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R & Sons Construction Ltd v Independent State of Papua New Guinea [2017] PGNC 425; N8365 (13 February 2017)

N8365

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 1720 of 2015

BETWEEN:
R & SONS CONSTRUCTION LTD
Plaintiff

AND:
DR. KEN NGANGAN,
Secretary for Finance
First Defendant

AND:
THE INDEPENDENT STATE OF
PAPUA NEW GUINEA
Second Defendant

Waigani: Hartshorn J
2016: 30^th November
2017: 13^th February

PRACTICE AND PROCEDURE - Application to dismiss proceedings on grounds that it is frivolous, vexatious and does not disclose a reasonable cause of action – consideration of grounds of dismissal - principles which apply to applications under Order 12 Rule 40 National Court Rules – consideration of - power conferred by Order 12 Rule 40 is not confined to striking out pleadings - proceeding is frivolous and vexatious – defendants application to dismiss granted – proceedings dismissed

Cases Cited:
Papua New Guinea Cases

Ronny Wabia v. BP Exploration Operating Co Ltd [1998] PNGLR 8
Kiee Toap v. The State (2004) N2731; N2766
Lerro v. Stagg (2006) N3050
Kerry Lerro v. Stagg & Ors (2006) N3050
Takori v.Yagari & Ors (2008) SC905
Mt Hagen Urban Local Level Government v. Sek No. 15 (2009) SC1007
Siu v. Wasime Land Group Incorporated (2011) SC1107
Toligai v. Chan (2012) N4842.

Overseas Cases

Brimson v. Rocla Concrete Pipes Ltd [1982] 2 NSWLR 937
Burton v. Shire of Bairnsdale [1908] HCA 57; (1908) 7 CLR 76
Dey v. Victorian Railways Commissioner (1949) 78 CLR 62
Howden v. Truth & Sportsmen Ltd [1937] HCA 74; (1937) 58 CLR 416
Tampion v. Anderson [1973] VicRp 32; [1973] VR 321
Wenlock v. Moloney [1965] 2 All ER 871
Willis v. Earl Howe [1983] 2 Ch 545

Counsel:

Mr. J. Apo, for the Plaintiff
Mr. M. Wangatau, for the Defendants

13^th February, 2016

1. HARTSHORN J: This is a decision on a contested application to dismiss this proceeding. The defendants seek to dismiss this proceeding on the grounds that it is frivolous, vexatious and does not disclose a reasonable cause of action. Reliance is placed upon Order 12 Rule 40(1) (a) and (b) National Court Rules.

Background

2. The plaintiff, R & Sons Construction Ltd (RSC), claims that amongst others, it successfully completed a contract that it was awarded for the upgrading and sealing of the Transgogol Highway from Bau Vocational to Maiwan in Madang Province. The value of the contract was K 9,999,874.06, but RSC claims that it has only been paid K 7 million. RSC commenced this proceeding seeking amongst others the sum of K 2,994,874.06.

This application

3. The defendants submit that this proceeding should be dismissed as amongst others:

a) no reasonable cause of action is disclosed and the proceeding is frivolous and vexatious as the evidence discloses that RSC has been paid the sum of K10 million for the contract. RSC was in fact overpaid;

b) RSC did not complete the contract although RSC was paid K10 million;

c) the “Taking Over Certificate” purportedly issued to the effect that the contract had been completed was issued in suspicious circumstances as the contract was not completed.

4. RSC submits that the proceeding should not be dismissed as:

a) the defendants should not use an application made under Order 12 Rule 40 National Court Rules to present its case substantively as such an application is not the trial of the proceeding;

b) in an application under Order 12 Rule 40, the enquiry is restricted to whether the plaintiff’s pleadings are defective, too vague or contain omissions and whether, with reference to the pleadings, the plaintiff’s claim is incontestably bad;

c) a plaintiff should not lightly be driven from the judgment seat.

Law

Order 12 Rule 40 National Court Rules

5. There are numerous authorities in respect of the principles which apply to applications under Order 12 Rule 40 National Court Rules and I refer to the following cases in this regard: Kerry Lerro v. Stagg & Ors (2006) N3050, Takori v.Yagari & Ors (2008) SC905, Mt Hagen Urban Local Level Government v. Sek No. 15 (2009) SC1007 and Siu v. Wasime Land Group Incorporated (2011) SC1107. The Court in Mount Hagen v. Sek (supra) in paragraphs 27 to 30 conveniently sets out the requirements of Order 12 Rule 40 (1) (a), (b) and (c) as follows:

“27. The terms “vexatious”, “frivolous”, “abuse of the process of the Court” and “reasonable cause of action” under O.12 r.40 of the National Court Rules have been judicially considered, defined and expounded in a number of decisions in both the National and Supreme Courts. These cases include Ronny Wabia v. BP Exploration Co. Limited & 2 Others [1998] PNGLR 8 (N1697); PNG Forest Products Pty Ltd and Another v. The State and Genia [1992] PNGLR 85; Gabriel Apio Irafawe v. Yauwe Riyong (1996) N1915; Eliakim Laki and 167 Others v. Maurice Alulaku and Others (2002) N2001; Kiee Toap v. The Independent State of Papua New Guinea & Another (2004) N2766; Kerry Lerro trading as Hulu Hara Investments Limited v. Philip Stagg, Valentine Kambori & The State (2006) N3050; Philip Takori & Others v. Simon Yagari & 2 Others (2008) SC 905. These cases say the same thing.

28. The law with regard to an application for dismissal of proceedings based on O.12 r.40 is settled in our jurisdiction. We note that the principles are succinctly set out in Kerry Lerro’s case (supra) and which has more recently been approved and applied by the Supreme Court in Philip Takori’s case (supra).

29. The phrase ‘disclosing a reasonable cause of action’ consists of two parts; cause of action and form of action. A cause of action is defined as a legal right or form of action known to law whereby a plaintiff in a statement of claim must plead all necessary facts and legal elements or ingredients to establish or prove his claim. The principles stated by these cases can be summarized as follows:

(i) A plaintiff or claimant should not be driven from the judgment seat in a summary manner and that the Court should be cautious and slow in exercising its discretionary power.

(ii) The Court has an inherent jurisdiction to protect and safeguard its processes from abuse.

(iii) The purpose of O.12 r.40, is to give the Court power to terminate actions or claims which are plainly frivolous or vexatious or untenable.

(iv) A frivolous claim is one that is characterized as a claim that is plainly and obviously untenable, that cannot possibly succeed and bound to fail if it proceeds to trial.

(v) A vexatious claim is one that is said to be a sham and cannot succeed where it seeks to merely harass the opposing party and put that party to unnecessary trouble and expense in defending or proving the claim.

30. In an application under O.12 r.40 of the NCR, the Court may dismiss a proceeding or action where it is satisfied that the pleading in the statement of claim is seriously wanting where a necessary fact or legal element has not been pleaded.”

Consideration

6. At this juncture, I mention that filed on behalf of RSC is an affidavit of Ms. Helen Kanimba. It was brought to this court’s attention that Ms. Kanimba sent an email to the lawyer for RSC, and copied it to the lawyer for the defendants’, in which she states that amongst others, she withdraws her affidavit from this proceeding. I have not therefore considered the content of Ms. Kanimba’s affidavit or taken it into account in my determination of this application.

7. I consider first whether this proceeding is frivolous or vexatious.

8. As to counsel for RSC’s submission that an application under Order 12 Rule 40 National Court Rules should focus on the pleadings, the power conferred by Order 12 Rule 40 is not confined to striking out pleadings: (see Ritchie’s Supreme Court Procedure, New South Wales Vol 1 p2332, and Brimson v. Rocla Concrete Pipes Ltd [1982] 2 NSWLR 937 concerning the New South Wales equivalent to Order 12 Rule 40). Order 12 Rule 40(2) makes it clear that the court may receive evidence on an application under this rule and is not confined to dealing with the matter solely by reference to the pleadings: Ritchie (supra); Wenlock v. Moloney [1965] 2 All ER 871; Howden v. Truth & Sportsmen Ltd [1937] HCA 74; (1937) 58 CLR 416 at 418.

9. Further, Ritchie (supra) goes on to state that evidence may be necessary to amongst others, demonstrate by reference to other circumstances that the plaintiff’s case is hopeless: Willis v. Earl Howe [1983] 2 Ch 545, or otherwise constitutes an abuse of process even though the pleading itself discloses no defect as to form: Burton v. Shire of Bairnsdale [1908] HCA 57; (1908) 7 CLR 76.

10. In this instance the evidence of the first defendant, Dr. Ken Ngangan, the Secretary for Finance, is that amongst others, RSC received, with acknowledgements of receipt, a cheque for the sum of K2 million on 24^th May 2012 and a cheque for K1 million on 6^th June 2012. Further, these cheques were paid for contract no. SC32-AT-23AA, the contract that was awarded to RSC and the contract that RSC claims was awarded to it and that it completed.

11. There is no evidence on behalf of RSC rebutting Dr. Ngangan’s evidence. Notwithstanding that Ms. Kanimba’s affidavit has been withdrawn and cannot be relied upon, there is no evidence given on behalf of RSC that RSC did not receive these cheques. As such evidence in my view is essential to allow RSC’s claim to remain credible, its absence is telling.

12. In Dey v. Victorian Railways Commissioner (1949) 78 CLR 62 and 84, Latham CJ said:

“...... if a court is of opinion that the plaintiff cannot succeed there is every reason for protecting the defendant from vexation by the continuance of proceedings which must be useless and futile.”

13. Further, proceedings have been held to be frivolous if the plaintiff would be bound to fail if the matter went to trial: Ronny Wabia v. BP Exploration Operating Co Ltd [1998] PNGLR 8; Kiee Toap v. The State (2004) N2731; N2766; Lerro v. Stagg (2006) N3050; Tampion v. Anderson [1973] VicRp 32; [1973] VR 321 and Toligai v. Chan (2012) N4842.

14. In this instance, RSC claims the contract value to which it is entitled is nearly K10 million. It admits receiving K7 million on 9^th November 2011. The unrebutted evidence of Dr. Ngangan is that RSC received and signed for two payments of K2 million and K1 million in May and June 2012. That is a total of K10 million received by RSC for the contract. As mentioned, that there is no evidence from RSC explaining that it did not receive the two payments of K2 million and K1 million is telling.

15. In circumstances in which RSC has had the opportunity to deny the defendants’ evidence that it received the two cheques, the evidence of which if true, is fatal to RSC’s claim, but it has not denied this evidence of the defendants’ and left it unrebutted, I am satisfied that I am able to conclude that RSC cannot succeed in this proceeding. This proceeding is frivolous and vexatious. To use the words of Latham CJ, there is every reason for protecting the defendants from vexation by the continuance of this proceeding which must be useless and futile.

16. Consequently, the defendants are entitled to the relief that they seek. Given this it is not necessary to consider the other submissions of counsel.

Orders

17. It is ordered that:

a) This proceeding is dismissed;

2. The plaintiff shall pay all of the defendants’ costs of and incidental to this proceeding to be taxed if not otherwise agreed.

c) Time is abridged.

_____________________________________________________________
Apo & Co Lawyers: Lawyers for the Plaintiff
Office of the Solicitor General: Lawyers for the Defendants