Niu Ailan Sustainable Enterprises Ltd v Tatami [2019] PGNC 450; N8223 (15 August 2019)

N8223

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO 802 OF 2016

BETWEEN:
NIU AILAN SUSTAINABLE ENTERPRISES LTD
Plaintiff

AND:
BISHOP ROCHUS JOSEPH TATAMI as
BISHOP - DIOCESE OF KAVIENG
First Defendant

AND:
BISHOP AMBROSE KIAPSENI
as FORMER BISHOP OF KAVIENG
Second Defendant

AND:
CATHOLIC MISSION KAVIENG PROPERTY TRUST
as the TITLE HOLDER
Third Defendant

AND:
SACRED HEART MISSION (NEW BRITAIN PROPERTY TRUST)
Fourth Defendant

Kavieng: Kangwia J
2019: 25^th July &15^th August

PRACTICE and PROCEDURE - Application to dismiss entire proceeding for disclosing no cause of action and abuse of process – National Court Rules Order 12 Rule 40 and Order 8 Rule 27

PRACTICE AND PROCEDURE – Application for judgement on cross-claim pursuant to Order 8 Rule 45 of the National Court Rules

Held

Pleadings failed to disclose a cause of action. Proceedings dismissed. Judgement entered in the cross-claim for assessment

Cases Cited:

Johanes Leah v Tom Otri (2009) N3860
Kiee Toap v the State (2004) N2731
Pius Nui v Sergeant Mas Tanda (2004) N2765
Pius Nui v Jackson Laka (2012) N4698

Counsel

G. Jerry, for the Plaintiff
V. Maraleu, for the Defendants

15^th August, 2019

1. KANGWIA J; The Plaintiff by a Writ of Summons claimed K1,000,000, 00 for loss of business, K1,000,000. 00 for economic loss and K500, 000. 00 for public embarrassment and hardship with costs.
   
2. The Defendants filed their notice of intention to defend and defence with a cross-claim. Having received no notice of intention to defend and defence to their cross-claim within the time prescribed, they moved by notice of motion for the entire proceedings to be dismissed and judgement on their cross-claim. This is the decision on the motion.
   
3. The Defendants sought the following orders:
   
   1. That the entire proceedings be dismissed for being frivolous, vexatious and disclosing no cause of action pursuant to Order 12 Rule 40 and Order 8 Rule 27 of the National Court Rules (NCR here on).
   2. That judgement be entered for failing to file their Notice of intention to defend and their defence to the Defendants Cross-Claim pursuant to Order 8 Rule 45 of the NCR.
      
4. The brief facts are these. The Catholic Mission on Kavieng holds a Certificate of Title as an estate in “fee simple” over the land identified as portion 50 in Kavieng under the Kavieng Property Trust Act.
   
5. The Plaintiff claimed that it bought two buildings located within portion 50 from a company called Pacific Drilling Limited which included rent free road access.
   
6. It further claimed that a memorandum of agreement between the Plaintiff and the Second Defendant was in place which allowed for the Plaintiffs to use the land rent free for 20 years.
   
7. The land was not a State lease for them to pay rent. It was a mission lease and s 98 of the Land Act provided that rent was not payable.
   
8. The Defendants denied entering into any such agreement and demanded the Plaintiffs to pay rent.
   
9. The Plaintiff refused to pay rent and argued that the title held by the Second Defendant was an estate in “Fee Simple” and not a Lease and therefore they had no obligation to pay rent or other charges to the Second Defendant.
   
10. The Defendants reacted by locking the gates to the property and the access road into the two buildings.
    
11. The Plaintiffs responded by instituting the current proceedings claiming that their rights to utilize the land and its property under the agreement were interfered with by the Defendants lockout which caused their business to suffer loss.
    
12. The Defendants filed their Defence and Cross-Claim and maintained that since 2010 they never entered into any binding agreement for the lease of the land with the Plaintiff. They claimed that portion 50 is a freehold estate and the title the Second Defendant held was an estate in Fee Simple and not a mission lease.
    
13. The main issue arising for determination is whether the Plaintiffs claim discloses a reasonable cause of action. Other issues that arose during argument shall be considered after that.
    
14. The Defendants relied on the affidavits of Bishop Ambrose Kiapsini as Bishop of Kavieng Diocese sworn on 19 October 2016 and Malcom Kana the Commercial Manager of the Plaintiff sworn on 21 July 2016.
    
15. The Plaintiffs relied on the affidavit of Glen Jerry the Counsel for the Plaintiffs dated 4 December 2018 and Malcom Kana dated 13 November 2018.
    
16. In the affidavit of Bishop Ambrose Kiapsini he averred that the Catholic Diocese of Kavieng was the holder of a title in Fee Simple over the land referred to as Portion 50.
    
17. The buildings on the land were built by early missionaries of the church. The first arrangement to lease the land was after Nivani Company Ltd purchased the two buildings on the land.
    
18. Sometime later Nivani Company Ltd sold the two buildings to Pacific Drilling Ltd. Both companies entered into an agreement with the Catholic Diocese to pay rent to the Diocese of Kavieng as the legal owner of the land up until the Plaintiff purchased the property from Pacific Drilling Ltd, and moved in to occupy the buildings.
    
19. He swore that the Plaintiffs were relying on an unsigned Memorandum of Agreement dated August 2010.
    
20. In his capacity as the bishop of the Kavieng Diocese he did not sign the Memorandum of agreement as he disagreed with the terms and conditions of the agreement since the Second Defendant as titleholder was not informed of the purchase from Pacific Drilling Services.
    
21. He further averred that the Plaintiff had been using the land without paying any rent for the last seven years.
    
22. The Diocese issued notices to the Plaintiffs to pay the rentals but did not pay any hence the lockdown of the property.
    
23. In the affidavit of Malcolm Kana he deposed that there was no lease agreement between the Plaintiff and the Defendants. The Defendants could not lease the land for rent as it was not a State lease.
    
24. The Defendants submitted that the Second Defendant as the titleholder was the owner. It did not enter into any agreement or sign any agreement with the Plaintiff as alleged. They further submitted that the Plaintiff had relied on a misinformation and should not be believed.
    
25. It was also submitted that the statement of claim should be dismissed as it did not disclose a reasonable cause of action in light of the following considerations:
    
    1. There was no interest created in the land pursuant to s 2 of the Frauds and Limitations Act which provided that such interest can only be in writing. In the present case there was nothing in writing between the parties over the land.
       
    2. Pleadings in the statement of claim were not set out chronologically, they were confusing, ambiguous and contained misinformation and were misleading.
       
    3. Failed to establish the cause of action from the facts pleaded in the statement of claim.
       
    4. The affidavits filed from which the Plaintiff could establish the cause of action do not contain evidence that was necessary to substantiate the pleadings in the claim and instead it pleaded misinformation throughout the claim that the title was a mission lease. That misinformation led the Plaintiffs to plead their right to occupy without paying rent.
       
    5. The Plaintiffs pleaded an oral and written agreement they relied on but have failed to plead who executed the agreements.
       
26. It was submitted that by relying on and pleading misinformation as the basis of their claim, no cause of action has been established and the proceeding must be dismissed.
    
27. Counsel for the Plaintiff did not advance any argument as to why the Plaintiffs claim should continue to its substantive hearing.
    
28. They have not responded to the submissions by the Defendants seeking to dismiss the entire proceedings. Much of their submission was centered on the principles guiding contempt proceedings which they submitted should apply to the lawyers for the Defendants.
    
29. They alleged that the Defendants breached two Court decisions dated 27 July 2017 and 27 October 2018 that were entered by consent and they were in contempt when they proceeded to move their motion. Therefore, the motion should be dismissed.
    
30. In submission counsel for the Plaintiff referred to order number 03 of the District Court Order dated 27 October 2018 which states:
    
    31. All parties to these proceedings, their employees and agents, shall refrain from dealing with 3^rd parties in regard to the property the subject of this proceeding until the substantive matter of these proceedings are disposed of.
        
31. From this order the Plaintiffs submitted that restraining both parties included filing or moving of motions concerning the proceeding and the motion should be dismissed as being in contempt.
    
32. The Law under Order 8 Rule 27 and Order 12 Rule 40 makes provision to dismiss a claim for disclosing no cause of action in the following manner:
    

Order 08 Rule 27: Embarrassment

(1) Where a pleading-

• (a) discloses no reasonable cause of action or defence or other case appropriate to the pleading; or
• (b) has a tendency to cause prejudice, embarrassment or delay in the proceedings; or
• (c) is otherwise an abuse of 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 pleadings be struck out.”
  

Order 12 Rule 40. Frivolity, etc

(b) 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 the proceedings be stayed or dismissed generally or in relation to any claim for relief in the proceedings.

33. There is numerous case law on the principles governing the issue of failing to disclose a reasonable cause of action.
    
34. In the case of Pius Nui v Sergeant Mas Tanda (2004) N2765 his Honour Cannings J while referring to the case of Kiee Toap v the State (2004) N2731 identified principles governing issue of reasonable cause of action. I set out the following for purposes of this proceeding:
    
    • - Whenever a person brings a case to Court, the original document must demonstrate that the Plaintiff has a cause of action. The document must set out;

- the legal ingredients or the elements of the of the claim and;

-the facts that support each element of the claim.

- The plaintiff must outline the claim and demonstrate that it has a clear legal basis. If that is not demonstrated it does not disclose a reasonable cause of action
- If the statement of claim leaves a defendant guessing what the Plaintiffs claims are it should be struck out.
- If a statement of claim is so ambiguous or lacking in particularity that it does not facilitate orderly and rational pleadings which would enable the issue to be identified it should be struck out.

35. It is therefore trite law that pleadings form the basis of a cause of action.
    
36. In the present case the pleadings in the original Statement of Claim failed to reveal good drafting. It is ambiguous as it lacks particulars and does not facilitate orderly and rational pleadings to enable the issues to be identified. It failed to plead whether the claim was founded on contract or negligence. The pleading did not demonstrate that the claim has a clear legal basis. It pleaded only the chronology of events that transpired. The chronology of events does not establish a cause of action as it is akin to story-telling.
    
37. Further, the pleadings do not identify a breach of duty if any, owed by the Defendants to found the basis of their claim for damages.
    
38. They have not pleaded loss of business, future loss of income, or damage to reputation which they claimed as remedies. The claim that the Plaintiff was shut out from which he suffered loss of business and damages have to be based on particulars to secure the remedy sought.
    
39. The Defendants submission that the claim was founded on misinformation is apparent and must be accepted in its entirety.
    
40. Firstly, the Plaintiff claimed that the land was a Mission Lease and they could not pay rent to the Second Defendant pursuant to s 98 of the Land Act which provides:
    

Section 98 Rent

Rent is not payable for a mission lease.

41. This provision does not apply to the world at large including the Plaintiff. The provision applies only to the proprietor of the Mission lease. In the present case only the Second Defendant is the proprietor as the holder of the title in fee simple.
    
42. Therefore, the provision exempts the Second Defendant only from paying rent to the State. Section 98 does not apply to occupants, users, settlers and whosoever that occupies the land which includes the Plaintiff. The argument on s. 98 of the Land Act has no basis.
    
43. Secondly, the Plaintiff claimed that the Second Defendant could not charge them rent since the Mission Lease did not permit commercial activities and rentals.
    
44. The provisions covering Mission lease under Division 6 of the Land Act sets out the purposes for which a Mission Lease is granted. It makes no provision for leases. Conversely there is also no provision which prohibits leases or subleases.
    
45. The enforcement or otherwise of the requirements of a Mission Lease lies with the Lands Department and not the Plaintiff. The Plaintiff cannot hide behind the cloak of the Mission Lease provisions to not pay rent. This claim has no basis.
    
46. Thirdly, the Plaintiff claimed that there was an agreement between them and the Second Defendant from which they were claiming their rights to rent free occupation.
    
47. The purported MOU document the Plaintiffs relied on is unverified and unsigned. Further to that, they have also failed to plead the name of the person who entered into the claimed agreement.
    
48. The Second Defendant is a corporate entity who cannot sign or communicate directly. It cannot be recognized as a valid document. The misinformation on the purported agreement has been proved as untrue. Under those circumstances no interest in the land was created. It cannot be recognized as a valid document. The Plaintiff’s claim on an MOU has no basis.
    
49. There is unchallenged evidence that the Plaintiff did not pay any rent since he moved in some 7 years ago. There is also evidence that two former owners of the property did pay rent for the land. Under those circumstances the Defendants as owners of the land were entitled to claim rental payments from the Plaintiff.
    
50. The Landlord gave adequate notice to the Plaintiff to pay rent for the period it had already used. Upon the Plaintiff’s failure to pay the rent as demanded, the Defendants exercised their right as owners of the land to enforce their demand. The Plaintiff in a way brought the consequences upon itself.
    
51. Under those circumstances the statement of claim discloses no reasonable cause of action and should be dismissed.
    
52. The proceeding should end here but it is considered that other points raised in submissions should be considered for purposes of completeness.
    

Fixtures

53. As to the two buildings on the land the Plaintiff claimed that it bought the two buildings from Pacific Drilling Ltd. which conferred a right to occupy the land.
    
54. In the affidavit of Bishop Ambros Kiapeni he deposed that the two buildings were built by the church. They were sold to the First buyer by the name of Nivani Company Ltd. That company sold them to Pacific Drilling who is alleged to have sold them to the Plaintiff.
    
55. The two buildings are fixtures on the land .On the question of fixtures, I agree with his Honor David J who expounded the law on the issue of fixtures in the case of Pius Nui v Jackson Laka (2012) N4698 where his honor said:
    

“On the question of fixtures, whatever is attached to the soil becomes part of it. They are in law “Land”. They are real property and not chattels which are removable. They become the property of the owner of the land unless otherwise granted or conveyed.”

56. I adopt that explanation in the present case. This therefore affirms that all structures on portion 50 belongs to the Second Defendant unless they are removed or sold. That remains with the Plaintiff to sort out.
    

Estate in Fee Simple

57. The other issue related to the Certificate of title, the Plaintiff claimed that the certificate of title for portion 50 is an estate in Fee Simple. They also claimed that when they purchased the property from the previous owner as a third fee simple buyer, they also bought the land on which the property sat on and they were the legal owners of the land.
    
58. The Plaintiffs have failed to authenticate their plea that they bought the property from the previous owner under a fee simple arrangement. They have failed to plead the law on fee simple and case authorities that supported their claim.
    

The Oxford Dictionary of Law, 7^th Edition states that “fee simple indicates ownership that is not liable to end upon any person’s death, with the expiration of time or on the failure of a particular line of heirs.”

59. It is a freehold over ownership of land. It is the most complete form of ownership of land.
    
60. Under the English common law three types of freehold estates that existed are described in the case of Johanes Leah v Tom Otri (2009) N3860 as follows:
    

“An estate that would end on the holder’s life was “Life Estate”. An estate that would descend to the holder’s heir was an estate in “Fee” which could be in one of two types; unrestricted (Simple) or restricted (Tailed) depending on the category of heirs who could inherit, hence the terms estate in Fee Simple and “Fee Tail”.

61. Although these were based on the English Common Law, they are still applicable in our jurisdiction.
    
62. It is differentiated with a lease which is a grant of exclusive possession of property to last for a period of time usually with reservation for rent.
    
63. In the present case the Second Defendant was granted an estate in fee simple over portion 50. That means that their ownership was unrestricted. It follows therefore that the land is not open to anyone to do whatever he or she chooses.
    
64. The law is that as long as the Second Defendant is the owner it determines what happens on the land and who lives on it. Under those circumstances the Plaintiff has no right to live and use the land at will.
    
65. The Plaintiff’s claim of a right because he bought two structure on it as a third simple fee buyer has not been satisfactorily established. It may be true that the property was bought from the previous owner but it is unclear whether it was bought under an estate in fee simple that would justify the claim. It is an allegation not pleaded properly apart from the claim that it was bought as a third simple fee buyer.
    
66. There is no evidence that the person who sold the property to the Plaintiff was the owner of the land. If he was not the owner of the land the question that arises is how he could have sold the land which was owned by someone else.
    
67. The Plaintiffs have not pleaded any particulars to establish that its rights were breached or infringed and it was entitled to the damages claimed. The pleadings are scant in that respect and no cause of action has been established.
    

Contempt

68. The Plaintiff submitted that the Defendants committed contempt of two Court Orders when they moved their Notice of motion. This argument is unverified by evidence.
    
69. From the records the two Court Orders referred to did not restrain any party from further filing or instituting applications in the pending matter.
    
70. The Second Court Order only restrained third parties from taking any action or dealing with the land in issue. The Defendants cannot be held to be in contempt of those orders.
    
71. They had satisfactorily satisfied all the requirements before the motion was moved. This issue is without any foundation and not relevant for any further consideration.
    

Cross-Claim

72. In the Notice of Motion, the Defendants also sought the orders claimed in the Cross Claim pursuant to Order 8 Rule 45 Of the NCR.
73. On 20 October 2016 the Defendants filed a Cross-Claim claiming that the Plaintiff owed them K252, 000. 00 in unpaid rent for 7 years.
    
74. There is no dispute on the facts relating to the claim for rent. The Plaintiffs contention was that they were entitled not to pay any rent under the purchase agreement.
    
75. The Cross-Claim was served on the Plaintiff on 21 October 2016. The Plaintiffs defaulted in filing a notice of intention to defend or a defence on the cross claim. The time for filing the documents lapsed on 29 November 2016.
    

The law on default of Defendants to Cross Claim under O 8 Rule 45 states:

45. Default of defendant to cross-claim. (6/7)

Where a defendant to a cross-claim does not give notice of an intention to defend the cross-claim or file a defence as required by these Rules, or does not file a defence in accordance with an order to do so, a judgement (including a judgement by default or by consent) or decision (including a decision by consent) on any claim, question or issue in the proceedings on the writ of summons or on any other cross-claim in the proceedings shall, unless the Court otherwise orders, be binding as between the cross-claimant and the defendant to the cross-claim so far as the judgement or decision is relevant to any Claim, question or issue in the proceedings on the cross-claim.

76. In the present case the Plaintiffs have not even sought leave to file their defence out of time. They have offered no explanation as to why the default occurred during the hearing of submissions.
    
77. They gave no attention to the Cross-Claim during submissions on the Defendants notice of motion. It demonstrates the Plaintiffs lack of interest on the Cross Claim. It is also concluded that the Plaintiffs have no defence to the Cross-Claim.
    
78. Therefore, Default judgment on the Cross-Claim must be entered in favor of the Defendants.
    
79. Based on the conclusions reached and in the exercise of the Courts discretion the following orders are made:
    
    1. The claim in WS 802 of 2016 is dismissed as establishing no reasonable cause of action.
    2. Judgement is entered in favor of the Cross Claimants for assessment of damages.
    3. Each party shall bear their own costs.

_____________________________________________________________
Parker Legal: Lawyers for the Plaintiff
Maraleu Lawyers: Lawyers for the Defendants