Itutu Investment Ltd v Nafy Co Ltd [2021] PGNC 225; N9092 (31 August 2021)

N9092

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS (COMM) NO. 1774 OF 2019

BETWEEN:
ITUTU INVESTMENT LIMITED
Plaintiff

V

NAFY COMPANY LIMITED
First Defendant

AND:
JIMMY SIMIKE
Second Defendant

AND:
EBON TIPAIYO
Third Defendant

AND:
SAMSON APINAI
Fourth Defendant

Waigani: Anis J
2021: 13^th & 31^st August

NOTICE OF MOTION – seeking to dismiss the proceeding – Order 10 Rule 9A(15)(2)(c) – National Court Rules – consideration – whether non-compliance with orders fatal to the plaintiff – exercise of discretion

Case Cited:

Itutu Investment Ltd v. Nafy Company Ltd and Ors (2021) N8897
Gigira Development Corporation Ltd and Ors v. Stanis Talu and Ors (2021) N9027

Counsel:

G Kaore, for the Plaintiff
J Lome, for the Defendants

RULING

31^st August, 2021

1. ANIS J: The defendant applied to the Court seeking orders to summarily dismiss the proceeding. The application was contested, and it was heard on 13 August 2021. After the hearing, I reserved my ruling to a date to be advised.

2. This is my ruling.

BACKGROUND

3. I have set out the background of the matter in my earlier decision in Itutu Investment Ltd v. Nafy Company Ltd and Ors (2021) N8897. I restate them herein:

3. With respect, it is quite difficult to understand the plaintiff’s pleadings as stated in its writ of summons and statement of claim filed 19 December 2019. But in summary, the plaintiff claims that its current shareholders were former shareholders of the first defendant. It alleges that the shareholders or at least the majority of them, sold their shares in the first defendant. It further alleges that by a resolution in 2009, the shareholders agreed to dissolve the first defendant and also divide the company assets of the first defendant. It claims that at the material time, the second, third and fourth defendants were not shareholders of the first defendant but were executives, and that without their knowledge, had taken steps to restore the first defendant back onto the company register.

4. It concludes by alleging that the actions or inactions of the defendants amount to malicious intent or intention, and it seeks damages including special damages for a liquidated sum of K240,000.

THE MOTION

4. The defendants’ notice of motion was filed on 27 July 2021 (NoM). They seek to dismiss the proceeding pursuant to Order 12 Rule 40(1)(a), (b) and (c) and Order 10 Rule 9A(15)(2)(c), of the National Court Rules (NCR). The sources of the NoM are not contested so I will proceed on that basis.

5. The defendants give 2 reasons why they say the proceeding should be dismissed. Firstly, they claim that the proceeding is frivolous and vexatious, and that it discloses no reasonable cause of action. Secondly, they refer to this Court’s Order of 5 July 2021, and claim that the plaintiff had failed to comply with a term of the Order where it was required to file an amended writ of summons and statement of claim before or by a specific date. As such, they submit that given that the original writ of summons and statement had been regarded by the Court as disclosing no reasonable cause of action, the proceeding should be dismissed.

6. The plaintiff denies the claim. Its main argument is that it has a valid reason for not filing its Amended Writ of Summons and Statement of Claim (AWoS) within the time as ordered by the Court.

ISSUES

7. The main issues, in my view, are (i), whether the reasons provided by the plaintiff in not filing its AWoS may be accepted against the Court Order of 5 July 2021, (ii), if not, whether the original pleading discloses a reasonable cause of action, and if not, (iii), whether I should exercise my discretion and dismiss the matter.

COURT ORDER OF 5 JULY

8. The Court Order of 5 July 2021 (July Order) reads in part:

1. The plaintiff’s notice of motion filed on 5 October 2020 is dismissed.
2. For the reasonings that I have given in my ruling and the consequential orders that I will make, they render the defendants’ notice of motion filed on 3 December 2020 unnecessary, and as such, I order its withdrawal.
3. The plaintiff is directed to re-consider its position, standing, and cause of action, that is, of whether it should seek leave to discontinue the proceeding.
4. If the plaintiff intends to pursue with the claim, leave is granted to it to file and serve its Amended Writ of Summons and Statement of Claim before or by 15 July 2021.
5. If the plaintiff utilizes term 4 of the order herein, the defendants shall file and served their defence before or by 29 July 2021.

......

COMMON GROUND

9. The parties are at common ground that term 4 of the July Order sets a deadline which is that if the plaintiff intends to continue with the matter, it shall file an amended writ of summons and statement of claim by 15 July 2021. The parties also acknowledge that the plaintiff filed its AWoS after the due date on 19 July 2021.

REASONS

10. Counsel for the plaintiff submits that they had submitted the plaintiff’s AWoS within time but that it was the National Court Registry that was slow and had sealed the document on 19 July 2021. As such, counsel submits that it was not the fault of the plaintiff that the document could not be filed within time.

11. The defendants submit, amongst others, that the plaintiff did not file any evidence to support its assertion. As such, they submit that there is not explanation before the Court. They submit that the failure is in breach of the July Order.

12. I uphold the defendants’ submission. The plaintiff did not file evidence to support its assertion. But that is just one aspect of the problems I see that the plaintiff faces. The other is this. The plaintiff did not file an application seeking extension of time or variation of the July Court Order. The explanation given by the plaintiff over the bar table, if it is to be regarded on its merit, ought to have been presented in evidence in an application to extend or vary the July Court Order. There is no such application made together with or that is pending before this Court.

13. In any event, even if these reasons are to be considered, they cannot correct or overturn the July Court Order. The said order is binding to this day. As such, I find the first issue irrelevant and against the plaintiff.

BREACH OF COURT ORDER

14. There is no issue in regard to failure by the plaintiff to comply with term 4 of the July Order. Given the facts at hand and my findings above, I also find that the plaintiff breached term 4 of the said Court Order.

EFFECT OF BREACH

15. The July Order was made after this Court, in Itutu Investment Ltd v. Nafy Company Ltd and Ors (supra), noted serious flaws in the pleadings in the original writ of summons and statement of claim filed on 19 December 2019 (the original writ). I refer to paragraphs 11 and 13, which states:

11. Having had the opportunity to fully consider the claim and the pleadings, I make these observations. Firstly, the plaintiff’s standing appears to be in serious doubt, that is, for bringing this cause of action which appears to be really a claim by former shareholders of the first defendant against the first defendant. These shareholders are legal persons, and the proceeding appears to concern matters that are personal in nature in terms of their interests in the first defendant. As such, there are processes under the Companies Act 1997 (the Companies Act) where these former shareholders may commence against the first defendant. The plaintiff is a legal person, which is established under s. 16 of the Companies Act, and there seems to be lack of pleadings on how its interest has or will be affected, or why it has commenced proceeding in this nature. My second observation is this. The cause of action appears ambiguous as is pleaded in the statement of claim. The pleadings suggest a cause of action for malicious intent or malicious intention. There is no tort of malicious intent or malicious intention. There is, however, the tort for malicious prosecution, and malicious intent or intention is one of its elements that may be established in a court of law. It is therefore not proper, in my view, to plead malicious intent or intention as a tort or a cause of action.

......

13. With this line of authorities and reasonings, I would also refuse to grant default judgment for the reason that the cause of action appears to lack merit. I will add that there is also reasonable basis to query whether the proceeding may also be regarded as frivolous given the questionable standing of the plaintiff and of its role, that is, to sue for the shareholders and their personal interest in the first defendant as pleaded, which may not concern its interest.

16. The status quo now is that the purported ASoC that was said to have been filed by the plaintiff on 19 July 2021 is a nullity. It was filed in direct breach of the July Order and shall not be regarded at all as a duly filed court document. Without that, original writ remains as duly filed. Therefore, and unlike the hearing of the earlier application by the plaintiff for default judgment where there was no basis for dismissal of the proceeding, the defendants herein and with their present NoM have drawn the Court to its jurisdiction to dismiss the proceeding, that is and amongst others, for want of reasonable cause of action and for breach of a Court Order.

17. I am inclined to and will uphold the relief sought in the NoM. Given that there is no change made to the pleadings, I adopt my reasonings and considerations made as stated above in Itutu Investment Ltd v. Nafy Company Ltd and Ors (supra). I find that the plaintiff has no standing in the matter. I find that the cause of action to be personal in nature which would or may be commenced by the former shareholders of the first defendant, against the first defendant or its former executives. As such, they ought to have commenced the proceeding themselves instead of through the plaintiff which has no primary rights or interest on the matters in contention as alleged in the original writ against the defendants. See case: Gigira Development Corporation Ltd and Ors v. Stanis Talu and Ors (2021) N9027. Secondly and as stated in the above case, the correct process may be to commence proceedings under the relevant provisions of the Companies Act 1997. I also find that the plaintiff has adopted an incorrect mode of proceeding by filing the present proceeding. Thirdly, I find that there is no precise cause of action pleaded in the original writ. I find that there is no such cause of action as tort of malicious intent or malicious intention. This requires clarity and in summary, I note that these were the basis for this Court to refuse the default judgment application, and in its stead, the Court issued directional orders to the plaintiff to consider which included the options to discontinue the matter or refile an amended statement of claim. The plaintiff as it is now, has failed to utilize its options and now is faced or left with the defective or flawed original writ.

18. I am therefore left with little choices under the circumstances, and it seems that the rational or reasonable way forward would be to dismiss the proceeding as I am satisfied that the defendants have established their reasonings of why the matter should be dismissed.

SUMMARY

19. I am inclined to and will dismiss the proceeding, that is, based on frivolity, want of reasonable cause of action, and also based on breach of the Court Order of 5 July 2021.

COST

20. An order for cost of this nature is discretionary. I will order cost to follow the event on a party/party basis to be taxed if not agreed.

ORDERS OF THE COURT

21. I make the following orders:

1. The proceeding is dismissed in its entirety.
   
2. The plaintiff shall pay the defendants’ cost of the proceeding on a party/party basis which may be taxed if not agreed.
   
3. Time for entry of these orders is abridged to the date and time of settlement by the Registrar which shall take place forthwith.
   

The Court orders accordingly

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George Kaore Lawyers: Lawyers for the Plaintiff
Jeffersons Lawyers: Lawyers for the Defendants