer for the Plaintiff
Twivey Lawyers: Lawyer for the Defendant/Respondent