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Coecon Ltd v Westpac Bank (PNG) Ltd [2012] PGNC 294; N5097 (20 December 2012)

N5097

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 1994 OF 2005

BETWEEN:

COECON LTD (Receiver and
Manager Appointed)
Plaintiff

AND:

WESTPAC BANK PNG LIMITED
Defendant

Waigani: Hartshorn J.
2012: 20th November,
: 20th December

Application for joinder

Facts:

The defendant applies to join Timothy Peter Neville as the second defendant to this proceeding. The application is made pursuant to Order 5 Rule 8(1) and Order 12 Rule 1 National Court Rules, and s. 155 (4) Constitution. The application is opposed by the plaintiff.

Held:

1. Order 5 Rule 8 (1) National Court Rules does not provide for this court to require Coecon to plead a cause of action against Mr. Neville against its wishes.
   
2. Section 155 (4) Constitution is not able to be relied upon in these circumstances as to do so would produce a result that would be inconsistent with Order 5 Rule 8 (1) National Court Rules.
   
3. No relief is sought in the statement of claim against Mr. Neville, he will not be affected if the relief sought in the statement of claim is granted and his joinder is not necessary to satisfy any orders made in the proceeding.
   

Cases cited:

Papua New Guinea Cases:

Esther Pierce v. MVIT [1988-89] PNGLR 480
Ken Mondiai v. Wawoi Guavi Timber Co Ltd (2006) N3061
Peter Makeng v. Timbers (PNG) Ltd (2008) N3317
Kare Puga Development Corporation v. James Kruse (2010) N4183
PNG Deep Sea Fishing Ltd v. Critten (2010) SC1126
Kara v. Public Curator of Papua New Guinea (2010) N4048
Medaing v. Ramu Nico Management (MCC) Ltd (2011) SC1144

Overseas Cases:

Dollfus Mieg et Compagnie S. A. v. Bank of England [1951] 1 Ch 33

Counsel:

Mr. C. Posman, for the Plaintiff
Mr. A. Chillion, for the Defendant

20th December, 2012

1. HARTSHORN J: This is an application for joinder. The defendant Westpac Bank PNG Ltd applies to join Timothy Peter Neville as the second defendant to this proceeding. The application is made pursuant to Order 5 Rule 8(1) and Order 12 Rule 1 National Court Rules, and s. 155 (4) Constitution. The application is opposed by the plaintiff Coecon Ltd (Receiver and Manager Appointed) (Coecon).

Background

2. Coecon is seeking damages from Westpac for negligence in regard to the operation of Coecon's bank account with Westpac.

The application

3. Westpac contends that Mr. Neville's joinder is necessary to ensure that matters in dispute concerning amongst others, his instructions, actions and knowledge with respect to the operation of accounts of Coecon, particularly after a Receiver and Manager had been appointed, are effectually and completely determined and adjudicated upon.

4. Coecon contends that:

a) it is entitled to determine who it sues and in this instance it decided not to sue Mr. Neville,

b) on the existing pleadings Mr. Neville would not be liable to satisfy any judgment found in Coecon's favour and so Mr. Neville's joinder is not necessary to ensure that all matters in dispute will be effectually and completely adjudicated upon,

c) there has been manifest delay by Westpac in making this application,

d) prejudice would be caused to Coecon if the application was granted,

e) any cause of action against Mr. Neville is statute barred, and

f) the application is an abuse of process.

5. Order 5 Rule 8 (1) National Court Rules is as follows:

"(1) Where a person who is not a party-

(a) ought to have been joined as a party; or

(b) is a person whose joinder as a party is necessary to ensure that all matters in dispute in the proceedings may be effectually and completely determined and adjudicated on,...."

6. Counsel for Westpac submitted that the law is well settled as to an application for joinder and cited the cases of Ken Mondiai v. Wawoi Guavi Timber Co Ltd (2006) N3061, Esther Pierce v. MVIT [1988-89] PNGLR 480 and Kare Puga Development Corporation v. James Kruse (2010) N4183. The decision of Ken Mondiai (supra) concerned an unsuccessful application by the Ombudsman Commission to be joined to judicial review proceedings. The principles discussed in that case submits Westpac, were that joinder can be permitted to claim a legal right and where there could be a cause of action against the proposed party, and that it is ordinarily desirable to join all parties who might have causes of action against each other arising out of the same facts, to avoid a multiplicity of proceedings. Esther Pierce (supra) was relied upon for the principle that it is a matter of discretion of the court whether a person may be joined and the applicant carries the burden of persuading the court. Kare Puga (supra) was relied upon for the principles that an applicant for joinder must have sufficient interest in the proceedings and that joinder must be necessary to ensure that all issues can be properly decided.

7. Counsel for Westpac submitted that:

a) there maybe causes of action against Mr. Neville disclosed in the latest statement of claim in respect of his operation of Coecon's accounts and it is desirable to join him as a party to avoid a multiplicity of actions,

b) Mr. Neville's joinder is necessary to ensure that all matters in dispute relating to his conduct are adjudicated upon

8. The paragraphs in the further amended statement of claim (statement of claim) concerning Mr. Neville to which Westpac refers are amongst others:

"15A. Further, at all material times Timothy Peter Neville-

(a) was a director of the Plaintiff;

(b) in the premises owed the Plaintiff fiduciary duties including a duty to act in good faith in the interests of the Plaintiff;

(c) owed the Plaintiff a like duty pursuant to section 112 (1) of the Companies Act 1997.

15B. Subsequent to the said appointment of the Receiver and until about 18 November 2003 Timothy Peter Neville withdrew or cause to be drawn from the Plaintiffs said bank account at the Defendant's Kavieng branch monies belonging to the Plaintiff totaling about K3,217,328.88.

15C. The said withdrawals from this account (or alternatively the vast majority of them) were not for the purpose of payment of the Plaintiff's debts or any other lawful purpose but instead constituted unlawful misappropriations of the Plaintiff's monies by or on behalf of Timothy Peter Neville.

15D. By his said actions Timothy Peter Neville breached his fiduciary and statutory duties owed to the Plaintiff."

9. In the recent Supreme Court case of PNG Deep Sea Fishing Ltd v. Critten (2010) SC1126, Kandakasi J. and Sawong J. said:

".... we are of the view that the most important test (sic) for joinder of parties are:

(a) whether the applicant has sufficient interest in the proceedings; and

(b) whether the applicant's joinder as a party is necessary to ensure that all matters in dispute in the proceedings can be effectively and completely adjudicated upon.

8. In considering whether a proposed party has met the above tests, it is necessary and important to have regard to the cause of action pleaded. For it is the pleadings that disclose the matters in dispute and who are the correct plaintiffs and defendants. If the pleadings disclose a cause of action against more than one person and only one of them has been named and an application is made to join the other party or parties who have not yet been named in the proceedings, that party or parties may be joined. Conversely, if a cause of action pleaded discloses or suggests that the pleaded cause of action is vested in common or jointly with another party who has not been named and an application is made to join a party, the application may be granted. Where however, the pleadings either deliberately or inadvertently omit to plead all of the relevant facts or there is a lack thereof, there must be a close examination of the facts and or the basis on which the application for joinder is made."

I was a member of the Court in PNG Deep Sea Fishing (supra) and agreed with their Honours' reasoning and conclusions concerning the appeal against the refusal to add parties.

10. In Kara v. Public Curator of Papua New Guinea (2010) N4048, after referring to the tests that are listed a) and b) in PNG Deep Sea Fishing (supra), I stated that:

"25. In considering whether a proposed party has a sufficient interest in the proceeding or whether his joinder is necessary to ensure that all matters in dispute in the proceeding can be effectually and completely adjudicated upon, certain factors warrant consideration.

26. These include whether:

a) any relief is sought against the proposed party,

b) the plaintiff opposes the application for joinder,

c) the proposed party will be affected if the relief sought in the statement of claim is granted,

d) the joinder of the proposed party is necessary to satisfy any orders made in the proceeding."

Plaintiff entitled to determine who it sues

11. As to the second factor above, here Coecon opposes Mr. Neville's joinder and submits that it is entitled to determine who it sues and it has decided not to sue Mr. Neville. This position adopted by Coecon was recognised in Dollfus Mieg et Compagnie S. A. v. Bank of England [1951] 1 Ch 33 in which Wynn-Parry J. said:

"The general rule is, I think accurately stated.... in these words: "Generally in common law and chancery matters a plaintiff who conceives that he has a cause of action against the defendant is entitled to pursue his remedy against the defendant alone. He cannot be compelled to proceed against other persons whom he has no desire to sue." "

12. Further in his judgment, Wynn-Parry J. referred to the case of McCheane v. Gyles (No. 2) [1902] UKLawRpCh 59; [1902] 1 Ch. 911 to illustrate the point. In McCheane (supra), a single defendant who was a trustee, was sued for breach of trust. He applied to add his co-trustee as a defendant. Buckley J. held that the co-trustee ought not to be added as a defendant against the plaintiff's wish. He said:

"The cestui que trust, who is the plaintiff in these proceedings, says 'There were two trustees, John Cronyn and the defendant Gyles. They committed a breach of trust, and were under a joint and several liability in respect of it. Gyles is liable; I elect to sue him 'alone.' The plaintiff is not bound to sue both the trustees." His Lordship then considered the wording of the rule, and a number of authorities, and proceeded: "Looking at the rule you must, in order to say that a person who is not a party ought to be added, find either that he 'ought to have been joined' or that his 'presence before the court may be necessary in order to enable the court effectually and completely to adjudicate upon and settle all the questions involved in the cause or matter.' I cannot hold that the plaintiff ought to have joined Mrs. Cronyn as a defendant, and her presence is not necessary to enable the court to decide whether Gyles is liable for a breach of trust. Moreover, if Mrs. Cronyn were joined as a defendant and the plaintiff did not make any allegation against her, she might ask to be dismissed from the action."

13. In this instance, notwithstanding that it is apparent that Coecon has a cause of action against Mr. Neville, it has decided, for whatever reason, to only pursue Westpac. If Mr. Neville were joined as a defendant and Coecon did not make any allegation or seek relief against him, Mr. Neville could seek to be removed from the proceeding.

14. Order 5 Rule 8 (1) National Court Rules does not provide for this court to require Coecon to plead a cause of action against Mr. Neville against its wishes. Further, s. 155 (4) Constitution is not able to be relied upon in these circumstances as to do so would produce a result that would be inconsistent with Order 5 Rule 8 (1) National Court Rules. It is settled law that s. 155 (4) is to be utilised to enforce a primary right in the absence of other law. It is not to be utilised to render a result that is inconsistent with an existing law such as the National Court Rules. An example of this is the decision of Injia CJ in Peter Makeng v. Timbers (PNG) Ltd (2008) N3317: see also Medaing v. Ramu Nico Management (MCC) Ltd (2011) SC1144. Similarly, Order 12 Rule 1 National Court Rules, a general provision, to my mind cannot be relied upon to produce a result that is inconsistent with a more specific provision of the National Court Rules.

15. As to the other factors to which I referred in Kara's case (supra), no relief is sought in the statement of claim against Mr. Neville, he will not be affected if the relief sought in the statement of claim is granted and his joinder is not necessary to satisfy any orders made in the proceeding. After considering the arguments of counsel, I am not satisfied that Westpac has satisfied the requirements of Order 5 Rule 8 (1) National Court Rules concerning the addition of parties. Given this, it is not necessary for me to consider the other submissions of counsel.

Costs

14. Coecon seeks costs against counsel for Westpac Mr. Chillion personally and Allens, on an indemnity basis. Given, amongst others, the allegations against Mr. Neville in the statement of claim, I am not satisfied that Coecon has successfully made out a case warranting such orders.

Orders

15. The formal orders of the Court are:

a) The relief sought in the notice of motion of the defendant filed 29th October 2012 is refused,

b) The defendant shall pay the plaintiff's costs of and incidental to the notice of motion on a party party basis,

c) Time is abridged.

___________________________________________________________

Posman Kua Aisi Lawyers: Lawyer for the Plaintiff
Allens Lawyers: Lawyers for the Defendant