PacLII Home | Databases | WorldLII | Search | Feedback

National Court of Papua New Guinea
You are here:  PacLII >> Databases >> National Court of Papua New Guinea >> 2025 >> [2025] PGNC 64

Database Search | Name Search | Recent Decisions | Noteup | LawCite | Download | Help

Digal v National Housing Corporation [2025] PGNC 64; N11180 (12 March 2025)

N11180


PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]


OS NO. 69 OF 2024


BETWEEN:
DAVID AU DIGAL
Plaintiff


AND:
NATIONAL HOUSING CORPORATION
First Defendant


AND:
JV INTER LIMITED
Second Defendant


GOROKA: NUMAPO J
11 OCTOBER 2024; 12 MARCH 2025


CIVIL PRACTICE AND PROCEDURE – Notice of Motion seeking to dismiss proceedings for; disclosing no reasonable cause of action – frivolous and vexatious – abuse of process – Order 12 Rule 40 (1) of National Court Rules (NCR) – Res judicata - Non-compliance of Court Order – Lack of pleading on fraud – Statute barred – Application dismissed.


Counsel


W. Kume for the plaintiff
A. Ninkama for the first defendant
W. Bigi for the second defendant


DECISION


  1. NUMAPO J: Three Notices of Motions were moved before me. They relate to a sale of property in Goroka, Eastern Highlands Province. The property concerned is described as Section 7 Allotment 4, Township of Goroka.
    1. BACKGROUND
  2. The first was by the plaintiff seeking to have the default judgment entered against the defendants granted by the court in; WS No 640 of 2016: David Au Digal v Kaure Investment and National Housing Corporation on 26th November 2018 concerning a property described as Section 7 Allotment 4, Goroka, EHP, pursuant to Order 12 Rule 25(1) (b) of the National Court Rules (NCR). The plaintiff alleges that fraud was committed when the first defendant sold the property to Kaure Investment Ltd.
  3. The second Notice of Motion was filed by the second defendant on the 26th June 2024 seeking to dismiss the application by the plaintiff for disclosing no reasonable cause of action, for being frivolous and vexatious and for abuse of process pursuant to Order 12 Rule 40 (1) of the NCR. The defendant’s contention that the application discloses no reasonable cause of action was premised on the grounds of res judicata, non-compliance of a court order dated 26th November 2018, insufficient or lack of pleading on fraud, and that the claim is statute barred.
  4. In response, the plaintiff filed another Notice of Motion (his second motion) dated 01 July 2024, seeking to dismiss the application made by the second defendant pursuant to Order 7 Rule 2 and Order 8 Rule 4(1) (b) of the NCR. Plaintiff contended that the defendants have not filed their notices of intention to defend the action before filing to dismiss the application made by the plaintiff therefore, plaintiff is entitled to a default judgment under Order 12 Rule 25. However, according to the court records both defendants have filed their respective notices of intention to defend the action. The first defendant filed its notice of intention to defend on 19 June 2024 and the second defendant filed its notice of intention to defend on 12 June 2024.
    1. PLAINTIFF’S CASE
  5. In the first notice of motion, the plaintiff, relying on the additional order made by the court in an earlier proceeding WS No. 640 of 2016: David Au Digal v. Kaure Investment Ltd and National Housing Corporation, sought to exercise his rights to pursue it further. The order stated that; “The plaintiff is at liberty to commence proceedings for a ‘different cause of action’ against JV Investment for declaratory orders and specific performance to enforce completion of the agreement.”
  6. Plaintiff commenced proceedings against the defendants for declaratory orders and specific performance seeking to cancel, revoke and recall the title of a property described as Section 7 Allotment 4, Goroka that was transferred to Kaure Investment Ltd the second defendant by the first defendant and subsequently transferred to the second defendant (JV Inter Limited), and to restore it back to the plaintiff. I should point out here that at no time was the title transferred to the plaintiff prior to it been transferred to Kaure Investment and eventually to the second defendant. At all times, the first defendant (NHC) was the registered proprietor of the land and has indefeasible title over it pursuant to section 33 (1) of the Land Registration Act when it transferred the title to Kaure Investment.
  7. It seems to me that the plaintiff’s claim on the property was based on the 10% deposit he paid after signing the contract of sale with the first defendant. The property was sold for K120, 000.00 and the plaintiff paid K12, 000.00 (10%) as the initial deposit. Plaintiff paid a further K2, 410.00 for the Stamp Duty fee. Plaintiff still has an outstanding of K108, 000.00 (90%) balance remaining to pay including obtaining other statutory approvals before the transfer of title could be effected.
  8. Plaintiff produced the copies of the receipts of payment which included a copy of an ANZ Bank cheque valued at K12, 000.00 dated 13 December 2000 paid to NHC for the 10% deposit, and a copy of the official receipt issued by NHC for the payment received dated 14 December 2000. There is also a receipt of payment from Internal Revenue Commission (IRC) for the payment of K2, 410.00 for the Stamp Duty fee. These are the only payments made to date regarding the property.
  9. The plaintiff seeks the following substantive declarations and orders in his originating summons based on the order of the earlier proceeding. They are:
  10. The declarations sought in the originating summons relates to the contract of sale and is mostly against the first defendant (NHC). Plaintiff craves the court for declaratory orders to enforce the contract of sale entered into between NHC and the Plaintiff. The various declaratory orders sought in this proceeding were the same as those sought in the earlier proceeding in David Au Digal v. Kaure Investment Ltd and National Housing Corporation (supra).
  11. The same cause of action and issues are raised again in this proceeding that have already been determined by the court. There is no “different cause of action” especially, against the second defendant commenced by the plaintiff as ordered by the court. There is very little in terms of orders sought against the second defendant who is currently the registered proprietor of the land and has an indefeasible title over the property. It is pointless seeking orders against the first defendant as it is no longer the owner of the property. In that regard, the plaintiff had not complied with the court order to make a fresh claim or a different cause of action against the second defendant.
  12. Plaintiff contended that there was a three (3) year delay between 2009 and 2012 in which the first defendant failed to transfer the title to the plaintiff therefore, in breach of the contract. The only time line stipulated in the contract of sale was in relation to the balance of the purchase price to be paid to the Vendor (first defendant) within fourteen (14) days from the date of the Purchaser (plaintiff) receiving notification of the statutory approval. There is no evidence of the plaintiff paying the outstanding balance of the purchase price for the property or any evidence of any statutory approvals had been given. Given all these, it is not too difficult to say that the plaintiff does not have any equitable or legal claim over the property.
  13. I find it difficult to accept the plaintiff’s claim that he had a significant interest or right over the property based on the contract of sale he had signed and the 10% deposit he paid. Contract law dictates that passing and/or transferring of title can only occur upon full payment of the purchase price and all other conditions of the contract of sale been met with statutory approvals given. Until this is done, the property in question remains the property of the first defendant. The title remains with the first defendant as the owner.
  14. Plaintiff further stated that he has not been reimbursed the K12, 000.00 he paid for the initial deposit and for this reason he had an interest in the property. There is a default and forfeiture clause in the contract of sale (Clause 13) that stipulates that; “If the purchaser defaults in the observance or performance of any obligation imposed on him under or by virtue of this agreement, the deposit paid by him should be forfeited to the vendor who shall be entitled to terminate the agreement and thereafter either to sue the purchaser for breach of contract or to resell the property as owner...”
  15. The terms of the contract is clear in that in the event of the purchaser defaulting, the vendor reserves the right to terminate the contract and either sue for the breach of contract or to resell the property. Any deposit paid for the purchase shall be forfeited. NHC, as the owner of the property reserves the right to deal with the property in the manner it sees fit if the purchaser defaulted. In this case, the plaintiff has defaulted in not paying the full purchase price within the time stipulated in the contract or within a reasonable period of time.
  16. With respect to the title, a transfer instrument was signed and executed by the then Managing Director of National Housing Corporation (NHC) Paul Asakusa to dispose of the property to the plaintiff. For some unknown reasons, the sale of property from NHC to the plaintiff was not completed. This could be attributed to the non-payment of the full purchase price of the property, I would assume. The first defendant then decided to exercise its rights as the owner and took the option to resell the property to Kaure Investment Ltd. Kaure then sold the property to the second defendant. The second defendant is now the registered proprietor of the subject property.
  17. For breaches of various clauses of the contract, his Honour Neil J (as he then was) in the earlier proceeding ordered the defendants to pay the plaintiff a sum of K580, 000. 00 in damages with interest of 2% yearly from the date of the filing of the Writ. An application by the plaintiff for declaratory orders and specific performance sought for rectification of the title and the cancellation and revocation of the transfer of the State Lease Volume 11 Folio 87 was refused by the court.
  18. Plaintiff alleges that fraud was committed when the title was transferred to Kaure Investment and then onto the second defendant. Fraud is a serious allegation and must be properly and sufficiently pleaded. The courts will not accept general allegations made on fraud without the particulars of the fraud complained of being fully set out and the circumstances under which fraud was committed. Order 8 Rule 30 of the NCR makes particular reference to pleadings of fraud especially if the fraud is in challenge to the grant of a certificate of title on the grounds of fraud. The court has traditionally insisted on strict rules for the protection of persons who are in possession of land to protect them against such allegations from busybodies hoping to find some fault on the title and bring actions without any reasonable cause (see: Maki v. Pundia & PNG Motors [1993] PNGLR 337).
  19. The second defendant obtained the title in good-faith and has an indefeasible title over the property, unless fraud is proven, it cannot be nullified (see; Mudge and Mudge v Secretary for Lands [1985] PNGLR 382.
  20. The plaintiff alleges constructive fraud but had not sufficiently pleaded fraud. He has not set out particulars of the fraud complained of and the circumstances relied upon to show that first defendant had a fraudulent intention when transferring the title. Court Rules requires that the acts alleged to be fraudulent must be stated fully and precisely with full particulars. Plaintiff failed to do that in the pleadings.
  21. Furthermore, the plaintiff chose the wrong mode of proceeding by use of originating summons alleging fraud. A proceeding founded on constructive fraud commenced by originating summons is liable to be dismissed on the pleadings: Wapua v Lopkopa (2009) SC1048. Proceedings pleading fraud must be commenced by a writ of summons and a statement of claim: Andakelka Ltd v Petronas Ltd [2010] PGNC 4; N3976.
    1. DEFENDANT’S CASE
  22. The second defendant (JV Inter Limited) in its Notice of Motion filed on 26 June 2024 sought to dismiss the plaintiff’s application on the basis that the proceeding discloses no reasonable cause of action; is frivolous and vexatious and is an abuse of process pursuant to Order 12 Rule 40 of the NCR.
  23. Defendants contended that there was nothing substantive sought in the originating summons against the second defendant. On that basis, the proceeding discloses no reasonable cause of action. The second defendant’s contention is based on res judicata, non-compliance with the court order of 26th November 2018, insufficient or lack of pleading of fraud and the claim being Statute barred.
  24. Order 12 Rule 40 (1) of the National Court Rules states:

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.


  1. Rule 40 requires each of the grounds to be specifically pleaded as alternative grounds in the notice of motion as a distinct ground on its own. They cannot be lumped together. An adverse finding made on one of the grounds is sufficient to find against the plaintiff.
  2. To disclose a cause of action, it must be properly pleaded with facts to prove to support the claim made. Statement of claim or defence (as the case may be) must clearly plead all legal elements and facts (not evidence) giving rise to the form of action.
  3. To determine whether or not a proceeding disclosed a reasonable cause of action the test is that the writ of summons and statement of claim must demonstrate that the plaintiff has a cause of action. The document must clearly set out the legal ingredients or the elements of the claim, and the facts that support each element of the claim. Plaintiff must demonstrate that it has a clear legal basis (see: PNG Forest Products Pty Ltd & Another v The State & Genia [1992] PNGLR 85).
  4. In the present case, the originating process commenced by the plaintiff was a originating summons filed on the 08th of May 2024. There is no writ of summons nor was there a statement of claim setting out the facts that support each element of the claim to demonstrate that the plaintiff has a cause of action.
  5. The substantive claim in this proceeding is for the declaratory orders which requires the plaintiff to satisfy several factors before declaratory orders can be made. These includes: (i) there must exist a controversy between parties; (ii) the proceeding must involve a right, (iii) the proceeding must be brought by a person who has a proper or tangible interest in obtaining the order, (iv) the controversy must be subject to the Court’s jurisdiction in obtaining the order, (v) The defendant must be a person having a proper or tangible interest in opposing the plaintiff’s claim, and (vi) The issue must be a real one. It must not be merely of academic interest, hypothetical or one whose resolution would be of no practical utility. (see: Toap v The Independent State of Papua New Guinea (21 December 2004) N2766).
  6. I am not able to find a controversy that existed between the parties. Firstly, the first defendant was the lawful owner of the property in question when the title was transferred to Kaure Investment. Plaintiff has not demonstrated what equitable or legal interest he might have over the property to make his claim. Secondly, there is no controversy between the plaintiff and the second defendant. The second defendant is unaware of any issue regarding the title. He purchased the property in good faith and obtained a clear title to it.
  7. In the earlier proceeding, the plaintiff sought damages for breach of contract and declaratory orders and specific performance. The court awarded him damages in the sum of K580, 000.00 for the various breaches of the contract. However, refused the plaintiff’s application for declaratory orders and specific performance to cancel and revoke the State Lease (Volume 11 Folio 87) transferred to Kaure Investment Ltd, which was subsequently transferred to the second defendant. The court found nothing improper or illegal in the transfer of the title and on that basis denied the plaintiff’s plea to rectify and recall the action taken by the first defendant. Plaintiff is pursuing the same action again which has already been determined by a court of competent jurisdiction hence, the plaintiff is estopped from bringing the proceeding again premised on the same cause of action (Telikom PNG Ltd v. Independent Consumer and Competition Commission (28 March 2008 SC906); (National Housing Corporation v. Paul Asakusa (2012) SC1165).
  8. I am therefore, satisfied that the court had determined the matter and has already given judgment in relation to the matter that is the subject of this litigation. The plaintiff is estopped from revisiting the same issues again that have already been litigated and determined by a court of competent jurisdiction. This offends against the principles of res judicata and issue estoppel (O’Neill v Eliakim (16 August 2016) SC 1522); (Ume v. Watson (30 Nov 2020) N8669).
  9. In its notice of motion, the second defendant sought to dismiss the plaintiff’s application for being frivolous and vexatious. A frivolous proceeding is one that is bound to fail if it goes to trial. A claim that is so obviously untenable that it cannot possibly succeed. A vexatious proceeding is a case that amounts to harassment of the defendant, including embarrassment. An unmeritorious claim that only subject the defendant to the trouble and expense of defending the proceeding that is a sham or which cannot possibly succeed (Toap v State & Or (supra)).
  10. Proceedings which are frivolous and vexatious amount to an abuse of process. Order 12 Rule 40 (1) confers power on the court to dismiss such proceedings. The power to dismiss such proceedings is discretionary (Ronny Wabia v BP Exploration Operating Co, Ltd & Ors (1998) N1697).
  11. The plaintiff’s claim appears to be based on the assumption that he has an equitable interest or right over the property by virtue of the contract of sale that he signed with the first defendant and the 10% deposit he paid when in fact, he does not have any valid claim over it. Signing a contract of sale does not give the plaintiff any right of claim. The ownership of the property is still vested in the first defendant (NHC) until such time the plaintiff pays the full purchase price and all the statutory approvals given before the transfer of title can be effected. There is no evidence of any payment being made on the full purchase price. Until this is done, the plaintiff does not have any right of claim over the property. I find the plaintiff’s claim frivolous and without basis and is unlikely to succeed if it goes on trial. It is bound to fail. The proceeding also amounts to harassment of the defendant as it is incurring unnecessary expenses to defending an unmeritorious claim. In that regard, the claim is vexatious. The plaintiff is not seeking any substantive orders against the second defendant who is currently the owner of the property in question and holds an indefeasible title over it. All in all, I find this proceeding discloses no reasonable cause of action and is an abuse of process.
  12. Finally, I note that the contract of sale between the plaintiff and the first defendant was signed in September 2009. The plaintiff commenced this present proceeding in May 2024 after more than fourteen (14) years. This proceeding is statute barred pursuant to section 16 of the Frauds and Limitations Act 1988.
    1. ORDER

Orders accordingly


Lawyers for the plaintiff: George Kaore Lawyers
Lawyers for the first defendant: Ninkama Lawyers
Lawyers for the second defendant: Henaos Lawyers

PacLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback
URL: http://www.paclii.org/pg/cases/PGNC/2025/64.html