Alvi v Tepoka [2006] PGSC 39; SC1151 (1 September 2006)

SC1151

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA NO 16 0F 2006

BETWEEN:

SMITH ALVI & 127 OTHERS
Appellants

AND:

ANDAKE TEPOKA
First Respondent

MAX UMBU PULI
Second Respondent

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Third Respondent

Waigani: Injia DCJ, Lenalia & Cannings JJ
2006: 28 August, 1 September

LAWYERS – nature of lawyer/client relationship – severing of retainer – duty of lawyers to act only on instructions

PRACTICE AND PROCEDURE – names of parties used to institute proceedings without instructions or authority – circumstances in which proceedings become a sham – abuse of process

The National Court made orders requiring a law firm's trust account to be audited. The orders were made on application by clients of the firm, who had previously given instructions to the firm to recover money due to them in a class action arising from an unlawful police raid of their village. The money had been recovered and deposited into the firm's trust account but the clients contended that they did not receive the money. The law firm filed an application for leave to appeal to the Supreme Court against the National Court's orders; and filed the application in the names of the clients in whose favour the National Court made the orders. The clients then filed an application in the Supreme Court, seeking dismissal of the application for leave on the ground that they never gave instructions for their names to be used as parties nor did any other person authorise the use of their names.

Held:

(1) It is a basic principle of the administration of justice and of a proper lawyer/client relationship that lawyers act only on instructions of their clients.

(2) Instructions may be express or implied, oral or in writing; but there must be instructions in place. If there are no instructions, whatever the lawyer does must be regarded as being in excess of authority.

(3) For a lawyer to institute proceedings in any court in the name of a person without obtaining instructions from that person is an abuse of the processes of the court and renders the proceedings a sham.

(4) In the circumstances, the Supreme Court was satisfied that the application for leave to appeal against the judgment of the National Court was filed using the names of persons who had given no instructions. The application for leave to appeal was therefore a sham and an abuse of process and was dismissed.

(5) This was an appropriate case in which to order the law firm that instituted the proceedings to pay the costs of its former clients on a solicitor-client basis.

Cases cited

The following cases are cited in the judgment:

Andake Tepoka and 129 Others v Chief Inspector Leo Kabilo and The State, Nos 33 – 163 of 1997
Council of Legal Education v Awaita [1987] PNGLR 38
Eton Pakui v The State (2006) N3001

Frank A Griffin v Westpac Bank (PNG) Ltd [1993] PNGLR 352

Joseph Kupo v Steven Raphael (2004) SC751
Kopen Yanda and Others v Apostolic Church Properties Association of PNG Inc (2006) N3042
MVIT v Viel Kampu (1998) SC587
POSFB v Paul Paraka trading as Paul Paraka Lawyers (2004) N2791
Roselyn Cecil Kusa v MVIT (2003) N2328

APPLICATION

This was an application to dismiss an application for leave to appeal against a decision of the National Court.

Counsel

P Kingal, for the applicants
N Tame, for the respondents

1 September, 2006

1. BY THE COURT: At the heart of this case is the principle that lawyers must act only in accordance with the instructions of their clients. It is contended that that principle has been breached and that proceedings in this Court have been instituted without instructions and therefore the proceedings should be dismissed.

2. The contentious proceedings are an application for leave to appeal against a decision of the National Court. There is a group of people who have applied to have the application for leave dismissed, as they contend it was instituted in their names by a law firm without their instructions or authority.

3. The event that led to these proceedings was a Police raid of a village in the Baiyer River District of Western Highlands Province in the 1990s. In 1997, 130 villagers commenced individual civil actions in the District Court in Mt Hagen in proceedings known as Complaint Nos 33-163 of 1997: Andake Tepoka and 129 Others v Chief Inspector Leo Kabilo and The State. They were successful and the District Court granted individual damages awards totalling K968,215.49 (excluding interest of K417,841.49). However, for some reason the money did not find its way to the intended recipients. One Hundred and twenty-eight(128) of the 130 complainants alleged that two of their group – Andake Tepoka and Max Umbu Pulu – misappropriated the money in 2001, in league with their then lawyer. It is not clear who the lawyer was but it was not any of the lawyers mentioned elsewhere in this judgment. So the group of 128, led by their mausman, Smith Alvi, sought and obtained orders in the National Court at Mt Hagen, stoping payment of the interest component of K417,841.49. That order was obtained in 2002 and Mr Alvi's group retained Kunai & Co Lawyers of Mt Hagen to act for them.

4. In 2003 Mr Alvi's group decided to follow a slightly different legal strategy. They approached Paul Paraka Lawyers of Port Moresby to act for them and gave instructions for them to commence fresh proceedings in the National Court aimed at retrieving the original sum of K968,215.49 and getting the K417,841.49 interest component paid into the Paul Paraka Lawyers trust account, so that it could be distributed to the rightful recipients. Paul Paraka Lawyers duly filed proceedings in the National Court at Waigani in OS No 407 of 2003. The parties were:

• Smith Alvi & 127 Others – plaintiffs;
• Andake Tepoka – first defendant (he was one of the original group of 130 complainants alleged to have defalcated the damages awarded by the District Court);
• Max Umbu Puli – second defendant (he was the other member of the original group of 130 complainants alleged to have defalcated the damages awarded by the District Court);
• The State – third defendant (it was joined as the plaintiffs were claiming that if the first and second defendants were not liable, the State would have to pay, presumably because it was claimed that the State had negligently paid out the money to the wrong people).
  

5. It will be observed that those parties are replicated in the proceedings in the Supreme Court: the plaintiffs have become the appellants; and the defendants have been joined as respondents.

6. On 7 October 2003 the National Court, in OS No 407 of 2003, made orders on application by the plaintiffs, through their lawyers Paul Paraka Lawyers, that:

• prevented payment of the interest component K417,841.49 to the first and second defendants; and
  
• required that money to be paid into the Paul Paraka Lawyers trust account.
  

7. During 2004 the Department of Finance paid two amounts (which in fact totalled more than the prescribed amount) into the Paul Paraka Lawyers trust account. A sum of K250,000.00 was paid on 22 June 2004 and K200,000.00 was paid on 8 December 2004. In the meantime, Paul Paraka Lawyers were given a letter purporting to be signed by Mr Alvi, saying that he and 126 others of this group were appointing another member of their group – Simon Nanoa – to act on their behalf from then on and authorising him to collect the money owing to them: K417,841.49. According to an affidavit tendered by a Paul Paraka Lawyers employee in the National Court, the money in the trust account was distributed as follows:

• K325,000.00 went to Simon Nanoa in two instalments, on the instructions of Mr Alvi and the 126 others;
  
• K125,000.00 went to Paul Paraka Lawyers, for their legal fees.
  

8. After Simon Nanoa received the second instalment, a sub-group of 48 of the plaintiffs cried foul. They were led by Pora Trokasi and Rote Rapura. They secured a different law firm, Pius Kingal & Associates, to act for them. They filed a notice of motion in June 2005, still under the same file – OS No 407 of 2003 – seeking, amongst other things, orders that the Paul Paraka Lawyers trust account be audited. In August 2005 Mr Alvi joined the Trokasi-Rapura sub-group. He swore an affidavit that he had not received any of the money distributed from the Paul Paraka Lawyers trust account. He swore that he did not authorise anyone else to uplift any money from the trust account.

9. The Trokasi-Rapura motion went before Davani J in the National Court on 23 December 2005. Mr Kingal appeared for the Trokasi-Rapura sub-group, supported by Mr Alvi. Mr Ranewa of Paul Paraka Lawyers also appeared, it seems, for the rest of the other plaintiffs and perhaps for Paul Paraka Lawyers. On 18 January 2006 Davani J delivered a written judgment, upholding key aspects of the Trokasi-Rapura motion. Her Honour concluded that there were serious contentions raised by all parties; that there was an apparent split in the plaintiffs' ranks; that Mr Alvi had supported the Trokasi-Rapura motion; and that the Paul Paraka Lawyers trust account must be audited so that the applicants and the court could be satisfied that the money was properly paid out. Her Honour ordered that:

• an auditor agreed to by both the applicants (Trokasi and Rapura) and Paul Paraka Lawyers be appointed to audit the Paul Paraka Lawyers trust account in relation to the receipt of the K417,841.49 from the Department of Finance;
  
• the matter return to court within seven days after receipt of the report for directions on whether there should be an inquiry under the Lawyers Act to determine whether there were any irregularities.
  

10. On 24 February 2006 Paul Paraka Lawyers filed an application in the Supreme Court, for leave to appeal against Davani J's orders. Leave was sought as Davani J's orders were in the nature of an interlocutory judgment and Section 14(3)(b) of the Supreme Court Act says that there can be no appeal against such a judgment except with the leave of the Supreme Court. As indicated above, the application was filed in the names of the plaintiffs in OS No 407 of 2003 and joined the defendants as respondents. Thus:

• Smith Alvi & 127 Others – were named as appellants;
• Andake Tepoka – was named as first respondent;
• Max Umbu Puli – was named as second respondent;
• The State – was named as third respondent.
  

11. The notice of application for leave to appeal was signed by Steven Ranewa on behalf of Paul Paraka Lawyers who were described as lawyers for the plaintiffs/applicants. No one else signed the notice.

THE APPLICATION NOW BEFORE THE COURT

12. The application we are determining was filed by Pius Kingal & Associates, described as 'Lawyers for Rote Rapura & 47 Others', on 1 June 2006. It is an application to dismiss the application for leave to appeal. Three grounds were originally set out. One of them – want of prosecution – was not pursued. The other two – lack of standing under Section 17 of the Supreme Court Act and filing of the application for leave without instructions – are closely related and bring into sharp relief the principle that lawyers must act only in accordance with instructions. Before we discuss that principle, we will address a preliminary issue raised by the lawyer opposing the application now before us, Mr Tame of Paul Paraka Lawyers.

PRELIMINARY ISSUE

13. Mr Tame argued that the application to dismiss the application for leave was, in effect, an objection to competency. It should have been styled as such and filed within 14 days after the filing of the application for leave, in order to comply with Order 7, Rule 14 of the Supreme Court Rules, which states:

A respondent who objects to the competency of an appeal or of an application for leave to appeal shall, within 14 days after service on him of the notice of appeal—

(a) file an objection in accordance with form 9;

(b) serve a copy of the objection on the appellant.

14. Mr Kingal, for the applicants, Rote Rapura & 47 Others – supported by Mr Alvi – argued that Order 7, Rule 14 did not apply as his clients were not respondents. They had been named as appellants.

15. We uphold Mr Kingal's response. In the peculiar circumstances of this case, he is correct: his clients have been named as appellants. They are not respondents, as such. Besides that, we do not consider that the failure to file a formal notice of objection within 14 days necessarily estops an 'objector' from raising an objection to competency. This is clear from Order 7, Rule 18, which states:

If notice of objection is not given and the appeal or the notice of application for leave to appeal is dismissed as incompetent, the respondent shall not receive any costs of the appeal unless the court on special grounds orders otherwise.

16. We therefore dismiss the preliminary point raised by Mr Tame and will proceed to determine the Rapura application.

THE ARGUMENTS IN SUPPORT OF THE RAPURA APPLICATION

17. Mr Kingal relied on both Section 17 of the Supreme Court Act and the general principle that a lawyer can only act in accordance with instructions. Section 17 states:

Where a person desires to appeal to or to obtain leave to appeal from the Supreme Court, he shall give notice of appeal, or notice of his application for leave to appeal, as the case may be, in the manner prescribed by the Rules of Court within 40 days after the date of the judgement in question, or within such further period as is allowed by a Judge on application made to him within that period of 40 days.

18. Mr Kingal argued that any person genuinely aggrieved and affected by a judgment of the National Court has standing under Section 17 to appeal or seek leave to appeal, subject to the 40-day time limit. Paul Paraka Lawyers could have appealed under Section
17. But they did not do so. Instead they instituted the proceedings in the names of their former clients and did so without instructions. He made the allegation squarely in the course of the hearing – in support of the grounds of the application – that Paul Paraka Lawyers had no instructions to file the application for leave to appeal. He relied on an affidavit by Smith Alvi sworn on 14 March 2006, to the effect that Mr Alvi never gave instructions to Paul Paraka Lawyers to file the application for leave to appeal.

THE RESPONSE

19. Mr Tame responded but it was not clear to us who he was, in fact, acting for. Was he appearing for Paul Paraka Lawyers? Or for the people named as appellants other than Mr Rapura + 47 others + Mr Alvi? We asked Mr Tame if Paul Paraka Lawyers actually had instructions from any of the 128 appellants (ie Smith Alvi & 127 others). His response was that Mr Alvi did not instruct Paul Paraka Lawyers to file an application for leave to appeal but that Paul Paraka Lawyers had instructions on behalf of the other appellants to file the application. His firm had acted for them in the National Court and it was to be implied that they are authorised to act for them in the Supreme Court.

20. Mr Tame, however, could not provide any evidence that Paul Paraka Lawyers had appropriate instructions. Nor did he give details of who specifically gave the instructions or when they were given. We are of the view that if the principal plaintiff, Mr Alvi, did not give instructions to file an application for leave to appeal against Davani J's orders, it is unlikely that the other plaintiffs would give separate instructions. Mr Tame's response was tantamount to an admission that Paul Paraka Lawyers had no instructions to file the application for leave. As a matter of law, a lawyer requires instructions to institute court proceedings in the name of a particular person. A lawyer who has instructions to act for someone in the National Court does not automatically have instructions to act for that person in the Supreme Court. We were not impressed with Mr Tame's response and find as a fact for the purposes of determining the application now before the court that Paul Paraka Lawyers had no instructions, express or implied, to file the application for leave to appeal.

DUTY OF LAWYER TO ACT ONLY ON INSTRUCTIONS

21. Honest and professional conduct by lawyers is pivotal to the proper administration of justice in Papua New Guinea. The critical role of lawyers was highlighted by Sir Mari Kapi in Council of Legal Education v Awaita [1987] PNGLR 38. We have adopted an adversarial court system, so everything that happens in the courtroom turns on how the lawyers conduct the case. Lawyers have an onerous responsibly to their clients and to the court of which they are officers to prepare and conduct their cases carefully and transparently. Things must be done 'above board'. When a Judge hears a case, the Judge must be able to tell from looking at the documents who the parties are and what the dispute is about and who the lawyers are representing.

22. A related and basic principle of the administration of justice and of a proper lawyer/client relationship is that lawyers act only on instructions of their clients. Instructions may be express or implied, oral or in writing; but there must be instructions in place. If there are no instructions, whatever the lawyer does must be regarded as being in excess of authority. Many PNG cases have highlighted this principle, including:

• Frank A Griffin v Westpac Bank (PNG) Ltd [1993] PNGLR 352;
• MVIT v Viel Kampu (1998) SC587;
• Roselyn Cecil Kusa v MVIT (2003) N2328;
• Joseph Kupo v Steven Raphael (2004) SC751;
• POSFB v Paul Paraka trading as Paul Paraka Lawyers (2004) N2791;
• Eton Pakui v The State (2006) N3001.
  

23. For a lawyer to institute proceedings in any court in the name of a person without obtaining instructions from that person is an abuse of the processes of the court and renders the proceedings a sham (Kopen Yanda and Others v Apostolic Church Properties Association of PNG Inc (2006) N3042).

24. In the present case we are satisfied that the application for leave to appeal against the judgment of the National Court was filed by Paul Paraka Lawyers using the names of persons who had given no instructions to them. The application for leave to appeal is therefore a sham and an abuse of process and it must be dismissed.

COSTS

25. This is an appropriate case in which to order the law firm that instituted the proceedings to pay the costs of its former clients on a solicitor-client basis. We will make an order to that effect by virtue of Section 6(2) of the Supreme Court Act and Order 22, Rule 65 of the National Court Rules. Paul Paraka Lawyers have acted without authority, misled the Supreme Court and abused its processes. Costs have been incurred improperly and without reasonable cause.

JUDGMENT

26. The Supreme Court will direct entry of judgment in the following terms:

(1) the application for leave to appeal against the orders of the National Court of 18 January 2006 in OS No 407 of 2003 is dismissed;

(2) the orders of the National Court shall be complied with forthwith;

(3) Paul Paraka Lawyers shall pay the costs of these proceedings to Rote Rapura & 47 Others on a solicitor-client basis to be taxed if not agreed.

Judgment accordingly.

_____________________
Pius Kingal & Associates: Lawyers for the Applicants
Paul Paraka Lawyers: Lawyers for the Respondents