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Supreme Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]
SCA. NO. 69 OF 2021
BETWEEN
RITA KUNDALIN
Appellant
AND
PENI IPO
Respondent
AND
SCA. NO. 137 OF 2021
BETWEEN
GEORGE LAU Trading as NIUAGE LAWYERS
First Appellant
AND
RITA KUNDALIN
Second Appellant
AND
PENI IPO
Respondent
Waigani: Hartshorn, Makail & Kangwia JJ
2023: 29th March and 24th April
SUPREME COURT APPEAL – Appeal from dismissal of proceeding – Finding of lack of standing – Property dispute – Deceased property – Deceased dying interstate – No administrator of estate appointed – Grant of letters of administration necessary to confer standing – Lack of certificate by District Officer to distribute estate according to custom – Wills, Probate and Administration Act – Sections 35D, 35E & 44
SUPREME COURT APPEAL – Apprehended bias – Denial of fair hearing – Judicial intervention – Extent and frequency of judicial intervention
SUPREME COURT APPEAL – Appeal from award of costs on solicitor/client basis against lawyers – Finding of improper conduct by lawyers – Costs unnecessarily incurred – Proceeding in National Court was bound to fail – National Court Rules – Order 22, rule 35
Cases Cited:
Papua New Guinea Cases
Thomas Conlife as Executor of the Estate of Albert Conlife & Jura Investment Limited & Ors (2021) SC2069
Public Curator v. Bank of South Pacific Limited (2006) SC832
Don Polye v. Jimson Sauk [2000] PNGLR 168
PNG Waterboard v. Gabriel Kama (2005) SC821
Island Helicopter Services Limited v. Wilson Sagati & Ors (2008) N3340
Hasifangu v. Mark Mauludu (2022) SC2256
Overseas Cases
Ridehaghl v. Horsefield [1994] 3 All ER 848
Galea v. Galea [1990] 19 NSWLR 267
Vakauta v. Kelly (1989)167 CLR 568
Re Keely; Ex parte Ansett Transport Industries (Operations) Pty Ltd [1990] HCA 27; (1990) 64 ALJR 495
Barbosa v. Di Meglio [1999] NSWCA 307
Counsel:
Mr. A. Benny, for Appellants
Ms. J. Nandape, for Respondent
JUDGMENT
24th April, 2023
1. BY THE COURT: There are two appeals for determination. These are:
(a) SCA No 69 of 2021 which is an appeal against the decision of the National Court of 24th June 2021 where the National Court dismissed the proceeding on the ground that the appellant (Rita Kundalin) lacked standing, and
(b) SCA No 137 of 2021 which is an appeal against the decision of the National Court of 15th September 2021 where the first appellant (George Lau trading as Niuage Lawyers) was ordered to pay costs of the proceeding on a solicitor-client basis.
Brief Facts
2. The brief uncontested facts are:
Grounds of Appeal
3. There are multiple grounds of appeal in SCA No 69 of 2021 but the appeal turns on the threshold issue of whether Rita has the requisite standing to institute a proceeding in the National Court to claim title over a deceased’s property who has died interstate. The issues identified in the other grounds of appeal are secondary to this threshold issue.
4. According to learned counsel for Rita, as Rita has been residing on the property prior to and after the death of Eric Kundalin, she acquired an equitable interest in the property. This has conferred on her the requisite standing to institute the proceeding in the National Court.
5. Learned counsel refers to a copy of the written submissions which he relied on in the National Court and submits that it extensively covered the issue of Rita’s standing but was overlooked by the National Court. Parts of it addressed the right of inheritance by Engan custom where the property of a deceased male sibling will pass to the surviving eldest female sibling. It is also an Engan custom that the property will pass on his death to Rita as the elder sister, as a token of appreciation, for raising late Eric Kundalin.
6. The next part addressed a claim that the respondent had procured title of the property by fraud, and it was necessary for the Court not to summarily dismiss the appeal without the benefit of hearing parties out on the claim of fraud. The claim of fraud is based on the allegation that Section 119 of the Land Registration Act provides that a personal representative shall make an application in writing to the Registrar of Titles to be the title holder of the property. In this case, there was no evidence that the respondent was appointed personal representative of the deceased when she applied and was granted title by transmission contrary to Sections 117, 119 & 125 of the Land Registration Act.
7. Rita also alleged that the Secretary of the Department of Provincial and Local-level Government Affairs acted on false and misleading information supplied by the respondent that she was the legal wife of the deceased and has three children from him and entitled to the property by Engan custom. As the Custodian of Trust Land, he signed a certificate of transmission under Sections 166 and 167 of the Land Registration Act. When it was later discovered that the information was false and misleading, on 8th August 2016 the Secretary wrote a letter and informed the Registrar of Titles to cancel the respondent’s title.
8. Instead, the presiding judge interjected and interrupted learned counsel in his presentation and consequently, failed to adequately consider the written submissions. It also demonstrated that the judge was biased and denied Rita a fair hearing. If he had allowed counsel to complete his submissions, he would have found in favour of Rita on this issue.
9. Learned counsel for the respondent refers to Section 44 of the Wills, Probate and Administration Act (WPA Act), and submits that by this provision, unless and until a letter of probate or administration is granted, no person including a duly appointed executor or the Public Curator has standing to commence any proceedings on behalf of a deceased estate.
10. Section 44 relevantly states:
“44. Initial vesting in Public Curator.
Until probate or administration is granted, the property of a deceased person vests in the Public Curator, in the same manner and to the same extent as formerly personal estate in England vested in the Ordinary.”
11. The Court notes that Rita did not produce letters of administration. A grant of letters of administration is critical and takes precedence over any equitable interest Rita may have including her claim of being a long-time occupant of the property.
12. As the National Court explained in its decision at p 304 and [30] of the volume 2 of the appeal book:
“Standing is always an issue. It is the first issue that any litigant needs to overcome or be satisfied that he or she has the standing to come to court. In the case of a deceased’s estate, when one is talking and challenging what happens to the deceased’s estate, that can only be raised by a properly appointed deceased administrator or one that is appointed by the court or a Will. Until then – until that process has taken place, the property gets vested in the Public Curator or a custodian.”
13. The requirement for a grant of probate or administration is necessary to confer standing on an executor of a will or administrator where there is no will, respectively to administer a deceased’s estate including institution of legal proceedings. In the case of probate, reinforcing the requirement of Section 44, the Supreme Court in Thomas Conlife as Executor of the Estate of Albert Conlife & Jura Investment Limited & Ors (2021) SC2069, held at [8] of the judgment that:
“The absence of a grant of probate is critical to the appellant’s standing, in view of s 44 (initial vesting in Public Curator) of the Wills, Probate and Administration Act,..........”.
14. Earlier on, the Supreme Court in Public Curator v. Bank of South Pacific Limited (2006) SC832, explained the effect of Section 44 in these terms:
“Until Grant of probate or Letters of Administration the property of a deceased person vests in the Public Curator. See: Wills Probate and Administration Act, s44. However he may not administer the estate unless he is granted representation rights. The deceased’s property vests for the purpose of administration in the person appointed by the National Court to have representation rights (Probate or Letters of Administration) (s45(2)). Property includes a thing in action and an interest in property (s36(1)). Therefore property includes an interest in any action at law. If representation rights (Probate or Letters of Administration) are granted to a person other than the Public Curator, all of the property of the estate transfers from the Public Curator to that person”.
15. In this case, the deceased died without a will and by virtue of Section 44, it is necessary for Rita to obtain letters of administration from the National Court to administer the estate of the deceased including instituting the proceeding in the National Court. For the foregoing reasons, this Court finds no error in the finding by the National Court that Rita did not produce letters of administration in her favour and, therefore, lacked the requisite standing to institute the proceeding in the National Court.
16. The issue of standing of Rita was critical to the success of the proceeding in the National Court. While learned counsel filed extensive written submissions which addressed the issue of Rita’s standing including the right of inheritance by Engan custom and a claim of fraud against the respondent, it is not correct to say that they were overlooked by the National Court. The legal position is quite clear. Where there is no evidence of letters of administration, pursuant to Section 44 Rita lacked the requisite standing to institute the proceeding in the National Court.
17. If the property were to be distributed by Engan custom, according to Section 35D and Section 35E of the WPA Act it is imperative that evidence is led to establish the custom on the right of inheritance and distribution of a deceased estate. Significantly, the person who claims to be entitled to the estate by custom must produce a certificate by a District Officer (from the district from where the deceased hails) or other person, who in the opinion of the Public Curator is competent to certify customary entitlement to the estate.
18. Relevantly, Section 35D states:
“Distribution on intestacy.
Where—
(a) a person dies intestate; and
(b) the estate of that person is dealt with under this Division,
the estate of that person shall be distributed in accordance with the custom applicable to that person and in accordance with Section 35E.”
19. And Section 35E states:
“Certification of persons entitled to estate.
(1) The persons entitled to the estate of a person who dies intestate are the persons certified under Subsection (2) as being so entitled.
(2) A District Officer or other person who, in the opinion of the Public Curator is competent to certify customary entitlements where a person dies intestate, shall certify the persons entitled to the estate of that deceased person.”
20. In this case, the Court notes that despite Rita’s claim that she is entitled to the property for the reasons she has given according to Engan custom, she did not produce a certificate from a District Officer or other person, who in the opinion of the Public Curator is competent to certify customary entitlement to the estate to comply with Section 35E (supra).
21. The presiding judge took time during the hearing to explain the legal requirement to learned counsel and where necessary, interjected to draw learned counsel’s attention to the requirement of applying for letters of administration because he was moving away from the issue. There was nothing untoward about what the presiding judge did. He was making sure that counsel remained focused on the threshold issue of Rita’s standing and to have that issue resolved before the Court could consider the other issues brought up by Rita. To put it into context, the transcript of the hearing is 32 pages-long. It is not necessary to recite it in its entirety for obvious practical reasons. It suffices to refer to parts of it at p 293 at [30] and [40] and p 294 at [30] of the appeal book in SCA No 69 of 2021 hereunder:
“HIS HONOUR: I am looking for a legislative provision. What is the law on persons wanting to claim interest in deceased’s estate or complain about what is happening to a deceased’s estate? What are the prerequisites?
MR BENNY: Your Honour, as I have submitted earlier, under section 44 of the Wills, Probate and Administration Act, the deceased’s estate property is vested with the office of Public Curator and that was what happened. So the beneficiaries went to the officer of the Public Curator pursuing their interest. But, your Honour, has seen in the evidence, Public Curator has refused to – declined to deal with the decision make --
HIS HONOUR: Yes, and then what should be the next step after the Public Curator declined?
MR BENNY: Next step, your Honour is this. My client was residing on the property and just within short period of time my client was not given an opportunity and then the title was already transferred under – transmitted under section 125 of the Land Registration Act. Your Honour, when you look at section 125 of the Land Registration Act, it requires a custom, someone who is related to the deceased person to apply under section 125 of the Land Registration Act. And in this case, your Honour, my client who is an elder sister residing on the property given by the deceased himself to reside on the property is someone who would have applied for transmission under section 125 of the Land Registration Act and my client here was not given the opportunity because the defendant has gone at the back of my client and -------.
HIS HONOUR: Okay, be that as it may, be that as it may, that is all the problems you might have. You are not answering the legal question.”
22. Learned counsel still did not address the requirement for grant of letters of administration or whether Rita had been granted such letters. Instead, he moved away from the issue and brought up a claim of Rita’s entitlement to the property by Engan custom. The judge had to bring him back to the issue of standing as can be seen from the transcript at p 294 at [30] of the appeal book in SCA No 69 of 2021:
“MR BENNY: So, your Honour, with due respect, in the pleading we plead the issue of custom where the issue of ---------
HIS HONOUR: But custom is what the Public Curator takes into account to determining entitlement and even when there is an application for letters of administration, custom also plays a part in there. Then there is custodian aspect, transmission and all that has happened. That is where you have got to challenge. In order to challenge, you have got to first secure your standing.”
23. The question of what extent and frequency of judicial intervention may constitute apprehended bias has been discussed in Galea v. Galea [1990] 19 NSWLR 263 at 281, a case cited by learned counsel. Kirby J listed six guidelines in relation to whether judicial intervention in a particular case constituted apprehended bias. It is not necessary to mention all of them, but those that are pertinent are, whether the excessive judicial questioning or pejorative comments have created a real danger that the trial (hearing) was unfair, whether the interventions indicate that a party was denied a fair trial (hearing) because the judge has closed his or her mind to further persuasion and importantly, times have changed because it has become more common for judges to take an active part in the conduct of cases than was the case previously. That is not to say that judges should remain silent. In Vakauta v. Kelly (1989)167 CLR 568 at 571 Brennan, Deanne and Gaudron JJ said:
“It seems to us that a trial judge who made necessary rulings but otherwise sat completely silent throughout a non-jury trial with the result that his or her views about the issues, problems and technical difficulties involved in the case remained unknown, until they emerged as final conclusions in his or her judgment would not be emulated.”
24. In this case, Rita’s standing was such a critical issue that it was necessary for the presiding judge to constantly remind learned counsel of the correct legal requirement, and it is not correct for learned counsel to say that the presiding judge unnecessarily interjected and interrupted him during submissions and moreover, was biased towards him and denied Rita a fair hearing. It was a case of a genuine engagement and debate about a critical issue which is permissible: Re Keely; Ex parte Ansett Transport Industries (Operations) Pty Ltd [1990] HCA 27; (1990) 64 ALJR 495 and Barbosa v. Di Meglio [1999] NSWCA 307. These grounds are unfounded and without merit.
25. Without letters of administration, the proceeding stood a slim chance of success. It is further compounded by the lack of evidence of a certificate by the District Officer or other person, who in the opinion of the Public Curator is competent to certify that according to Engan custom, Rita was entitled to the property. Thus, it was unnecessary and unacceptable for learned counsel to persist and maintain his submissions as he did. The Court further notes that despite its best efforts during the hearing to explain the legal requirement and to obtain from counsel, a concession, counsel persisted and maintained submissions that were contrary to Section 44, before this Court.
26. Significantly, this Court suggested that it may be a worthwhile course to concede that the claim of fraud was a live issue and one that could be taken up in a fresh proceeding in the National Court. Parties would then be spared time and would avoid incurring additional costs of litigation before this Court.
27. In proposing this option to learned counsel, this was in no way an attempt to trivialise the seriousness of the claim of fraud. If the claim of fraud is based on the allegation that the grant of title to the respondent by transmission was in breach of Sections 117, 119 & 125 of the Land Registration Act, coupled with alleged false and misleading information provided by the respondent to the Custodian of Trust Land to issue a certificate of transmission, these are serious matters and warrant a judicial intervention but in a fresh proceeding. However, learned counsel did not accept this suggestion and continued with the appeals.
28. To persist and maintain a submission contrary to Section 44 will have serious consequences. One of them is an award of costs on a solicitor/client basis against the lawyers for the parties. The main ground of appeal in SCA No 137 of 2021 is against the National Court’s award of costs on solicitor/client basis against Rita’s lawyers (George Lau trading as Niuage Lawyers).
29. The National Court’s reason to award costs against the lawyers was that it was clear that there was no merit in learned counsel persisting and maintaining the proceeding. The proceeding was bound to fail because Rita lacked the requisite standing. The National Court formed a view that the conduct of the learned counsel to persist and maintain an unmeritorious proceeding was improper and liable to costs on solicitor/client basis.
30. Despite this, learned counsel for the appellants maintains that his conduct was not improper. He submits that in his considered opinion, the proceeding was meritorious because Rita will rely on the claim that the respondent procured the title to the property by fraud and will seek to have it set aside. Secondly, Rita was previously self-represented and did not receive proper legal advice when she instituted the proceeding. Therefore, the lawyers should not be penalised for what she did. Thirdly, the order for costs was made in the absence of expressed relief sought in the notice of motion contrary to Order 4, rule 49(8) (Form of Motions) of the National Court Rules (“NCR”).
31. Generally, an award of costs is discretionary and will be awarded to the successful party. Order 22, rule 35 of the NCR forms the basis for an order for costs on solicitor/client basis where costs may be allowed unless the amount of costs is unreasonable and/or unnecessarily incurred. In the case of determining whether solicitor/client costs should be awarded against the lawyers or counsel for the parties, the proper test to apply is not only subjective but also an objective one. The Court must look at all the circumstances of the case including the nature of the case and conduct of the lawyers or counsel to determine whether the lawyers or counsel should be ordered to pay costs on solicitor/client basis.
32. The test was put in a questionnaire form but with the same outcome in Don Polye v. Jimson Sauk [2000] PNGLR 168 where the Supreme Court adopted the tests in Ridehaghl v. Horsefield [1994] 3 All ER 848 as follows:
(a) Has the legal representative of who complaint is made, acted improperly, unreasonably, or negligently?
(b) if so, did such conduct cause unnecessary costs?
(c) If so, is it in all the circumstances just to order the legal representative to compensate any party to proceedings for the whole or any part of the relevant costs?
33. The reason behind these tests is that, given that lawyers act on instructions from their clients, it is arguable that they should not be penalised by an order for costs in bringing an unsuccessful litigation. The counter argument is that lawyers read the law and it is expected that they must know the law and accordingly, advise their clients to act according to the law. According to case law, a lawyer’s conduct is held to be improper where the lawyer pursued proceedings that disclosed no reasonable cause of action as in PNG Waterboard v. Gabriel Kama (2005) SC821. The lawyers were ordered to pay costs on solicitor/client basis.
34. In Island Helicopter Services Limited v. Wilson Sagati & Ors (2008) N3340, Injia DCJ as he then was granted leave to the appellant to discontinue the appeal but on application by the respondent, ordered the appellant to pay costs on solicitor/client basis. His Honour held that a lawyer who causes his client or the other party to incur unnecessary costs through improper conduct or by default may be ordered to pay costs on a solicitor/client basis.
35. In a more recent case of Hasifangu v. Mark Mauludu (2022) SC2256, the Supreme Court ordered counsel for the appellant to personally pay costs on a party/party basis because he failed to advise the appellant to comply with the requirement to give notice under Section 5 of the Claims By and Against the State Act 1996. The Supreme Court stated, “The responsibility for this entirely unmeritorious course of action by the appellant must rest with her lawyer.”
36. In the present case, it was quite clear that Rita’s standing was pivotal to the success of the proceeding. A consideration of the other claims in relation to equitable interest and fraud were secondary. Regardless of whether Rita was previously self-represented and did not receive proper legal advice when she instituted the proceeding, when she engaged the services of the lawyers, it was the duty of learned counsel to research thoroughly the law on the standing of a person who seeks to make a claim to a property in a case where a deceased has died interstate and left behind a property. The research would include a consideration of the WPA Act, Order 19 of the NCR which provides for rules on probate and administration of estates, and case law from this jurisdiction and similar overseas jurisdictions to form an opinion touching on the issue of Rita’s standing.
37. If learned counsel had undertook thorough research, it would have been revealed that Section 44 and the cases of Thomas Conlife (supra) and Public Curator v. Bank of South Pacific Limited (supra) make it necessary for Rita to have applied for letters of administration before taking up the case. The Court notes that learned counsel glossed over Section 44 in his submissions, made no mention of these Supreme Court cases, and strenuously opposed the motion for dismissal of the proceeding under the misguided notion that Rita’s long and uninterrupted occupation of the property conferred some kind of equitable interest in the property such that she was entitled to some form of protection from the Court. In addition, Rita also had a claim of fraud in the procurement of title of the property which also required some form of Court protection.
38. According to Order 22, rule 35, it is quite clear that the respondent’s costs of defending the proceeding in the National Court were unnecessarily incurred. The proceeding was untenable, but Rita’s lawyers maintained, it was not. If Rita failed to produce letters of administration or a certificate from a District Officer or someone who is competent to do so that she is entitled to the property under Engan custom, this Court is satisfied that for learned counsel to persist and maintain a submission contrary to the legal requirements of Sections 35E and 44 is demonstrative of conduct that is defiant, misleading, and improper.
39. This Court further upholds the National Court’s finding of improper conduct because it is further supported by the ruling of the National Court in OS (JR) No 35 of 2020 where the National Court refused leave. It found that Rita lacked the requisite standing to institute the judicial review proceeding. The refusal of the application for leave was sufficient reason to put learned counsel on notice to refrain from further litigation until Rita’s standing was settled. Despite this, he persisted. Such conduct will inevitably attract an award of costs on a solicitor/client basis against the lawyers.
40. Finally, there is no merit in the ground that the notice of motion did not state that the respondent will be seeking an order for costs on solicitor/client basis against the lawyers. While it is necessary to give adequate notice to the lawyers in the notice of motion, this was not a case where the presiding judge did not give parties adequate time to address the question of costs on solicitor/client basis.
41. It was a case where, following the dismissal of the proceeding on 24th June 2021, the presiding judge reserved the question of the rate of costs for further arguments, to a later date. Pertinently, his Honour informed both counsel that the “Issue of costs.......will go to the defendants but as to what rate, be it indemnity, solicitor/client, party/party.....” will be heard later. On 15th September 2021 parties appeared before the presiding judge and presented their respective submissions and thereafter, he gave an ex tempore ruling. In this kind of case, the appellants cannot rely on lack of specific pleading on the costs on a solicitor/client basis to claim lack of notice and denial of a fair hearing.
42. The other consideration operating against the appellants is that the respondent’s lawyers did forewarn them in a letter dated 28th January 2021 attached to the affidavit of service of Michael Kowi filed 3rd February 2021 and it was followed with submissions that they seek costs on a solicitor/client basis against them at the hearing on 15th September 2021. The practice of lawyers forewarning the opposite party is not a novel one. In Island Helicopter Services Limited case (supra), his Honour Injia DCJ as he then was, held that, the practice of forewarning the lawyers against whom costs is proposed to be sought against is a good practice and a relevant consideration in the exercise of such discretion.
43. The presiding judge was satisfied with the evidence of forewarning by lawyers for the respondent to the appellants’ lawyers.
In his decision at pp 360 – 361 and [40] of volume 2 of the appeal book in SCA No 137 of 2021, the presiding judge reinforced
the need to forewarn the opposite party in these terms, “Case law is also clear that there has to be some forewarning before a court order can follow against a lawyer and if forewarning
is not adhered to and once the court comes to a decision, then the Court would be inclined to give effect to the self-sorry, forewarning
letter.” Based on the letter, the National Court awarded costs on a solicitor/client basis. For these reasons, this Court is not satisfied
that Rita and her lawyers were not informed of the respondent’s intention to seek costs on a solicitor/client basis against
the lawyers. The appeal against costs order in SCA No 137 of 2021 lacks merit and is dismissed.
Conclusion
44. The appellants have failed to establish that the National Court erred in holding that Rita lacked the requisite standing to institute the proceeding in the National Court and erred in dismissing the proceeding for lack of standing. They also failed to establish an error in the finding that the lawyers acted improperly and ordered to pay costs on a solicitor/client basis.
Costs
45. As to the costs of the appeals, learned counsel for the respondent submits that as Rita never had the requisite standing to institute the appeal in SCA No 69 of 2021, and the appeal was bound to fail, the lawyers should be ordered to pay costs on solicitor/client basis for giving her the wrong legal advice. The Court notes that these appeals could have been withdrawn if learned counsel took up the proposal to settle Rita’s standing first to comply with Section 44. Alternatively, Rita can make a claim for the property under Engan custom if she is able to produce a certificate from a District Officer or a person competent to do so certifying her entitlement by custom to comply with Section 35E. After considering these matters including the learned counsel’s reluctance to withdraw the appeals, there will be an order for costs against the lawyers for the appellants on a solicitor/client basis in both appeals, to be taxed, if not agreed.
Order
46. The formal terms of the final order are:
2. The appeal SCA No 137 of 2021 is dismissed.
________________________________________________________________
Niuage Lawyers: Lawyers for Appellants
Nandape Lawyers: Lawyers for Respondent
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