Daniel v Pak Domoi Ltd [2009] PGSC 7; SC970 (1 May 2009)

SC970

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA NO 33 OF 1997

BETWEEN

ALFRED ALAN DANIEL
First Appellant

AND

SIGFRID DANIEL
Second Appellant

AND

PAK DOMOI LIMITED
Respondent

Waigani: Injia CJ, Yagi & Makail JJ,
2009: 27th April & 1st May

SUPREME COURT APPEAL - Appeal from entry of judgment - "Summary judgment" distinguished from judgment entered based on admissions - No defence filed - Denials in Affidavits - Whether judgment properly entered - Appeal upheld - National Court Rules - Order 8, rule 21, Order 9, rule 30 & Order 12, rule 38.

Cases Cited:

Alfred Alan Daniel & Anor -v- Pak Domoi Limited (2004) SC736
Rawson Construction Limited -v- Department of Works (2005) SC777
Kappo No 5 Pty Limited -v- Wong [1998] PNGLR 544
Porgera Freighters Limited -v- Bank of South Pacific Limited (2004) N2662
Curtain Brothers (PNG) Limited -v- University of Papua New Guinea (2005) SC788
Bruce Tsang -v- Credit Corporation (PNG) Limited [1993] PNGLR 112
Curtain Bros (Qld) Pty Limited -v- The State [1993] PNGLR 285

Counsel:

Mr T. Anis for Appellants
No appearance for Respondent

1st May 2009

JUDGMENT

1. BY THE COURT: This is an appeal from the decision of the National Court of 27th May 1997 entering "summary judgment" against the Appellants in proceedings WS No 690 of 1994. By their Supplementary Notice of Appeal, the Appellants seek to quash that decision following an earlier decision of the Supreme Court (Kapi CJ, Injia DCJ, and Jalina J), dismissing in part the Respondent’s Objection to Competency of Appeal on 2nd April 2004 and ordering the appeal to proceed to substantive hearing based on the declaratory orders sought in the Writ of Summons. See Alfred Alan Daniel & Anor -v- Pak Domoi Limited (2004) SC736.

BRIEF FACTS

2. The brief facts are as stated by the Supreme Court in its earlier decision which we simply adopt for purposes of this appeal. The proceedings before the National Court giving rise to this appeal are that on 31st August 1994, the Respondent filed a Writ of Summons seeking certain declaratory orders as to ownership of the registered freehold land known as Pak and Viwulau Islands situated in the Manus Province. The Respondent also claimed damages for destruction and loss of property situated on the land. In the Statement of Claim, the Respondent alleged lack of authority of one Kamkam Popei and John Walker Habuka to execute a mortgage over the property on behalf of the Respondent in favour of the First Appellant. They also disputed the subsequent purported mortgage sale by tender of the property by the First Appellant to the Second Appellant.

3. On 18th October 1993, the Respondent obtained a National Court order restraining the First Appellant from proceeding with the sale and on 21st December 1993, the order was dissolved upon application by the First Appellant, thus, paving the way for the sale of the property to proceed. As a result, the Respondent commenced proceedings in the National Court claiming declaratory orders invalidating the purported mortgage sale and declaring itself the registered proprietor of the land. It also claimed damages against the First Appellant for trespass and damage to a house situated on the property and removing properties.

4. On 13th December 1996, by Notice of Motion, the Respondent sought the same declaratory orders sought in the Writ of Summons and a further order that damages be assessed. The principal basis was that the Appellants had failed to file and serve a defence after filing their Notice of Intention to Defend. The Motion was heard inter partes and "summary judgment" was entered against the Appellants in respect of the declaratory orders sought. It is the entry of "summary judgment" that is the subject of this appeal.

5. We should also mention here that at the commencement of the hearing of the appeal, Mr Titus of Titus Lawyers appeared and informed the Court that his firm had ceased to act for the Respondent but had failed to file a Notice of Ceasing to Act. He relied upon his Affidavit sworn and filed on 27th April 2009 for this explanation. He deposed that the Chairman of the Board of Directors of the Respondent had verbally withdrawn instructions but he had not filed a Notice of Ceasing to Act. Besides that, the Directors of the Respondent were residents of Pak Island and had no means of communicating with him to give appropriate instructions. We accepted his explanation, and he was excused from taking any further part in the appeal. We proceeded to hear the appeal with only the Appellants’ counsel since the appeal had been outstanding for a long time.

GROUNDS OF APPEAL

6. The Appellants based their appeal on 11 grounds which, we set out in full below for purposes of clarity and appreciation of how we have arrived at our decision in this appeal:

"3(a) His Honour erred in law after having found in page 1 of his reasons for decision that the Respondent’s Motion was for Summary Judgment in proceeding to enter judgment when the Appellant’s claim was based on an allegation of fraud (National Court Rules Order 12, rule 37(b)).

3(b) His Honour erred in law after having found that the Respondent’s motion was for summary judgment in proceeding to enter judgment when there was no evidence of the facts on which the Respondent’s claim or part was based and there was no evidence given by the Respondent’s or by some responsible person that the Appellant had no defence to the claim or part as required by Order 12 rule 38(1).

3(c) Alternatively, His Honour erred in law in entering judgment in default of the Appellants not having filed a defence (but having filed a Notice of Intention to Defend), there being no evidence that the Respondent’s lawyers had given notice to the Appellant’s lawyers in accordance with Practice Direction NCR 1/87.

3(d) Alternatively, His Honour erred in law in entering judgment when there were no admissions made by the Appellants whether by their pleadings or otherwise in support of the allegations contained in the Respondent’s Statement of Claim.

3(e) His Honour erred in law in entering judgment for the Respondent’s by failing to have regard to the following Affidavits filed in the proceedings:

(i) Kamkam King Popei sworn 24th May 1995;

(ii) Ricther Habuka sworn 29th May 1995;

(iii) John Habuka sworn 23rd May 1995;

(iv) Alfred Alan Daniel sworn 06th June 1995;

(v) Waisale Tivuka sworn 03rd July 1995; and

(vi) Seth Landine Daniel sworn 10th August 1995.

all of the said Affidavits containing evidence traversing to the allegations contained in the Respondent’s Statement of Claim and all of the Affidavits demonstrating that there was an issue to be tried between the Appellants and the Respondent.

3(f) His Honour erred in law in failing to have regard to the Order of the National Court made on 28th August 1996 in the proceedings that:

"The Plaintiff shall be at liberty to apply to set the matter down for trial on provision being made for payment of the Defendant’s costs under OS 174/03 which should be agreed, if not, taxed".

there being no evidence before Mr Justice Salika on 27th May 1997 that the Respondent had made provision for the payment of the Appellant’s costs and there being no evidence before His Honour Mr Justice Salika that the Respondent had given notice to the Appellants requiring the Appellants to file their defence prior to the matter being set down for trial.

3(g) Alternatively, His Honour erred in law in entering judgment against the Appellants for default in filing their defences when the Respondent was, by its conduct in having sought to have the matter set down for trial in the absence of a defence and having obtained an order on 28th August 1996 that the Respondent be at liberty to have the matter set down for trial on provision being made for payment of the Appellant’s costs under OS 174/93, estopped from applying for judgment to be entered without giving proper notice to the Appellant that it required to file and serve their Defence.

3(h) His Honour erred in law in entering judgment in favour of the Respondent relying upon an implied admission by the Appellants without embarking upon consideration of the Affidavit evidence by both the Appellants and the Respondent.

3(i) His Honour erred in law in entering judgment by failing to observe the principals (sic) of natural justice and in particular in failing to act fairly and have regard to the evidence filed in the proceedings by the Appellants.

3(j) His Honour erred in law in refusing the Appellant’s application that His Honour defer handing down judgment on 27th May 1997 in that His Honour had failed to act fairly to the Appellants in circumstances where the Respondent’s lawyers had not served upon the Appellants lawyers the Respondent’s submission nor given any notice to the Appellant’s lawyers that it required submissions to be filed by a particular time.

3(k) His Honour erred in law in entering judgment for the Respondent lacked in the legal capacity to prosecute the National Court proceedings having been struck off the Register of Companies on 31st August 1995 pursuant to section 319(4) of the Companies Act".

PRELIMINARY APPLICATION FOR LEAVE TO ADDUCE FRESH EVIDENCE

7. Before the hearing of the substantive appeal, counsel for the Appellants made a preliminary application by Notice of Motion filed on 21st April 2009 for leave to adduce fresh evidence to support Ground 3(k) of the appeal. The application is made pursuant to section 6(1)(a) of the Supreme Court Act. Section 6(1)(a) states:

"6. Appeal to be by way of rehearing.

(1) An appeal to the Supreme Court shall be by way of rehearing on the evidence given in the court the decision of which is appealed against, subject to the right of the Supreme Court -

(a) to allow fresh evidence to be adduced where it is satisfied that the justice of the case warrants it; and

(b) to draw inferences of fact.

(2) ...............".

8. He relied upon an Affidavit of Gideon Kehara sworn on 2nd July 2008 and filed on 21st April 2009. Mr Kehara deposed that he is a search clerk employed by Blake Dawson lawyers for the Appellants. On instructions from Mr Ian Shepherd, a Partner with the firm of Blake Dawson he did search Government Gazette No G5 dated 18th January 1996 at the Office of the Registrar of Companies on 1st July 2008 with respect to the Respondent. As a result of his inquiries, he found that the Respondent had been struck off from the Register of registered companies by the Deputy Registrar on 31st August 1995. He annexed a copy of the Dissolution Notice published by the Deputy Registrar on 18th January 1996.

9. He further deposed, on 7th May 2008, on instructions of Thomas Anis of Blake Dawson lawyers, he had conducted a search at the Office of the Registrar of Companies and the results of his researches had revealed that the Respondent had registration status "operating" which meant that it was subsequently restored to the Registrar of Companies sometimes after it had been removed from the Register on 31st August 1995. On 2nd July, he obtained an Order made by the National Court on 5th April 2000. From the Order, he observed that the Respondent had been restored to the Registrar of Companies on 5th April 2000.

10. In essence, it is the Appellants’ submission that the Respondent had no legal capacity to sue the Respondent because at the time the matter was pending trial, the Respondent was deregistered or struck off the Register of registered companies on 31st August 1995. That is, the National Court entered "summary judgment" on 27th May 1997 against the Appellants after almost 1 year and 9 months after it was deregistered or struck off the Register of registered companies. It was further submitted that it is a normal practice a search is conducted at the Companies Office to ascertain the status of a company involved in litigation at the beginning of the proceedings or before an appeal is filed. In the case of a Plaintiff, the search is done prior to the issuing of proceedings and in a case of a Defendant, after service of the court process such as the Writ of Summons.

11. In the present case, the Appellants submitted that they had conducted a search and the search confirmed that the Respondent was registered at the time of the issue of proceedings but was not aware that the Respondent was deregistered at the time of the hearing of the application for "summary judgment". To further press the point, the Appellants submitted that it is the duty of the Respondent or its lawyers to inform or disclose to the Court, the Respondent’s legal status at the time of the hearing of the application for "summary judgment". As it had not, neither the Court nor the Appellants were aware and the Court went ahead to enter "summary judgment".

12. Having considered the evidence of Mr Kehara and submissions of the Appellants, we are not satisfied with the explanation given by the Appellants for their failure to raise the issue of legal capacity of the Respondent before the National Court. Mr Kehara does not state in his Affidavit whether he conducted a search at the Companies office to ascertain the status of the Respondent after the Respondent had serve the Writ of Summons on the Appellants. He had as recent as 01st July 2008 conducted a search at the Companies office and discovered from the records that, the Respondent was deregistered on 31st August 1995. In our view, the evidence in relation to the status of the Respondent was readily available or at the disposal of the Appellants had they conducted a further search at the Companies office.

13. In the Supreme Court judgment of Rawson Construction Limited -v- Department of Works (2005) SC777, the Supreme Court said this in relation to an application to adduce fresh evidence:

".......

2(4) An applicant in an application to adduce "fresh evidence" must show that:

(a) The evidence in question was not available at the time of the trial and that it could not with the exercise of reasonable care and attention be ascertained, secured and adduced in evidence before the trial judge; and

(b) The justice of the case warrants an admission of the evidence in question. James Pari & Anor –v- The State [1993] PNGLR 173 followed".

14. Applying these principles to the present case, we find that the evidence in question was available at the time of the hearing of the application and that it could have with the exercise of reasonable care and attention been ascertained, secured and adduced in evidence before the trial judge had the Appellants conducted a due diligence test of the Respondent whether after service of the court process or during the course of the proceedings. Such due diligence test would have included the ascertainment of the Respondent’s legal status. This is because, where it is pleaded in the Statement of Claim that a party is a company and has legal capacity to sue and be sued, it is incumbent as part of the due diligent process to conduct a search at the Companies office to ascertain the true legal status of the company, either after the service of the court process or during the proceedings.

15. In this case, clearly the Respondent had pleaded in paragraph 1 of the Statement of Claim that it is a company duly incorporated and can be sued or be sued. That should have caused the Appellants to conduct further searches to ascertain its legal status. As the Appellants had not conducted further searches at the Companies office to ascertain the legal status of the Respondent right up until the time of the hearing of the application and even after that time, we find that they have failed to properly inquire into the legal status of the Respondent and cannot use that as a valid reason to introduce the evidence on the legal status of the Respondent in this appeal. We reiterate that the evidence in respect of the legal status of the Respondent was readily available or at the disposal of the Appellants had the Appellants exercised reasonable care and attention to ascertain, secure and adduced the evidence in question had they conducted further searches at the Companies office.

16. We also reject the Appellant’s submission that it is the duty of the Respondent or its lawyers to inform the Court of the Respondent’s legal capacity at the hearing of the application for "summary judgment". We find no law or rule that imposes a duty on the Respondent to advise or disclose to the Court its status as far as legal capacity is concerned, but the conduct of the lawyers of the Respondent for not bringing that issue to the attention of the Court at the hearing of the application for "summary judgment" maybe a concern.

17. The conduct of the lawyers then maybe in breach of rule 3(a)&(b) of the Professional Conduct Rules 1989, however, we note apart from there being no submissions made by counsel for the Appellant on this point, we consider it irrelevant. On the other hand, in the absence of an expressed provision in a statute or the National Court Rules imposing a duty on the Respondent or its lawyers to advise or disclose its legal status to the National Court, we are not persuaded that the Respondent has a duty to advise or disclose its legal status to the National Court. We reject the Appellant’s submission on this point.

18. The result is that, we are not persuaded that the Appellants have made out their application for leave to adduce fresh evidence and dismiss it accordingly.

GROUND 3(k) OF SUPPLEMENTARY NOTICE OF APPEAL

19. As we have dismissed the application for leave to adduce fresh evidence in respect of the legal status of the Respondent, it follows that there is no evidence to sustain ground 3(k) of the appeal and we dismiss it.

GROUNDS 3(f) & 3(g) OF SUPPLEMENTARY NOTICE OF APPEAL

20. Grounds 3(f) and 3(g) of the appeal have been abandoned by the Appellants during the course of the hearing as it became apparent that these grounds had been disallowed by the earlier Supreme Court decision of 02nd April 2004. As such, we need not consider them.

GROUND 3(a) OF SUPPLEMETARY NOTICE OF APPEAL

21. Grounds 3(a) of the appeal raised the issue of fraud. The Appellants argued that the trial judge erred in law when he entered "summary judgment" on a claim that was based on fraud. It was submitted that the Respondent’s action before the National Court was one of fraud. We were referred by counsel for the Appellants to paragraphs 4 t0 13 of the Statement of Claim located at pp 11 to 13 of the Appeal Book as the Appellants’ basis for the proposition that the claim was one of fraud. Proceeding on that basis, it was submitted that, as the claim was one of fraud, it was not open for the Court to enter "summary judgment" because a claim based on fraud was one of those claims excluded by virtue of Order 12, rule 37 of the National Court Rules, in summary disposal cases.

22. We are in agreement with the Appellants’ submissions to that extent that because a claim based on fraud is one of those claims excluded by virtue of Order 12, rule 37 of the National Court Rules, in summary disposal cases. That is the law under Order 12 rule 37, which states as follows:

"37. Application of Division 4. (13/1)

This Division applies to all proceedings except proceedings which include

(a) .......................................; or

(b) a claim by the plaintiff based on an allegation of fraud; or

(c) ........................................".

23. The cases of Kappo No 5 Pty Limited -v- Wong [1998] PNGLR 544 and Porgera Freighters Limited -v- Bank of South Pacific Limited (2004) N2662 cited by counsel for the Appellants in his written submissions are on point and we see no need for us to elaborate on this rule suffice to say that it is abundantly clear that summary judgment is not available in a claim based on fraud. But what we do not agree with is the Appellants’ submissions that, the trial judge proceeded to enter "summary judgment" against the Appellants when the Appellants’ claim was based on fraud. We hold this view because we cannot find in the written decision of the trial judge if the issue of fraud was raised before his Honour nor can we find in the materials in the Appeal Book records of that issue being raised by the Appellants at the hearing of the application for "summary judgment".

24. It is settled law in this jurisdiction that if a party in the Court below does not take issue with a factual matter or law, it is estopped from raising the issue on appeal. See Curtain Brothers (PNG) Limited -v- University of Papua New Guinea (2005) SC 788 and other cases cited in that judgment. That being the law, we must find that the Appellants are estopped from raising the issue of fraud in this appeal. Accordingly, we dismiss this ground of appeal.

GROUNDS 3(b), 3(c) & 3(d) OF SUPPLEMETARY NOTICE OF APPEAL

25. We will consider grounds 3(b), 3(c) and 3(d) of the appeal together because in our view they are interrelated and raise the issue of the nature of the judgment entered by the trial judge against the Appellants. That is to say, was the judgment a "summary judgment" or some other kind of a final judgment?

26. This issue requires a closer examination of the written judgment of the trial judge at pp 94 to 97 of the Appeal Book and the evidence before His Honour such as the Affidavit materials at pp 27 t0 49 of the Appeal Book. But first the law on summary judgment is clear and settled. Order 12, rule 38 of the National Court Rules states:

"38. Summary judgement. (13/2)

(1) Where, on application by the plaintiff in relation to any claim for relief or any part of any claim for relief of the plaintiff -

(a) there is evidence of the facts on which the claim or part is based; and

(b) there is evidence given by the plaintiff or by some responsible person that, in the belief of the person giving the evidence, the defendant has no defence to the claim or part, or no defence except as to the amount of any damages claimed,

the Court may, by order, direct the entry of such judgment for the plaintiff on that claim or part, as the nature of the case requires.

(2) Without limiting Sub-rule (1), the Court may under that Sub-rule direct the entry of judgment for the plaintiff for damages to be assessed.

(3) In this rule, "damages" includes the value of goods".

27. The Appellants argued that the trial judge erred when he first ruled that the application was an application for "summary judgment". They said it was not a "summary judgment". They argued that by applying the strict application of Order 12, rule 38 of the National Court Rules and the case authorities on summary judgment, such as Bruce Tsang -v- Credit Corporation (PNG) Limited [1993] PNGLR 112 and Curtain Bros (Qld) Pty Limited -v- The State [1993] PNGLR 285, the trial judge would not have found that the application was for summary judgment because the requirements for summary judgment would not have been met.

28. Secondly, it was argued that the trial judge having determined the nature of the application proceeded to deal with the application as an application under Order 8, rule 21 and Order 9, rule 30(1) of National Court Rules. But, even if one were to follow the trial judge and apply these two rules, it was further submitted that the trial judge would have still fallen into error because the words "or otherwise" used in Order 9, rule 30(1), included Affidavit evidence filed by the parties and proceeding on this premise, there was evidence before his Honour disputing the allegations of the Respondent in its Statement of Claim.

29. From our reading of the trial judge’s written decision, one matter that is apparent is that, the Appellants seem to have misunderstood the application of "summary judgment" under Order 12, rule 38 and the application of judgment under Order 8 rule, 21 and Order 9 rule, 30(1). These applications are quite distinct in a sense that the principles governing their application are different although they have a common resultant effect and that is, they dispose off proceedings in a "summary way". In an application for summary judgment under Order 12, rule 38, an Applicant must show that:

1. there is evidence of the facts proving the essential elements of the claim; and

2. that the Applicant or some responsible person give evidence that in his belief there is no defence.

30. If an Applicant is able to establish these two elements, summary judgment maybe granted without a need for a full trial.

31. In an application for judgment under Order 8, rule 21 and Order 9, rule 30(1), judgment is entered based on admissions. Order 8, rule 21 states:

"21. Admissions and traverse. (15/20)

(1) Subject to Sub-rule (3), an allegation of fact made by a party in his pleading shall stand admitted by any opposite party required to plead to that pleading unless it is traversed by that opposite party in his pleading or a joinder of issue under Rule 22 operates as a denial of it.

(2) A traverse may be either by a denial or by a statement of non-admission, and either expressly or by necessary implication, and either generally or as to any particular allegation.

(3) Where a pleading makes an allegation of the suffering of damage, or an allegation of an amount of damages, a pleading to that pleading by an opposite party shall be taken to traverse the allegation, unless the allegation is specifically admitted".

32. According to rule (1) of Order 8, admissions are made when an opposite party who is required to plead in response does not plead to that pleading. The opposite of that is, there are no admissions if the opposite party traverses or joins issue with the pleading. In other words, the allegation raised in the pleading is denied by the opposite party and according to rule 2 of Order 8, "A traverse may be either by a denial or by a statement of non-admission, and either expressly or by necessary implication, and either generally or as to any particular allegation".

33. In considering these two different applications in the present appeal, we find that his Honour did not apply the rules on applications for summary judgment in this case. What his Honour did however was that, he found that the Appellants failed to file their defence even though they had filed a Notice of Intention to Defend. See pp 17 and 18 of the Appeal Book. This is apparent from his Honour’s judgment at p 4 or p 97 of the Appeal Book. The significance of this is that, where a defence is filed, in such manner, it creates confusion and uncertainty as to whether or not a pleading in the Statement of Claim is denied or admitted. That is why his Honour was in agreement with the Respondent’s submission when he said at p 3 of the judgment or p 96 of the Appeal Book, "I am in agreement with the plaintiffs submission that the defendant by its failure to file its defence has failed to traverse the plaintiffs pleadings.

34. The position his Honour took is made clearer when one reads on in his judgment at p 3 or p 96 of the Appeal Book where he stated:

"The defendants have only filed a notice of intention to defend the claim. Is that sufficient to satisfy Order 8 Rule 21(2) of the National Court Rules? I do not think so although the specific rule says the ‘A traverse may be either by a denial or by a statement of non-admission, and either expressly or by necessary implication, and either generally or as to any particular allegation’. The defendant have not made a denial or a statement of non admission either expressly or by necessary and either expressly or by necessary implication, and either generally or as to any particular allegation".

35. Thus, it is clear to us that his Honour did not deal with that application as an application for "summary judgment" although he had stated at the introductory part of the judgment that, "The plaintiff (sic) motion is seeking declaratory orders by way of summary judgment". See p 94 of the Appeal Book. On the other hand, we find that the true nature of the application before the trial judge was not a "summary judgment" under Order 12, rule 38 but an application for judgment based on admissions purportedly made by the Appellants under Order 8, rule 21 and Order 9, rule 30(1). On that basis, we find that the trial judge did not consider the application before him as a "summary judgment" application. It follows that his Honour did not fall into error in that respect and we dismiss these grounds of appeal.

GROUND 3(e) & 3(h) OF SUPPLEMETARY NOTICE OF APPEAL

36. This leads us to consider grounds 3(e) & 3(h) of the appeal which raises the issue of whether the trial judge properly exercised his discretion to enter judgment against the Appellants in the National Court based on admissions under Order 8, rule 21 and Order 9, rule 30(1). This is where in addition to Order 8, rule 21, Order 9 rule 30 of the National Court Rules is of relevance. It states:

"30. Judgment on admissions. (18/3)

(1) Where admissions are made by a party, whether by his pleading or otherwise, the Court may, on the application of any other party, direct the entry of any judgment or make any order to which the applicant is entitled on the admissions.

(2) The Court may exercise its powers under Sub-rule (1) notwithstanding that other questions in the proceedings have not been determined".

37. The Appellants submitted that there was evidence from the Appellants that there is a dispute over a registered freehold land known as Pak and Viwulau Islands in the Manus Province. They referred to six Affidavits which we will refer to below to demonstrate the denial and non admissions raised by the Appellants to the allegations of illegal or unauthorized sale of the said land by the Respondent to them.

38. We have perused carefully the Affidavits filed in opposition to the application for "summary judgment" in particular:

1. Affidavit of Kamkam King Popei sworn 24th May 1995;

2. Affidavit of Ricther Habuka sworn 29th May 1995;

3. Affidavit of John Habuka sworn 23rd May 1995;

4. Affidavit of Alfred Alan Daniel sworn 06th June 1995;

5. Affidavit of Waisale Tivuka sworn 03rd July 1995; and

6. Affidavit of Seth Landine Daniel sworn 10th August 1995.

39. There is no doubt in our minds that there is a dispute between the Appellants and the Respondent over a registered freehold land known as Pak and Viwulau Islands in the Manus Province. We found that there is evidence from the Appellants disputing the Respondent’s claim of ownership of the said land. For example, the First Appellant stated in paragraphs 4 to 21 of his Affidavit of 06th June 1995 the description of the land, how it was acquired from the Respondent and subsequently sold to the Second Appellant.

40. Seith Landine Daniels in paragraphs 4 to 15 of his Affidavit deposed to factual matters surrounding the purported shareholders’ meeting of the Respondent on 28th June 1995 at the beach at Pak Island where he had also attended. In that meeting it was alleged that the sale of the said land by the Respondent to the Appellants was without the approval of the shareholders and the Board of Directors of the Respondent may not have been authorized by the shareholders to sell the land. It was agreed that legal proceedings be commenced against the Board of Directors but as it turned out, legal proceedings was commenced against the Appellants.

41. The Affidavit of Kamkam King Popei of 24th May 1995 deposed that there were numerous absenteeism at Board meetings of the Respondent by the Chairman of the Board of Directors, one Cholai Karu which had led to his removal by a Board of Directors and the election of Kamkam King Popei as new Chairman. It appears, during the term of Kamkam King Popei’s chairmanship, the First Appellant acquired the said land under the mortgage and through an auction sale, sold the said land to the Second Appellant.

42. The pleadings of the Respondent in the Statement of Claim clearly alleged that the Respondent was the registered proprietor of the said land and sold the said land through an auction without the expressed authority of the shareholders of the Respondent. These allegations are found at paragraphs 3 to 22 of the Statement of Claim at pp 11 to 15 of the Appeal Book. Although there is no defence being filed to traverse or join issue with the allegations of the Respondent in its Statement of Claim, when one holds the evidence of these witnesses against the allegations of the Respondent in its Statement of Claim, it is clear that there is a dispute over the said land and how the land was sold to the Second Appellant after it was acquired by the First Appellant under the mortgage. These are issues which in our view cannot be disposed off in a summary way. There has to be a proper trial conducted to properly determine these issues.

43. By operation of the words "or otherwise" used in Order 9, rule 30(1), we accept the Appellants’ submission that this phrase covers Affidavit evidence and as such, the Appellants through the above witnesses have denied the allegations of the Respondent that they are not the legitimate owners of the said land. As we have set out above, where there is denial either by pleadings or Affidavit evidence, an application for judgment based on admissions should not be readily granted and in our view, that alone should have formed a sufficient basis for His Honour to refuse the application for judgment. As His Honour had not done so, we find his Honour had not properly exercised his discretion and had fallen into error. (Emphasis added).

44. In the circumstances, we uphold these grounds of appeal.

GROUNDS 3(i) & 3(j) OF SUPPLEMETARY NOTICE OF APPEAL

45. As we have upheld grounds 3(e) and (3(h) of the appeal, we consider it not necessary to consider grounds 3(i) and 3(j).

CONCLUSION

46. For the above reasons, we uphold the appeal and award costs to the Appellants.

ORDERS

The formal orders of the Court are:

1. The appeal is upheld.

2 The "summary judgment" entered by the National Court on 27th May 1997 is quashed.

3. The substantive matter is remitted for directions hearing before the National Court on a date to be fixed.

4. The Respondent shall pay the Appellants’ costs of the appeal.

__________________________________________

Blake Dawson Lawyers: Lawyers for the Appellants
No appearance: Lawyers for the Respondent