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Coconut Products Ltd v Markham Farming Co Ltd [2018] PGSC 60; SC1717 (10 October 2018)


SC1717

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]


SCA NO 94 OF 2017


BETWEEN
COCONUT PRODUCTS LIMITED
Appellant


AND
MARKHAM FARMING COMPANY LIMITED
Respondent


Waigani: Gavara-Nanu, Makail & Dingake JJ
2018: 3rd May & 10th October


SUPREME COURT – Appeal against entry of judgment and award of damages


JUDGMENTS – Oral judgment – Written judgment – Reasons for decision – Duty to give reasons – Failure to publish detailed reasons – Effect of – Breach of natural justice


CIVIL – Cause of action – Frivolous or vexatious proceedings – Proceedings constituting abuse of process – Actionable tort – Civil malicious prosecution – Tort of abuse of process – A form of tort – Tort part of PNG Underlying law – Constitution – Schedules 2.2 and 2.3


Facts


The appellant occupied a piece of land (“Property”) under a lease agreement with a former proprietor and had discussion with various options to renew the lease and to purchase the property. The property was subsequently purchased by the respondent and registered in its name. The appellant instituted multiple proceedings to set aside the title of the respondent. All of these proceedings were determined in favour of the respondent. The respondent instituted civil proceedings for malicious prosecution and sought damages. The trial judge upheld the claim based on a cause of action of civil malicious prosecution and awarded damages for loss of business and other losses in the total sum of K3,981,000.00. In delivery of his decision, the trial judge gave a brief summary of the decision and delivered the orders. He indicated that he would publish his detailed reasons for decision. No published decision was received by the parties. This was an appeal against that decision.


Held:


  1. A trial judge has a duty to provide reasons for decision and if no reasons are given, it leaves open an inference that there are no good reasons for the decision made: Sir Arnold Amet v. Peter Charles Yama & Electoral Commission (2010) SC1064, Ombudsman Commission v. Peter Yama (2004) SC 747, Godfrey Niggints v. Henry Tokam & 2 Ors [1993] PNGLR 66 and Mission Asiki v. Manasupe Zurenoc & Ors (2005) SC797 reaffirmed.
  2. In order to determine the question whether the trial judge provided reasons for decision, the appellate Court must look at the transcript of the oral judgment and be satisfied that it has sufficient reasons to assist the appellant formulate the grounds of appeal and, vice versa, the respondent to defend them.
  3. The appellate Court must be further satisfied that both parties are able to identify the issues borne out by the grounds. If parties are able to achieve these results with ease or less inconvenience, the appellate Court should be able to conclude that the trial judge provided sufficient reasons for decision.
  4. In this case the trial judge gave reasons for his decision at the time of delivery of decision and the reasons were sufficient and enabled the appellant to prepare this appeal. No error of law was established and the ground on breach of natural justice was dismissed.
  5. The common law recognised the tort of malicious prosecution of civil proceedings or abuse of process. It is one form of tort which is actionable and available to an injured party to seek remedy or redress and formed part of the PNG Underlying law pursuant to Schedules 2.2 and 2.3 of the Constitution: Grainger v. Hill [1838] EngR 365; (1838) 4 Bing NC 212 applied.
  6. To succeed in establishing the tort of malicious prosecution of civil prosecution or abuse of process, it must be pleaded and proved that the initiation of prior proceedings was done with malice and without reasonable and proper cause.
  7. In this case the finding by the trial judge that the respondent was entitled to institute proceedings WS No. 225 of 2013 for tort of civil malicious prosecution to claim damages against the appellant was correct in law and no error of law was established. This ground of appeal was dismissed.
  8. The evidence did not support the finding by the trial judge that the initiation of the prior proceedings was done with malice and without reasonable and proper cause. This ground of appeal was upheld.
  9. The appeal was allowed in part and the decision and orders of the National Court were, accordingly, set aside.

Cases cited:
Papua New Guinea Cases


Sir Arnold Amet v. Peter Charles Yama & Electoral Commission (2010) SC1064
Ombudsman Commission v. Peter Yama (2004) SC 747
Godfrey Niggints v. Henry Tokam & 2 Ors [1993] PNGLR 66
Mission Asiki v. Manasupe Zurenoc & Ors (2005) SC797
Ronny Wabia v. BP Exploration Operating Co Ltd [1998] PNGLR 8
Titi Christian v. Rabbie Namaliu (1995) SC1583
Telikom PNG Ltd v. ICCC (2008) SC906
MVIL v. Kauna Kiangua (2005) SC1476
Peter O’Neil v. Nerrie Eliakim (No 1) (2016) SC1522
Peter O’Neil v. Nerrie Eliakim (No 2) (2016) SC1539


Overseas Cases


Carlson v. King (1947) 64 WN (NSW) 65
Pettitt v. Dunkley [1971] 1 NSWLR 376
Hanrahan v. Ainsworth (1985) 1 NSWLR 370
Crawford Adjusters & Ors v. Sagicor General Insurance (Cayman) Ltd & Anor [2013] UKPC 17
Corbett v. Burge (1932) 48 TLR 626
Gasing Heights SDN BHD v. Aloyah Abd Rahman & Ors [Civil Suit No: 22-187-91] - 2 August 1996
Grainger v. Hill [1838] EngR 365; (1838) 4 Bing NC 212
Goldsmith v. Sperrings Ltd [1977] 1 WLR 478; [1977] 2 All ER 566
Speed Seal Ltd v. Paddington [1985] 1 WLR 1327
QIW Retailers Limited v. Felview Pty Ltd [1989] 2 QdR 245
Williams v. Spautz [1992] HCA 34; (1991-92) 174 CLR 509
Ballina Shire Council v. Ringland (1994) 33 NSWLR 680
Bhagat v. Global Custodians Ltd [2000] NSWSC 321
Johnston v. Australian and New Zealand Banking Group Ltd [2001] NSWSC 238
Quartz Hill Consolidated Gold Mining Co v. Eyre [1883] UKLawRpKQB 126; (1883) 11 Q.B.D. 674
Ballina Shire Council v. Ringland (1999) NSWSC 110
Gregory v. Portsmouth City Council [2000] 1 AC 219


Counsel:


Mr. M. Goodwin with Mr. A. Paru, for Appellant
Mr. I. Molloy with Ms. E. Suelip, for Respondent


JUDGMENT

10th October, 2018


1. BY THE COURT: This is an appeal against the decision of the National Court of 26th May 2017 wherein the trial judge entered judgment for the respondent and awarded damages for loss of business and other losses in the total sum of K3,981,000.00, with 8% interest and legal costs.


BACKGROUND FACTS


2. The appellant occupied a piece of land described as Allotment 11, Section 2, Buka passage, North Solomons Province (“Property”) and entered into a lease agreement with the former proprietor, Kokonas Industri Koporesen (“KIK”) and had discussion with various options to renew the lease and to purchase the property.


3. On or about 2nd November 2009 the respondent purported to purchase the property from KIK and the appellant disputed the sale. The appellant being aggrieved by the purported sale of the property to the respondent, instituted proceedings, WS No. 622 of 2011: Coconut Products Limited v. KIK Prestine Co. No. 101 Limited and Henry Wasa as the Registrar of Titles. There were several proceedings following the events of WS No. 622 of 2011 proceeding one of them being CIA No. 170 of 2011.


4. All of these proceedings were determined and judgment entered in favour of the respondent with costs. Subsequent to this, the respondent instituted further proceedings, WS No. 225 of 2013 against the appellant, claiming damages purported to accrue from those previous proceedings. It claimed damages for loss of business, special damages and other losses. This is the proceeding giving rise to the decision which is the subject of this appeal.
NATIONAL COURT PROCEEDING


5. In the National Court, the appellant presented brief evidence of the nature of each prior proceedings and the orders made in those proceedings in the affidavit of Bobby Nutley sworn and filed on 28th October 2013. It was asserted by Mr. Nutley that the issues were limited to the specific relief that the defendant (appellant) was seeking to protect its interest in the property from which it had been operating a successful business for many years. The contentious facts were that, firstly none of the orders made in the prior proceedings made a finding that the action is dismissed for being frivolous, vexatious or an abuse of process.


6. Secondly, no evidence was presented in the National Court proceeding of the evidence in each prior proceeding, or even of the full facts, pleadings, nature and detail of each proceeding. The only evidence before the Court was that of the appellant outlining for the assistance of the Court the outcome of each order in the prior proceedings.


7. Finally, there was no evidence of malice or frivolous and vexatious conduct by the appellant in the prior proceedings in the National Court proceeding. The orders in each prior proceeding only found in favour of the respondent and awarded the usual costs on a party/party basis to the respondent, except for the order in CIA No. 170 of 2011.


8. On 11th November 2014 final addresses were made by counsel for the parties and the trial judge reserved his decision to a date for parties to be advised. On 26th May 2017 the trial judge delivered his decision. In delivery of his decision, he gave a brief summary of the decision and delivered the orders. His Honour indicated that he would publish his detailed reasons for decision. None was received by the parties.


GROUNDS OF APPEAL


9. The appeal is made on five main grounds:


9.1. Failure of the trial judge to provide reasons for his decision (error of law).


9.2. Failure to find that there was no cause of action (error of law).


9.3. Failure to properly consider and apply the principles of estoppels, res judicata, judgment recovered, and merging of the causes of action in the judgment as a bar to the proceedings in the National Court (error of law).


9.4. Failing to find that any loss of business profits to the respondent is not a recoverable head of damage or a special damage of the kind required to sustain an action for abuse of process, frivolous and vexatious claims or malicious issue of civil proceedings (error of fact and law).


9.5. Failing to find that legal costs from prior proceedings cannot be claimed in subsequent proceedings as a special head of damage, and failing to differentiate party/party costs from actual costs incurred (error of fact and law).


ISSUES


10. The issues are:


10.1. Whether the trial judge failed to provide reasons for his decision.


10.2. If he did not, whether it is a ground capable of setting aside the decision of the National Court?


10.3. Can a proceeding or set of proceedings, if dismissed, as being frivolous, vexatious or abuse of process form a cause of action known to law?


10.4. If yes, is the action in the National Court barred by the doctrines of res judicata and issue estoppel?


10.5. If no, were the prior proceedings dismissed as being frivolous, vexatious or abuse of process?


10.6. If yes, did the respondent prove its losses?


FAILURE TO PROVIDE REASONS FOR DECISION


11. In delivery of his decision, the trial judge indicated that he would publish his detailed reasons for decision but none was received by the parties. The failure to provide detailed published reasons by trial judge formed one of the grounds of appeal and subject of contest in this appeal.


12. It was contended for the appellant that this failure constituted a breach of natural justice and disadvantaged the appellant in the preparation of this appeal. However, the respondent contended that it is erroneous for the appellant to contend that the trial judge failed to provide his reasons for decision because he did. He did at the time of delivery of the judgment. If the appellant is seeking published reasons for the decision, the failure to provide published reasons is not a ground to set aside the decision. These competing propositions raise the questions we have posed at [10.1] and [10.2] above; did the trial judge provide reasons for his decision and if he did not, is it a ground capable of setting aside the decision of the National Court?


13. These questions were adequately addressed in the obiter dictum of the Supreme Court in Sir Arnold Amet v. Peter Charles Yama & Electoral Commission (2010) SC1064. That was a review of an election petition case for the Madang Provincial electorate following the 2007 General election. At the time of delivery of judgment, the trial judge indicated that he would publish detailed reasons for his decision but did not. The applicant took no issue with the lack of published reasons. For the present purpose, the joint judgment of Salika DCJ and Batari J is pertinent.


14. It will be noted from their Honours’ judgment that they acknowledged that the trial judge gave a comprehensive and lengthy oral judgment with several reasons for upholding the petition by the respondent, Mr. Yama. They referred to an earlier decision of the Supreme Court in the case of Ombudsman Commission v. Peter Yama (2004) SC 747 by Injia J (as he then was), Sakora & Sawong JJ and the decision of the National Court of Godfrey Niggints v. Henry Tokam & 2 Ors [1993] PNGLR 66 by Amet J (as he then was). From these cases, they pointed out that the trial judge had a duty to provide reasons for decision because it is a necessary part of the duty of a public official to accord natural justice to persons affected by the decisions of those public officials.


15. They went on to endorse the statement by Amet J (as he then was) in Godfrey Niggints v. Henry Tokam that “If no reasons are stated other than this kind of statement, it leaves the Court no option than to conclude that there was no good reasons at all.” They said that it is a sound principle of law to guide the appellate Courts in dealing with appeals and reviews that are without or lacking reasons or sufficient reasons for decision.


16. The view expressed by Amet J (then) was reinforced by a subsequent Supreme Court decision in 2005 in the case of Mission Asiki v. Manasupe Zurenoc & Ors (2005) SC797. There, the Court held that the first respondent’s failure to give reasons means that there were no good reasons and further held that it amounted to an error or law and a denial of natural justice. That was an appeal from a judicial review case of an administrative decision.


17. We reaffirm the principles approved by their Honours that a trial judge has a duty to provide reasons for decision and secondly, if no reasons are given, it leaves open an inference that there are no good reasons for the decision made.


18. The last statement of principle requires a further comment and we do so with the greatest respect to the trial judge or any other judge for that matter. When a judge gives an oral judgment and indicates to the parties that detailed reasons will be published later, he must ensure that it is done without delay. We cannot stress enough this point and it would be amiss of us not to draw the attention of judges to the timely reminder by their Honours at [14] of the judgment:


“.......where the trial judge undertakes to publish the reasons, the judgment ought to be made available to the parties at the end of the proceeding or soon thereafter. The parties are entitled to it, more so for the parties in an appeal or judicial review application. The written reasons for decision will assist them to consider whether to proceed with or to defend the appeal or review. It will also assist the Appellate Court when it deliberates the grounds of appeal or review.” (Emphasis added).


19. We say no more except to point out that their Honours did not have to decide the review on the grounds of lack of reasons because the reasons given by the trial judge in the oral judgment were considered sufficient. They were also given that benefit by the fact that the appellant did not take issue with the lack of published reasons by the trial judge.


20. We distil from that judgment that in order to determine the question whether the trial judge provided reasons for decision, the appellate Court must look at the transcript of the oral judgment and be satisfied that it has sufficient and adequate reasons to assist the appellant formulate the grounds of appeal and, vice versa, the respondent to defend them. Further, it must be satisfied that both parties are able to identify the issues borne out by the grounds. If parties are able to achieve these results with ease or less inconvenience, the appellate Court should be able to conclude that the trial judge provided sufficient reasons for decision.


21. In that case it is advisable that an aggrieved party (appellant) should start working on formulating the grounds of appeal without delay with the aid of audio recordings of the oral judgment obtained or accessed from the Court Reporting Services. It is good practice given the strict time limitation of 40 days to prepare an appeal and often than not, the published written judgment will contain no more than the finer details of the trial judge’s decision and to wait for one might be a futile exercise.


22. The legal obligation to give reasons for decision is not a new concept. It is something Courts in foreign jurisdictions have been taken to task to address and have written extensively in their published judgments. It will be quite interesting to see how the issue is being addressed by the Courts in those jurisdictions. For example, we need not look far than Australia and a brief search of reported cases there will show judgments, in particular, ex tempore, as lacking or having insufficient reasons. In Carlson v. King (1947) 64 WN (NSW) 65 at 66, the New South Wales Full Court had to consider an appeal from a decision of a judge of the District Court, who delivered an ex tempore judgment in these terms:


“I do not agree with the submissions on behalf of the defendant. I find a verdict for the plaintiff for £175. Judgment accordingly.”


23. The Full Court held that this was insufficient. Jordon CJ, delivering the judgment of the Court, said at 66:


“It has long been established that it is the duty of a Court of first instance, from which an appeal lies to a higher Court, to make, or cause to be made a note of everything necessary to enable the case to be laid properly and sufficiently before the appellate Court if there should be an appeal. This includes not only the evidence, and the decision arrived at, but also the reasons for arriving at the decision. The duty is incumbent, not only on magistrates and District Courts, but also upon this Court, from which an appeal lies to the High Court and the Privy Council.”


24. Some 24 years later this principle was adopted and expounded in the decision of the New South Wales Court of Appeal in Pettitt v. Dunkley [1971] 1 NSWLR 376. That was a case where a pedestrian plaintiff was struck by a motor vehicle in a pedestrian crossing. The trial judge in the District Court entered judgment for the defendant. He gave ex tempore reasons as follows:


“It would not help in view of this lady’s condition of health, psychomatic (sic) or otherwise, for me to give any other reasons.”


25. It was not surprising that the plaintiff’s appeal was successful. The Court of Appeal found that the findings by the primary judge were insufficient to meet the legal requirements imposed upon him. These cases reinforced the proposition that a trial judge has a duty to give reasons for decision and if there is a claim that no reasons were given, the appellate Court must be satisfied if the oral judgment give adequate and sufficient reasons to enable the case to be laid properly and sufficiently before the appellate Court.


26. In this case, we have read the oral judgment of the trial judge provided in the Court transcripts. Unlike the decision of the District Court judge in Carlson v. King or Pettitt v. Dunkley, it is 10 pages-long. It sets out the background of the case, the issues raised for determination and the reasons for the decision. The undisputed background facts stated by the trial judge are summarised at [2] to [4] above. The primary issue in the various proceedings instituted by the appellant was the validity of title of the respondent in relation to the subject property. To date the respondent enjoys the fruits of the title according to the doctrine of indefeasibility of title.


27. Not much can be said about the reason for the respondent instituting proceeding, WS No. 225 of 2013. It was a result of the appellant’s failed multiple proceedings over the same property dispute. It was said that there were six different proceedings and they were all determined in favour of the respondent, some were dismissed, discontinued or had interlocutory orders granted in favour of the appellant, set aside. The proceeding by the respondent was basically to claim damages for loss suffered as a result of the appellant’s actions/conduct in instituting and maintaining those multiple proceedings. His Honour characterised them as “unmeritorious claims” or “proceedings not demonstrating a proper cause of action, frivolous and vexatious and an abuse of process.”


28. His Honour also referred to the appellant’s defence. Firstly, res judicata and explained why the appellant relied on it as a defence. Secondly, issue estoppel and also explained why it was raised as a defence by the appellant. In summarising the defence of the appellant, he said “[t]hose basically were the grounds upon which a challenge to the integrity of the plaintiff’s proceedings, WS 291 (sic) of 2013, was dealt with.”


29. The appellant was unable to disprove the respondent’s indefeasible title and for that reason, each proceeding was either dismissed or discontinued or interlocutory order set aside. It would appear that this number of proceedings concerning the same property was quite overwhelming for the trial judge and led him to conclude that the appellant abused the process of the Court and it was open to the respondent to bring an action for damages against the appellant.


30. In relation to proof of damages, it was quite clear that his Honour accepted the evidence of the manager of the respondent whose evidence outlined the expenses, costs and losses suffered by the respondent. As to quantum, he also accepted the manager’s evidence. Except for rejecting the claim for general damages, on the evidence of loss of business earnings of K3,388,000.00 and other losses of K593,000.00, he awarded a total sum of K3,981,000.00.


31. In our view the trial judge’s summation of the entire case was quite comprehensive and as will be seen shortly, the appellant was not denied natural justice and disadvantaged in its preparation of this appeal. Turn to the grounds of appeal set out at [9.2] to [9.5] above and it will be noticed that they identify the key issues in this appeal. They tell us that the appellant seeks to challenge the trial judge’s findings in relation to firstly there being a cause of action arising from a proceeding or set of proceedings dismissed for being unmeritorious or frivolous, vexatious or an abuse of process and secondly, his assessment and award of damages for loss of business earnings, other losses and costs.


32. Based on the foregoing reasons, we come to the conclusion and agree with the respondent that his Honour gave reasons for his decision at the time of delivery of decision albeit not published. We are also satisfied that the reasons given were sufficient and enabled the appellant to prepare this appeal. We find no error of law has been committed by the trial judge and the ground of breach of natural justice is not established. For that, it will not be necessary for us to consider the second issue posed at [10.2] above. It only remains to say that the first ground of appeal is not established and will be dismissed.


FAILURE TO FIND THAT THERE WAS NO CAUSE OF ACTION


33. This ground of appeal formed the heart of this appeal and presented a more difficult question for us. Can a proceeding or set of proceedings, if dismissed, as being frivolous, vexatious or abuse of process form a cause of action known to law? We are not aware of any reported cases in PNG which decided this question and we acknowledge that each party has put forward a strong case on this issue to have the appeal either allowed or dismissed.


34. The English common law recognizes the tort of malicious prosecution of criminal proceedings. The one under consideration is malicious prosecution of civil proceedings found as being frivolous, vexatious or an abuse of process. As will be seen shortly, some judges and legal scholars refer to it as the tort of abuse of process or a collateral action. The English cases demonstrate that it is one form of tort. To succeed in an action it must be pleaded and proved that the initiation of prior proceedings by the defendant was done with malice and without reasonable and proper cause. In the New South Wales case of Hanrahan v. Ainsworth (1985) 1 NSWLR 370, it was held that malice can be inferred from the facts and it must be established that the predominant purpose for the initiation of the proceedings against the injured party was to accomplish an end ulterior to that which is the proper aim of the legal claim.


35. As to improper cause or purpose, the definition given by Lord Wilson of the Privy Council in Crawford Adjusters & Ors v. Sagicor General Insurance (Cayman) Ltd & Anor [2013] UKPC 17 at [63] of the judgment is simple and helpful:


“If the claimant’s intention is that the result of victory in the action will be the defendant’s downfall, then his purpose is not proper; for it is nothing other than to achieve victory in the action, with all such consequences as may flow from it. If, on the other hand, his intention is to secure the defendant’s downfall – or some other disadvantage to the defendant or advantage to himself – by use of the proceedings otherwise than for the purpose for which they are designed, then his purpose is improper.”


36. The arguments advanced on behalf of the appellant were based on non-recognition of the cause of action at law and public policy considerations. It was its submission that no action for damages can be founded on prior proceeding or set of proceedings that was dismissed as being frivolous, vexatious or an abuse of process. Such a cause of action would be contrary to public policy for there must be finality to litigation.


37. If this decision were allowed to stand, it would open up a new cause of action which may well result in a flood of litigation by successful litigants seeking to claim further damages not raised in prior proceedings. This is not in the interest of justice and is against public policy. If there was any entitlement to restitution for the respondent, it was costs awarded in those proceedings but restricted to party/party costs except for CIA No 170 of 2011.


38. We were also provided with a copy of each party’s written submission in the Court below at Tabs 11 and 12 of the Appeal Book. We do not wish to rehearse them. It will be sufficient for us to highlight the essential points. Firstly it was clear that the appellant maintained in the Court below the position that the tort of malicious prosecution is confined to failed criminal prosecution where the necessary elements of malice and without reasonable and proper cause of the defendant should be established.


39. Secondly, there was doubt if there was a cause of action for abuse of process. In Corbett v. Burge (1932) 48 TLR 626 the Court formed the view that if such an action existed, necessary elements of malice and ulterior motives of the defendant should be established. It must be a case where the Court must be certain that its process was utilized for an ulterior motive other than the true purpose designated for such processes.


40. We note what the Court stated at page 627 in relation to such an action:


“The question for the Court was whether a cause of action had been shown. No precedent had been produced for such an action.”


41. We further note the appellant’s submission that the Court doubted if there was a cause of action and at page 626 stated in its judgment:


“Held, that the cause of action in tort, if any, was the malicious issue of civil process against the plaintiff. There was no evidence of malice, and the supposed damages were irrecoverable.”


42. Thirdly, the High Court of Malaysia took the same position in the case of Gasing Heights SDN BHD v. Aloyah Abd Rahman & Ors [Civil Suit No: 22-187-91] - 2 August 1996 when determining the issue as to whether the plaintiff has a cause of action under tort of abuse of process. That was a case where the plaintiff claimed damages on the basis that the defendants filed a motion purposely to injure the plaintiff thereby abusing the process of the Court.


43. The respondent was diligent in its research and dug up English and Australian cases going back to the 19th and 20th centuries such as Grainger v. Hill [1838] EngR 365; (1838) 4 Bing NC 212; Goldsmith v. Sperrings Ltd [1977] 1 WLR 478; [1977] 2 All ER 566; Speed Seal Ltd v. Paddington [1985] 1 WLR 1327; QIW Retailers Limited v. Felview Pty Ltd [1989] 2 QdR 245; Hanrahan v. Ainsworth; Williams v. Spautz [1992] HCA 34; (1991-92) 174 CLR 509; Ballina Shire Council v. Ringland (1994) 33 NSWLR 680; Bhagat v. Global Custodians Ltd [2000] NSWSC 321 and Johnston v. Australian and New Zealand Banking Group Ltd [2001] NSWSC 238 to show that there is a common law action in tort of abuse of process which may be brought by a separate and subsequent proceeding. Such a right of action has been recognised in England since at least the decision in Grainger v. Hill.


44. The respondent submitted that the tort of malicious prosecution of civil proceedings or abuse of process may be unknown in PNG but we should not use it as a reason to find that this form of tort is not part of the PNG law. As the PNG Underlying law has adopted and applied the English common law liability in tort, it was urged upon us to find that it is not inapplicable or inappropriate to the circumstances of the country. On the contrary, we should find it entirely appropriate.


45. A read of the English cases has revealed that the tort of malicious prosecution of civil proceedings or abuse of process has been recognised as a tort and may arise from different sets of circumstances. For instance, Grainger v. Hill was a case involving a vessel which was mortgaged by the plaintiff owner to the defendants as security for a loan. The plaintiff was to repay it after 12 months. He retained the register in order to make voyages. Two months later the defendants became concerned about the adequacy of the security and sought to obtain the register from him by issuing a writ of capias for his arrest in support of a claim of assumpsit well before the expiry of the period of loan. In fear of being arrested by the sheriff’s officers, he handed over the register. Subsequently, he repaid the loan and the mortgage was discharged. He then sued the defendants for malicious issue of the civil proceedings on the grounds that the defendants’ proceedings were brought for an improper purpose in that, it was a means to coerce him to give up the register to which they had no right. The Court upheld his claim.


46. In another case, it may be brought up in a defamation (libel) action by way of a motion to stay or dismiss the proceeding as was done in Goldsmith v. Sperrings Ltd. That was a libel and injunction case against the producers, editors and distributors of a newspaper. Some of the defendant distributors applied to stay or dismiss the proceeding on the grounds that it was an abuse of process. They alleged that the plaintiff’s purpose in instituting and pursuing the proceedings against them was not to protect his reputation but for the collateral purpose of destroying the paper by cutting its retail outlets.


47. There are also cases where a party may seek to add it to its pleadings as a counter-claim. It was done to show that the action was brought in bad faith for ulterior motive, and was done to damage the defendant’s business and not to protect any legitimate interest of plaintiff as was done in Speed Seal Ltd v. Paddington.


48. It is also helpful to note that in Australia the Courts have not had much difficultly in accepting this form of tort. However, it would appear that the scope and remedies of the tort have not been clearly defined and posed a real challenge to the development of the tort in Australia. As to its scope, it is quite broad. It may arise in a winding up petition case. An example was the case of QIW Retailers Limited v. Felview Pty Ltd. The first defendant applied for a winding up order. The application was dismissed by the Supreme Court of Queensland. The plaintiff subsequently instituted proceeding against the first and second defendants, claiming damages, including exemplary damages, for malicious prosecution and for abuse of process. Macrossan J referred to Quartz Hill Consolidated Gold Mining Co v. Eyre [1883] UKLawRpKQB 126; (1883) 11 Q.B.D. 674 and observed that “.......it made it clear that the action [malicious prosecution of civil proceedings or abuse of process] can be available for the wrongful presentation of a petition under the Companies Act provided that the other necessary conditions are satisfied”. It was said that the reference to the necessary conditions were without reasonable and probable cause.


49. The decision of the High Court of Australia in Williams v. Spautz [1992] HCA 34; (1991-92) 174 CLR 509 was another example of a case where a claim of abuse of process was raised in a counter-claim to the proceedings. The facts are that, an appeal was made to the High Court against the orders of the Court of Appeal of New South Wales which set aside orders obtained by the appellants from Smart J in the Supreme Court staying the prosecutions instituted by the respondent against the first two appellants and another (now deceased) for criminal defamation and conspiracy. It was on the ground that the proceedings constituted an abuse of process of the Court. Regardless of whether the proceedings would succeed or not, the question the High Court had to consider was whether the institution of the prosecution proceedings and maintained by the respondent was for an improper purpose and constituted an abuse of process where a stay should be ordered. Another case of abuse of process alleged in a cross-claim is Ballina Shire Council v. Ringland: see also Ballina Shire Council v. Ringland (1999) NSWSC 110.


50. Other Australian cases attempted to identify the preconditions of the tort. In Johnston v. Australian and New Zealand Banking Group Ltd, Master Harrison referred to Hanrahan v. Ainsworth and observed that “an action the tort of abuse of process rests on the ability of the injured party to prove that the predominant purpose of the proceedings initiated against it were to accomplish an end ulterior to that which is the proper aim of the legal claim”. In Johnston v. Australian and New Zealand Banking Group Ltd, the pleadings on the tort of abuse of process were deficient and the plaintiff was given a further opportunity to re-plead them.


51. In some jurisdictions, Practice Directions for claims of abuse of process were issued. The New South Wales Supreme Court decision in Bhagat v. Global Custodians Ltd was another case of tort of abuse of process and one such example. It is pertinent to note at [20] of the judgment that Young J was referred by the plaintiff to the Supreme Court Practice [15.26.2A] which was headed “Abuse of Process-Action in Torts” which stated:


“Where proceedings are pursued for a collateral purpose so as to constitute an abuse of process, the circumstances may entitle the defendant both to a permanent stay and to a claim for damages.”


52. The type of remedy available for this tort is unsettled and evolving with time. Broadly speaking, it ranges from general damages for injured reputation, mental distress, loss of business earnings (economic loss) to special damages for extra legal costs or award of legal costs in the prior proceedings. In other cases, out-of-pocket expenses and charges may be ordered as special damages where strict proof is required. A helpful discussion on the types of remedies may be found in the leading judgment of Lord Wilson of the Privy Council in Crawford Adjusters & Ors v. Sagicor General Insurance (Cayman) Ltd & Anor at [44] and [78(i)]. In another case, an order to stay proceedings may be an appropriate remedy: Williams v. Spautz.


53. Turning to the appellant’s submissions, we are not satisfied that the High Court of Malaysia in Gasing Heights SDN BHD v. Aloyah Abd Rahman & Ors had any doubt if the tort of malicious prosecution did not extend to civil proceedings. On the contrary, the High Court did not rule out that possibility when it referred to Corbett v. Burge and stated: “at best this case must be put as a malicious prosecution of a civil process......‘Wherever a man complains before a Court of justice of false and malicious legal proceedings of another, his complaint, in order to give a good and substantiated cause of action, must show that the false and malicious legal proceedings have been accompanied by malice expressed or implied,’ and then specified the special damage that would support such an action. Here there was no evidence of malice or of such special damage as would support such an action”.


54. As to Corbett v. Burge, we are not satisfied that it ruled out this form of tort such that no cause of action can be grounded on malicious issue of civil process against the plaintiff. On the contrary, it was more a case of there being no evidence of malice to establish the claim and for this reason, the claim failed.


55. It was further suggested that the tort can be extended to disciplinary proceedings but it was held that it should only apply to criminal proceedings. That was the view expressed by the House of Lords in Gregory v. Portsmouth City Council [2000] 1 AC 219. Then in June 2013, the Privy Council reaffirmed that the tort of malicious prosecution should be available to civil proceedings. That was in Crawford Adjusters & Ors v. Sagicor General Insurance (Cayman) Ltd & Anor. The reason for this was that there was no other tort available to provide a remedy and redress for a party who was subjected to a harassing suit.


56. The Gregory v. Portsmouth City Council case can be distinguished because that was a case involving disciplinary proceedings as opposed to civil proceedings and the plaintiff initiated a further proceeding claiming that the disciplinary proceedings initiated by defendant was done with ulterior motive. This distinction is crucial because all the other mentioned cases support the respondent’s submission that the English common law recognised the tort of malicious prosecution in civil proceedings as an actionable tort.


57. Most of these cases including Crawford Adjusters & Ors v. Sagicor General Insurance (Cayman) Ltd canvassed in detail the floodgate and public policy argument advanced by the appellant and did not consider them as strong and compelling reasons to rule out this form of tort. The counter-argument is much stronger and compelling. It will deter vexatious and fictitious litigants or busy bodies from frequenting the Courts. It will put parties on notice that they also run the risk of being sued for issuing malicious proceedings.


58. The English and Australian cases established that to succeed in establishing the tort of malicious prosecution of civil prosecution or abuse of process, it must be pleaded and proved that the initiation of the prior proceedings was done with malice and without reasonable and proper cause. We are satisfied that the tort of malicious prosecution of civil proceedings or abuse of process is recognised in English and Australia as demonstrated by the above cited cases. These cases have considered the public policy argument on finality to ligation and the danger of what may be referred to as “satellite litigation” and found that they were outweighed by a much stronger counter-argument that a party who has been a victim of a legal system abused by another for an ulterior motive should not be left without a remedy. If this form of tort is actionable and formed part of PNG law, it will also deter vexatious and fictitious litigants from initiating baseless multiple proceedings.


59. The origins of this form of tort may be traced back to the 19th century in Grainger v. Hill. Its development evolved over the next two centuries as demonstrated by the English and Australian cases. According to Schedules 2.2 and 2.3 of the Constitution, the principles of common law and equity prior to PNG Independence formed part of the PNG Underlying law. Based on the foregoing reasons, we accept the respondent’s submission that just because this form of tort may be unknown to PNG did not mean that it should not be part of PNG law. On the contrary, we are satisfied that it is a sound principle of law and should form part of the PNG Underlying law pursuant to Schedules 2.2 and 2.3 of the Constitution.


60. We conclude that the finding by the trial judge that the respondent was entitled to institute proceedings, WS No. 225 of 2013 for tort of civil malicious prosecution to claim damages against the appellant was correct in law and no error of law is established. This ground of appeal is dismissed.


FAILURE TO PROPERLY CONSIDER AND APPLY THE PRINCIPLES OF ESTOPPEL, RES JUDICATA, JUDGMENT RECOVERED AND MERGING OF THE CAUSES OF ACTION IN THE JUDGMENT AS A BAR TO THE PROCEEDINGS


61. It was in anticipation of there being an actionable tort of civil malicious prosecution or abuse of process that the appellant relied on a further ground that the action was barred by operation of the doctrines of res judicata and issue estoppel. But first, the appellant submitted that the trial judge did not adequately address the defence of res judicata and issue estoppel in his decision because if he did, the claim would not have been allowed. However, we have found that his Honour had adequately addressed them in his oral judgment.


62. Turning to the key question we posed at [10.4] above, whether these doctrines operated as a bar to the action in the National Court, the appellant submitted that the respondent should have raised the issue of frivolity, vexatiousness and abuse of process in the prior proceedings. However, we accept the respondent’s submission that defence of res judicata and issue estoppel do not apply to this case. As to estoppel it was not something which either should or could have been raised in the previous proceedings.


63. The doctrine of res judicata has been recognised in the following Supreme Court cases: Titi Christian v. Rabbie Namaliu (1995) SC1583; Telikom PNG Ltd v. ICCC (2008) SC906; MVIL v. Kauna Kiangua (2005) SC1476; Peter O’Neil v. Nerrie Eliakim (No 1) (2016) SC1522 and Peter O’Neil v. Nerrie Eliakim (No 2) (2016) SC1539 where an action has been brought and judgment has been entered in that action, no other proceeding may be maintained on the same cause of action. It does not apply in this case because the previous proceedings were not for the same cause of action as the proceeding from which the appeal is brought.


64. This ground of appeal is misconceived and will be dismissed. Other than this, we did not receive any submissions on the defence of judgment recovered and merging of causes of action and will not comment on them.


65. If the action was not barred by res judicata or issue estoppel, did the Court hold in the prior proceedings that they were frivolous, vexatious or an abuse of process? The appellant submitted that there was no evidence to establish that the prior proceedings were frivolous, vexatious or an abuse of process and for this reason the trial judge erred. We understood the respondent’s position as being opposite to that of the appellant, in that, the Court expressly stated that the prior proceedings were frivolous, vexatious and abuse of process.


66. The minutes of the order in the Appeal Book are not expressed in those terms nor are there transcripts of the National Court proceedings in WS No. 622 of 2011, CIA No. 170 of 2011 and WS No. 1090 of 2011 and Supreme Court appeal proceedings in SCA No. 96 of 2011 and SCA No. 73 of 2012 to support the respondent’s assertion and it is difficult for us to say if those were the reasons why those proceedings were dismissed. And it may be that a large number of proceedings concerning the same property may be sufficient to infer that the appellant acted without reasonable and proper cause and abused the process of the Court.


67. However, each of the proceedings must be considered in its context and it will be observed that in the beginning, the appellant occupied the property over a long period of time and was in discussion with the previous proprietor KIK to purchase it. The sale fell through and the respondent ended up purchasing it. The property was registered in the respondent’s name. As a party who initially expressed an interest in purchasing the property, it was within its right to challenge the decision of KIK to sell the property to the respondent. It did that on 20th June 2011 when it initiated the first proceeding, WS No. 622 of 2011 against KIK and the Registrar of Titles.


68. It may be that on 11th August 2011 the National Court presided by Hartshorn J dismissed the proceeding on the ground that the appellant failed to plead the necessary particulars of fraud but the dismissal does not mean that the appellant acted with malice. It is also the law that a losing party has a right to appeal a decision of the National Court to the Supreme Court: Sections 4 and 14 of the Supreme Court Act.


69. In the exercise of its right to appeal, on 18th August 2011 the appellant appealed the decision of the National Court to the Supreme Court in SCA No. 96 of 2011. On 23rd August 2011 it exercised its right under Section 19 of the Supreme Court Act by applying for and was granted an order to stay the District Court proceedings CL No. 59 of 2011 between Pristine Co No 101 Ltd and it. This proceeding was initiated by the respondent to have the appellant ejected from the property and was resisted.


70. On 15th September 2011 the Supreme Court refused the application for stay. It also discharged an interim injunction staying the District Court proceedings CL No. 59 of 2011. There was a reason for these orders. A registered proprietor holds an indefeasible title. The title can only be voided if fraud or any one of the grounds set out in Section 33(1) of the Land Registration Act is established. This was the reason the Chief Justice sitting as a single judge of the Supreme Court gave when he found that the appellant failed to establish fraud or any of the grounds under Section 33(1) (above). Other than this, there was no evidence to establish that the availing of the statutory remedies by the appellant under the Supreme Court Act was to sabotage or curtail the interest of the respondent, economically or otherwise.


71. On 23rd September 2011 the appellant filed another proceeding in the National Court. It was WS No. 1090 of 2011 against KIK & Pristine Co No. 101 Ltd and Henry Wasa. The requirement to plead particulars of fraud was not optional but mandatory under Order 8, rule 32 of the National Court Rules. The first proceeding, WS No. 622 of 2011 was dismissed for failing to satisfy this legal requirement. However, the question of proof of fraud perpetrated on the title remained unresolved. Given this, it was open to the appellant to revisit this question in the form of fresh proceedings in WS No. 1090 of 2011 (“second proceeding”). In our view, it acted in good faith. On 11th April 2012 Kariko J dismissed those proceedings with costs. It did not matter if the first proceeding was dismissed because the result did not operate as a bar to the second proceeding. Similarly, the dismissal of the second proceeding did not establish that the appellant acted with malice: see Speed Seal Ltd v. Paddington and Williams v. Spautz.


72. Meanwhile, on 17th November 2011 the District Court in CL No. 59 of 2011 ordered the appellant to give vacant possession of the property within 14 days to the respondent. Similar to a right of appeal to the Supreme Court, the law grants to an aggrieved party, a right to appeal a decision of the District Court to the National Court: Section 219 of the District Courts Act. In the exercise of this right, the appellant appealed the decision (ejectment order) to the National Court in CIA No. 170 of 2011 on 16th December 2011. To preserve its interest pending the appeal, on the same date, the appellant obtained an ex parte order to stay the ejectment order. Six months later, on 14th June 2012 Davani J set aside the ex parte order for stay and dismissed the appeal for failing to comply with the appeal procedure of the District Court.


73. In the exercise of its right to appeal, on 27th June 2012 the appellant filed an appeal against the order of Davani J in SCA No. 73 of 2012: Again, that right is guaranteed by statute law under Sections 4 and 14 of the Supreme Court Act. The appeal was lodged primarily against the failure by Davani J to find that the question of the appellant’s entitlement to the property was arguable and pending determination. On 29th August 2012 the Supreme Court dismissed the appeal. Similar to any order for dismissal, the dismissal did not necessarily mean that the appellant acted with malice and without reasonable and proper cause when he appealed against the National Court decision: Speed Seal Ltd v. Paddington and Williams v. Spautz. Even the discontinuance of SCA No. 96 of 2011 after the respondent instituted the proceeding, WS No. 225 of 2013 was not enough to prove malice.


74. Finally, the Manager of the respondent Mr. Kurubalan M. Rengaraju did not depose in his affidavit that a staff of the appellant expressed a desire to destroy or damage the business of the respondent by initiating these multiple proceedings as was the case in Goldsmith v. Sperrings Ltd. What appeared to cause the respondent to make this assertion was that, there was no binding agreement in a form of a contract of sale between the appellant and the respondent for the sale of the property to the appellant and the appellant’s 10 percent cheque for the proposed purchase price was refunded to it. Weigh these two basic propositions against the undisputed long occupation of the property by the appellant where it operated copra and coconut products trading business and it will explain why the appellant initiated the multiple proceedings and resisted one.


75. At the highest the appellant had an equitable interest in the property unless it was able to prove fraud or any one of the grounds set out in Section 33(1) above. Two of the proceedings it initiated in the National Court were dismissed because of defects found in the pleadings where fraud was alleged. The dismissals can be attributed to carelessness and poor draftsman-ship by the lawyers rather than the appellant being motivated by malice and acted without reasonable and proper cause. For, there must be intent or manifestation of that intention by the appellant to use the court process to destroy or damage the business and reputation of the respondent. As Lady Hale of the Privy Council in Crawford Adjusters & Ors v. Sagicor General Insurance (Cayman) Ltd observed at [88] of the judgment, “It is one thing to say that the [appellant] should not be liable for carelessness and quite another to say that [it] should be liable for malice”.


76. We conclude that the evidence did not support the finding by the trial judge that the initiation of prior proceedings was done with malice and without reasonable and proper cause such that the appellant should be liable for damages. We are satisfied that the appellant has succeeded in establishing an error in the exercise of discretion by the trial judge and this ground of appeal will be upheld.


AWARD OF DAMAGES FOR LOSS OF BUSINESS EARNINGS


77. By this ground of appeal the appellant sought to quash the trial judge’s assessment and award of damages. Parties made submissions on this ground but in the light of our finding on liability, it is not necessary to consider it. The award will be set aside as a matter of course.


AWARD OF LEGAL COSTS OF PRIOR PROCEEDINGS AS SPECIAL DAMAGES


78. It is not necessary to consider this ground of appeal for the reasons stated at [77] above.


CONCLUSION


79. We have dismissed three of the grounds of appeal, upheld one and the other two were not necessary to consider. The dismissal of one of the grounds was crucial to the survival of the action in the National Court. We have found that the trial judge made no error when he found that the respondent was entitled to sue the appellant for civil malicious prosecution. However, the evidence fell short of establishing liability. It follows that except for the finding on the cause of action, the findings on liability and quantum will be disturbed. In the end, the appeal will be allowed in part and the decision and orders of the National Court will, accordingly, be set aside. As both parties succeeded in prosecuting and defending the grounds of appeal, we will order that each party bear its own costs of the appeal and the National Court proceeding, WS No. 225 of 2013.


ORDER


80. The orders are:


  1. The appeal is allowed in part.
  2. The decision and orders of the National Court of 26th May 2017 are set aside.
  3. The entry of judgment on liability is quashed.
  4. The award of damages in the total sum of K3,981,000.00 is quashed.
  5. Each party shall bear its own costs of the appeal and the National Court proceeding, WS No. 225 of 2013.

________________________________________________________________
O’Briens Lawyers: Lawyers for Appellant
Mirupasi Lawyers: Lawyers for Respondent


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