JLE Pacific Advertising Ltd v Trinidad [2024] PGNC 358; N11033 (10 October 2024)

N11033

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 304 OF 2024

BETWEEN:
JLE PACIFIC ADVERTISING LIMITED
First Plaintiff

BETWEEN:
ANTONIO PEQUENA ENGUERO
Second Plaintiff

AND
DENNIS HERNANDEX TRINIDAD
First Defendant

AND
MA FE ELEPIRIA
Second Defendant

AND
SWAN DIAGNOSTIC CLINIC LIMITED
Third Defendant

Lae: Dowa J
2024: 7^th & 10^th October

PRACTICE AND PROCEDURE- application for dismissal of proceedings for disclosing no reasonable cause of action and for abuse of process - Order 12 Rule 40 of the National Court Rules-pleadings convoluted, vague and containing evidentiary material offending Order 8 Rules 8 & 9 of the National Court Rules- clear case for striking out the statement of claim on competency grounds-application granted, proceedings dismissed.

Cases Cited:
PNG Forest Products vs. State (1992) PNGLR 84–85
Ronny Wabia vs. BP Exploration Co. Ltd [1998] PNGLR 8
Wabia vs. BP Petroleum (2019)) N4337
Mt. Hagen Urban LLG vs. Sek No. 15 (2009) SC1007
National Provident Fund vs. Maladina & Others (2003) N2486
Wambunawa Holdings Ltd. vs. ANZ Bank (2020) N8310

Counsel:
K Kiendip, for Plaintiff
J Aku, for the Defendants

DECISION

10^th October 2024

1. DOWA J: This is a ruling on competing applications by the parties.
   
2. The Plaintiff, by Notice of Motion, seeks interim restraining orders while the Defendant seeks dismissal of the proceedings under Order 12 Rule 40 (1) of the National Court Rules. It was generally agreed that the Court deals with the competency matter first and if the proceedings survive, it will proceed to the hearing of the application for the interim injunctive orders.
   

Defendants’ Application

3. By Notice of Motion, the Defendant seeks the following orders:
   
   1. The entire proceedings be dismissed for:
      
      • (a) Disclosing no cause of action pursuant to Order 12 Rule 40(1)(a) of the National Court Rules; and
      • (b) Being frivolous and vexations pursuant to Order12 Rule 40(1)(c) of the National Court Rules; and
      • (c) Being an abuse of process of the Court pursuant to Order 12 Rule 40(1)(c) of the National Court Rules; and
      • (d) Being frivolous and vexatious pursuant to Order 12 Rule 40(1)(b) of the National Court Rules.

2. Costs of the proceedings.

4. The Application is supported by the following affidavits:

1. Affidavit of Dennis Hermandez Trinidad filed 3rd October 2024
2. Affidavit of James Aku filed 3rd October 2024
   

Background Facts

5. The second Plaintiff and the first and second Defendants are citizens of the Republic of Philippines. The first Plaintiff is a company owned by the second Plaintiff and operates in Papua New Guinea. It is managed by the first Defendant as a Director and General Manager. The second Defendant was employed by the first Plaintiff as Account Officer. The second Plaintiff remained in the Philippines due to travel restrictions brought about by the Covid19 Pandemic. The second Plaintiff left the management of the first Plaintiff company to the first Defendant for the period 2020 to2024.

6. It is alleged during management of the first Plaintiff company, the first and second Defendants conspired and (to use the words in paragraph 18 of the statement of claim) “devised various fraudulent schemes in which they wrongfully and maliciously conspired amongst themselves to defraud and to injure the Plaintiff company of its business where they systematically stole , misappropriated and embezzled the Plaintiff company funds and diverted these funds to their private accounts and for their own use and the setting up of the third Defendant company”. The total amount of money alleged to have been stolen or misappropriated is K 1,381,836.42.

7. The Plaintiff therefore seeks judgment for the monies lost. Apart from the judgment for damages, the Plaintiff seeks orders that the first and second Plaintiff be declared directors and shareholders of the third Defendant company while the first and second Defendants be removed as directors and shareholders.

Submissions of the Parties
8. Mr Aku, counsel for the Defendants, submits that the proceedings be dismissed for the following reasons:

a. the statement of claim comprising 156 pages is thick and bulky.

b. the statement of claim is identical to an affidavit.

c. the statement of claim is convoluted, vague, too general and difficult to ascertain the cause of action.

d. Due to multiplicity of parties, it is difficult to ascertain the complaint made against each of the defendants named.

e. the statement of claim is scandalous and highly defamatory

9. In response, Mr. Keindip, counsel for the Plaintiffs, submits the statement of claim does disclose a reasonable cause of action. Counsel submits, the proceedings are for theft, conversion, misuse and misappropriation, of a substantial amount of money belonging to the Plaintiffs. Counsel submits that amendments will be made to the statement of claim to reduce the size and urges the Court not to grant the orders sought by the Defendants.

The law

10. The application for dismissal is made under Order 12 Rule 40(1) of the National Court Rules. It reads:

” 40. Frivolity, etc. (13/5)

(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

(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 that the proceedings be stayed or dismissed generally or in relation to any claim for relief in the proceedings.”
11. The caselaw on Order 12 Rule 40 of the National Court Rules is well settled. Refer: PNG Forest Products vs. State (1992) PNGLR 84–85, Ronny Wabia vs. BP Exploration Co. Ltd (1998) PNGLR 8, Wabia vs. BP Petroleum (2019)) N4337, Mt. Hagen Urban LLG vs. Sek No. 15 (2009) SC1007, National Provident Fund vs. Maladina & Others (2003) N2486; and Wambunawa Holdings Ltd. vs. ANZ Bank (2020) N8310.

12. The principles of law settled and emanate from the above cases are:

1. A claim may be disclosing no reasonable cause of action if the facts pleaded does not clearly show all necessary facts and legal elements to establish a claim known to law.
2. A claim maybe frivolous if it can be shown that it is obviously untenable that it cannot possibly succeed or is bound to fail it if proceeds to trial.

100. Proceedings are vexatious where the case is a sham, amounting to harassment of the opposing party, or where the opposing party is put to unnecessary trouble and expense of defending the case.

4. The Court has an inherent jurisdiction to protect and safeguard its processes from abuse.
5. The Court cannot readily dismiss a case for lack of disclosing a reasonable cause of action or for frivolity or abuse of process unless it is shown that the case is clearly untenable and that it is unlikely to succeed even it proceeds to trial.
   

13. I will now proceed to consider the grounds raised by the Defendants for the dismissal.

Consideration

14. I have perused the statement of claim carefully. It has 156 pages. It has 8 pages of the statement of claim and annexed to the statement of claim are 8 annexures of copies of documents, bank transaction records, invoices, under different categories of the claim like misappropriation, illegal transfers, private purchases, transactions involving each of the three Defendants.

15. In my view, the pleadings offend Order 8 Rules 8 and 9 of the National Court Rules. Rules 8 and 9 read:

“8. Facts, not evidence (15/7)

(1) A pleading of a party shall contain only a statement in a summary form of the material facts on which he relies, but, subject to these Rules, not the evidence by which those facts are to be proved.

(2) Sub-rule (1) has effect subject to this Division and to Order 4 Division 2 (originating process) and to Division 2 (particulars).

9. Brevity (15/8)

A pleading shall be as brief as the name of the case admits”

16. The rules are clear. The pleadings must contain only a brief statement in form of the material facts. This is to make it clear to the opposing party to understand the allegations and plead his defence appropriately.

17. In the present case, the facts are convoluted, and general in nature. It would make it difficult for the Defendants to plead a defence to each of the allegations which are multiple and convoluted.

18. The Writ of Summons is too bulky containing 156 pages. It is drafted in a form of an affidavit. It contains the evidence the Plaintiffs rely on. The annexures to the Writ are the same in every detail contained in the Affidavit of the second Plaintiff, Antonio Pequena Enguero filed not long after the filing of the Writ of Summons.

19. I find the form and manner of pleading offends the Rules on pleading and is therefore an abuse of the Court Rules and processes.

20. What orders should the Court make. Order 1 Rule 8 of the National Court Rules provide that noncompliance of the Rules does not render the proceedings void unless the Court so directs. The Court has therefore a discretion to strike out the statement of claim and dismiss the proceedings or allow the proceedings to continue with directions for amendment to the statement of claim.

21. Mr Keindip, counsel for the Plaintiff, has urged the Court not to strike out the proceedings but give them time to amend the pleadings. During the hearing the Court suggested to the Plaintiff to consider the option of withdrawing the proceedings and file fresh proceedings. Counsel took a brief break to seek instructions. After the break, counsel decided to continue and defended the application.

22. After considering all matters, I have decided to strike out the statement of claim and dismiss the proceedings for being incompetent. My reasons are these. Filing a 156-page Writ of Summons containing evidentiary material is a gross abuse of the Court Rules and processes. It makes it difficult for the opposing party to respond to the claim. I note the Plaintiff’s desire to amend the Writ of Summons, but no action has been taken yet. Even then, in my view, no amount of amendment will cure the defects without completely overhauling the entire Writ and statement of claim. The Court must not be tolerant to a party who blatantly abuses the pleading rules.
23. It will be unfair and prejudicial to the Defendants to allow the proceedings to continue in the present form. On the other hand, the Plaintiffs shall have the liberty to file fresh proceedings if they so desire.

24. For the foregoing reasons, the statement of claim shall be struck out and the proceedings dismissed.

Costs
25. The general rule on cost is costs follow the event. The Defendants have succeeded in their application. They are entitled to their cost and so shall be ordered.

Orders

26. The Court orders:

1. The statement of claim in WS No 304 of 2024 is struck out and the proceeding dismissed for being incompetent.
2. The Plaintiffs are at liberty to file fresh proceedings if they so desire.
3. The Plaintiff shall pay the cost of the proceeding to be taxed if not agreed.
4. Time be abridged.

________________________________________________________________
Gamoga Lawyers: Lawyer for the Plaintiffs
Jaku Lawyers: Lawyers for the Defendants