Independent Public Business Corporation v Motor Vehicles Insurance Ltd [2021] PGNC 5; N8718 (28 January 2021)

N8718

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS (COMM) NO. 1252 OF 2010

BETWEEN:
INDEPENDENT PUBLIC BUSINESS CORPORATION
Plaintiff/First Cross Defendant

V

MOTOR VEHICLES INSURANCE LIMITED
First Defendant/Second Cross Defendant

AND
NOMINEES NIUGINI LIMITED
Second Defendant/Cross Claimant

AND
NATIONAL SUPERANNUATION FUND LIMITED
Third Defendant

AND
BENJAMIN TERRENCE O’DWYER, TERRANCE JAMES O’DWYER AND BACKWELL LOMBARD CAPITAL PTY LTD
Second Cross Defendant to the Second Cross Claim

AND
DR JOHN MUA
Third Cross Defendant to Second Cross Claim

AND
BERNARD FONG
Fourth Cross Defendant to Second Cross Claim

Waigani: Anis J
2020: 12^th August
2021: 28^th January

NOTICE OF MOTION – seeking dismissal of proceeding for want of prosecution – Order 4 Rule 36(1), Order 10 Rule 5, Order 12 Rule 1 and Order 10 Rule 10A Rules 15 and 16 of the National Court Rules – consideration – exercise of discretion – consequential orders

Cases Cited:

Ronald Nicholas v Commonwealth New Guinea Timbers Pty Ltd (1986) PNGLR 133
Seravo v Bahafo (2001) N2078
John Niale v Sepik Coffee Producers Limited & Ors (2004) N2647

Counsel:

Mr A Mana, for the Plaintiff
Ms M Tusais, for the First Defendant
Mr J Brooks, for the Third Defendant

RULING

28^th January, 2021

1. ANIS J: The 3^rd defendant applied to dismiss the proceeding for want of prosecution or alternatively, to have itself removed as a party to the proceeding. I heard submissions on 12 August 2020 and reserved my ruling to a date to be advised.

2. Parties have been notified so I rule on it now.

BACKGROUND

3. The plaintiff files this proceeding against the defendants on 7 October 2010. Initially, Nasfund, which is the applicant herein, was not a defendant to the proceeding. The defendants then were Motor Vehicles Insurance Limited (MVIL) and Nominees Niugini Limited (NNL), that is, the 1^st and 2^nd defendants. Nasfund (the applicant) was joined as a party on 24 June 2011 by a Court Order after the plaintiff had applied for that on 7 June 2011.

4. Briefly, the claim is this. The plaintiff seeks to challenge the validity of an Equity Monetisation Contract (EMC). The EMC was entered into between MVIL and NNL on or about 22 July 2009. Pursuant to the EMC, NNL lent to MVIL K100 million (the loan), which was monies it obtained from the applicant. As security for the loan, MVIL signed a Legal Mortgage of Shares contract (LMS) with NNL on or about 22 July 2009. Under the LMS or security contract, MVIL vested or mortgaged with NNL, 530,105,100 of its ordinary uncertified fully paid shares that it had at the material time with Bank South Pacific Limited (BSP). So, in summary, MVIL had put up as security, its shares that it had in BSP, in favour of NNL for the K100 million loan that NNL had agreed to and had loan to MVIL, the loan money which had been facilitated by the applicant. As it turned out, MVIL may have defaulted on or has breached the terms of the EMC. NNL proceeded to exercise its rights under the various agreements, and in so doing, transferred 193,972,790 of MVIL’s shares in BSP over to the applicant, to fully repay the loan.

5. This led to the plaintiff filing this proceeding. It claims that MVIL, as a majority state owned enterprise, had breached mandatory provisions under the Independent Public Business Corporation Act 2002 (IPBC Act), including s. 46B, when it transacted or made these dealings with NNL without the approval of the responsible Minister. Various amendments have been made since the original writ of summons and statement of claim was filed on 7 October 2010. This included defences and crossclaims filed by the parties to the proceeding. There had been various interlocutory applications filed and appeals made to the Supreme Court. I note that these were highlighted in the evidence and submissions of the applicant, the plaintiff, and the 1^st defendant. I will refer to them later below.

MOTION

6. The applicant’s notice of motion was filed on 24 July 2020 (NoM). It cites various sources, namely, Order 4 Rule 36(1), Order 10 Rule 5, Order 12 Rule 1, and Order 10 Rule 10A Rules 15 and 16, of the National Court Rules. In summary, the applicant seeks to dismiss the entire proceedings for want of prosecution, or alternatively, it seeks orders for it to be removed as a party to the proceeding.

ISSUES

7. The main issues are as follows: (i), whether there was delay, and if so, (ii), whether the delay was inordinate, and subject to the Court’s findings in regard to the 2 issues, (iii), whether the Court should exercise its discretion and dismiss the proceeding, and finally, (iv), if the Court decides against the applicant on the 3 issues, whether it should nevertheless exercise its powers and remove the applicant as a necessary party to the proceeding.

LAW

8. The Court’s power when it comes to whether it should dismiss a matter or not like in this case, is discretionary. The applicant has cited various sources, namely, Order 4 Rule 36(1), Order 10 Rule 5, Order 12 Rule 1, and Order 10 Rule 10A Rules 15 and 16, of the National Court Rules. I note that these, as shown in the case law, have similar considerations or tests. See cases: Ronald Nicholas v Commonwealth New Guinea Timbers Pty Ltd (1986) PNGLR 133, Seravo v Bahafo (2001) N2078, John Niale v Sepik Coffee Producers Limited & Ors (2004) N2647. The considerations are not exhaustive.

9. They include the following:

(i) The Plaintiff’s default is intentional or that it permits inordinate or inexcusable delay in prosecution of the claim [Ronald Nicholas v Commonwealth New Guinea Timbers Pty Ltd (supra)];

(ii) There is no reasonable explanation(s) provided for the delay [Ronald Nicholas v Commonwealth New Guinea Timbers Pty Ltd (supra)];

(iii) The delay has caused injustice or prejudice to the defendant [Ronald Nicholas v Commonwealth New Guinea Timbers Pty Ltd (supra)];

(iv) The Court should specifically look at the conduct of the parties and their lawyers [John Niale v Sepik Coffee Producers Limited & Ors (supra)];

(v) Dispensation or interest of justice consideration, [Ronald Nicholas v Commonwealth New Guinea Timbers Pty Ltd (supra) and John Niale v Sepik Coffee Producers Limited & Ors (supra)];

(vi) Failure to comply with court orders or directions (Order 10 Rule 9A(15)(2)(c) of the National Court Rules).

ACTIVITIES

10. It is obvious to me hearing submissions from the parties as well as by having a look at the history of the matter, that there had been many interlocutory hearings in the National Court and appeals in the Supreme Courts, that is, up to as far as May of 2020. All of these interlocutory processes, I note, were not directly instigated by or against the applicant, but rather between the plaintiff and the 1^st and 2^nd defendants. Be that as it may, I note that these interlocutory processes had to be exhausted first before the substantive matter could progress to trial. In that context, I do not think that one party, like the applicant in this case, can fairly argue that because it had not been directly involved in all these other court activities, that it should be treated differently, or that its case should be judged without regard to these other matters that had been contested between the other parties to the proceeding.

11. When I say ‘these other matters’ or court activities, I of course refer to the following which I note are also pointed out at paragraph 19 of the plaintiff’s written submission,

(i) Amendments made to the writ of summons and statement of claim:

(a) amendment filed on 2 December 2010;

(b) amendment filed on 28 June 2011; and

(c) amendment filed on 26 March 2015.

(ii) Related proceeding titled WS 1300 of 2013 filed by the Second Defendant against the First Defendant based on the same transactions where the plaintiff seeks to set aside in the present proceeding.

(iii) various Supreme Court appeals relating to this proceeding and WS 1300 of 2013, namely, SCA 87 of 2012, SCA 44 of 2014, SCA 53 of 2014, SCA 76 of 2015, SCA 85 of 2015, SCA 11 of 2017 and SCA 14 of 2017.

(iv) change of lawyers representing the various parties to the proceeding.

12. The applicant, as stated, was joined as a party to the proceeding on 24 June 2011. Parties such as the plaintiff and the 1^st and 2^nd defendants, filed various challenges before this Court as well as the Supreme Court as I have summarized above. But these, it seems, had been done within their rights or prerogatives as litigants, that is, when they had lodged the appeals against the interlocutory decisions to the Supreme Court, or when they had taken steps to amend the pleadings or filed related proceedings. My general observation is this. I do not think that I should regard these interlocutory and related challenges negatively against the parties that had been involved nor should I regard the time that had been spent there as valid grounds for delays in favour of the applicant. To do so, in my view, may be unjust as the aggrieved parties then, it seems, were only pursuing justice within the bounds of their rights which is permitted under law.

DELAY

13. For this purpose, the main issue is delay and whether it was inordinate. The applicant’s NoM was filed on 24 July 2020. The matter is about 10 years old. The applicant was joined as a party on 24 June 2011. From that time to the date of filing of the NoM is about 9 years. That in itself should be of concern. In my view, litigants that come to Court obviously want to be heard, and one would have thought that the only thing left to do when a proceeding is filed, is to identify the issues and proceed to trial based on the evidence which would or ought to have been at hand prior to the commencement of a proceeding. Unfortunately, and as I have observed, not in this case but in many other instances that I have presided over, litigants or parties tend to file proceedings first before they negotiate or look for evidence to support their claims. This, in my view, has seen or contributed to backlog of cases that are pending in the National Court. But for this purpose, its history is well set out in the submissions of the parties. There had been numerous activities at the interlocutory level as well as at the appeal level before the Supreme Court. I can see why it has taken that long and why the matter has not progressed, and it seems that the parties are well aware of the delays which is again reflected in their submissions to this Court.

14. What is however relevant for this purpose, is contained in the evidence deposed to by the applicant in its various affidavits filed. These affidavits include (i), affidavit of Jason Brooks filed on 14 July 2020, (ii), another affidavit of Jason Brooks filed on 7 August 2020, and the affidavit of Ian Tarutia filed on 14 July 2020.

15. In addition to the general delay argument, the facts which the applicant also alleges to support its claim are these. The last or relevant of the appeals concluded on 5 July 2018. On 4 October 2018, Darren Young, the then Managing Director of Kumul Consolidated Holdings which is the successor to the plaintiff, met with the Chief Executive Officer of Nasfund, Mr Tarutia. According to Mr Tarutia, Mr Young’s position on the matter was to expedite the hearing and or to make an offer to try to settle the matter. The applicant says that after these said discussions (that had been had on the 4^th and 5^th of October 2018), it did not receive any settlement offer from the plaintiff nor was the matter expedited to a hearing stage. It filed this NoM as a result of or as part of the main reasons for the delay, on 24 July 2020.

16. The plaintiff has this to say in reply. It submits, amongst others, that the delay had not been intentional nor inexcusable. It submits that the delay in general was caused by (i) amendments that had been made to the originating process, (ii), commencement and attendances that had to be made in relation to a related proceeding, that is, WS 1300 of 2013 which had been filed by the second defendant against the first defendant, (iii), attendances to a total of 5 supreme court appeals that had been filed that were directly, or if not, related to the present proceeding. The 1^st defendant supports the plaintiff’s contention and in summary submits that the NoM should be dismissed.

17. A further relevant consideration is this. The last activity in preparing for trial was discovery between the 2^nd defendant and 2^nd cross-defendants to the 2^nd cross-claim. The process ended on 26 May 2020. That process is part and parcel of the entire claim.

18. When I weigh all these, I will say this. There is a significant delay in this matter in that 10 years have lapsed and the matter is still pending a hearing date. This fact is evident by looking at the history of the matter and does not require proof. That said, I now turn to the reasons for the delay. The main causes of the delay, as stated, have arisen by parties exercising their rights to raise various challenges or seek various relief by way of interlocutory processes. Various appeals have arisen as a result and which have all been dealt with by the parties. At this juncture, it seems that the matter will now progress to trial. In my view, I do not find that the delays have been unreasonably or unfairly caused by the plaintiff. This is quite a complex matter with additional parties who have filed cross-claims. I cannot see how I can simply dismiss the matter in the manner as proposed by the applicant. Pleadings show that the applicant may not be a party that had direct participation in the matter or the contractual arrangements. But it shows that the applicant appeared to have provided funds which had been used by the 2^nd defendant to facilitate the transactions which are now the subject of the disputes that are before this Court. This is not the time to decide the merits and extent of the liabilities (if any) of the applicant, which obviously should be left to the trial proper.

19. I am therefore not persuaded that this is a matter that should be summarily dismissed, or that the proceedings should be dismissed without proper considerations. The other reason why I am disinclined to dismiss the matter is this. The transaction involves monies that exceeds K100 million. As such, it should in my view be properly trialed and parties should be required to prove or disprove their claims. The next reason is this. The 2^nd defendant has filed a cross-claim against the plaintiff and the second cross defendants namely, Benjamin Terrence O’Dwyer, Terrance James O’Dwyer and Blackwell Lombard Capital Pty Ltd. It is quite difficult therefore to dismiss the proceedings generally in the manner as proposed by the applicant. I note that no detailed or proper submission was made by the applicant in that regard. And again, given the complexity of the matter, it is, in my view, fair and just that all the issue, claims and cross-claims, should be heard on their merits rather than in a summary fashion.

REMOVAL AS A PARTY

20. Given my reasonings, let me move on to consider whether the applicant should be removed as a party to the proceeding. The applicant seeks this as its alternative relief. I have considered the submissions of the parties.

21. I note that the question of whether the applicant is a necessary party had been raised earlier in this proceeding. The parties do not deny this fact. The applicant was joined as a party to this proceeding on 24 June 2011. This Court also granted leave to the plaintiff to file and serve an amended writ of summons and statement of claim to reflect the applicant’s joinder as a party. The applicant did not appeal against the Court’s decision to join it as a party, but instead filed its notice of intention to defend on 15 July 2011, and then its defence on 12 August 2011.

22. In my view, the issue of whether the applicant is a necessary party was decided earlier about 9 years ago on 24 June 2011. The applicant did not appeal against the said decision. I note that the applicant did not advance any argument on whether there has been a change of circumstances that would warrant this Court to reconsider the issue and consider whether to grant the alternative relief or not. I also note that the argument is belatedly raised after about 9 years and where the matter appears to be at an advanced stage. This consideration does not favour removing the applicant from the proceeding.

23. But all these aside, let me refer to the amended writ of summons and statement of claim filed on 25 March 2015 (amended writ). The applicant has pleaded or the pleadings against it, are such that it is not merely regarded as a necessary party where its inclusion is merely to ensure that all issues are considered, but rather or beyond that, that is, the applicant is regarded an express or material party with serious allegations raised against it in the pleadings and in the relief that are being sought against it. When I say that, I make particular reference to paragraphs 10 and 10A to paragraph 15A, paragraphs 18, 21, 29 to 31, paragraphs 31A, 40, 41 and 42, of the amended writ and also to all the 13 relief that are sought therein. The said pleadings and relief directly affect the applicant. The premise of the claim in summary is this. The plaintiff seeks to undo or declare null and void various transactions that had been had or entered between the defendants. The plaintiff says the 1^st defendant’s BSP shares of 193,972,790 had been wrongly transferred to the applicant over the loan facility arrangements or the EMC and LMS agreements that have been signed between the defendants. As a result, it seeks, amongst others, to declare these agreements null and void, illegal and for the re-transfer of the 193,972,790 BSP shares that are currently being held by the applicant, to the 1^st defendant.

24. In my view, based on the pleadings, the applicant is not a nominal defendant nor a defendant whose joinder is merely necessary, but rather, is a primary defendant whose interest may be significantly affected, that is, based on the pleadings and the relief that are set out in the amended writ. The applicant, in my view, is a material party to the proceeding.

PREJUDICE

25. The applicant also argues that it is prejudiced on the basis that those persons that had direct knowledge of the matter no longer work for it or that they had left the company and that it would be difficult to trace their whereabouts if the matter is to be trialed, that is, in view of the long delay.

26. Let me refer in particular to the affidavit of Ian Tarutia filed on 16 July 2020. At paragraph 28 he states, and I quote, Due to the time that has elapsed, the employees, officers and directors of Nasfund that have actual direct knowledge of the matters the subject of this proceeding are no longer available. In some case their whereabouts are unknown. Mr Tarutia also deposes therein that he has no direct knowledge of the matter that is the subject of this proceeding. I note the submissions of the parties on this. What I find lacking from the evidence given by Mr Tarutia is this. He makes general assertions without giving details of the persons or employees of the fund that have since left. Which employees is he referring to, and if they had left the fund, where did they go or to which country and what was their last contact address, or if they had had difficulty in reaching them then where is the factual evidence of that?

27. With these deficiencies in the evidence and based on my other reasonings given above on the other matters raised herein, I am not satisfied that the applicant has provided a satisfactory reason for me to fully consider the issue of prejudice. I also take into account, based on the pleadings, the limited but significant role that the applicant is alleged to have partaken in the alleged transactions that have led to the claims that are now before this Court.

28. I will also add that interest of justice in this instance favours the plaintiff. The pleadings appear to have merits. They are not matters that should be brushed aside or be regarded as trivial. Public consideration also comes into play, and in my view, appears as a relevant consideration. The plaintiff, including the 1^st defendant, are public bodies or companies and they represent the interest of the citizens of the country. Transactions that are entered into by these public bodies require public scrutiny or transparency if serious allegations are raised. These allegations, in my view, have been properly raised before this Court and as such, this Court has the duty, like it has for any other matter that is properly before it, to ensure that it is heard and determined on its merit with an outcome. If the applicant claims that its interest in the allegations raised was limited, nil, or was of no significant value or consequence to the various transactions or claims alleged in the matter, that would or may be established at the trial proper. But I do not see justice being served if I were to dismiss the entire proceedings, which involve serious claims and allegations that are worth hundreds of millions of kina, on the basis of want of prosecution for the benefit of just one party who happens to claim that it played no or lesser role in the alleged transactions that are seriously contested by the other parties.

SUMMARY

29. In the end, except for relief 1 which seeks leave of this Court to withdraw an earlier notice of motion that was filed on 14 July 2020 which is not contested and which I will grant, I will refuse to grant the balance of the applicant’s NoM filed on 24 July 2020.

COST

30. Awarding of cost in such an application is discretionary. I do not see why cost should not follow the event. I will order the applicant to pay the costs for the plaintiff and the 1^st defendant herein.

ORDERS OF THE COURT

31. I make the following orders:

1. Except for relief 1 which is granted, the balance of relief in the 3^rd defendant’s notice of motion filed on 24 July 2020 is refused.
   
2. The 3^rd defendant shall pay the plaintiff and the 1^st defendants’ costs of the application 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.
________________________________________________________________
Corrs Chambers Westgarth: Lawyers for the Plaintiff
Dentons Lawyers: Lawyers for the First Defendant
Ashurst Lawyers: Lawyers for the Third Defendant