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Supreme Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]
SCA NO. 21 OF 2019
BETWEEN
GEORGE KAKAS & 63 OTHERS
Appellants
AND
NATIONAL HOUSING CORPORATION
First Respondent
AND
MATHEW MINAPE
Second Respondent
AND
MONEY TALKS LIMITED
Third Respondent
Waigani: Salika CJ, Makail & Berrigan JJ
2020: 24th August & 15th September
SUPREME COURT – Appeal against refusal to set aside summary dismissal order – Dismissal of proceedings – Summary determination – Inordinate delay – Explanation for delay – Unsatisfactory – Explanation for allowing order to dismiss proceeding to be entered – Unsatisfactory explanation – Interests of justice – Fraud alleged against registered proprietor – Property occupied by long-time tenants – Public housing purpose – Fraud allegation appropriate for trial – Land Registration Act – Section 33(1)
SUPREME COURT – Practice & Procedure – Appeal against refusal to set aside summary dismissal order – Jurisdiction of National Court to set aside ex parte summary dismissal order – National Court Rules – Order 12, rule 8
Facts
This is an appeal against a discretionary judgment of the National Court given on 14th February 2019 whereby the primary judge refused to set aside a summary dismissal order made on 28th April 2018. The summary dismissal order was made ex parte after the proceedings in the National Court was outstanding for some time and the Registrar of the Court published a notice in the print media for summary determination along with other matters in addition to the appellants’ failure and/or non-appearance at the summary determination hearing on the relevant date. The second and third respondents raised but did not press at the hearing whether the appellant correctly invoked the Court’s jurisdiction by appealing the refusal order and not the summary dismissal order. As to the merits the appellants argued, inter alia, that the primary judge failed to find that they alleged that the respondents had procured the title of the property by fraud and it warranted a trial. Secondly, that as long-time tenants of the property, the appellants should have been given prior notice of the sale of property to the third respondent by the first respondent.
Held:
Cases Cited:
Christopher Smith v. Ruma Constructions Ltd (2002) SC695
George Kakas & Ors v. National Housing Corporation & Ors (2015) SC1611
National Superannuation Fund Ltd v. Yawenaik Holdings Ltd (2018) SC1709
Wawoi Guavi Timber Company Limited & Ors v. John Molu (2016) SC1514
Thomas Rangip v. Peter Loko (2009) N3714
Roselyn Inugu & Ors v. Hon Richard Maru & Ors (2019) SC1873
Rea Joseph v. Manau Sereva (2011) SC1152
Punangi v. Pacific Plantations Timber Ltd (2011) SC1153
Thomas Barry v. Joel Luma (2017) SC1639
Counsel:
Mr. D. Dotaona, for Appellants
No appearance, for First Respondent
Mr. D. Levy, for Second & Third Respondents
JUDGMENT
15th September, 2020
1. BY THE COURT: This is an appeal against a discretionary judgment of the National Court given on 14th February 2019 whereby the primary judge refused to set aside a summary dismissal order made on 28th April 2018.
2. The summary dismissal order was made ex parte after the proceedings in the National Court was outstanding for some time and the Registrar of the Court, amongst other, published a notice in the print media for summary determination along with other matters in addition to the appellants’ failure and/or non appearance at the summary determination hearing on the relevant date.
Exercise of Discretion
3. The discretion conferred on the primary judge under Order 12, rule 8 of the National Court Rules is exercised based on three basic principles, they being:
4. These principles have been applied in many past cases including but not limited to Christopher Smith v. Ruma Constructions Ltd (2002) SC695; George Kakas & Ors v. National Housing Corporation & Ors (2015) SC1611; National Superannuation Fund Ltd v. Yawenaik Holdings Ltd (2018) SC1709; Wawoi Guavi Timber Company Limited & Ors v. John Molu (2016) SC1514; Roselyn Inugu & Ors v. Hon Richard Maru & Ors (2019) SC1873 and Thomas Rangip v. Peter Loko (2009) N3714.
5. In recent times, the Court has taken into account the overriding principle of interests of justice.
Brief Facts
6. The appellants are tenants of a property allocated for public housing purpose at Section 97 Allotment 30, Hohola. It is also popularly known as the Gordons Flats and located opposite the Gordons Police Barracks in the city of Port Moresby. It is alleged by the respondents that pursuant to a Board meeting of the first respondent, the property was sold to the third respondent. On 5th March 2008 the appellants filed court proceedings in the National Court to challenge the validity of the sale of the property to the third respondent.
7. By an amended statement of claim filed 30th June 2008 the appellants alleged the respondents conspired to fraudulently procure the title of the property and sought, amongst others, an order to quash the title of the third respondent.
8. It so happened that the appellants did not diligently prosecute the proceedings and on 19th July 2009 the National Court dismissed it for want of prosecution. An application to set aside the dismissal order by the appellants was refused by the National Court. This led to an appeal being filed in the Supreme Court on 3rd December 2010 against the refusal of the application to set aside the dismissal order.
9. It was not until 3rd July 2015 that the Supreme Court upheld the appeal, quashed the decision of the National Court, and ordered that the matter be reinstated and remitted to the National Court for hearing.
10. For the second time, the National Court summarily dismissed the proceedings on 28th April 2018 which led to the appellants applying to set aside the summary dismissal order. It was refused and they appealed that decision to the Supreme Court. It is the one now under consideration.
Preliminary Issue - Jurisdiction
11. A preliminary issue was raised by the second and third respondents in their written submission but not pressed at the hearing. It is in relation to whether the appellants have correctly invoked the Court’s jurisdiction by appealing the refusal order and not the summary dismissal order.
12. We note that the second and third respondents submitted that there are conflicting lines of authority on this issue: one for the proposition that the National Court has jurisdiction to set aside its own ex parte dismissal order for want of prosecution under Order 8, rule 32 of the National Court Rules. The cases of Christopher Smith v. Ruma Constructions Ltd (supra); Wawoi Guavi Timber Company Limited & Ors v. John Molu (supra) and National Superannuation Fund Ltd v. Yawenaik Holdings Ltd (supra) stand for this proposition.
13. In Roselyn Inugu & Ors (supra) the Supreme Court appeared to accept that it is no longer an issue that the National Court has jurisdiction under Order 12, rule 32 of the National Court Rules to set aside an ex parte dismissal order.
14. The other is that, the appropriate course to take to set aside an ex parte dismissal order is to appeal it to the Supreme Court. The cases of Rea Joseph v. Manau Sereva (2011) SC1152 and Punangi v. Pacific Plantations Timber Ltd (2011) SC1153 and Barry v. Luma (2017) SC1639 support this view.
15. Where there are conflicting lines of authority on the application of a substantive or procedural law, it is advisable and appropriate to leave the issue to the Supreme Court constituted by a greater number of judges to determine on another occasion. For this reason, we will determine the appeal on the premise that it is correctly before us.
16. In any event, we note that the primary judge noted at [8] of the written judgment that “It is agreed that this court has jurisdiction to set aside the ex parte orders”. If it was agreed between the parties that the National Court has jurisdiction to set aside its own ex parte order it will not be necessary for us to consider it. It will be accepted that the appeal is properly before us for determination.
Delay
17. There is no issue that the application to set aside the summary dismissal order was made promptly. For this reason, it does not require our consideration.
18. The contentious issues are: first, the reasons for allowing the summary dismissal order to be entered in the absence of the appellants, secondly, a reasonable explanation for the proceedings not being prosecuted with diligence and thirdly, whether the interests of justice requires that the summary dismissal should be set aside and the appellants be allowed to prosecute their claim based on fraud.
Reasons for the order to be allowed to be entered in the absence of the appellants
19. The appellants contended that their failure to attend the summary determination hearing was occasioned by the failure of the Registrar of the Court to give a notice of the summary determination hearing on:
(a) their former lawyers, Stevens Lawyers,
(b) the lead appellant Mr George Kakas, and
(c) them as tenants.
20. They submitted that a notice letter is a requirement under Order 10, rule 9A(15)(3) of the National Court Rules and the primary judge erred when he failed to find that Registrar failed to comply with it. Further, the failure constituted a denial of natural justice under Section 59 of the Constitution.
Procedure for Summary Determination
21. In Roselyn Inugu & Ors v. Hon Richard Maru & Ors (supra) the Supreme Court at [14] of its judgment noted that the primary judge identified the procedure that the Registrar must follow in referring a matter for summary determination under Order 16, rule 13(13)(2)(c) of the National Court Rules. It may be summarised as follows:
22. We consider that while the above summary determination procedure applies to judicial review proceedings under Order 16 of the National Court Rules, the same procedure may be adopted in civil proceedings coming under Order 10, rule 9A(15)(3) of the National Court Rules.
23. In this case, the appellants’ contention concerns the giving of notice letter and publication of notice in the print media as identified in bullet points one to six of the summary determination procedure above. The appellants do not say that they received the notice letter dated 14th March (April) 2018 but say that they did not respond to it and as a result, the Registrar did not receive a written or verbal response from them and placed it in the court file for the judge to consider at the summary determination hearing. In addition, they did not attend the hearing to oppose the matter from being summarily dismissed.
24. Finally, the second and third respondents’ lawyers Manase & Co Lawyers wrongly appeared and supported the summary dismissal of the matter even though Mawa Lawyers were the lawyers on record for them.
Notice to Stevens Lawyers
25. There is no dispute that Dotaona Lawyers were the original lawyers for the appellants who commenced the National Court proceeding in April 2008. Along the way Stevens Lawyers were retained by the appellants and remained as their lawyers until the proceedings was summarily dismissed on 28th April 2018.
26. This is further confirmed by Stevens Lawyers not filing a notice of ceasing to act to notify the Registrar that they had ceased to act for the appellants and no longer were they the lawyers for the appellants. We also refer to paragraph 12 of the affidavit of the appellants’ lawyer Mr Harry where he stated “I admit that I had not filed a Notice of Change of Lawyers prior to the hearing.......” As a matter of procedural law, Stevens Lawyers were the lawyers on record for the appellants at the relevant time.
27. The appellants’ assertion that they were not served the notice letter must fail for the further reason that the uncontroverted evidence by Mr Harry at paragraph 48 of his supplementary affidavit filed 12th June 2018 is that, he was busy managing the change at the firm to ensure that they were able to commence operation in 2018 under a new firm and the real work continued in April 2018. If that is the case, then it explains why the notice letter that was addressed to Stevens Lawyers did not reach him. The primary judge was correct to hold that the Registrar forwarded a notice letter to Stevens Lawyers. The letter informed them that he was referring the matter for summary determination. No error has been established in relation to this ground and it is dismissed.
28. Further, as to whether a wrong law firm was given notice as lawyers for the second and third respondents, appeared and supported the summary dismissal of the matter, it is a side issue and does not alter the fact that the notice letter was given by the Registrar to the appellants’ former lawyers who were the lawyers on record. Neither were they denied natural justice under Section 59 of the Constitution. We are not satisfied that the primary judge erred and dismiss this ground.
Notice to Mr Harry and Lead Appellant-Mr Kakas
29. As to the option to publish the notice letter in the print media (newspapers), counsel for the appellants contended that the primary judge erred in failing to hold that it was not given when there was un-contradicted evidence from the appellants’ former counsel Mr Paul Harry and the lead appellant Mr George Kakas that they did not read nor were they aware of the hearing notice for the summary determination of the matter published in the newspapers.
30. With respect, this contention goes beyond the obligation imposed on the Registrar by Order 10, rule 9A(15)(3) of the National Court Rules. It shifts the blame to the Registrar and is an attempt to impose an additional obligation on the Registrar to satisfy himself if Mr Harry and Mr Kakas had read or were aware of the notice letter published in the newspapers before referring the matter to the Court for summary determination hearing. That is not the expressed intention of the Rules.
31. All the Registrar is required to do is to have the notice letter published in the newspapers and that is what he did in this case. Finally, the lawyer and lead appellant’s failure to read the notice in the newspapers does not constitute a denial of natural justice under Section 59 of the Constitution. We are not satisfied that the primary judge erred and dismiss this ground.
Notice to Tenants
32. As to the contention that the primary judge erred in not holding that the Registrar failed to serve notice letter directly on them as tenants at the Gordons Flats, again, it would be reading too much into the Court Rules and asking too much from the Registrar. As we have pointed out above, the duty imposed on the Registrar is to have the notice letter sent to the appellants’ lawyers or published in the newspapers and he did. No error has been established in relation to this ground and it is dismissed.
Reasonable explanation for the proceedings not being prosecuted with due diligence
33. The next contentious issue is whether the appellants are able to demonstrate that they provided a reasonable explanation for their failure to prosecute the matter with due diligence. Their counsel contended that they did but the primary judge was wrong to reject it.
34. Based on the information contained in the appeal book, we note that the delay in the prosecution of this case can be attributed
to a combination of factors. But it would be wrong to start with the date when the proceedings was commenced to determine the question
of delay. The period of delay should be computed from the date of the Supreme Court decision which reinstated the proceedings and
remitted it for hearing in the National Court. This was on 3rd July 2015. From this date to the date of its dismissal of 28th April 2018 is about
two years and nine months. This is the period of delay.
Requests and Attendance at Directions Hearing
35. There is uncontroverted evidence by affidavits of the appellants’ lawyers Mr Harry and the lead appellant Mr Kakas that between 5th July 2015 and 11th August 2016 there were four letters sent by the appellants former lawyers to the Registrar to list the matter for directions hearing. This was on 19th July, 21st, 31st August 2015 and 10th April 2016. After the requests were eventually attended to and the matter was listed for directions hearing, there were two court appearances by the appellants’ former lawyers on 2nd and 11th August 2016. On 11th August 2016 the matter was further adjourned to 21st October 2016. These follow-ups and court attendances show that the appellants had taken steps to prosecute the matter.
Missing Court File
36. However, after 11th August 2016, the Court file went missing and a supplementary court file was created some time towards the end of 2016. This explains why the appellants did not progress the matter until 2017.
Attendance at Directions Hearing
37. On 17th March 2017, Mr Harry attended the directions hearing but the respondents’ lawyers did not and the matter was adjourned to 3rd April 2017 for pre-trial conference. Again, on 3rd April 2017 Mr Harry appeared and this time, Mr Paul Mawa of Mawa Lawyers appeared for the second and third respondents and by consent, the matter was adjourned to 11th April 2017 for directions hearings. On that date, Mr Harry did not attend and it is not certain if Mr Mawa attended. However the record of court file endorsement shows another lawyer had appeared for the second and third respondents and one of the appellants had appeared and the matter was further adjourned to 2nd May 2017.
38. The preliminary hearing on 11th April 2017 appeared to be the last activity in Court as there are no further records of preliminary hearings until 28th April 2018 when the matter was summarily dismissed.
Absence of Appellants’ former lawyer
39. From April 2017 to August 2017 the uncontroverted evidence is that Mr Harry contested in the 2017 General election and was away from the office and did not attend to the matter. One of his colleagues had resigned to set up his own legal practice and the other was very ill and not in a position to take charge of the matter.
40. Mr Harry did not advise the appellants to engage another law firm to act for them and prepare for trial. He failed in his duty to advise them of this option and it contributed to the delay. By the time he returned to practice in September 2017, the firm was virtually non-existent and he had to organise a new legal practice in the name of Harry Lawyers. Also, he had to re-establish contact with clients including the appellants.
41. By then the matter was referred by the Registrar for summary determination and dismissed. He found out about its dismissal when he filed a notice of change of lawyers on 30th April 2018 some two days later. The appellants through Mr Kakas as lead appellant did not follow-up with Mr Harry on the progress of the matter but assumed that Mr Harry was attending to the matter at all material times.
42. In the end, it came down to a delay of one year because from April 2017 to 28th April 2018, there was no activity due to Mr Harry’s absence and on his return, was busy organising the set up of his new legal practice. In a case where Mr Harry was going for elections and not going to be available for the appellants, it was his duty to advise the appellants to retain another lawyer to act for them. If he did not, it does not assist the appellants to explain why they did not prosecute the matter with due diligence.
43. In addition, for Mr Harry to focus solely on establishing his new legal practice without giving a single attention to the matter is unacceptable and conduct bordering on professional negligence which the primary judge rightly pointed out. It is not a reasonable explanation for the appellants’ default. We uphold the primary judge’s finding that the delay of twelve months was inordinate and inexcusable. We find no error in this finding and dismiss this ground.
Interests of Justice
44. The long delay is one aspect of the case. Conversely, the denial of the second and third respondents of the quiet enjoyment and use of the property is another aspect to consider. But the discretion conferred on the primary judge includes a consideration of the overall interests of justice, that is, whether it is in the interests of justice that the dismissal order should be set aside. In this regard, we note that the primary judge referred to the overall interests of justice at [28] of the judgment where he noted that “Counsel also urged the court to exercise its discretion in favour of the application in the interest of justice”.
45. It was pointed out by counsel for the appellants that the appellants’ claim was based on serious allegations of fraud and procedural irregularity and supported by the evidence of the former Managing Director of the first respondent, Mr Tarcissius Muganawa. Despite this, the primary judge rejected it.
46. The appellants submitted that the primary judge erred in fact and law when he failed to find that, they had demonstrated that they relied on a claim that the third respondent’s title was procured by fraud pursuant to Section 33(1) of the Land Registration Act, and the summary dismissal order be set aside and they be allowed to progress the claim to trial.
47. Their counsel referred us to the affidavit of Mr Muganawa filed 16th June 2009 who deposed that amongst others, the Board decision which approved the sale of the property did not have a valuation report on the estimated value of the property and did not comply with standard sale procedure for disposal of NHC properties prior to the Board decision. These irregularities amounted to serious breaches and go to show that the Board decision was flawed and tainted with fraud. As they have alleged fraud, it raised a triable issue and the primary judge should have granted their application and allowed it to be tried.
48. Instead the primary judge relied on the defence filed by the first respondent which denied the allegation of fraud and held that the affidavit of Mr Muganawa contradicted the defence of the first respondent and rejected it.
49. We consider that an allegation of fraud is a serious matter and as long as it has been pleaded as a cause of action to support a relief that the title of the third respondent be quashed or set aside, it is sufficient to allow it to be tried. The question of whether it will be proved is not one for the primary judge to decide at that stage of the proceedings.
50. In this case, we note that the primary judge addressed the allegation of fraud in this way:
“28. .........................Counsel argued that his clients’ claims contain serious allegations of fraud and procedural irregularity that should be tried, and the claims are supported by an affidavit filed 16th June, 2009 by Tarcissius Muganawa the then Caretaker Managing Director of NHC. The deponent states that the property was fraudulently sold and the NHC has since decided to rescind its decision to sell the property. However, that statement is contradicted by the Defence filed by the NHC on 22nd May, 2008 in which NHC denies any impropriety in the sale/transfer. The particulars of conspiracy and fraud alleged by the plaintiffs are categorically denied in the Defence. The NHC pleads that the sale was executed properly and pursuant of a decision of the NHC Board. Interestingly, the NHC has not taken any legal action to have these transactions nullified. It is safe to assume from this fact that the NHC has no issues with the sale/transfer of the Property to Money Talks Limited.
51. It is clear that the primary judge formed a view that the matters deposed in the affidavit of Mr Muganawa in relation to the property being fraudulently sold and rescinded by a subsequent Board decision contradicted the defence filed by the first respondent. By that defence, the first respondent denied any impropriety. The primary judge concluded that there was no issue with the sale/transfer of the property to the third respondent.
52. As we have pointed out earlier at [49] supra, the appellants relied on an allegation of fraud to prove that the third respondent’s title is illegal. Where the first respondent has filed a defence and denied the allegation of fraud or any impropriety, it is sufficient to refer the allegation to a full trial. Similarly, the veracity of the evidence of Mr Muganawa will be determined only after a trial.
53. Additionally, unless they choose otherwise, parties will call witnesses to testify for and against the allegation of fraud. Finally, whether the first respondent had taken legal action to have these transactions in relation to the sale and transfer of title to the third respondent nullified will form part of the issues for determination at trial.
54. By rejecting the appellant’s submissions on the allegation of fraud to challenge the validity of the third respondent’s title, refused to set aside the summary dismissal order and allowed the allegation to proceed to trial, this is where the primary judge fell into error.
55. The final point on the interests of justice is in relation to [30] of the judgment of the primary judge. The primary judge referred to “There are two other points of interest that I note in considering “the interest of justice”. First is that as sitting tenants of the first respondents, the appellants were not given the opportunity to purchase the property. The primary judge went on to find that the appellants failed to plead or present evidence that they were in a position to purchase the property.
56. Secondly, the lead appellant Mr Kakas was Provincial Police Commander and based in Wabag, Enga Province and not physically present to check on the lawyers on the progress of the matter. The primary judge went on to observe that this raised an issue as to whether he is a lawful tenant of the Gordons Flats and has standing to continue these proceedings.
57. We agree with the primary judge in his identification of the two additional issues which were relevant to the question of interests of justice. However, we find that the primary judge erred when he rejected them. The question of whether as sitting tenants, the appellants were not given notice of the proposed sale prior to the sale and opportunity to exercise the option to purchase the units was pleaded and comes to the forefront of the dispute as an additional issue for consideration at trial. In other words, the appellants alleged that they were not given the first right of refusal. We are able to identify this allegation/issue at paragraph 27(a) to (f) of the amended statement of claim filed 30th June 2008.
58. As to proof, the allegation to be proved by the appellants is not in relation to them being in a position, willing and ready to purchase the Gordons Flats as stated by the primary judge at [30] of the judgment but that the first respondent failed to give notice of the proposed sale and gave them the option to purchase the units. This is the first right of refusal the first respondent is obliged to give to the appellants as sitting tenants.
59. The first right of refusal is significant because it must be borne in mind that the subject property is not a private property. It was allocated for public housing purposes and there are 64 tenants living on it as indicated in the schedule to the amended statement of claim. Mr Muganawa deposed in his affidavit (supra) that the property was sold for K400.000.00. This evidence is enough to show that 64 tenants with their families stand the risk of being without accommodation due to a decision made by the first respondent Board without due consideration to the tenants’ welfare and wellbeing. This must be balanced with the interest of the in-coming owner who must have access and quiet enjoyment of the property.
60. As to the question of whether the lead appellant Mr Kakas is a legal tenant as he lives and works in Wabag as the Provincial Police Commander of Enga Province, we are of the view that this question will form part of the issues for determination at trial because evidence must be led to counter Mr Kakas’ entitlement to one of the units of the property. Thus, it is not open to the primary judge to determine this issue when he was only required to determine if the appellants had a meritorious claim against the respondents and in the interests of justice, they should be allowed to litigate it.
Conclusion
61. In the end, when we consider the delay of twelve months occasioned largely by the appellants’ lawyers tardiness which is inexcusable, the second and third respondent’s right to quiet enjoyment of the property and the serious allegation of fraud against the respondents, it is in the interests of justice that an order to set aside the summary dismissal order would have been the appropriate order to make in the circumstances.
62. Pursuant to our powers under Section 16 of the Supreme Court Act, we allow the appeal, quash the decision of the National Court which refused to set aside the summary dismissal order and substitute it with an order to set aside the summary dismissal order, reinstate the proceedings and remit it for hearing.
Order
63. The orders are:
________________________________________________________________
Dotaona Lawyers : Lawyers for Appellants
In-house counsel : Lawyers for First Respondent
Manase & Co Lawyers : Lawyers for Second & Third Respondents
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