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Vailala Purari Investment Ltd v Papua New Guinea Forest Authority [2004] PGNC 190; N2594 (7 July 2004)

N2594
PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE AT WAIGANI]

OS NO. 566 OF 2003

BETWEEN:

VAILALA PURARI INVESTMENT LIMITED
as representative of the 124 Incorporated Land Groups within the Vailala TRP Area
First Plaintiff

AND:

JAMES HARIVA LOHORO
Second Plaintiff

AND:

ERE KILAVI Incorporated Land Group within the Vailala TRP Area
Third Plaintiff

AND:

KORE EVERE
Fourth Plaintiff

AND:

LAULA MEAHU Incorporated Land Group within the Vailala TRP Area
Fifth Plaintiff

JIMMY MEARO
Sixth Plaintiff

AND:

HAORA Incorporated Land Group within the Vailala TRP Area
Seventh Plaintiff

AND:

KILALA KARIKARA
Eighth Plaintiff

AND:

AVOILA CLAN Incorporated Land Group within the Vailala TRP Area
Ninth Plaintiff

AND:

JOE MERE
Tenth Plaintiff

AND:

KAO HARUIPI NO. 2 Incorporated Land Group within the Vailala TRIP Area
Eleventh Plaintiff

AND:

FRED LAUARA
Twelfth Plaintiff

AND:

HARUPI Incorporated Land Group within the Vailala TRP Area
Thirteenth Plaintiff

AND:

PAPUA NEW GUINEA FOREST AUTHORITY
First Defendant

AND:

MICHAEL OGIO, MINISTER FOR FOREST
Second Defendant

AND:

FRONTIER HOLDINGS
Third Defendant

Waigani: Davani, .J
2004: 10th June
7th July

PRACTICE AND PROCEDURE – Application for leave for Judicial Review – Execution of Deed of Settlement and Release – Notice of Discontinuance filed

PRACTICE AND PROCEDURE – Effect of Deed of Settlement and Release on existing proceedings – proceedings brought to an end – institution of fresh proceedings

Cases cited:
Pryer v. Gribble [1875] LR10 Ch App 534
Smythe v. Smythe [1887] 18 2BD 544;
Green v. Rozen [1955] 2 All ER 797;
Caltex (Overseas) Limited v Douglas Charles Dent [1978] PNGLR 411
Green v. Rozen [1955] 2 All ER 797;
Siaman Piri & Anor v Simon Nusen & Ors N1375 (1995)
Karl Paul and Aruai Kispe and the Regional Manager – PNG Forest Authority, Lae and PNG Forest Authority N2085 delivered on 17.4.01
National Capital District Commission v. Yama Security Services Pty Ltd SC707 of 2002
Halsburys Fourth Edn. Vol. 137
Ritchies Supreme Court Procedure (NSW)

Counsel:
R. Pato for the Plaintiff/Applicants
W. Frizzell for the third Defendant

7th July, 2004

RULING
(Application for leave for judicial review)

DAVANI, J: I have Notice of Motion before me filed by the plaintiffs on 15th April, 2004 seeking various orders which are that;

1. Leave be granted to join various entities and person as plaintiffs;

2. Leave be granted to amend Originating Summons and Statement of Claim to include new plaintiffs and details of their material circumstances as applicants for judicial review;
   
3. That these amended pleadings then be served upon defendants or their lawyers;
   
4. That the application for leave to seek judicial leave should then proceed thereafter.
   

The orders sought in relation to joining and amending were granted by the motions court on 5th April, 2004. The application for leave for judicial review proceeded on 10th June, 2004 and was adjourned for my decision.

At the hearing of the application to join plaintiffs, Mr Frizzel for the defendants mentioned in court that a Notice of Discontinuance had been filed by the plaintiffs on 21st April, 2004 and that at that time the plaintiffs were represented by Stevens Lawyers. I informed counsel that the issue of whether the Notice of Discontinuance should remain can be argued at the hearing of the application for leave for judicial review.

It was not until after I adjourned for my ruling on the application for leave for judicial review that, on perusing the file, I noted that the Notice of Discontinuance was filed, relying on the terms of a Deed of Settlement and Release which was executed on 5th February, 2003 (the ‘Deed’) by the plaintiffs representative and the third defendant, Frontier Holdings Limited. The Deed referred to proceedings in the National Court described as WS No. 820 of 2003 and OS 566 of 2003. These present proceedings are OS 566 of 2003. I set out in full the terms of the Deed because they are very pertinent to the continuation or not of the application for judicial review. This document reads;

"DEED OF SETTLEMENT AND RELEASE

This deed of settlement and release is made on the 5th day of February, 2003.

BETWEEN : VAILALA AND PURARI INVESTMENTS LIMTIED care of PO Box 662, Port Moresby, National Capital District, (hereinafter referred to as "Vailala’).

AND : FRONTIER HOLDINGS LIMTED of PO Box 102, Port Moresby, National Capital District (hereinafter referred to as "Frontier").

WHEREAS:

1. Vailala issued proceedings in the National Court known as WS No. 820 of 2003 against Frontier and others in respect of timber permit number TP2-16 ("TP 2-16.) held by Frontier.
   
2. Vailala issued proceedings in the National Court known as OS No. 566 of 2003 against Frontier and others seeking judicial review of an extension in 2002 of TP 2-16.
   

100. Vailala and Frontier have agreed to settle their differences as hereinafter provided and Vailala has agreed to release Frontier from all claims howsoever described in respect of TP 2-16.
     

WITNESS:

1. Owners of land by custom
   

Vailala and its directors agree to exercise its and their best endeavours to assist Frontier in respect of conflicts arising between owners of land in the timber permit area and the landowner companies certified pursuant to clause 4.4.1 of the TP 2-16.

2. National Forest Authority review
   

Vailala will exercise its best endeavours to assist Frontier in conducting awareness programmes in the timber permit area in respect of the proposed National Forest Authority review of the terms and conditions of TP 2-16 and a proposed new project agreement in respect of the operations of Frontiers in and about the permit area and in the carrying out of the permit conditions.

3. Discontinuance
   

Vailala shall within seven days hereof:-

(a) shall instruct its lawyers to file notices of discontinuance of proceedings known as WS No. 820 of 2003 and OS No. 566 of 2003; and

(b) make application to the Registrar of Companies for deletion of Vailala from the registrar of companies pursuant to the Companies Act 1997.

4. Costs

Each party agree to bear their own costs of and incidental to discontinuance of proceedings pursuant to clause 3 (a).

5. Release

Vailala hereby releases Frontier from all claims, actions and demands howsoever arising now or in the future in respect of the subject matters of WS No. 820 and OS No. 566 of 203.

6. Proceedings bar

Vailala and Frontier agree that this deed of settlement and release may be pleaded in bar to any further litigation of proceedings known as WS No. 820 of 2003 and OS No. 566 of 2003 and in respect of the subject matter of the release hereby given by Vailala to Frontier.

Executed as a deed.

The Common Seal of

VAILALA AND PURARI INVESTMENTS LIMITED

was hereunto affixed by authority of the Board of Directors"

(common seal affixed)

The Common Seal of Frontier Holdings Limited was hereunto affixed by authority of the Board of Directors"

(common seal affixed)

It was on that basis then and pursuant to clause 3 of that Deed, that the third defendants lawyers filed the Notice of Discontinuance.

I will deal firstly with the issue of the Notice of Discontinuance because I consider it a threshold issue that must be determined first. To assist me decide on that issue, I have reviewed affidavit evidence filed by the plaintiff's representative in support of their contentions that the court should ignore the said Notice and proceed to grant leave.

The affidavit of Jack Eka filed for and on behalf of the plaintiff and sworn on 21st April, 2004 deposes that he is the chairman of the board of the landowner company Vailala Purari Investments Limited, the plaintiff. It deposes further that he Jack Eka, was promised monies by the defendants representatives if he discontinued the claim against the defendants. He said, "I did so only because I was induced and pressured into it by representatives of Frontier. I do not think we should discontinue or settle the legal case and neither do our people. We want the court to hear our case."

Under normal circumstances, a Notice of Discontinuance that was filed midway through proceedings, without the leave of the court, is an abuse of the court process and the court may order that such a purported notice be removed from the court file. (see par 21.2.6 of Ritches Supreme Court Procedure (NSW)). These are the arguments raised by Mr. Pato for the plaintiff. However, in this case, the Notice of Discontinuance was filed based on a settlement reached between the parties and a Deed executed to that effect.

It is settled law that a settlement or compromise gives rise to a new agreement between the parties and constitutes a fresh cause of action superseding the cause of action sued on. (see Green v. Rozen [1955] 2 All ER 797; Smythe v. Smythe [1887] 18 2BD 544; Caltex (Overseas) Limited v. Dent [1978] PNGLR 411. A settlement in fact prevented parties from proceedings further on the original action. I refer to Pryer v. Gribble [1875] LR10 Ch App 534; Green v Rozen (supra); and Caltex (Overseas) Limited v. Dent (supra)).

The Deed of Release has in effect put a stop to proceedings OS 566 of 2003 and WS 820 of 2003. On the face of it, this action cannot proceed any further.

I find I cannot deliberate on the application for leave for judicial review whilst the Deed remains a "good" document. I note the challenge by Jack Eka for the plaintiffs as to the validity of this document. I also note that although Mr. Pato has filed submissions and addressed me on the effect of the Notice of Discontinuance, that he has not addressed me on the Deed. Mr. Frizzel has also not done that. I do not wish to delay this matter any further, because of counsels inadvertence or failure and will proceed to consider the effect of the Deed in relation to these proceedings.

I also remind myself that the court has powers to control the conduct of proceedings before it. In saying that, I refer to

Karl Paul and Aruai Kispe and the Regional Manager – PNG Forest Authority, Lae and PNG Forest Authority N2085 delivered on 17.4.01 in Lae, by Injia .J (as he then was) where he said;

"The Court has wide powers to control the conduct of proceedings before it, subject of course, to jurisdictional limitations fixed by statute. It is in the inherent jurisdiction of the Court to take firm control of the proceedings to ensure that the business of the Court is conducted in an orderly and fair and timely manner and to ensure that justice is done in the particular case."

His Honour, went further to discuss the Courts discretion when acting on its own initiative to screen and weed out claims. He said;

"There is a wide discretion vested in the Court by the National Court Rules to screen and weed out claims which do not disclose a reasonable cause of action, are frivolous and vexatious or an abuse of process of the Court (O.12 R.40) or the documents filed in court is scandalous, irrelevant or otherwise oppressive (O.2 r.29) or on the ground of irregularity. That discretion is normally exercised upon application by an interested party. Nevertheless, it goes without saying that the Court may exercise that discretion on its own initiative. It is open to the Court to raise and determine questions concerning the regularity (O.1 r.1-9) or competency of proceedings at any stage of the proceedings with or without application by an interested party."

His Honour, made reference to the case Siaman Piri & Anor v Simon Nusen & Ors N1375 (1995) and I too rely on that.

According to Halsburys fourth edition; vol. l37 at par. 391, the effect of a settlement or compromise is that;

"where the parties settle or compromise pending proceedings, whether before, at or during the trial, the settlement or compromise constitutes a new and independent agreement between them made for good consideration. Its effects are:

(1) to put an end to the proceedings, for they are thereby spent and exhausted;
(2) to preclude the parties from taking any further steps in reaction except where they have provided for liberty to apply to enforce the agreed terms; and
(3) to supersede the original cause of action altogether."

What is the remedy then for affected parties? Halsburys states further:

"an agreement for a compromise maybe enforced or set aside on the same grounds and in the same way as any other contract"

Having said that, can the plaintiffs make such an application in these same proceedings?

No, the plaintiff must challenge the validity of the Deed in fresh proceedings. I say this relying on the various cases cited above and National Capital District Commission v. Yama Security Services Pty Ltd SC707 of 2002 Supreme Court judgment handed down on 6th June 2003. The bench comprising Injia DCJ, Davani and Mogish JJ deliberated on an appeal from the National Court involving a judgment of the National Court of 27th March, 2002 where the National Court entered summary judgment and awarded K8.5 million to the respondent relying on a Deed of Release executed by the appellants and the respondent. The court heard the appeal and ruled on the threshold issue that because a settlement gives rise to a fresh cause of action, that the party seeking to enforce payment as agreed under the deed, had to file a fresh action. The matter was referred back to the National Court.

I set out the cases cited above to illustrate the legal position, that the matter is completely settled when a Deed of Release is executed;

Green v Rozen and others (supra)

The Plaintiff brought an action to recover £500.00, money lent to him to the defendants jointly, and a further sum of £50.00 alleged to be due from the first defendant as consideration for making the loan to the three defendants jointly. When the action came before the court, Counsel informed the court that the action had been settled and what the terms of settlement were. The agreed terms on the back of Counsel’s briefs, were that Defendants were to pay the Plaintiffs a sum of £450.00 by instalments on the dates stated and other terms.

The Defendants failed to pay the last instalment. The Plaintiffs then made an application on the original action asking for judgment for the amount of the final instalment and an order for costs.

Slade J refused the application "...because the court having made no order in the action, the agreement compromising the action between the parties completely superseded the original cause of action and the court had no further jurisdiction in respect of that cause of action."

Per CURIAM: The Plaintiff’s only remedy was to bring an action on the agreement of compromise.

The court held further there that "...In my judgment, therefore, the Plaintiff’s remedy in this case to enforce the sum of £83 6s 8d., plus taxed costs which the defendants agreed to be paid, must be by action on the new agreement. I am sorry to have to come to that conclusion, because it may mean starting a new action, under R.S.C., Ord. 14, but, in my judgment, I have no jurisdiction – this is not a matter of discretion – to give the Plaintiff the relief which she seeks..."

Caltex (Overseas) Limited v Douglas Charles Dent (supra)

In that case, the Plaintiff brought an action to recover K1434.00 from the Defendant. After entry for trial, the matter was settled out of court on the basis that the Plaintiff accept the sum of K838.84 in satisfaction of its claim, plus costs. The sum of K838.84 having been paid, and no agreement having been reached as to costs, the Plaintiff made application to the court for an order "that judgment be entered for the Plaintiff in the sum of K838.84 and costs."

Saldanha .J held that "the agreement compromising the action had superseded the original cause of action, and there being no provision in the Rules of Court for judgment to be entered in the particular circumstances, the court had no jurisdiction to make an order and the application should be dismissed".

That being the case, a new or fresh cause of action should be instituted challenging the validity of the Deed of Release i.e. the issues raised by Mr Jack Eka in his affidavit of 21st April, 2004 i.e. that he was coerced into signing the Deed by payment to him of a sum of money of K3,000.00, which incidentally, was paid into court on 2nd April, 2004. A notice of deposit was filed on 2nd April, 2004. The National Courts receipt No.14891 issued by the National Court Registrar on 2nd April 2004, is on the court file.

I refer also to the affidavit of Max Mera sworn on 2nd April, 2004 which similarly, deposes to promises made by the defendants representatives to him (Max Mera) to pay him sums of money for him to withdraw these proceedings. He said he was paid K1,500.00 on 25th March, 2004. He said he was instructed by his lawyers to pay those monies into court. This was done and the National Court’s receipt no. 14891 dated 2nd April, 2004 was issued. A copy is attached to his affidavit.

The possible grounds in seeking to set aside the deed of release would be that of fraud, illegality and possibly bribery.

As to costs, I note the plaintiff is aggrieved by the third defendants decision to renew or extend the logging permit. I note also that based on the affidavit material before me, that although the plaintiffs signed the Deed of Settlement and Release, that they may have been coerced into signing it. Therefore I find that the plaintiffs should be responsible for their own costs in relation to the application before me. The defendant should also be responsible for its own costs because if it had not prompted settlement in the manner it did and allowed the hearing of the leave for judicial review to take place, that the matter would not now be entering another arena in relation to litigation, that of a challenge to the validity of the Deed of Release.

Court’s orders

Therefore, I will not make the orders sought by the plaintiffs in relation to leave for judicial review, but make the following orders, in its stead:

1. The application for leave for judicial review is refused;

2. The plaintiff is at liberty to file fresh proceedings in relation to the validity of the Deed of Release and Settlement executed on 5th February, 2003;
   

3. Each party shall pay their own costs of these proceedings.
_________________________________________________________________
Lawyer for the plaintiff/applicant : Pato Lawyers
Lawyer for the defendants/respondents : Warner Shand Lawyers