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Fagau v Bank of South Pacific Ltd [2012] PGNC 131; N4847 (12 July 2012)

N4847

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS 446 OF 2010

BETWEEN:

ANDREW FANGAU & AIDA DAVID
Plaintiffs

AND:

BANK OF SOUTH PACIFIC
LIMITED
Defendant

Kokopo: Hartshorn J.
2012: 6th & 12th July

Application to dismiss proceeding - Order 12 Rule 40 and Order 4 Rule 2 National Court Rules – facts in dispute – whether proceeding should have been commenced by Writ – whether declaratory relief sought would resolve the dispute between the parties

Facts:

This is an application by the defendant, Bank South Pacific Ltd (BSP) to dismiss the proceeding. The plaintiffs commenced this proceeding in August 2010. They seek by originating summons, amongst others declaratory relief that a notice to vacate issued by BSP in July 2010 is premature as loans approved to the plaintiffs had not been fully drawn and that the default in loan repayments by the plaintiffs was the fault of BSP.

Held:

1. The declarations sought raise issues which appear to be in dispute. Thus, the proceeding should have been commenced by writ of summons and not originating summons.
2. The proceeding is frivolous.
3. The declaratory relief sought is an abuse of process.

Cases cited:
Papua New Guinea Cases

Tampion v. Anderson [1973] VicRp 32; [1973] VR 321
NCDIC v. Bogibada Holdings Pty Ltd [1987] PNGLR 135
Ok Tedi Mining Ltd v. Niugini Insurance Corporation (No. 2) [1988-89] PNGLR 45
Ronny Wabia v. BP Exploration Operating Co Ltd [1998] PNGLR 8
TS Tan v. Elcom (2002) SC683
Kiee Toap v. The State (2004) N2731, N2766
Lerro v. Stagg (2006) N 3050
Telikom PNG Ltd v. ICCC (2007) N3144
Tigam Malewo v. Keith Faulkner (2007) N3357
Kurubu Ipara & Anor v. Daniel Yaluma (2010) N4277

Counsel:

Mr. N. Kopunye, for the Defendant

12th July, 2012

1. HARTSHORN J: This is an application by the defendant Bank South Pacific Ltd (BSP) to dismiss the proceeding. I allowed the application to be heard in the absence of representation on behalf of the plaintiffs as I was satisfied that the notice of motion of BSP and the affidavit in support were served upon the lawyers for the plaintiffs and that the lawyers for the plaintiffs had been advised in writing of the date and time of the hearing of the motion.

2. The plaintiffs commenced this proceeding in August 2010. They seek by originating summons, amongst others declaratory relief that a notice to vacate issued by BSP in July 2010 is premature as loans approved to the plaintiffs had not been fully drawn and that the default in loan repayments by the plaintiffs was the fault of BSP.

3. BSP submits that pursuant to Order 12 Rule 40 National Court Rules the proceeding does not disclose a reasonable cause of action, is frivolous or vexatious and is an abuse of the process of the court. BSP submits that the plaintiffs' should have commenced this proceeding by writ of summons, as the facts are in dispute. Reliance is also placed upon Order 4 Rule 2 (1) (c) to the effect that the proceeding should have been commenced by writ of summons.

4. I will consider whether the proceeding should have been commenced by writ of summons first.

Writ or originating summons?

5. BSP submits that it disputes various alleged facts deposed to by one of the plaintiffs Mr. Andrew Fangau in his affidavit filed 13th August 2010. This affidavit was filed on the same day as the originating summons. The alleged facts disputed by BSP are deposed to in the affidavit of Mr. John Kambilapi. This affidavit is detailed and sets out BSP's position as well as addressing and disputing the content of Mr. Fangu's affidavit.

6. BSP relies on the case of Tigam Malewo v. Keith Faulkner (2007) N3357, a decision of Davani J in support of its submission. At paragraph 15 of the decision Her Honour states that:

"Although the plaintiff applies for declarations of right, the matters that it raises in its originating summons do not fall within the category listed in O4. R3 (2). I say this because on hearing counsel, there are obviously going to be numerous disputed facts, that the issues before the Court not the interpretation or construction of an act or an instrument or a deed or a will etc ...... Although the plaintiff has the right to choose the mode of proceedings, clearly the declaratory orders it seeks raise numerous disputed issues and which orders cannot be claimed in the originating summons."

7. I respectfully agree with Her Honour's comments and am of the view that they apply here. The declarations sought raise issues such as whether certain repayments have been made, whether they should have been and whether the default of the plaintiffs was caused by BSP. Most of these issues appear to be in dispute. The plaintiffs are not here to submit otherwise.

8. Further, the lawyers for the plaintiffs were put on notice by the lawyers for BSP that the proceeding should have been commenced by writ of summons and not originating summons. Notwithstanding this, the lawyers for the plaintiffs have continued with the originating summons. I am satisfied that to have issued this proceeding by originating summons and to have continued with it, for the above reasons is an abuse of process and the proceeding should be dismissed.

9. Having so found, it is not necessary for me to consider the other submissions of counsel. I will however consider whether the proceeding is frivolous and an abuse of process.

Whether frivolous

10. The second declaration sought contains an admission that there has been a default in loan repayments by the plaintiffs. That a declaration that the default of the plaintiffs was the fault of BSP is sought, does not remove the admission. Further, an order is sought that "the Notice to Quit be stayed" when from the evidence that was before the court on this application, no notice to quit was issued. In addition, as to the declaration sought in paragraph 1 of the originating summons, it seeks that the notice to vacate be declared premature. Even if the notice to vacate was declared to be premature, does that prevent BSP from issuing the notice under its mortgage?

11. From this, it is apparent that the substantive relief sought would not be granted. Again, the plaintiffs are not here to argue otherwise. When a proceeding is bound to fail, it has been held to be frivolous: Ronny Wabia v. BP Exploration Operating Co Ltd [1998] PNGLR 8, Kiee Toap v. The State (2004) N2731, N2766, Lerro v. Stagg (2006) N 3050 and Tampion v. Anderson [1973] VicRp 32; [1973] VR 321. For the above reasons in my view, the proceeding is frivolous and should be dismissed.

Whether an abuse of process

12. As to whether seeking the declaratory relief sought is an abuse of process, if that relief was granted, issues such as; defaults in loan repayments, the rights of BSP to exercise its powers under its mortgage, delays by BSP and the plaintiffs' rights of redemption would still remain to be determined. The grant of the declaratory relief sought would not determine these issues.

13. In NCDIC v. Bogibada Holdings Pty Ltd [1987] PNGLR 135, a decision of Kapi DCJ as His Honour then was, it was held that declaratory relief should be refused, where the granting of the declarations sought would not settle the dispute between the parties. This reasoning was followed in the Supreme Court decision of TS Tan v. Elcom (2002) SC683, Ok Tedi Mining Ltd v. Niugini Insurance Corporation (No. 2) [1988-89] PNGLR 45, Telikom PNG Ltd v. ICCC (2007) N3144 and Kurubu Ipara & Anor v. Daniel Yaluma (2010) N4277. On the authority of these decisions, in my view the declaratory relief sought is an abuse of process for the above reasons.

14. As to costs, BSP has sought costs on an indemnity basis. I am satisfied that they are entitled to such costs as they put the lawyers for the plaintiffs on notice that such costs would be sought if an application such as this was successful. The plaintiffs or their lawyers chose to ignore this notice.

Orders

15. The orders of the Court are:

a) This proceeding is dismissed.

b) The plaintiffs and their lawyers, Motuwe Lawyers shall pay the defendant's costs of the proceeding on an indemnity basis.

c) Time is abridged.

_____________________________________________________

Motuwe Lawyers: Lawyers for the Plaintiffs
Bradshaw Lawyers: Lawyers for the Defendant