Geru Holding Ltd v Kruse [2021] PGNC 338; N9169 (27 September 2021)

N9169

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 221 OF 2021

BETWEEN:
GERU HOLDING LTD
First Plaintiff

AND
JAMES KRUSE
First Defendant

AND
DELOITTE TOUCHE TOHMATSU
Second Defendant

AND
ROBIN FLEMING as the Chief Executive Officer of Bank of South Pacific Financial Group Ltd
Third Defendant

AND
BANK OF SOUTH PACIFIC FINANCIAL GROUP LTD
Fourth Defendant

AND
MOROBE PROPERTIES LTD
Fifth Defendant

Waigani: Tamade AJ
2021: 21^st September

PRACTICE AND PROCEDURE – notice of motion by defendant – motion seeking orders to dismiss plaintiff’s proceedings for being frivolous, vexatious and abuse of court process – motion brought pursuant to Order 12 Rule 40 (1) of the National Court Rules – whether plaintiff is a vexatious litigant – plaintiff has filed same proceedings involving same issues multiple times over the years – principles of issue estopple applies – plaintiff is a vexatious litigant – proceedings dismissed – costs awarded against plaintiff and its lawyer

Cases Cited:

Geru Holdings v Homeland Joint Venture Limited and Ors- SCA 105 of 2017
Kerry Lerro v Philip Stagg (2006) N3050
Nema v Rural Development Bank Ltd (2012) N5317
Philip Takori v Simon Yagari (2008) SC905
Smugglers Inn Resort Hotel Ltd v PNGBC (2006) N3062
Telikom PNG Ltd v ICCC (2008) SC906
The State v The Senior Stipendiary Magistrate of NCD Court at Port Moresby; Ex Parte 5)The Acting Public Prosecutor [1976] PNGLR 344, SC103
Yagama v Uguro [2018] PGNC 68

Counsels:

Camillus Gagma, for the Plaintiff
Ethel Heagi, for the First, Second, Third and Fourth Defendants.
Peterson Kewa, for the Fifth Defendant

27^th September, 2021

1. TAMADE, AJ: This is the Fifth Defendant’s application for dismissal of the entire proceedings for being frivolous, vexatious and an abuse of the Court’s process. The First, Second, Third and Fourth Defendants through their lawyers Ashurst Lawyers also support the Fifth Defendant and also move their application that these proceedings be dismissed and that the Plaintiff be declared a vexatious litigant.
.
Facts of the Case

2. The Plaintiff was a guarantor to a loan taken out by a company called Piunde Limited. Piunde Limited defaulted in 2009 to its loan obligations and as a result, Bank South Pacific Limited exercised its’ rights in respect of that loan and its’ securities. The Plaintiff has therefore been challenging the bank and the Defendants by way of previous National Court proceedings and appeals to the Supreme Court.

3. A property the subject of the security in which the bank took action over is the property in which was sold to the Fifth Defendant and in which the Plaintiff has challenged it’s right over.

Previous court proceedings

4. OS 305 of 2009- Geru Holdings Limited v Bank South Pacific and Ors- these proceedings sought a right over the property known as Section 3 Lot 10 in Kundiawa. The proceedings were subsequently withdrawn.

5. OS 797 of 2015- Geru Holdings Limited v James Kruse- these proceedings sought similar remedy to the OS 305 of 2009 matter over the same subject matter. These proceedings were subsequently discontinued.

6. WS 428 of 2017- Geru Holdings v James Kruse and Ors- the Plaintiff sought to assert it’s right over the same subject property by challenging the Defendants, a similar attempt to past proceedings however this time through a Writ of Summons.

7. SCA 105 of 2017- Geru Holdings Limited v James Kruse and Ors- this was an appeal on WS 428 of 2017 from an interlocutory order from the National Court refusing to grant interim injunctions to the Plaintiff over the subject property. The Defendant’s however were successful in dismissing the appeal.

8. The Plaintiff’s subsequently after the demise of SCA 105 of 2017, discontinued WS 428 of 2017.

9. The Plaintiff is again before the National Court in this current proceeding WS 221 of 2021.

10. The Plaintiff has commenced proceedings in 2009 and is still in court 11 years on and still in possession of the subject property in which the bank has exercised its’ right over and in which the Fifth Defendant now has a registered title over.

11. Issues

1. Has the Plaintiff abused the process of the court by filing numerous proceedings over the same subject matter? Are these proceedings res judicata and the Plaintiff is therefore estopped from filing these proceedings?
   
2. Is the Plaintiff’s claim time barred?
   

100. Is the Plaintiff a vexatious litigant?
     

a) Has the Plaintiff abused the process of the court by filing numerous proceedings over the same subject matter/land? Are these proceedings res judicata and the Plaintiff is therefore estopped from filing these proceedings?

12. The Defendant’s claim in their respective applications that the Plaintiff has abused the process of the Court by filing many proceedings over the same subject matter and by so doing, the Defendants have been dragged through the years in Court. The Defendants rely on Order 12 Rule 40 (1) of the National Court Rules.

13. Order 12 Rule 40(1) is in the following terms:

(1) 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-

1. No reasonable cause of action is disclosed; or
2. the proceedings are frivolous or vexatious; or

100. the proceedings are an abuse of the process of the Court;

The Court may order that the proceedings be stayed or dismissed generally in relation to any claim for relief in the proceedings.

14. A claim cannot merely be an abuse of the process of the Court on the reason that it has been filed more than on one occasion over the same subject matter, however, it is an abuse, if the subject matter is res judicata, meaning it has been judicially decided and the Plaintiff has come back to Court attempting to have a second bite at the cherry so to speak.

15. Justice Hartshorn in the case of Nema v Rural Development Bank Ltd (2012) N5317 sets out the following grounds to be established by a party relying on a defence of res judicata:

1. Was the earlier decision a judicial decision?
2. Was the judicial decision pronounced?

100. Did the judicial tribunal have competent jurisdiction?

4. Was the judicial decision final
5. Did the judicial decision involve the determination of the same question?
6. Are parties the same?
   

16. I am drawn to the Fifth Defendant’s submissions that the Court has exercised its rights in past proceedings on the same subject matter and therefore the matter is ‘functus officio’. The term functus officio as the Fifth Defendant submits is where a Court has discharged its function or duty on the subject matter, the court lacks power to make a determination again on the same subject matter. The Fifth Defendant relies on the case of Yagama v Uguro [2018] PGNC 68 to define this principle.

17. The Fifth Defendant also relies on the case of The State v The Senior Stipendiary Magistrate of NCD Court at Port Moresby; Ex Parte The Acting Public Prosecutor [1976] PNGLR 344, SC103 where the Magistrate having decided on a matter on sentence, adjourned the matter and took further evidence and then suspended the same sentence on a good behaviour bond. The Supreme Court found that the Magistrate had acted functus officio by revisiting his own decision on sentence and cannot undo his own decision.

18. I am of the view that the subject matter complained of by the Plaintiff was not decided upon at the National Court and or at the Supreme Court on merits for the principle of res-judicata to apply and or for the principle of functus officio to apply however the Plaintiff has attempted to file proceedings and discontinue them only to file a fresh one and discontinue again over the course of eleven years since 2009.

19. Even though there was no determination of the issues raised by the Plaintiff in the many proceedings before the Courts, it is imperative to note the decision of the Supreme Court in SCA 105 of 2017- Geru Holdings v Homeland Joint Venture Limited and Ors. The Supreme Court in hearing the appeal on WS 428 where in the National Court refused to grant interim injunctions sought by the Plaintiff therein, the Supreme Court affirmed the decision of the National Court and remarked that the Plaintiff’s claim therein was statute barred and that ‘the appellants did not have a very strong case and or all their claims appeared to be statute-barred and/or a rehash of relief refused in previous proceedings.’

20. The finding by the Supreme Court therefore points to the multiplicity of proceedings and the issue of time bar, a ground which points to the issue of estoppel.

b) Is the Plaintifff’s claim time barred?

21. Section 16 (1) of the Frauds and Limitations Act 1988 states that:

LIMITATION OF ACTIONS IN CONTRACT, TORT, ETC.

(1) Subject to Sections 17 and 18, an action–

(a) that is founded on simple contract or on tort; or
(b) to enforce a recognisance; or
(c) to enforce an award, where the submission is not by an instrument under seal; or
(d) to recover any sum recoverable by virtue of any enactment, other than a penalty or forfeiture or sum by way of penalty or forfeiture,

shall not be brought after the expiration of six years commencing on the date on which the cause of action accrued.

22. The origin of the Plaintiff’s claim upon which he asserts all other rights (beginning with the legal challenge to the bank, the appointment of the First Defendant herein etc and also the challenge against the Fifth Defendant who has purchased the subject property) , the initial alleged right complained of as a guarantor of the company Piunde Limited which cascaded into other causes of actions is time barred as correctly pointed out by the Supreme Court in SCA 105 of 2017.

23. The Plaintiff argues that the Defendants cannot rely on the issue of the matter being time barred because they have not filed a Defence pleading the defence of the matter being time barred. I refuse to accept this argument. A court has the discretion to do justice in a case, to carefully be guided by set principles and the rules and to exercise that discretion sparingly so as to protect the Court’s process from abuse.

24. To my mind, this is a matter that is incontestably bad. By looking at the Statement of Claim in these proceedings and my enquiries with the lawyer for the Plaintiff during submissions, the Plaintiff’s cause of action seems to stem from 2014 or further back when the bank exercised its right over the properties the subject of the securities put forth by the Plaintiff as the said guarantor and when the First Defendant was appointed.

25. I adopt the principles discussed in the case of Philip Takori v Simon Yagari (2008) SC905 as adopted from the case of Kerry Lerro v Philip Stagg (2006) N3050 where the Court stated that:

1. Our judicial system should never permit a plaintiff or a defendant to be ‘driven from the judgment seat’ in a summary way, ‘without a Court having considered his right to be heard.’ A party has a right to have his case heard, as guaranteed by the Constitution and the laws of the land. The Rules are designed to enhance those rights and to ensure the prompt and fair disposal of matters coming before the Court. That right cannot be lightly set aside.

2. At the same time however, the law, such as the Rules under consideration, provide for and the Court has an inherent jurisdiction to protect and safeguard against any possible abuse of the processes of the Court.

3. The object of these rules are therefore ‘to stop cases which ought not to be launched — cases which are obviously frivolous or vexatious or obviously unsustainable.’ In other words ‘the object of the rule was to get rid of frivolous actions.’

4. A claim may be frivolous if it can be characterized as so obviously untenable that, it cannot possibly succeed or that, the claim or defence is bound to fail, if it proceeds to trial.

5. A claim or defence may be vexatious, if the case amounts to a sham or one which, cannot succeed and is one that amounts to harassment of the opposing party who is unnecessarily put to the trouble and expenses of defending or proving the claim.

6. With regard to the issue of disclosing a reasonable cause of action or defence, the Court must be clear that, there are two parts to the phrase ‘cause of action’. First, it entails a right given by law, such as an entitlement to reasonable damages for breach of human rights under s. 58 of the Constitution, commonly referred to as, the ‘form of action’. Secondly, it entails the pleadings disclosing all the necessary facts which give rise to the form of action.

7. The phrase ‘cause of action’ could thus be defined in terms of a legal right or form of action known to law with:

‘every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the court. It does not comprise of every piece of evidence which is necessary to prove each fact, but every fact is necessary to be proved.’

8. A statement of claim or a defence (as the case may be) must therefore, clearly plead the form of action by pleading the necessary legal elements or ingredients of the action and the relevant and necessary facts (not the evidence) giving rise to the form of action. It follows therefore that, where a statement of claim or a defence is so ambiguous or lacking in particularity that it does not facilitate orderly and rational pleadings, which would enable the real issues to be identified, and instead leaves it to guess work, it should be struck out.

9. These rules provide a summary judgment procedure or remedy which is available to a plaintiff or a defendant, and one which vests and calls for an exercise of a discretion by the Court.

10. The discretion must be exercised sparingly and only in a case where the statement of claim or the defence (as the case might be) is ‘obviously and almost incontestably bad.’ In other words this discretion can be exercised only in cases that ‘are plain and obvious so that the master or Judge can say at once that the statement of claim [or defence] as it stands, is insufficient, even if proved, to entitle the plaintiff [or defendant] to what he asks for."

26. The Plaintiff seems to run his litigation based on the same causes of action but perhaps refined after eliciting from every proceeding filed some new fact that did not exist before to keep coming back to the Courts.

27. In so doing, the Defendants have been prejudiced having had to defend every proceeding both in the National and Supreme Court only to have those proceedings dismissed and or the Plaintiff discontinuing same only to come back again to the same Courts.

28. From my enquiry with counsels in the hearing of the matter, the Plaintiff has not paid any costs to the Defendants from past proceedings.

29. The Court in Telikom PNG Ltd v ICCC (2008) SC906 stated that a party commencing a multiplicity of legal proceedings concerning the same issues will commit an abuse of process unless very good reasons are shown to justify it.

30. I am of the view that the Plaintiff has not shown any good reason why multiple proceedings were filed over the years over the same subject matter. I can only think of whether the Plaintiff was unsure of its legal right so as to file and withdraw and or discontinue proceedings multiple times.

c. Is the Plaintiff a vexatious litigant?

31. A litigant can be declared a vexatious litigant after having filed numerous proceedings and having failed on all these proceedings to establish his claims. In the case of Smugglers Inn Resort Hotel Ltd v PNGBC (2006) N3062, the Court stated that it has an inherent jurisdiction in the protection of its process from abuse. The Court therefore can:

1. Make orders to prevent the making of anticipated, unwarranted and vexatious applications in an action which is pending in court, unless the applicant first obtains leave of court,
2. Prevent the commencement of anticipated and unwarranted and vexatious proceedings, unless the litigant the subject of the order first obtains leave by showing that the case is arguable,

100. A vexatious litigant order would not normally be made until after the litigant has made a number of applications in a single proceeding all of which have been dismissed because they are totally devoid of merit

4. An extended vexatious litigant order would ordinarily be made only after;

1. The litigant has commenced proceedings that has little or no basis in law but has the effect of subjecting the defendants to inconvenience, harassment and expense out of all proportion to any gain likely to accrue to the claimant
2. The litigant has sued the same party repeatedly in reliance on essentially the same cause of action, perhaps with minor variations,
3. The litigant relies on essentially the same cause of action, perhaps with minor variations, after it has been ruled upon in actions against successive parties who, if they were to be sued at all, should be joined in the same action
4. The litigant automatically challenges every decision on appeal and refuses to take any notice or give any effect to orders of the Court.
   

32. I am of the view that the Plaintiff is a vexatious litigant having commenced proceedings through its same lawyer over the course of 11 years in different modes and only to discontinue in order to resurrect same again in another fresh proceeding, subjecting the Defendant’s to inconvenience, harassment and expense out of all proportion to any gain likely to accrue to the claimant.

33. The Fifth Defendant has made submissions that it has acquired the property the subject of this proceeding and has been deprived of this property as a result of the Plaintiff continuing to file and run litigation over the same subject matter and continuing to remain in possession of same.

34. I find that, the Plaintiff’s conduct has been malicious in this matter and greatly prejudicial to all Defendants who have had to incur costs over the years defending suits brought on by the Plaintiff.

35. The Fifth Defendant has made submissions that because the Plaintiff has been represented by the same lawyer since 2009 when he filed the first proceeding, that Gagma Legal Services should be personally liable for all of the Defendant’s costs.

36. Lawyers have a higher duty to advise and inform their client’s well as to causes of actions identifiable in law and the consequences of being unsuccessful in court and or discontinuing matters, the payment of costs to parties unnecessarily dragged into Court to defend matters.

37. I am of the view that these proceedings add on to the multiplicity of proceedings over the years pursued by the Plaintiff over the same subject matter and the fact that the matters complained of as affecting the Plaintiff’s rights are time barred. I will dismiss the proceedings.

38. I make the following orders:

1. The Plaintiff is declared a vexatious litigant.
2. These proceedings are dismissed in its entirety against all Defendants.
3. The Plaintiff and Gagma Legal Services shall equally meet all the costs of the Defendants on a solicitor client basis.
   
4. All costs of these proceedings shall be met prior to the institution of any new proceeding over the same subject matter.
   

39. I make these orders accordingly.

Orders accordingly.
________________________________________________________________
Gagma Legal Services: Lawyers for the Plaintiff.
Ashurst Lawyers: Lawyers for the First, Second, Third and Fourth Defendants
Serria Legal Services: Lawyers for the Fifth Defendant