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Supreme Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]
SCA NO. 54 OF 2017
BETWEEN:
KURKURAMB ESTATES LIMITED
Appellant
AND:
LUTHER SIPISON-
SECRETARY FOR LANDS & PHYSICAL PLANNING
First Respondent
AND:
INDEPENDENT STATE OF PAPUA NEW GUINEA
Second Respondent
AND:
KUMUL CONSOLIDATED HOLDINGS LTD
Third Respondent
Waigani: Kirriwom, J
2017: 17 & 19 May
SUPREME COURT - Appeal - From interlocutory judgment - Leave to appeal - Injunctive orders - Leave not required - Supreme Court Act, s.14(3)(b)(ii)
PRACTICE AND PROCEDURE - Stay pending appeal - Application for stay of substantive proceedings and stay of enforcement of injunctive orders - McHardy Principles considered and applied - Apparent errors of law and arguable case - Interest of justice - Preservation and protection of subject of dispute between the parties - Stay ordered - Funds held in a party's lawyer's account ordered to be paid to National Court Registrar's Trust Account - Time for compliance of order fixed - Costs in the appeal.
Cases cited:
Sir Arnold Amet v. Peter Yama (2010) SC1064
Benson Gegeyo and Others v Minister for Lands and Physical Planning [1987] PNGLR 336
Gary McHardy v Prosec Security and Communications Ltd trading as Protect Security (2000) PNGLR 279
Thaddeus Kambanei v. The National Executive Council (2006) N3064
Tarsie v Ramu Nico Management (MCC) Ltd [2010] N4142
Counsel:
H Nii, for the Appellant/Applicant
S Ketan, for First and Second Respondents
G Garo, for the Third Respondent
REASONS FOR DECISION
19 May, 2017
1. KIRRIWOM, J: This is an application by the appellant, the applicant herein, seeking to stay the substantive proceedings pending before the National Court in WS No.981 of 2016 between Kukuramb Estates Ltd as the Plaintiff and Luther Sipison Secretary for Lands and Physical Planning and the Independent State of Papua New Guinea (hereafter WS No. 981 of 2016) after lodging an appeal against an order for joinder of the Third Respondent in the substantive proceeding and associated injunctive orders following the grant of leave for joinder to the Third Respondent as the Third Defendant in that proceeding.
2. The appeal that was lodged on 5th April 2017 against that interlocutory ruling pursuant to section 14(3)(b)(ii) of the Supreme Court Act is one that does not require as the appeal is against the decision granting injunctive relief sought by the Third Respondent.
3. The stay application also seeks to stay the enforcement of these injunctive orders as well as the substantive proceeding pending hearing of this appeal.
4. A short history of the case is that an agreement was reached between the State through various State entities and the Appellant in the proceeding below for the Defence Force Lancron Base in Port Moresby Harbour to be relocated to the Appellant's land under a compulsory acquisition scheme on appropriate compensation being paid to the Appellant for the acquisition. That acquisition was executed and a Deed of Discharge and Transfer of Title Instruments were executed between the Appellant as one party and the First Defendant plus another were the other parties for a consideration of K46.6million in December 11, 2015.
5. No compensation was forthcoming following the compulsory acquisition and based on that deed of release the appellant was compelled to file proceedings in the National Court on 15 August 2016 naming Secretary of Department of Lands and Physical Planning and the State as the Defendants. The Third Respondent was not a party in that proceeding.
6. While the proceeding was pending the parties entered into discussion and an agreement for settlement was reached resulting in a memorandum of understanding executed by the Third Respondent, the Department of Defence and the Appellant based on which the Third Respondent agreed to pay and did pay to the Appellant K46.6 million in two instalments:
(i) K20m on 16th October 2016
(ii) K26.6m on 26th December 2016
7. Not long after this payment was sanctioned in this MOU on 20 February 2017 the Third Respondent commenced proceeding in the National Court titled WS No. 107 of 2017 between Kumul Consolidated Holdings Ltd as Plaintiff against Kukuramb Estates Ltd as Defendant (hereafter WS No 107 of 2017) claiming fraud and seeking judgment for the sum of K46.6million from the Defendant. By this time the amount of K46.6 million had already exchanged hands and the parties in WS.No.981 of 2016 were happy and took steps to discontinue the proceedings.
8. While that WS No.107 of 2017 was pending before the Court, the Third Respondent also filed a joinder application in this proceeding in the court below by way of cross claim on 14 March 2017 based on the same facts and seeking the same relief as in the WS No 107 of 2017 action. The appellant then responded to this by filing an application to dismiss both proceedings as being bad for duplicity and an abuse of process.
9. On 21 March 2017 when both applications went before the trial judge, Third Respondent's joinder application before the court was proceeded with first when as the applicant argues, the Appellant's application for dismissal of the third respondents motion for joinder ought to have been heard first. But that did not happen and is a reason also for this appeal.
10. That order, subject of this appeal reads:
" THE COURT ORDERS THAT:
(i) K20m on 16th October 2016
(ii) K26.6m on 26th December 2016
(i) K20m on 16th October 2016
(ii) K26.6m on 26th December 2016
c) That pursuant to Order 12 Rule 1, Order 14 Rule 1 of the National Court Rules and Section 155(4) of the Constitution, and account be taken of the money totalling K46.6m received by the Plaintiff from the Cross Claimant on or about:
(i) K20m on 16th October 2016
(ii) K26.6m on 26th December 2016
d) That:
e) Pursuant to Section 155(4) f the Constitution and Order 12 rule 1 of the National Court Rules, the;
11. Apart from this order, there is no written reason or reasons accompanying the order. Such an order is open to criticism because there is legal authority for the proposition that if a court makes a decision or order without giving any reason or reasons for that decision or order, then the decision or order is devoid of good reason: see Sir Arnold Amet v. Peter Yama (2010) SC1064 and Benson Gegeyo and Others v Minister for Lands and Physical Planning [1987] PNGLR 336.
12. At the hearing of this application there was a clear demarcation drawn between the views taken by the Third Respondent and the Appellant supported by the First and Second Respondent as to when a pleading is closed or is said or deemed to have closed. This is a pertinent issue that the full bench will have to ultimately determine because the issue of whether or not the joinder order of 21 March 2017 that enjoined the Third Respondent to the proceedings titled WS.No 981 of 2016 after the substantive proceeding, as far as the original parties in it considered it closed following settlement and Notice of Discontinuance had been filed on 15 March 2017 with consent of the First and Second Respondent was forced to remain alive, will be an important legal issue that will ventilated in this appeal.
13. The appellant supported by the First and Second Respondent maintained the view that the pleadings had not closed when a settlement took place between the parties. Therefore pursuant to Order 8 rule 61 National Court Rules, the parties were at liberty to discontinue proceedings without the leave of court. But the Third Respondent contended that the pleadings had closed and therefore the proceeding can only be discontinued with leave of the Court. It further argued that the proceedings could not be discontented when there were orders previously made by the trial judge awaiting compliance. And until they were complied with the proceeding remained alive.
14. This is the issue that the Appellant chose not to proceed with today choosing instead to deal only with the application for stay. And the application for stay is grounded on the appeal based on questions of law regarding the trial judge's orders with respect to injunctive reliefs granted consequent upon her order for joinder. Section 14(3)(b)(ii) states that "..except in cases of granting or refusing an injunction..." where leave to appeal is not required. Otherwise all appeals stemming from an interlocutory ruling must be by leave of the court.
15. Even then, it is also arguable that the issue of whether the proceeding in WS No 981 of 2016 was not yet terminated by the settlement between the parties when the Third Respondent applied to be joined and was joined is a question of law and quite rightly one for the Supreme Court to hear and determine. It isn't a trivial point that the parties need to argue over its appropriateness for legal argument in the Supreme Court.
16. I am therefore of the view that as this appeal is already properly before the Supreme Court by virtue of section 14(3)(b)(ii) of the Supreme Court Act, it will be most appropriate in my view for the leave application to be pursued before the full court together with the substantive appeal, if it is considered that leave is required. And this is what I am recommending as the Directions Judge in order to minimise and eliminate procrastination and delay in the expedient disposition of this appeal.
17. But the issue before me is whether a stay can be ordered in respect of the substantive proceeding in WS No. 981 of 2016 and stay of enforcement of the injunctive orders of 21 March 2017.
18. Whether a stay can be ordered following lodgement of appeal is a discretionary matter and there are already established principles governing the practice and the court's determination of this question. The relevant considerations have been referred to by Mr Nii for the appellant which are set out in Gary McHardy v Prosec Security and Communications Ltd trading as Protect Security (2000) PNGLR 279. They are:
“ i. Whether leave to appeal is required and whether it has been obtained;
ii. Whether there has been any delay in making the application;
iii. Possible hardship, inconvenience or prejudice to either party;
iv. The nature of the judgment sought to be stayed;
v. The financial ability of the applicant;
vi. Preliminary assessment about whether the Applicant has an arguable case on the proposed appeal;
vii. Whether on the face of the record of the judgment there may be indicated apparent error of law or procedure;
viii. The overall interest of justice;
ix. Balance of convenience; and
x. Whether damages would be sufficient remedy.”
Whether leave to appeal is required and whether leave has been obtained?
19. The question of leave only arises because this is an appeal against an interlocutory judgment which by the very nature of the argument raised by the parties, it can be said that the issue is one of both fact and law, as such question of leave may not be necessary. And the question of leave only arises because of the following:
(a) There is dispute as to when the pleadings have closed and whether the proceedings remained open as the appellant did not seek leave of the court to file notice of discontinuance?
(b) The court's direction to the Registrar for the removal of the Notice of Discontinuance filed on 15 March 2017 Doc #16.
Otherwise the appellant already has an appeal registered on questions of law as it concerns the grant of injunctive reliefs to the Third Respondent for which no leave is required under section 14(3)(b)(ii) of the Supreme Court Act.
Besides the Notice of Appeal already before the Court contain grounds, namley 3.8, 3.9 and 3.10 that incorporate arguments that will address these two issues that no separate appeal seeking leave will be necessary.
20. I set out below therefore the Appellant's grounds of appeal just to illustrate this:
" GROUNDS OF APPEAL
3.1 The trial judge erred in law in granting injunctive orders in favour of the Third Respondent, when the Third Respondent did not fully satisfy any or all of the conditions for the grant of injunction.
3.2 The trial judge erred in law in granting the injunctive orders in favour of the Third Respondent without giving any opportunity to, and or without hearing submissions from, the Appellant as well as the Second and Third Respondents on the issue of whether or not injunctive orders should be granted.
3.3 The trial judge erred in law in granting the injunctive orders in favour of the Third Respondent when the Third Respondent did not produce evidence to satisfy the grant of injunction and the evidence, if any, adduced by the Third Respondent did not disclose any urgency or prejudice warranting grant of the injunctive orders.
3.4 The trial judge erred in law in granting the injunctive orders in favour of the Third Respondent in the circumstance where her Honour failed to provide any reason at all or adequate reasons for the decision to grant the injunctive orders.
3.5 The trial judge erred in law and in principle in determining the Third Respondent’s application for joinder and for injunction first when the Appellant’s application for dismissal of the Third Respondent’s joinder was properly before the Court and had her Honour given the opportunity to counsel for the Appellant to move the application first the Court would have been made aware that the application for joinder by the Third Respondent was an abuse of process (duplicity of proceedings) and would have dismissed the Third Respondent’s application hence the subsequent grant of injunctive orders would not have been necessary.
3.6 In the alternative, the trial judge erred in law and in fact in granting interim injunctive orders in favour of the Third Respondent, when-
3.7 The trial judge erred in law and in principle in determining the Third Respondent’s application for joinder and for injunction first when the Appellant’s application for leave to discontinue the proceedings was properly before the Court and had her Honour given the opportunity to counsel for the Appellant to demonstrate the court would have been made aware that Her Honour did not have jurisdiction to grant injunctive orders on the 21st March 2017 when the proceedings has been discontinued as of right by the parties by Notice of Discontinuance of Proceedings filed on the 15th March 2017.
3.8 In the alternative, the trial judge erred in law and in fact in granting interim injunctive orders on the 21st March 2017 when the Appellant had already discontinued the proceedings with the consent of the First and Second Respondents by Notice of Discontinuance of Proceedings filed on the 15th March 2017, pursuant to Order 8 Rule 61 of the National Court Rules.
3.9 The trial judge erred in law and in fact in maintaining or continuing to maintain the proceedings and subsequently granting interim injunctive orders merely on the basis of purported non-compliance of previous directional orders of 9th December 2016 and 15th February 2017 against the First and Second Respondents, when those orders, if any, were superseded by the Appellant electing to discontinue the proceedings with the consent of First and Second Respondents.
3.10 The trial judge erred in law and in fact in ordering or directing the Registrar of the National Court to remove the Notice of Discontinuance of Proceedings filed by the Appellant on the 15th March 2014 from the Court file pursuant to Order 2 Rule 9 of the National Court Rules, when there was no legal basis for removal of a Court Document properly filed in accordance with Order 8 Rule 61 of the National Court Rules. In the circumstances the exercise of Court’s power or discretion under Order 2 Rule 9 of the National Court Rules was abused by the Third Respondent. "
Whether there has been any delay in making the application.
21. I am satisfied on the submission made and conceded to by the Third Respondent that there is no delay in the making of this application. The orders of the court, subject of this appeal, were made on 21 March 2017 and this application was filed on 17 April, 2017 while the appeal was filed on 7th April 2017, all within close proximity of one to two weeks from the date of the judgment. There is therefore no delay.
Possible hardship, inconvenience or prejudice to either party
22. In considering whether either party is going to be placed in any hardship, inconvenience or prejudice by a stay order, I bear in mind that the Third Respondent is a new addition to this proceeding which is one of reasons for this appeal and that the appellant is entitled by virtue of the deed of settlement to the funds accruing from that settlement between the original parties, nevertheless a court of competent jurisdiction has made an order that is now the subject of this appeal and it would therefore be in the best interest of all parties that a stay of the nature sought must be beneficial to the parties with the aim of preserving the status quo. The final outcome is for the Supreme Court to decide.
The nature of the judgment sought to be stayed
23. The stay is sought to in respect of continuation of the substantive proceeding pending the hearing of this appeal and stay of the enforcement of the injunctive orders made on 21 March 2017 set out above which are already subject of a stay order which the court extended last Wednesday to this Friday when this ruling is given when the future of that interim stay will be determined. A review of that interim stay order is necessary in the light of the dismissal of the related proceeding in WS.No.107 of 2017 which provided the legs and now it is without legal basis for its existence.
The financial ability of the applicant.
24. I note from the appellant's counsel's submission that financial ability or viability of the appellant is dependent on the money paid to it by the Third Respondent under the MOU and the deed of settlement which payment is now the subject of this litigation before the National Court by way of cross-claim in the proceedings WS No. 981 of 2016. Given so, the necessity to protect this money while there is a dispute over its payment initially by the Third Respondent under an agreement that did not include it raises serious questions that need to be properly investigated.
Without this money it seems the appellant has no independent financial ability to meet any financial commitment it enters into.
Preliminary assessment about whether the Applicant has an arguable case on the proposed appeal
25. On the grant of injunctive orders, no doubt the appellant has an arguable case with good prospects of success. In a number of ways the order granting injunctive reliefs appear to violate some very basic fundamental principles of fair trial in that while the motion sought those reliefs but no address was made as it is not reflected in the transcript of the day's proceedings and no reasons were given for those orders. See Thaddeus Kambanei v. The National Executive Council (2006) N3064 where (per Injia, DCJ (as he then was)) nine (9) principles pertaining to grant of mandatory injunction are set out:
“(i) A mandatory injunction should normally only be granted where a strong case that serious damage will occur to the applicant is made out.
(ii) The general principles for negative injunctions apply, that is that there is a serious case to be tried, damages are not an adequate remedy and the balance of convenience favour the applicant, but the case should normally be one of giving an unusually strong and clear view that the applicant will be successful at trial.
(iii) The more likely it appears that the plaintiff will succeed at trial the less reluctant the court will be to interfere on an interim basis.
(iv) But if it is necessary to make some interim order the Court will do so whether or not the high standard of probability of success is made out.
(v) The costs to the defendant of performing the mandatory acts should be weighed against the likely damage to the applicant.
(vi) If the relief sought is such as would normally only be granted after a trial, it should be refused on an interim application unless the prejudice or hardship to the applicant is disproportion to the prejudice and hardship to be caused to the defendant in performing the order.
(vii) If the mandatory injunction is simply to restore some activity which has been previously performed by the defendant, rather than to embark upon some new activity, it will be more readily granted.
(viii) Ultimately, in deciding whether or not to grant a mandatory injunction the overriding consideration is an exercise in deciding which course will do the least damage, or, to put it another way, the lower risk of injustice, if it turns out that the court has made the “wrong” decision.
(ix) If an injunction is granted the order should specify exactly what it is the defendant has to do, leaving the defendant in no doubt as to what is required to comply with the order.”
26. These considerations are relevant in this case given the circumstances in which the trial judge granted the orders without actually addressing the appellant's side of the case at all in respect of the injunctive orders.
27. On the question of discontinuance of the proceedings following filing of Notice of Discontinuance on 15 March 2017, the Rules of Court are specific as stated in Order 8 Rule 61 of the National Court Rules:
"61. Discontinuance. (21/2)
(1) A party making a claim for relief may discontinue proceedings so far as concerns the whole or any part of any claim for relief by him —
(a) where the pleadings are not closed—without leave or consent; and
(b) where judgement has not been entered—with the consent of all other parties; and
(c) at any time—with the leave of the Court.
(2) A party making a claim by originating summons may, with the leave of the Court, discontinue the proceedings at any time so far as concerns the whole or any part of the claim."
28. In the commentary in the black book Civil Practice in the National Court under this Rule the following passage taken from Tarsie v Ramu Nico Management (MCC) Ltd [2010] N4142 is worthy of noting:
"(1) If a Plaintiff wishes to discontinue proceedings and their application for leave to do so is made with the consent of all the defendants, leave should generally be granted, it being in the interests of justice to encourage parties to reach an out of court settlement of their disputes;
(2) To refuse leave to discontinue would constitute a restriction on a plaintiff's right to freedom based on law under section 32 of the Constitution and the right to the full protection of the law under section 37(1) of the Constitution and such a restriction ought only be imposed in extreme circumstances."
30. Both parties are strongly at loggerheads on this particular issue because the survival of the Third Respondent's cross claim clearly hinges heavily on this point which is dependent on how the court interprets the application of this Rule in the given circumstance of this case. As I stated earlier, this issue will be addressed in this appeal on the grounds clearly pleaded in the notice of appeal.
Whether on the face of the record of the judgment there may be indicated apparent error of law or procedure;
31. As I mentioned earlier in the preceding paragraphs that there are some merits in the complaints that there are possible breaches of the law or principles in the orders made by the trial judge that is subject of this appeal and it is only proper that the Supreme Court determines the case on its own merits and arrive at its own independent decision.
The overall interest of justice
32. Where is the overall interest of justice? My view is that the overall interest of justice rests in the preservation and protection of the subject matter of the dispute between the parties in this case. Following the trail of the money that was paid to the Appellant by the First and Second Respondents through the bank account of the Third Respondent or funded by the Third Respondent on direction of the National Executive Council and now there is this counter-claim by the Third Respondent to be repossessed of this money for the reasons that had compelled the instigation of its recovery proceedings enjoined to this action that the Appellant and First and Second Respondents want to see it at end, whatever the outcome of that trial, is a matter that can unfold at its appropriate time. But for now there is an order made for the Third Respondent to be given the opportunity to be heard on the movement of this money which is now the subject of this appeal. Whatever the Supreme Court decides is a matter for the Supreme Court full bench, my task is only to facilitate this eventuality for the substantive hearing of the appeal before the full bench without having to pre-empt the decision of the court.
33. Therefore the real and overall interest of justice in this case and this appeal is the preservation and protection of the sum of K46.6million that is the subject of dispute and it is only for that purpose that the Third Defendant is interested in this case.
Balance of convenience
34. I have taken note of Mr Nii's submission and also supported by Mr Ketan for the Secretary for Lands and the Independent State of Papua New Guinea that the balance of convenience favoured not disturbing the status quo which is to leave the money, the subject of this dispute or proceeding, remain in the bank account of Jema Lawyers until the appeal is heard.
35. I am also mindful of an existing interim order that has the effect of safeguarding the funds in the bank account of Jema Lawyers pursuant to a commitment of the law firm concerned. But I am not altogether satisfied that such an undertaking or promise is a surest guarantee that is fool-proof and not tantamount to be broken.
36. I am of the view that, whatever the prospects of the Third Respondent's case maybe, particularly in the light of the recent decision of the National Court dismissing the Third Respondent's related proceeding WS No.107 of 2017 pleading the same cause of action and relying on virtually the same set of facts and circumstances as the cross-claim enjoined to WS No. 981 of 2016, now the subject of this appeal, as long as there is this appeal and it will be a while before this appeal is finally heard, the subject matter of this on-going dispute can only be safe for this case to be worth fighting for to the bitter end is to park the money in an independent and impartial place, not in the bank account of one of the parties or their lawyer's bank accounts. That is what the balance of convenience favours in this case.
37. In any event there is a distinction between the proceeding in WS No 107 of 2017 and WS No 981 of 2016 in that the former action failed to name the State as a party whereas in the latter the State is a party. So that is a difference.
Whether damages would be sufficient remedy.
38. Damages will definitely not be an adequate remedy in this case because supposing the Third Respondent succeeds but the funds in the custody, control and possession of the Appellant have moved and no longer available or accessible to be recouped, there is no way the Appellant can be able to pay damages to the Third Respondent.
39. In the final analysis therefore I agree with the Appellant/Applicant's application for stay of the proceedings in WS No.981 of 2016 until this appeal is heard and determined and the future of that proceedings in the National Court becomes clear given recent developments in related proceedings. The appeal will address those matters set out in the grounds of appeal and those injunctive orders pertaining to the procedural issues on filing and withdrawal of notices of discontinuance of the original proceedings in the court below.
40. However, it is my view that it will be a futile and purely academic exercise to pursue this case as far as the highest court of the land without being sure and certain that the subject matter of this litigation between the parties, in the court below and in this appeal, is safely parked away in a neutral and independent place and there is no such better place than the National Court Registrar's Trust Account.
41. In the circumstances, I grant the leave sought by the appellant as to the stay of the proceedings in the National Court but I order that the sum of K46.6 million referred to in the two lots of payments as per the National Court order of 21 March 2017 as set out in paragraph 10 of this judgment presently in the bank account of Jema Lawyers since the transfer from another account in Kina Bank be paid into the National Court Registrar's Trust Account forthwith.
42. This order is to be complied with by no later than 3pm Monday 22nd May 2017.
43. Cost of this application shall be costs in the appeal.
ADDENDUM
44. The proposed orders in paragraphs 41 and 42 above were amended after my ruling on the above following further submission from Mr Nii for the Appellant by way of clarification based on material contained in the affidavit of Harvey Nii of 12 April 2017 Doc #3 Annex N17 which formed part of the evidence in this application and not disputed by counsel for the Third Respondent in that the only sum remaining from that K46.6million in the Jema Lawyers Trust Account with ANZ Bank (PNG) Ltd is K28,575,995.61 which is already subject of freezing order or direction from Bank of Papua New Guinea to the ANZ Bank (PNG) Ltd.
45. As the consequence appropriate amendment to the order was made to reflect the actual amount of K28,575,995.61 in the Jema Lawyers Trust Account to be paid into the Registrar's National Court Trust Account no later than 3pm Wednesday 24th May 2017 once the freeze on the said lawyers account is uplifted by the Bank of Papua New Guinea. Both the Bank of Papua New Guinea and ANZ Bank (PNG) Ltd are as the consequence ordered to take all necessary steps to uplift the freeze on Jema Lawyers Trust Account number 15402502 for the amount of K28,575,995.61 to be drawn from this account and paid into the National Court Registrar's Trust Account number 1000583618 with Bank of South Pacific Waigani Branch forthwith pending hearing of this appeal.
46. It is noted that annexure N17 in Harvey Nii's affidavit of 12th April 2017 is a copy of the letter carrying similar request to the Bank of Papua New Guinea from Dentons Lawyers for the Third Respondent dated 3rd April, 2017 and as such the application for amendment to the court's earlier orders is consistent with the reality of the current status of the subject matter in dispute.
ORDER
47. Thus the amended order of the Court now reads:
Harvey Nii Lawyers: Lawyers for the Appellant
Ketan Lawyers: Lawyers for the First & Second Respondents
Dentons PNG: Lawyers for the Third Respondent
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