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Varika v Mendikwae Ltd [2016] PGNC 44; N6228 (12 February 2016)

N6228

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 36 of 2014

BETWEEN:

JIMMY VARIKA
Plaintiff

AND:

MENDIKWAE LIMITED
First Defendant

AND:

PAM LOGISTIC LIMITED
Second Defendant

Waigani: Hartshorn J
2015: March 25th
2016: February 12th

Application for orders for the joinder of a party and leave to file a cross claim out of time

Cases cited:

Coecon Ltd v. Westpac Bank Ltd (2012) N4926
James Marape v. Peter O'Neill and Ors (2015) SC1458
Louis Medaing v. Ramu Nico Management (MCC) Ltd (2011) SC1144
PAC LNG International Ltd v. SPI (208) Ltd (2014) N5861
Peter Makeng v. Timbers (PNG) Ltd (2008) N3317
Workers Mutual Insurance (PNG) Ltd (in Liq) v. Sathasivan Sivakumaran (2012) N4637

Counsel:

Mr. D. Bidar, for the Plaintiff
Mr. R. Ott, for the First Defendant

12th February, 2016

1. HARTSHORN J: This is a decision on an application for the joinder of a party as a defendant and for leave to file a cross claim out of time. The application is made by the first defendant Mendikwae Ltd and is opposed by the plaintiff, Mr. Jimmy Varika, who is now deceased. There was no appearance on behalf of the second defendant.

Preliminary

2. Before the hearing of Mendikwae's amended notice of motion, the plaintiff sought to be named in the proceeding as "The Estate of the late Jimmy Varika", as Mr. Varika had died. There was no objection taken by the first defendant and so the order was made.

Background

3. Mr. Varika claimed that he is the registered proprietor and entitled to the fee simple estate of the land known as Ikuri Maku, 2369C Milinch of Granville, Fourmil, Port Moresby (Land). Mr. Varika further claimed that the defendants have wrongfully taken possession of the Land and are trespassing. Notices to quit have been given but the defendants have remained. So the Varika Estate now seeks declaratory relief that it owns the Land and is entitled to vacant possession of it, and orders that it be given possession. Other ancillary orders are also sought.

This application

Joinder

4. Mendikwae applies pursuant to Order 5 Rule 8 (1) National Court Rules and contends that Mr. Rabua Charlie Madaha should be joined as the third defendant to the proceeding as:

a) he has sufficient interest in this proceeding as he is the Chief of his clan, and the interim chairman of the clan's Incorporated Land Group. His clan owned land that included the Land, the subject of this proceeding. The Land, he alleges, was fraudulently converted by Mr. Varika into Mr. Varika's name.

b) his joinder will help to resolve all issues involved in the dispute concerning the Land.

5. The Varika Estate contends that Mr. Madaha should not be joined as the third defendant to the proceeding as amongst others:

a) The evidence relied upon by Mendikwae is hearsay;

b) any challenge to the conversion of the Land into Mr. Varika's name is out of time, statute barred and estopped;

c) the claim of the Varika Estate concerns vacant possession of the Land and not the conversion of the Land from customary to a fee simple estate;

d) a plaintiff is entitled to decide the defendant that it sues.

Law

6. I recently considered the law concerning joinder of a party in James Marape v. Peter O'Neill and Ors (2015) SC1458. Notwithstanding that my decision constituted the minority, the majority agreed with my summation of the principles relevant to the exercise of discretion on the joinder of a party.

I reproduce that part of my decision in Marape v. O'Neill (supra):

".... Order 5 Rule 8 (1) ... (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, the Court, on application by him or by any party or of its own motion, may, on terms, order that he be added as a party ........"

23. In the 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. ..."

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

25. 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."

26. As to the second factor above, where the plaintiff, in this case the appellant, opposes the joinder, as I referred to in Coecon Ltd v. Westpac Bank (PNG) Ltd (2012) N5097, this factor 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." "

27. In Coecon v. Westpac (supra), although it was apparent that the plaintiff had a cause of action against the person sought to be joined as a defendant, the plaintiff had decided, for whatever reason, not to pursue him and only to pursue the defendant. The plaintiff opposed the application for joinder. I refused the application. Similarly in Timbers PNG Ltd v. Papua New Guinea Forest Authority (2012) N4638, I refused an application for joinder that was opposed by the plaintiff.

28. In Coecon v. Westpac (supra), no relief was sought against the person sought to be joined and he would not have been affected if the relief sought by the plaintiff was granted. In Timbers PNG Ltd (supra), the plaintiff had been granted leave to judicially review a decision of the Minister for Forests. No relief was sought against the company seeking to be joined. The company could have been indirectly affected if the judicial review of the Minister's decision was successful but not as a direct result of the relief sought by, or the actions of, the plaintiff.

29. In Bobby Enda v. Kanawi Pouru (2013) N5314, although the plaintiffs opposed the joinder application and no relief was sought against the applicant seeking to be joined, it was apparent that if the relief sought was granted it would have directly affected the applicant's rights to exercise its timber permit rights. Consequently, I was satisfied that the applicant had a sufficient interest and granted the joinder."

Consideration

7. The relief sought in the statement of claim seeks amongst others vacant possession of certain land from the defendants and is not concerned with the conversion of that land from customary land to a fee simple estate. The dispute is concerned with the ownership of a fee simple estate. If the Varika Estate is unsuccessful, Mendikwae and the second defendant Pam Logistic Ltd will be. Mr. Madaha will not be affected regardless of whether the relief sought in the statement of claim is granted or rejected. Consequently I am not satisfied that Mr. Madaha has a sufficient interest in this proceeding to warrant his joinder.

8. As to whether Mr. Madaha's joinder is necessary to ensure that all matters in dispute in the proceeding can be effectively and completely adjudicated upon, from the pleadings and the evidence relied upon, I am not satisfied that Mr. Madaha's joinder is necessary for this purpose given the matters in dispute as pleaded. If necessary, Mr. Madaha may be a witness if any party determines that his evidence could be of assistance.

9. Further, as mentioned, in the normal course a plaintiff is entitled to pursue his remedy against the defendants of his choosing: Dollfus Mieg v. Bank of England (supra), Coecon Ltd v. Westpac Bank (supra), Timbers PNG v. PNG Forest Authority (supra) and Enda v. Pouru (supra). A factor that may require the joinder of a party in opposition to a plaintiff's wishes is if the party seeking to be joined will be directly affected if the relief sought in the proceeding is granted: Enda v. Pouru (supra).

10. As previously referred to, in my view Mr. Madaha will not be directly affected, if the relief sought is granted. Further, no relief is sought against him and his joinder is not necessary to satisfy any orders that may be made. Given the above the application for Mr. Madaha's joinder should be refused.

Leave to file a cross claim

11. Mendikwae applies pursuant to Order 8 Rule 37, Rule 38 (2), Order 4 Rule 34, Order 12 Rule 1 National Court Rules, and s. 155 (4) Constitution to be granted leave to file a cross claim out of time.

12. Order 8 Rule 37 and Rule 38 (2) do not provide for this court to grant leave to file a cross claim out of time. Order 4 Rule 34 is in Division 4 of Order 4. Order 4 Rule 23 provides that Division 4 only applies to proceedings commenced by Originating Summons. This proceeding is commenced by a Writ of Summons and so Order 4 Rule 34 being in Division 4 of Order 4 does not apply.

13. Order 12 Rule 1 National Court Rules, is a general provision and does not contain a concise reference to the court's jurisdiction to grant the order specifically sought. As no objection was taken by counsel for the Varika Estate however, I will allow the application to proceed under this Rule. Given this it is not necessary to consider s. 155 (4) Constitution in this context. I mention though that s. 155 (4) Constitution is not the source of primary jurisdictional power: Peter Makeng v. Timbers (PNG) Ltd (2008) N3317 and cannot be applied to do anything contrary or inconsistent with the provisions of the National Court Rules: Louis Medaing v. Ramu Nico Management (MCC) Ltd (2011) SC1144.

14. Mendikwae contends that it should be granted leave to file a cross claim out of time as:

a) difficulty was experienced in obtaining evidence from witnesses and obtaining the authority and instructions to file affidavits;

b) the proposed cross claim contains serious allegations of fraud;

c) the cause of action pleaded in the proposed cross claim is not statute barred.

15. Varika Estate contends that leave to file a cross claim out of time should not be granted as:

a) a period of 12 months has elapsed since the cross claim should have been filed and no reasonable explanation has been given for the delay in bringing the application for leave to file a cross claim;

b) some matters pleaded in the cross claim are statute barred and further, have already been dealt with.

Law - leave to file a cross claim out of time

16. Counsel for Varika Estate referred the court to the decision of Coecon Ltd v. Westpac Bank Ltd (2012) N4926. This decision of Sawong J., is a refusal of an application to file a cross claim out of time for the reasons that the cause of action in the proposed cross claim are statute barred and also because of significant and chronic delay in bringing the application.

17. In the case of Workers Mutual Insurance (PNG) Ltd (in Liq) v. Sathasivan Sivakumaran (2012) N4637, I refused an application to file a defence and cross claim out of time. The application was made pursuant to Order 1 Rule 15 National Court Rules. I reproduce that part of my decision that considered the relevant principles concerning an application to file a defence out of time:

"In the case of Duma v. Hriehwazi (2004) N2526, Kandakasi J. stated that the principles applicable to an application to set aside a default judgment with appropriate modification should apply to an application for leave to file and serve a defence out of time. In the case of Tipaiza v. Yali (2006) N2971, Cannings J. agreed that the factors to be taken into account on an application for an extension of time were; the extent of the delay, the reasons for the delay and does the defendant appear to have a good defence? To those factors he added one further; where do the interests of justice lie? I also make reference to the case of Green & Co. Pty Ltd (Receiver Appointed) v. Roger Britain Green [1976] PNGLR 73. That case involved an application to set aside a default judgment regularly entered. It was held that on such an application, the principal matter that must be shown by the applicant is that he has a defence on the merits. That statement of the law, in my view, is equally applicable to an application seeking an extension of the time in which a defendant may file its defence."

18. I am also of the view that the above statement of the law is equally applicable to an application seeking an extension of time in which the defendant may file a cross claim but with the requirement that instead of the applicant having to show that he has a defence on the merits, he has to show that he has a serious question to be tried by way of cross claim that has a real possibility of ultimate success. This is similar to the serious question to be tried requirement for an interlocutory injunction. In this regard I refer to a passage from PAC LNG International Ltd v. SPI (208) Ltd (2014) N5861:

"A serious question to be tried has been interpreted to mean:

"What the plaintiff must prove is that he has a serious, not a speculative case which has a real possibility of ultimate success....": Robinson v. National Airlines Commission [1983] PNGLR 478 and

"..... a strong case which, on the evidence presented would support a permanent injunction": Markscal Ltd v. MRDC [1996] PNGLR 419."

Consideration

Explanation for not filing the cross claim in time

19. Mendikwae submits that difficulty was experienced in obtaining evidence from witnesses and in obtaining the authority and instructions to file affidavits. It is the case, however, that Mendikwae filed an amended defence on 22nd May 2014 after leave to do so was granted by consent. Mendikwae does not state why leave was not obtained to file a cross claim then or why an appropriate application was not made for an extension of time. Given this I am not satisfied that a reasonable explanation for not filing the cross claim in time has been given.

Whether a serious question to be tried disclosed

20. Mendikwae submits that there are very serious allegations of fraud against Mr. Varika. There are confessional statements and evidence to the effect that the conversion and registration of the Land was fraudulent. Further, the proposed cross claim is not statute barred it is submitted.

21. The Varika Estate submits that the evidentiary material relied upon by Mendikwae is hearsay with no factual basis. This is in contrast to the affidavit evidence of Mr. Varika which details how he acquired the fee simple title together with the conclusion of proceedings before the Land Titles Commission (LTC). The LTC has exclusive jurisdiction: s.15 (1) Land Titles Commission Act 1962. Sections 34 and 38 provide for the right of review and appeal. Those rights have not been exercised here and the time in which to do so expired about 19 years ago. Consequently, submits the Varika Estate, Mendikwae is estopped from raising the matters it does in the proposed cross claim, and further, the matters raised are statute barred.

22. From a perusal of the submissions, the evidence relied upon, the proposed cross claim and a consideration of the relevant provisions of the Land Titles Commission Act 1962, I am not satisfied that Mendikwae has established that it has a serious question to be tried that has a real possibility of ultimate success.

23. As I have found that Mendikwae has not given a reasonable explanation for the delay in making the application to file a cross claim out of time and has not established that it has a serious question to be tried that has a real possibility of ultimate success, I refuse the application to file a cross claim out of time.

Orders

24. The Orders of the Court are:

a) The relief sought in paragraph 1 of the notice of motion of the plaintiff filed 13th March 2015 is granted;

b) Paragraph 2 of the notice of motion of the plaintiff filed 13th March 2015 shall be argued at a later date to be fixed;

c) The relief sought in the amended notice of motion of the first defendant filed 18th March 2015 is refused;

d) The costs of the plaintiff, of and incidental to the amended notice of motion of the first defendant filed 18th March 2015 shall be paid by the first defendant;

e) Time is abridged.
_____________________________________________________________ O'Briens Lawyers : Lawyers for the Plaintiff
Themis Lawyers : Lawyers for the First Defendant
Stevens Lawyers : Lawyers for the Second Defendant