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Nola v Alipet [2019] PGNC 209; N7939 (12 July 2019)

N7939

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS No. 1774 of 2015

BETWEEN:
JEFF NOLA
Plaintiff

AND:
EMMANUEL ALIPET
First Defendant

AND:
TOYOTA TSUSHO (PNG) LIMITED
Second Defendant

Waigani: Shepherd J

2018: 22^nd May
2019: 12^th July

VICARIOUS LIABILITY – plaintiff must plead and prove that: (1) employee of employer committed tort or other wrong against plaintiff while acting in course of employee's duties (2) employee was engaged in furthering the business or interest of the employer (3) the degree of deviation from scope of employee's authorised acts not such that it was a separate activity (4) in cases of theft, the property stolen from plaintiff was put in custody of employee by the employer.

CAUSES OF ACTION – plaintiff must have cause of action known to law – cause of action must be proved by relevant and admissible evidence – defective pleadings - Court can strike out claim under National Court Rules, Order 8 Rule 27(1)(a) – Court can dismiss claim under Order 12 Rule 40(1) where no reasonable cause of action is disclosed on pleadings or evidence.

DEFENCES TO CAUSES OF ACTION – defences of res judicata and issue estoppel – only applicable in later proceedings where same issues were finally determined between same parties in earlier proceedings – earlier criminal proceedings involving an offender who is later a defendant in civil proceedings not a bar to civil suit.

RESTITUTION – restitution content of a sentencing order made for benefit of an offender later cited as a defendant in civil proceedings is not enforceable by victim without further order of the Court in its criminal jurisdiction or its civil jurisdiction – Section 14 of Criminal Law (Miscellaneous Provisions) Act Chapter 263.

PRACTICE AND PROCEDURE – plaintiff can choose who to sue or continue to sue in multi-party civil suit – Court's discretion to order costs against plaintiff who commences suit but later does not pursue claims made against particular defendant.

Held:

(1) The defences of res judicata and issue estoppel did not apply in this case because the parties in the earlier criminal proceedings involving the first defendant were different from the parties in this civil suit, the issues which were determined in the criminal proceedings were different from the issues in this civil suit and the decision in the criminal proceedings did not extinguish the foundation of the plaintiff's claim or right to set up civil causes of action against the first defendant and the second defendant.

(2) The restitution content of the order on sentence of the first defendant which was made in the criminal proceedings was made for the benefit of the first defendant as offender as a condition for his possible early release from imprisonment; it was not a final order or judgment for restitution which could be enforced by the plaintiff against the first defendant without further order of the National Court in its criminal jurisdiction or its civil jurisdiction.

(3) A plaintiff is at liberty to choose who the plaintiff shall sue or continue to sue in a multi-party civil suit, but this is subject to the Court's discretion to order costs against a plaintiff who has commenced suit against two or more defendants but later does not pursue claims made against a particular defendant.

(4) In order for a plaintiff to establish a cause of action based on vicarious liability, a plaintiff must specifically plead and prove that:

a) the employee of the employer committed a tort or other wrong against the plaintiff while acting in the course of that employee's duties as an employee;

b) at the time the misconduct of the employee occurred, the employee was engaged in furthering the business or interests of the employer;

c) the degree of deviation from the scope of acts which the employee was usually authorised to do was not such that the employee's misconduct could be regarded as being a separate activity outside the scope of acts which the employee was authorised to do.

d) in cases of theft, the monies or other property stolen from the plaintiff had been put in the custody of the employee by the employer.

(5) The failure by the plaintiff to plead in the circumstances of this case:

1. a) that the first defendant had committed a tort or some other cause of action known to law against the plaintiff personally for which the first defendant was liable to the plaintiff ; and
2. b) the elements necessary to establish vicarious liability on the part of the second defendant as the employer of the first defendant; and

c) that the second defendant owed a duty of care to the plaintiff personally and that such duty was breached by the second defendant to the detriment of the plaintiff, rendered the pleadings defective such that the plaintiff's claim against the second defendant was struck out and the proceeding against the second defendant dismissed.

(6) Even if the plaintiff's statement of claim had properly pleaded vicarious liability and tortious negligence on the part of the second defendant, which it did not, the evidence of the plaintiff did not support either of those two causes of action.

Cases Cited:

The following cases are cited in the judgment:

Papua New Guinea Cases

Telikom PNG v. ICCC (2008) SC906
Wilson Thompson v. National Capital District Commission (2004) N2686
Titi Christian v. Rabbie Namaliu (1966) SC1583
Sebulon Wat v. Peter Kari [1975] PNGLR 325
Konze Kara v. Public Curator of Papua New Guinea (2010) N4048
Kappo No. 5 Pty Ltd v. James Chi Kung Wong (1997) SC520
Kuk Kuli v. The State (2004) N2592
Andrew Daiva and Ome Ome Forests Ltd v. Lawrence Pukali: Ome Ome Forests Ltd v.Ray Cheong (2002) N2289
Peter Aigilo v. The State (2001) N2012
Desmond Huaimbukie v. James Baugen (2004) N2589
Pagasa Pembaro v. Garry Baki as Commissioner for Police (2015) N6224
Dalin More v. The State (1998) N1736
Kolta Development Ltd v. The State (2013) N5954

Overseas Cases

R v. Wilkes [1948] HCA 22; (1948) 77 C.L.R. 511
Chesworth v. Farrar [1967] 1 Q.B. 407
Blackburn v. Smith [1848] EngR 712; (1848) 2 Ex. 783

Texts

Halsbury's Laws of England 4^th Ed. Vol.16

Clerk & Lindsell on Torts (2006) 19^th Ed, Sweet & Maxwell

Counsel:

Greg Konjib, for the Plaintiff
Gomara Gorua, for the Second Defendant

DECISION
12th July, 2019

1. SHEPHERD J: The plaintiff (Mr Nola) claims an order against the second defendant (Ela Motors) for the refund of K17,000 which Mr Nola paid to the first defendant (Mr Alipet), a used car salesman employed by Ela Motors The amount of K17,000 comprised K2,000 which Mr Nola paid to Mr Alipet as commission for Mr Nola's intended purchase from Ela Motors of a second-hand Toyota utility, with a further sum of K15,000 as payment in advance for the vehicle, which payment was given by Mr Nola to Mr Alipet in person in cash several days later. The purchase of the utility never eventuated because Mr Alipet pocketed the commission of K2,000 and wrongfully retained the purchase monies of K15,000 for the vehicle for his own use and benefit. Ela Motors never received any of those monies. Mr Alipet was arrested by the police on the complaint of Ela Motors. Mr Alipet was subsequently convicted by the National Court. He pleaded guilty to criminal charges of obtaining goods by false pretence, misappropriation and stealing monies totaling K149,000, of which Mr Alipet admitted K17,000 had been stolen by him from Mr Nola, with the balance of K132.000 stolen from Ela Motors in a separate series of thefts. Mr Alipet was sentenced to a total 11 years on these 3 charges, to be served concurrently over 4 years. It was a condition of sentence that if Mr Alipet were to make restitution in full of K17,000 to Mr Nola and K132,000 to Ela Motors, he could be released early from prison. Mr Nola, the plaintiff in this current civil proceeding, contends that in these circumstances Ela Motors was negligent in its supervision of its employees as regards cash transactions and that Ela Motors is vicariously liable to him for the amount of K17,000 for the criminal conduct of Mr Alipet.

Background – earlier civil and criminal proceedings against Emmanuel Alipet

2. Ela Motors took civil action against Mr Alipet in uncontested National Court proceeding WS No. 453 of 2014: Toyota Tsusho (PNG) Ltd v Emmanuel Alipet. Summary judgment with damages to be assessed was entered by consent against Mr Alipet in that civil suit on 9 August 2014. Damages were subsequently assessed against Mr Alipet in that case by Hartshorn J on 25 January 2016 at K249,428.30 for loss of profit from goods and money stolen by Mr Alipet from Ela Motors.
   
3. The criminal proceedings in CR (FC) No. 228 of 2015 against Mr Alipet resulted in sentence being pronounced by Salika DCJ (as he then was) on 17 March 2016. A copy of Justice Salika's written decision on sentence was admitted into evidence in the present proceeding. When addressing the matter of restitution, His Honour stated:
   

"In most misappropriation and stealing cases the victims usually require restitution of their monies. This case is no different. Jefferey Nola wants his money back and Ela Motors wants its money that was stolen by the prisoner. The prisoner on his own is unable to make the restitution immediately. He has suggested restitution over time through periodic instalments ... That proposal to me is not a satisfactory one. His real hope of restitution rests with his father to secure a loan to pay off one debt and to sell the family home to settle Ela Motors."

4. Justice Salika then concluded his reasons for sentence of Mr Alipet as follows:

"In view of those factors and taking into account the mitigating factors and your plea of guilty I impose the following sentences:-

Count 1: Obtaining goods by false pretence – 3 years imprisonment in hard labour.

Count 2: Misappropriation – 4 years imprisonment with hard labour.

Count 3: Stealing – 4 years imprisonment with hard labour.

All of the sentences are to be served concurrently with each other meaning that the prisoner will serve 4 years from a total of 11 years.

All of the 4 years will be suspended if the total K149,000.00 charged is restituted.

...

Once the entire K149,000.00 has been repaid to Mr Nola (K17,000.00) and to Ela Motors (K132,000.00) he will be released. He is not to be released until the full amount has been paid."

5. Regarding restitution, Justice Salika acknowledged in his written decision that an initial instalment of K1,000 towards restitution of the K17,000 owed by Mr Alipet to Mr Nola had already been paid by Mr Alipet's father to Mr Nola, leaving a balance of K16,000 still owed by Mr Alipet to Mr Nola at that time. Mr Alipet's father, Mr Alipet Alikapson, was also an employee of Ela Motors at the time the failed transaction between his son and Mr Nola occurred.
   
6. By the time Mr Alipet was sentenced for his criminal conduct on 17 March 2016, Ela Motors had already obtained its abovementioned formal judgment for K249,428.30 against Mr Alipet in civil proceeding WS No. 453 of 2014 on 25 January 2016.
   
7. Mr Alipet and his relatives have made no further restitution payments to Mr Nola since 2015. This means that there is still an amount of K16,000 which Mr Alipet owes to Mr Nola as a result of the findings which were made by Justice Salika in the criminal proceedings. It is those findings which Mr Nola now largely relies upon in this civil proceeding WS No. 1774 of 2015 in his pursuit of a formal judgment against Mr Alipet and Ela Motors.
   

Threshold issues raised by Ela Motors:

(1) res judicata or issue estoppel
(2) failure of Mr Nola to pursue his civil claim against Mr Alipet

8. Ela Motors has raised two threshold issues which it submits should be determined before the Court is able to consider the primary issues pleaded by the plaintiff Mr Nola:
   

(1) The first of these threshold issues advanced by Ela Motors is whether the Court lacks jurisdiction to determine this civil proceeding WS No. 1774 of 2016 under those principles of law known as res judicata and issue estoppel.

(2) In the alternative, Ela Motors argues that Mr Nola's failure to pursue a finding of liability against Mr Alipet as first defendant by way of default judgment in this proceeding is fatal to Mr Nola's claim against Ela Motors based as it is in vicarious liability and the tort of negligence.

Ela Motors contends that if either of these threshold issues is successful, this proceeding must be dismissed.

Threshold Issue 1 - res judicata or issue estoppel

9. Ela Motors submits that because the criminal proceedings against Mr Alipet have already determined his guilt, the order which was made by Justice Salika for Mr Alipet to make restitution of K17,000 to the plaintiff and K132,000 to Ela Motors in full if Mr Alipet wished to obtain early release from prison is already enforceable by Mr Nola against Mr Alipet. Ela Motors argues that Mr Nola should therefore pursue enforcement of that ruling by Justice Salika in the criminal proceedings and abandon his civil claims against Mr Alipet and Ela Motors in this proceeding. Ela Motors asserts that the principles of res judicata, alternatively issue estoppel, operate in this proceeding by way of defence to divest the National Court of its civil jurisdiction to determine Mr Nola's claim against Ela Motors.
   
10. The issue as raised by Ela Motors can be posed as follows: Does an order for restitution made in criminal proceedings preclude a victim, by operation of the principles of res judicata or issue estoppel, from pursuing separate civil action based on the same facts from which the criminal conviction arose? The resolution of that issue depends on the particular circumstances of each case, with reference to who were the parties and what was ordered in the criminal proceedings when viewed against the composition of the parties and what is sought in the civil proceedings.
    
11. In support of its first threshold submission, Ela Motors relies on the decision in Telikom PNG v ICCC (2008) SC906 as authority for the proposition that res judicata or issue estoppel apply to Mr Nola's claims in this proceeding against Mr Alipet and Ela Motors such that Mr Nola is now prevented from litigating issues relating to the civil liability to him of Mr Alipet and Ela Motors.
    
12. I reject this argument. The Telikom PNG case was a Supreme Court decision in a civil suit, Injia DCJ (as he then was), Kirriwom and Cannings JJ presiding. It was held in that case that the doctrine of res judicata operates when the issues between the parties have already been finally determined by a court or tribunal having lawful authority to do so. But there is more to the doctrine than this. In the course of his judgment in the Telikom PNG case, Justice Injia stated:
    

"In summary, in order for the defence of res judicata to succeed a party relying on the doctrine must show:
1. The parties in both matters are the same;
2. The issues in both matters are the same;

3. The previous judgment or decision extinguished the foundations of the claim or the right to set up an action. The result is therefore final and conclusive and it binds every other Court; and
4. A court of competent jurisdiction made the first decision."

13. Applying those factors to the present case:
    

(1) The parties in the criminal proceedings were the State and Mr Alipet. Mr Nola and Ela Motors were not parties to those proceedings. They were the victims of Mr Alipet's criminal conduct. The State is not a party to this civil proceeding instituted by Mr Nola.

(2) The issues in the criminal proceedings were different from the primary issues now presented in the current civil proceeding between Mr Nola, Mr Alipet and Ela Motors. The criminal proceedings concerned the prosecution by the State of Mr Alipet for the criminal offences of false pretence, misappropriation and stealing, offences prescribed by the Criminal Code. In contrast, in this civil proceeding the issues as pleaded by Mr Nola in his statement of claim are based, albeit loosely, on assumed civil causes of action founded on the doctrine of vicarious liability and the tort of negligence.

(3) The judgment in the criminal proceedings related to the conviction and sentencing of Mr Alipet. That judgment did not extinguish the foundation of the victims' civil claims against Mr Alipet or the rights of the victims to claim for their losses in civil proceedings against Mr Alipet. The judgment in the criminal proceedings, although final and binding on the National and Supreme Courts in their criminal jurisdiction as to the conviction and sentencing of Mr Alipet, is not determinative of the current civil proceeding in the National Court because different issues are now presented for decision by the Court.

(4) It is self-evident that the judgment on sentence in the criminal proceeding was made by the National Court as a first decision and that the National Court was lawfully competent to make that judgment. This is the only factor enumerated by Justice Injia in the Telikom PNG case which is applicable to this current civil proceeding. The remaining three factors have no application at all to this civil suit.

14. In Wilson Thompson v. National Capital District Commission (2004) N2686 Kandakasi J (as he then was) explained the doctrine of res judicata this way:

" ... in order for the defence of res judicata to succeed, it is necessary to show not only that the cause of action was the same but also that the plaintiff has had an opportunity of recovering in an earlier proceeding. A plea of res judicata must show either an actual merger or a determination of the same point between the same parties in an earlier proceeding."

15. The order for restitution which was made by Justice Salika in the criminal proceedings was a condition for the possible early release of Mr Alipet, which could only occur if full restitution of K17,000 to Mr Nola and K132,000 to Ela Motors was made by or on behalf of Mr Alipet while he was still in prison. This aspect of Mr Alipet's sentence was not couched in terms of a formal judgment of the National Court.
    
16. Sections 14(1) and 14(2) of the Criminal Law (Miscellaneous Provisions) Act Chapter 263 provide:
    

"14. Restitution of property:

(1) Where any person is prosecuted on the information of –

(a) the owner of any property; or

(b) any person on whom the right to any property has devolved by operation of law,

on a charge of an indicatable offence of which the unlawful acquisition of the property by him is an element, and is convicted of the offence on indictment, the court may order the property to be restored to the owner.

(2) An order made under Subsection (1) –

(a) has the effect of a judgment; and

(b) is binding on the offender and any person claiming through him as determining the ownership of the property,

but as regards any other person it has the effect only of changing the possession of the property and does not affect any right of property or right of action."

17. In the present instance, the informant in the criminal proceedings against Mr Alipet was Ela Motors. The informant was not Mr Nola. And although Mr Alipet was convicted of indictable offences involving the theft of monies from Mr Nola and Ela Motors, no express order for restitution was made by Justice Salika under Section 14(1) of the Criminal Law (Miscellaneous Provisions) Act which required the monies Mr Alipet had stolen to be repaid by Mr Alipet to Mr Nola and Ela Motors. Rather, His Honour made it a condition of sentence that Mr Alipet could only be released from imprisonment early if all of the monies stolen by Mr Alipet from Mr Nola and Ela Motors were repaid. Mr Nola therefore had no opportunity to recover the K17,000 which Mr Alipet stole from him by simply endeavouring to rely on the restitution content of the sentencing order which was made by Justice Salika on 17 March 2016. In my view, the restitution aspect of Mr Alipet's sentence cannot, without further order of the National Court, be enforced by Mr Nola or by Ela Motors as an order of the Court for restitution or reimbursement of monies which were stolen by Mr Alipet from Mr Nola and Ela Motors.
    
18. As to the doctrine of issue estoppel, this arises where the causes of action are different but the parties or those privy to them are the same and the same issue is raised and conclusively determined by the Court.^[1] The classic statement of this principle, cited with approval and adopted by Amet CJ in Titi Christian v Rabbie Namaliu (1996) SC1583 and by Justice Injia in Telikom (PNG) Ltd v. ICCC (supra) is derived from the following passage in Halsbury's Laws of England:^[2]
    

"An estoppel which has come to be known as "issue estoppel" may arise where a plea of res judicata may not be established because the causes of action are not the same. A party is precluded from contending the contrary of any precise point which, having once been distinctly put in issue has been solemnly and with certainty determined against him. Even if the objects of the first and second actions are different, the finding on a matter which came directly (not collaterally or incidentally) in issue in the first action, provided it is embodied in a judicial decision that is final, is conclusive in a second action between the same parties and their privies. This principle applies whether the point involved in the earlier decision, as to which the parties are estopped, is one of fact or one of law, or one of mixed fact and law. The conditions for the application of the doctrine have been stated as being that:

(1) the same question was decided in both proceedings;

(2) the judicial decision said to create the estoppel was final; and

(3) the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised or their privies."

19. It is immediately apparent that even on a cursory application of these three conditions, the doctrine of issue estoppel has no relevance to the present case. Although the criminal proceedings against Mr Alipet were based on the same or similar facts as are presented in the civil case now before the Court, the criminal proceedings raised very different issues than those pleaded by Mr Nola in this civil case. The criminal proceedings determined the guilt of Mr Alipet and his sentence on conviction for serious criminal offences involving the theft of money from Mr Nola and Ela Motors. Those proceedings did not determine issues of alleged negligence or of vicarious liability on the part of Ela Motors for Mr Alipet's criminal conduct. And although the judicial decision of the National Court on sentence in the criminal proceedings involving Mr Alipet was final, the parties in the criminal proceedings, that is to say the State and Mr Alipet, are not the same parties as are involved in the present civil claim by Mr Nola against Ela Motors.
    
20. In short, the decision of the National Court in the criminal proceedings has no bearing on the jurisdiction of the National Court to determine the current civil proceeding WS No. 1174 of 2015. The doctrines of res judicata and issue estoppel do not apply to Mr Nola's civil case against Mr Alipet or Ela Motors. The National Court has jurisdiction to determine this proceeding.
    

Threshold Issue 2 – Mr Nola's failure to pursue his civil claim against Mr Alipet

21. The second threshold issue raised by Ela Motors challenging the jurisdiction of the Court to determine this civil suit is that Mr Nola has not pursued his civil claim against Mr Alipet. Ela Motors submits that unless there is a primary finding by this Court involving wrongful conduct by Mr Alipet, Ela Motors cannot be held vicariously liable for monies stolen by Mr Alipet from Mr Nola. Ela Motors points out that Mr Nola has only been actively pursuing his claim in this current proceeding against Ela Motors, not Mr Alipet.
    
22. I observe that no affidavit of service of the writ of summons in WS No. 1774 of 2015 on Mr Alipet has been filed by Mr Nola's lawyers to date, although there is a document on the Court's file not formally in evidence which purports to bear the signature of Mr Alipet whereby he acknowledges that he was served with a sealed copy of the writ of summons at Bomana CIS on 19 July 2017 at 1.45 pm. No notice of intention to defend this proceeding and no defence has been filed by or on behalf of Mr Alipet. This proceeding is therefore undefended by Mr Alipet as first defendant. No application for default judgment against Mr Alipet has ever been sought by Mr Nola in this civil suit.
    
23. Ela Motors submits that in these circumstances Mr Nola must nevertheless first prove liability against Mr Alipet before Mr Nola can pursue his claim in vicarious liability against Ela Motors. The argument is that if liability is not proven against Mr Alipet in this civil action, Mr Nola's claims in vicarious liability and negligence against Ela Motors must fail.
    
24. While it is correct, as submitted by counsel for Ela Motors, that proof of service of a writ of summons must be established to the Court's satisfaction by way of an affidavit of service which complies with the requirements of Order 6 Rule 18 National Court Rules, there is nothing in the National Court Rules which compels a plaintiff to file an affidavit of service if the plaintiff elects not to proceed against a defendant where two or more defendants are cited in the proceeding. The filing of an affidavit of service is mandatory on an application for default judgment against a defendant under Order 4 Rule 49(19)(3)(a)(i)(2) National Court Rules but in this instance Mr Nola, for whatever reason, has elected at this stage not to seek default judgment against Mr Alipet. That is Mr Nola's prerogative. As Hartshorn J observed in Konze Kara v. Public Curator of Papua New Guinea (2010) N4048, a plaintiff is entitled to choose who he wishes to sue. I concur and add that a plaintiff is at liberty both before and after commencement of civil suit to choose who the plaintiff may sue or continue to sue. This is of course subject to the Court's discretion under Order 22 of the National Court Rules to order costs against a plaintiff who causes a defendant to incur legal and other expenses after the plaintiff has commenced suit but then later withdraws or abandons the proceeding against an otherwise dormant or absent defendant.
    
    25. The Court also has discretionary power under Order 5 Rule 6 National Court Rules to order separate trials or make such other order as the Court thinks fit where any joinder of parties or causes of action could embarrass or delay trial of the case. In the present instance the Court allowed the case to proceed against Ela Motors alone because Mr Nola had not applied for default judgment against Mr Alipet and because Mr Alipet was still in prison and had taken no steps to defend the claims made against him by Mr Nola in this proceeding.^[3] The Court's order for this case to progress to trial against Ela Motors as second defendant in the absence of Mr Alipet as first defendant was made by Justice Kandakasi on 17 August 2017. The order directed that the trial be by way of affidavit evidence.
        
26. I rule therefore that Mr Nola is at liberty to proceed with his claims in this action against the second defendant Ela Motors alone, subject of course to the onus Mr Nola as plaintiff bears of proving on balance of probabilities that all elements for his twin causes of action against Ela Motors based on vicarious liability and the tort of negligence are established.
    

Substantive Issues for Determination

27. There is no dispute on the evidence in this present civil case that at the material time the first defendant Emmanuel Alipet was an employee of Ela Motors. He was employed by Ela Motors as its Used Car Sales Manager at the company's branch at Badili, NCD. Mr Alipet held that position in the company at the time Mr Nola gave him commission monies of K2,000 in cash on 27 December 2013, which was followed shortly afterwards on 30 December 2013 by the officially unreceipted payment in cash of K15,000 by Mr Nola to Mr Alipet for Mr Nola's intended purchase from Ela Motors of a second-hand Toyota utility registration no. BAW-642. There is no dispute that Mr Alipet's conduct in keeping the total amount of K17,000 for himself and that his failure to account to Ela Motors for the purchase monies of K15,000 which he had received from Mr Nola for the Toyota utility was criminal and fraudulent.
    
28. The issues that now fall for determination by the Court are these:

(1) Is Ela Motors vicariously liable to Mr Nola for the criminal conduct of Mr Alipet?

(2) Did Ela Motors owe a duty of care to Mr Nola in the particular circumstances of this case to supervise the performance of Mr Alipet's duties upon Mr Alipet receiving cash monies, and if so was that duty of care breached by Ela Motors to the detriment of Mr Nola?

(3) If yes to either or both of the preceding two issues, what liquidated damages and special damages, if any, are payable by Ela Motors to Mr Nola.?

Substantive Issue 1 – Is Ela motors vicariously liable to Mr Nola for the criminal conduct of Mr Alipet?

29. It is a fundamental principle of civil litigation that a plaintiff must plead his or her causes of action with accuracy. In Kuk Kuli v The State (2004) N2592, Manuhu J stated:

"In a statement of claim ... sufficient particulars of the cause of action must be pleaded. The duty imposed upon a defendant must be sufficiently particularized. The nature of breach must be sufficiently particularized. The nature of relief sought must also be specified. Where liability is based on the principle of vicarious liability, it will be necessary to establish, first, a cause of action against the principal defendant; second, the relationship between the principal defendant and the party vicariously liable; and third, that the tort in question was committed in the course of employment of the principal defendant."

30. In the present case, Mr Nola has pleaded his first cause of action against Ela Motors, which is based on vicarious liability, in these terms:
    

"5. The action or omission of his [sic] employees, servant and agents vicariously binds the said Second Defendant pursuant to Wrong (Miscellaneous) Provisions Act.

...

20. The First Defendant who has left employment actions and or omissions has vicariously bind the Second Defendant to the loss of the Plaintiff's K17,000 cash."

31. Paragraphs 6 to 19 of the statement of claim plead certain facts on which Mr Nola relies as setting out the basis of his claim against Mr Alipet and presumably why Mr Nola says Ela Motors should then be vicariously liable to him for Mr Alipet's wrongful conduct.
    
32. Ela Motors in paragraph 5 of its statement of defence denies that it is vicariously liable to Mr Nola for the actions of its employee Mr Alipet pursuant to the Wrongs (Miscellaneous Provisions) Act. Ela Motors also expressly denies in paragraph of 16(b) of its statement of defence that it "has vicariously bind the Second Defendant to the loss of the Plaintiff's K17,000 cash". This is a general denial of vicarious liability which is further repeated in paragraph 21(b) of the statement of defence. Ela Motor additionally pleads in paragraph 21(c) of its statement of defence that Mr Nola's statement of claim fails to disclose any reasonable cause of action against Ela Motors and that this proceeding is frivolous, vexatious and should be dismissed with costs in favour of Ela Motors.
    
33. Disregarding the many grammatical and typographical errors where they occur in Mr Nola's statement of claim, I observe that Mr Nola has pleaded in paragraph 5 of his statement of claim that his cause of action in vicarious liability against Ela Motors is founded on a statutory cause of action said to exist under the Wrongs (Miscellaneous Provisions) Act Chapter 297. Part I of that Act deals with the State's liability in tort. The remaining Parts II to XIII of that Act have nothing to do with claims based on the doctrine of vicarious liability against parties other than the State. The balance of the Act deals with actions between husband and wife, proof of loss of service in actions of seduction, wrongful or negligent acts causing death, abolition of the doctrine of common employment, claims for mental or nervous shock, proceedings against and contribution between tortfeasors, contributory negligence, damage by aircraft, damage to navigation works, occupiers liability and damage by fire. None of these miscellaneous matters regulated by the Act relate to claims of vicarious liability involving non-State parties. Mr Nola's cause of action pleaded against Ela Motors in paragraph 5 of his statement of claim, based as it is on the alleged vicarious liability of a private company under a statutory cause of action which only applies to the State pursuant to the Wrongs (Miscellaneous Provisions) Act, is wholly defective and must fail.
    
34. Turning to Mr Nola's general pleading contained in paragraph 20 of his statement of claim that Mr Alipet's "actions and or omissions has vicariously bind the Second Defendant to the loss of the Plaintiff's K17,000", there has been no attempt in that pleading to identify the relationship of Ela Motors to Mr Alipet as that of employer and employee or of principal and agent at the material time when Mr Alipet carried out his fraudulent wrongdoing. Paragraph 20 of Mr Nola's statement of claim merely asserts that Ela Motors is vicariously responsible for Mr Alipet's "actions and or omissions" for Mr Nola's loss of K17,000, but no pleading or particulars have been given to allege how or why Ela Motors should be vicariously liable to Mr Nola for the criminal conduct of Mr Alipet.
    
35. More importantly, Mr Nola's statement of claim fails to specifically plead any cause of action recognized in civil law against Mr Alipet, such as the tort of deceit or the equitable causes of action known as monies had and received^[4] and restitution^[5]. Nowhere in Mr Nola's statement of claim does he expressly aver that Mr Alipet committed the tort of deceit or that he fraudulently obtained monies from Mr Nola in the context of monies had and received or that restitution in equity is sought . There is no reasonable doubt on the facts that Mr Alipet criminally defrauded Mr Nola. Mr Alipet was convicted on his own admission of having stolen K17,000 from Mr Nola. Yet Mr Nola's statement of claim is woefully defective for not having pleaded any cause of action known in law with the particularity required to sustain any civil claim against Mr Alipet. It seems that the draftsman of the statement of claim was more intent on pursuing a claim in vicarious liability against Ela Motors than first setting a proper foundation for any claim in tort or equity against Mr Alipet on which to then base a claim in vicarious liability against Ela Motors.
    
36. Moreover, paragraph (a) of the prayer for relief at the conclusion of Mr Nola's statement of claim simply claims an order "for the refund of the sum of K17,000.00". This prayer for relief as worded does not distinguish whether it is Mr Alipet or Ela Motors, or both, whether jointly or severally, who should "refund" Mr Nola the sum of K17,000 if Mr Nola were to succeed in his various claims, all of which seem to be directed against Ela Motors, not Mr Alipet. It is common ground on the evidence that Ela Motors never received any part of the sum of K17,000 which Mr Nola paid to Mr Alipet for Mr Nola's intended purchase of the Toyota utility, so there can be no question of Ela Motors ever being ordered by this Court to "refund" monies which Ela Motors never received.
    

Substantive Issue 2 – Did Ela Motors owe a duty of care to Mr Nola which was breached to the detriment of Mr Nola?

37. A similar objection to Mr Nola's implied allegation in his statement of claim that Ela Motors has committed the tort of negligence is also immediately apparent. Paragraphs 21 to 23 of Mr Nola's statement of claim, exactly as pleaded, are set out below:
    

"21. The Second Defendant is a global corporate entity which has a Vision and Mission which statements is directed towards customer satisfaction and genuine service provider and has always maintained that position.

22. However, it has not ensure that it has internal control measures to curb pilferage, teeming and lading and cheating by its employees as is presently the case hence it is negligent.

23. Particulars of Negligence

(a) The First Defendant [sic] has a duty to ensure that its Sales employees tasks are segregated from accepting cash deposits and negotiating disposal/sale of Motor Vehicles.

(b) Also do surprise audits on all transactions undertaken by its employees including salesman at any one time.

(c) It breached that duty by when it allowed the First Defendant to accept cash during business hours at its workstation at the Sales Office at badili, and by providing a computer generated printed out as pleaded in paragraph 10 above and affixing its official stamp on the said Printout."

38. Mr Nola's statement of claim does not expressly allege that Ela Motors owed a duty of care to Mr Nola personally to have internal measures in place "to curb pilferage, teeming and lading and cheating by its employees" or that Mr Alipet had actually committed any of those wrongs. The term "teeming and lading" is a form of bookkeeping fraud also known as short banking, delayed account or lapping.^[6] It involves the allocation of one customer's payment to another customer's account so as to give the appearance that the financial records of a business are in balance. This is usually done to conceal a shortfall or theft of monies from the first customer. The term "pilfering" is of more general application and means the theft of things of small value.^[7] The term "cheating" means the act of dishonestly gaining an advantage or depriving a person of something by dishonesty.^[8] In this instance Mr Alipet's criminal conduct could be viewed as a form of cheating in the sense that Mr Alipet dishonestly obtained cash payments totaling K17,000 from Mr Nola by fraudulent means. However the terms "teeming and lading" and "pilfering" have no relevance to the course of misconduct which Mr Alipet embarked on to wrongfully extract money from Mr Nola.
    
39. I similarly observe that there is no express pleading in Mr Nola's statement of claim that Ela Motors owed a duty of care to Mr Nola personally to ensure that internal financial controls were in place to prevent Mr Alipet as an employee of Ela Motors from "cheating" or committing fraud by deceitful conduct to the detriment of Mr Nola.
    
40. The recitation of facts alleged in Mr Nola's statement of claim is not sufficient to inform either Mr Alipet or Ela Motors of the cause or causes of action alleged against them. Mr Nola's statement of claim is so poorly drafted that it does not convey with any clarity at all how or why:
    

a) Mr Alipet should be liable to Mr Nola;

2. Ela Motors should be vicariously liable to Mr Nola for the criminal conduct of Mr Alipet;

c) Ela Motors breached a duty of care to Mr Nola personally to supervise Mr Alipet's receipt of cash monies.

41. No attempt was made before or at trial to amend Mr Nola's statement of claim to properly plead the numerous causes of action on which Mr Nola should or could have relied.
    
42. The whole of the statement of claim filed for Mr Nola is so defective and poorly drafted that to the extent that it purports to set out Mr Nola's claims against Ela Motors as second defendant (as distinct from claims made against Mr Alipet as first defendant), all claims made in the statement of claim against Ela Motors will be ordered to be struck out pursuant to Order 8 Rule 27(1)(a) National Court Rules and the claims made against Ela Motors dismissed. I make no such order at this stage in respect of Mr Nola's claims involving Mr Alipet as first defendant. I will reserve that aspect of this proceeding for further directions.
    

Analysis of the evidence

43. In case I am wrong in my application of the fundamental principles of pleading in civil suit to Mr Nola's statement of claim, I turn now to the evidence, which in my view fails to supports any cause of action which Mr Nola assumes, or was advised by his lawyers, he might have against Ela Motors.
    
44. At trial Mr Nola relied on two affidavits sworn by him. They are brief in content. The first of Mr Nola's affidavits was sworn by him on 9 June 2017. His second affidavit was sworn on 21 July 2017.
    
45. Ela Motors relied on much more affidavit material at trial. The following affidavits by employees of Ela Motors were accepted in evidence:

1. affidavit of Eymard Joseph, Ela Motors' General Manager–Finance and Company Secretary, sworn and filed on 13 April 2017;

b) affidavit of George Buka, National Used Vehicles Operations Manager of Ela Motors, sworn on 20 July 2017 and filed 21 July 2017;

100. affidavit of Pius Tapu, Ela Motors' Business Review Manager, sworn on 20 July 2017 and filed 21 July 2017;

4. affidavit of Alipet Alikapson, Ela Motors' Property Administration Officer (and father of the first defendant Emmanuel Alipet), sworn and filed on 21 July 2017;
5. affidavit of Dale Harrison, Ela Motors' Human Resources Operations Manager, sworn and filed on 28 July 2017.

46. Mr Nola deposes in his affidavit material to the effect that he and his family reside close to the headquarters of Ela Motors at Badili, NCD. In December 2013 Mr Nola and his family decided to purchase a used vehicle from Ela Motors. Mr Nola had already sighted a suitable second-hand Toyota utility at Ela Motors' used vehicle car yard at Badili. Mr Nola sent his daughter Nancy to the car yard to make enquiries of Mr Alipet, who was then the manager of Ela Motors' Used Vehicles Division, regarding that vehicle. Mr Nola says he was already known to Mr Alipet. Mr Nola had on three prior occasions purchased used vehicles from Ela Motors, in 1989, 1991 and 1992. Mr Nola says that Nancy reported back to him that Mr Alipet had told her Mr Nola could purchase the Toyota utility for K15,000 and that Mr Alipet's commission would be K2,000.
    
47. Attached to Mr Nola's first affidavit as annexure "A" is Mr Nola's ANZ bank statement which shows that a cash withdrawal of K10,000 was made from Mr Nola's ANZ bank account on 23 December 2013. A further amount of K5,000 was withdrawn in cash from that account on 30 December 2013.
    
48. Mr Nola deposes that his family collected K2,000 in cash which Mr Nola says he personally delivered to Mr Alipet at his office at Ela Motors' Used Vehicles Division at Badili on 27 December 2013 in payment of the commission requested by Mr Alipet for Mr Nola's purchase of the Toyota utility. Mr Alipet did not arrange for any official receipt from Ela Motors for that commission to be given to Mr Nola.
    
49. Mr Nola says that on 30 December 2013 he and his wife and family members attended at Mr Alipet's office at Ela Motors somewhere between 9.00 am and 10.00 am with K15,000 in cash to pay for the Toyota utility. Mr Nola's ANZ bank statement shows that he withdrew K5,000 that day from the bank's Waigani branch. Mr Nola must therefore have been one of the first of the ANZ Bank's customers at that branch that morning, otherwise he would not have had time to be able to return from Waigani to Ela Motors at Badili between 9.00 am and 10.00 am.
    
50. Mr Nola deposes in his first affidavit that when he met with Mr Alipet in his office at Ela Motors on the morning of 30 December 2013, Mr Alipet told him to do a test drive of the Toyota utility and that if he was satisfied with the vehicle, he could then pay the purchase price of K15,000 in cash. According to Mr Nola, Mr Alipet then "surrendered" the keys of the Toyota utility to him and Mr Nola says he took the vehicle for a test drive towards Badili Police Station, past Government stores and past "Muniogo Village and my excited extended family members, and then back to the Ela Motors Second hand Car park." The impression which Mr Nola gives in his first affidavit is that it was he alone who took the Toyota utility for a test drive.
    
51. At trial, Ela Motors disputed that Mr Nola took the Toyota utility for a solo test drive on 30 December 2013. Ela Motors relied on the affidavit of its National Used Vehicles Operations Manager, George Buka, sworn on 20 July 2017. Mr Buka's affidavit was in answer to Mr Nola's first affidavit of 9 June 2017. Mr Buka deposes at length in his affidavit as to the procedures which are taken by staff of Ela Motors when selling a vehicle, a matter I return to later in this decision. But with reference to Mr Nola's assertion that Mr Alipet handed over the keys to the Toyota utility to Mr Nola to enable him to do an unaccompanied test drive, Mr Buka says this in his affidavit:

"At paragraph 9 [of Mr Nola's sworn on 9 June 2017] the Plaintiff states that he was given the keys for test drive and he took the car for a test drive. The normal process is that the salesman concerned signs off on the keys to car and he is required to accompany the customer for the test drive. We do not just give the keys to the customer and let them do the test drive alone as is suggested by the Plaintiff in his Affidavit."

52. Mr Nola replied immediately to Mr Buka's affidavit in answer by swearing his second affidavit on 21 July 2017, which was filed by Mr Nola's lawyers the same day. Mr Nola's second affidavit is titled "Further Supplementary Affidavit In Support (Clarifying Liability & Underlying Transactions)". It contains 10 short paragraphs. Mr Nola states in his second affidavit by way of "clarification" that he test drove the Toyota utility on 30 December 2013 accompanied by a mechanic from Ela Motors Used Vehicles Division named John Mossie. Mr Nola says that the route of the test drive took them from Badili to Korobosea, then down 2-Mile Hill back to Ela Motors' used vehicles car yard at Badili, a somewhat different route from that which was described by Mr Nola in his first affidavit.
    
53. No evidence was given at trial by Mr Nola to corroborate his second version as to who he says accompanied him on the test drive of the Toyota utility or the route which was taken. At trial Ela Motors further challenged Mr Nola's second version of these events. Ela Motors relied in this regard on the affidavit of Dale Harrison. Mr Harrison deposed as follows, in his capacity as Ela Motors' General Manager-Human Resources, as follows:
    

"2. At the Human Resources Division, amongst others, we maintain a record of all past and current employees of the Second Defendant.

3. I have sighted the Further Supplementary Affidavit in Support (Clarifying Liability & Underlying Transactions) of Jeff Nola filed 21 July 2017 and note that in paragraph 8 he mentioned a certain John Mossie as employed by the Second Defendant as a Used Car Mechanic. I have conducted a search of our records and confirm that no such person has ever been employed by the Second Defendant at any time."

54. There is therefore a discrepancy between Mr Nola's first version and his second version as to what transpired in connection with the test drive of the Toyota utility which Mr Nola says he undertook on 30 December 2013. While this discrepancy may not necessarily be major, it does show that if Mr Nola's second version was intended to be a "clarification", then in view of Mr Harrison's evidence, which I accept, this means that Mr Nola was mistaken both as to the name of the person who he says accompanied him on the test drive to Korobosea and back to Badili and his assertion that that person was a mechanic employed by Ela Motors.
    
55. Ela Motors contends that there was no employee of Ela Motors who accompanied Mr Nola on his test drive of the Toyota utility and that this is a fabrication by Mr Nola. Ela Motors asserts that Mr Nola knew, or ought to have known, as a result of his past three used vehicle purchases from Ela Motors that Mr Alipet or some other employee from Ela Motors should have accompanied him when he did the test drive of the Toyota utility. It is Ela Motors' contention that Mr Nola knew, or ought to have known, that Ela Motors' standard operating procedure was that none of Ela Motors' salesmen or other employees would "surrender" the keys of a vehicle to any customer interested in doing a test drive. If that were to occur, the likelihood of theft of the vehicle by a supposed customer would be disproportionately high. Ela Motors asserted that Mr Nola already knew from his past dealings with Ela Motors that the keys to the Toyota utility needed to be signed off from a register and that Mr Alipet or some other person authorised by Ela Motors was required to accompany Mr Nola on the test drive. Ela Motors argued at trial that this did not occur in this instance because it was submitted that Mr Nola had already entered into a private deal with Mr Alipet, who unbeknowns to anyone else at Ela Motors, had three days earlier received a secret commission of K2,000 which he had requested from Mr Nola, a commission which, according to the evidence of Ela Motors' National Used Vehicles Operations Manager George Buka, was not allowed by Ela Motors.
    
56. Mr Buka deposes in his affidavit:
    

"At paragraph 4 and 5 [of Mr Nola's first affidavit], the Plaintiff states that Emmanuel [Alipet] asked for K2000 as commission. This is not allowed by the Second Defendant. An employee caught asking for commission as in this case can be terminated. The Second Defendant pays all Salesmen some form of commission monthly as such we are not allowed to ask for commission."

57. It is not possible on balance on the evidence for me to determine whether the reference by Mr Nola in his "clarification" affidavit to Mr John Mossie as being an employed mechanic of Ela Motors who accompanied Mr Nola when Mr Nola did his test drive of the Toyota utility was fabricated in response to Mr Harrison's affidavit evidence in that regard. However this discrepancy impacts on the accuracy or otherwise of Mr Nola's version of other events which transpired. It also impacts on Mr Nola's reasons, unexplained in his evidence at trial, as to why he did not insist on obtaining an official receipt from Ela Motors' cashier for the payment of K15,000 in cash for the Toyota utility which he gave to Mr Alipet.
    
58. Mr Nola says in his first affidavit that after completing his test drive of the Toyota utility on 30 December 2013, he returned the vehicle to Ela Motors' car yard and he "surrendered" the keys back to Mr Alipet. Mr Nola deposes that he and his wife then immediately went with Mr Alipet to an inner office past Ela Motors' reception area which is where Mr Nola gave Mr Alipet cash totaling K15,000 which was "counted and recounted". Mr Nola says that Mr Alipet then gave him a computer-generated printout of the details of the Toyota utility showing Mr Nola's name as customer and Ela Motors' management's "acceptance" of his offer of K15,000 for the Toyota utility.
    
59. A close inspection of a copy of the print-out which Mr Nola says Mr Alipet gave him on 30 December 2013, which is annexure "B" to Mr Nola's first affidavit, shows that it is in fact a screen print-out, a print-out of what is otherwise known as a screen shot, which any person having access to a computer and printer at Ela Motors could produce. I accept that it was Mr Alipet who was the person at Ela Motors who generated this screen print-out. I also accept that the handwritten words "K15,000 plus commission K2,000 Thousand Total 17,000,00" at the foot of that screen print-out were written by Mr Alipet, to give the appearance of some form of interim receipt. There is also the imprint of a stamp below the handwritten words bearing the words "Toyota Tshusho (PNG) Ltd trading as Ela Motors" which has an illegible signature through it, presumably the signature of Mr Alipet. The imprint of the stamp was obviously placed there by Mr Alipet as part of his ruse to give the appearance of legitimacy to the screen print-out as some form of interim receipt and contract document without having to tender the K15,000 in cash in the presence of Mr Nola to Ela Motor's nearby cashier, thereby avoiding Ela Motor's standard procedure of issuing an official receipt on Ela Motor's letterhead for deposits and monies paid by a customer in connection with purchase of a vehicle.
    
60. The screen print-out which Mr Alipet gave to Mr Nola on 30 December 2013 after receiving cash of K15,000 from him was not an official company receipt from Ela Motors for the purchase monies for the Toyota utility. This is confirmed by the evidence of Mr Buka. In his affidavit, Mr Buka outlines the procedure applicable to the sale of any vehicle by Ela Motors. Mr Buka says that when a customer expresses interest to purchase a certain vehicle, the customer is first issued with a quotation. When the customer makes payment on acceptance of the quotation, Ela Motors then issues the customer with an invoice, a sales contract and an official company receipt confirming payment. Samples of this sale documentation and a sample official receipt are attached to Mr Buka's affidavit.
    
61. Mr Buka further explains in his affidavit that after a customer has paid in full for the purchase of a vehicle, Ela Motors arranges for registration of the vehicle in the name of the customer. The vehicle is then delivered to the customer, who signs a delivery process checklist. To complete the transaction, Ela Motors issues a final invoice to the customer, which includes the registration number of the vehicle and repeats all of the information previously set out in the earlier sale documentation which the customer has already received.
    
62. Mr Nola asserts in his first affidavit that after he gave the K15,000 in cash to Mr Alipet at an inner office at Ela Motors' premises at Badili on 30 December 2013, Mr Alipet told him that the Toyota utility had to go for two weeks' service and that Mr Alipet would let him know when the vehicle was ready for collection. Mr Nola says that after two weeks had elapsed, he checked with Mr Alipet, which would have been in mid-January 2014, to find out if the Toyota utility was ready but Mr Alipet told him that there were many vehicles in Ela Motors' workshop and that he would have to wait another week. Further follow-ups with Mr Alipet during the first half of 2014 by Mr Nola proved fruitless. It is at this point that Mr Nola's evidence becomes vague. He says in his first affidavit to the effect that he sought the assistance of three executives at Ela Motors to find out the reason for the delay in his being able to take delivery of the Toyota utility. He names those executives as Pius Tapu, Manager-Business Review; Ben Ilari, Manager-New Cars and John Foster. Mr Nola does not indicate in his affidavit what position was held by John Foster at Ela Motors in 2014. Mr Nola gives no dates, not even approximate dates, as to when he had discussions with these executives during 2014. All that Mr Nola deposes to is that he says none of these executives assisted him to recover his money back from Mr Alipet while Mr Alipet was still in the employ of Ela Motors.
    
63. The only date given by Mr Nola with certainty in his affidavit evidence in connection with the follow-up enquiries he made in 2014 regarding the whereabouts of the Toyota utility is to be found in the statement which Mr Nola gave to Police who were investigating Mr Alipet's theft of the K15,000 which Mr Nola had given to Mr Alipet on 30 December 2013. The typed statement, prepared by the investigating police officer which Mr Nola signed, is dated 13 October 2014. It is annexure "C' to Mr Nola's first affidavit. Mr Nola states at the conclusion of his police statement that after he made numerous enquiries of Mr Alipet, Mr Alipet told him another customer had taken the Toyota utility back but that more vehicle stock was coming from Mt Hagen and that Mr Nola would be given one of the new stock of utility vehicles when they arrived at Badili. Mr Nola says in his police statement that when this didn't happen, he decided he wanted his money reimbursed. He states:

"I would normally go down to [Mr Alipet's] office and ask when the processes of refund [will] take place. He kept on saying after two weeks to give time to main office people to sort it out."

64. The police investigation into Mr Alipet's theft of K15,000 from Mr Nola was not instigated by any complaint to the Police by Mr Nola. It was instigated by Ela Motors. Pius Tapu, Ela Motors' Business Review Manager, deposes in his affidavit that part of his duties at Ela Motors include conducting regular internal audit investigations into various business areas of Ela Motors, including audit investigations into complaints received externally, in other words investigations into complaints received from customers. Mr Tapu explains that where necessary, he lodges complaints to Police in matters where staff of Ela Motors are implicated in criminal conduct. With reference to Mr Alipet's theft of monies from Mr Nola, Mr Tapu states in his affidavit:
    

"3. I conducted an investigation into this matter ... which comprised an internal audit of monies receipted against vehicle sales. I concluded among other findings that the First Defendant received monies from the Plaintiff to himself. These monies were not deposited into the Second Defendant's bank accounts. ... Following my investigations, I lodged a complaint with the Police to investigate who later charged the First Defendant. The First Defendant was found guilty by the National Court and sentenced accordingly. Annexed hereto and marked with the letter "A" is a true copy of the National Court decision between the State –v- Emmanuel Alipet (First Defendant).

4. The First Defendant was not only convicted and sentenced for the offence involving the Plaintiff's monies now being claimed against Ela Motors, but there were other matters also.

5. The First Defendant's deceitful conduct caused the Second Defendant losses totaling K249,428.30. As a result Ela Motors issued instructions to its lawyers – Bradshaw Lawyers - to commence recovery proceedings against the First Defendant. Subsequently the National Court found in favour of Ela Motors and ordered the First Defendant to repay Ela Motors K249,428.30. Annexed hereto and marked with the letter "B" is a true copy of the National Court decision ordering the First Defendant to pay Ela Motors K249,428.30.

6. The First Defendant was terminated from employment for engaging in criminal conduct on his own accord, outside the scope of his employed duties."

65. It is clear from this evidence that Mr Nola did at least report his concerns to Mr Tapu at Ela Motors at some point in or after mid-2014 regarding the K15,000 in cash which he had paid to Mr Alipet and Mr Alipet's subsequent failure to produce for collection by Mr Nola either the Toyota utility which Mr Nola thought he had purchased or a replacement for that vehicle. It is also clear that it was Mr Nola's complaint in this regard which triggered Mr Tapu's internal audit and investigation into why Mr Alipet had failed to account to Ela Motors for Mr Nola's K15,000. That audit and investigation also revealed losses experienced by Ela Motors as a result of other fraudulent conduct of Mr Alipet which went far beyond the financial losses sustained by Mr Nola. The overall losses incurred by Ela Motors from Mr Alipet's criminally fraudulent conduct involving different customers of Ela Motors were reflected in the civil judgment for K249,428.30 which Ela Motors obtained against Mr Alipet in National Court proceeding WS 453 of 2014 on 25 January 2016.
    
66. The matters deposed to by Mr Tapu in his affidavit are corroborated in the earlier affidavit of Eymard Joseph, Ela Motors' General Manager and Company Secretary. Mr Joseph states in his affidavit:
    

"4. Briefly, this is a claim arising from fraudulent conduct of the First Defendant. The First Defendant was terminated from employment and the matter was referred to the Police and he was charged. The First Defendant was subsequently found guilty and convicted by the National Court.

5. The Second Defendant cannot be held responsible for the actions of the First Defendant as he acted outside the scope of his duties and responsibilities and fraudulently obtained monies from the Plaintiff to his own benefit.

...

10. I have been advised that this proceeding is filed on the basis that the Second Defendant is vicariously liable for the actions of the First Defendant. I am of the firm belief that this is not correct as the Second Defendant never benefitted nor did it authorize and give consent for the First Defendant to engage in such illegal conduct. The First Defendant acted outside the scope of his duties and responsibilities and as such the Second Defendant cannot be held vicariously liable for the actions of the First Defendant."

67. Although paragraphs 5 and 10 of Mr Joseph's affidavit contain opinion evidence which by itself carries little weight, what is significant in paragraph 10 of Mr Joseph's affidavit is that Mr Joseph's evidence establishes that Ela Motors obtained no benefit from Mr Alipet's fraudulent conduct and that Ela Motors did not authorise or give consent to Mr Alipet's illegal conduct. No evidence was led by Mr Nola at trial to challenge or contradict Mr Joseph's evidence in this regard.
    
68. Having heard the totality of the evidence for Mr Nola and Ela Motors, I can only speculate on the reasons why Mr Nola was so vague regarding dates and times when he claims he reported his concerns regarding Mr Alipet to executives of Ela Motors during 2014. The undisputed facts are that this was Mr Nola's purchase of a fourth vehicle from Ela Motors, that Mr Nola was known to Mr Alipet before December 2013, that Mr Alipet willingly paid what was in effect a secret commission of K2,000 in cash to Mr Alipet on 27 December 2013, followed by a payment for the Toyota utility of K15,000 in cash, not by bank cheque as one would normally expect, to Mr Alipet in an office close to Ela Motor's cashier, with no official receipt for the K15,000 having been issued by Ela Motors' cashier or requested of the cashier by Mr Nola. The combination of these facts all point to Mr Nola's intended purchase of the Toyota utility as being a suspicious transaction from the very outset of the negotiations. I make no finding as to whether Mr Nola was colluding with Mr Alipet in endeavouring to obtain a below market value deal for the Toyota utility even though the agreed purchase price of K15,000 seems unusually low. However in view of Mr Nola's past experience in purchasing used vehicles from Ela Motors, Mr Nola must surely have known that it was improper and against Ela Motors' standard operating procedures for Mr Alipet to request and be paid a commission by a purchaser. The fact that Mr Alipet requested a commission of K2,000, which Mr Nola paid without question, should have rung alarm bells which Mr Nola ignored.
    
    69. Mr Nola is aggrieved that the executives of Ela Motors who he says he spoke with some time in 2014 regarding Mr Alipet's failure to produce the Toyota utility did not assist him to recover his money from Mr Alipet. Mr Nola states at para. 14 of his first affidavit that:

"None of this gentleman [sic] assisted me to recover my money from Mr Alipet whilst he was on the employ of Ela Motors."
However this not surprising, given that Mr Nola already knew by that stage that Ela Motors had never received any of the purchase monies of K15,000, which Mr Alipet had kept for himself. This is not a situation where that money had been received by Ela Motors but which through error on the part of any employee of Ela Motors, whether as to accounting or stock control, needed to be refunded to Mr Nola. By mid-2014, when it became apparent to Mr Nola that he had been defrauded by Mr Alipet, he already expected Ela Motors to compensate him for Mr Alipet's criminal conduct by paying him the equivalent of the money stolen from him by Mr Alipet.

70. Mr Nola relies on the legal principles applicable to the vicarious liability of an employer for the misconduct of its employee as well as the tort of negligence in support of his claims against Ela Motors in this suit. I now consider those principles as they apply to the evidence presented in this case, notwithstanding that I have already ruled that Mr Nola's statement of claim is so defectively pleaded that it must be struck out insofar as it relates to Ela Motors.
    

Vicarious liability – the evidence

71. The basic principles of law relating to vicarious liability of a company for the misconduct of its employees are well settled in Papua New Guinea. Those principles are have been expounded in numerous cases.
    
72. In Andrew Daiva and Ome Ome Forests Ltd v. Lawrence Pukali & Anor: Ome Ome Forests Ltd v. Ray Cheong & Ors (2002) N2289, Kandakasi J explained the doctrine of vicarious liability in the context of the liability of a company this way:

"The company can only be liable for the acts of its employees if they act in the course of their employment pursuing their employer's (the company's) interest. If they are out on a frolic and detour of their own they could become personally liable." [underlining supplied]

73. In stating this principle, Kandakasi J relied on numerous other cases, including Peter Aigilo v. The Independent State of Papua New Guinea & Ors (2001) N2012. In a number of later cases, His Honour stressed the need for a plaintiff to plead and prove that an employee was in the course of his employment furthering the business or interest of the employer in order to attract vicarious liability against the employer: see for example Desmond Huaimbukie v. James Baugen (2004) N2589 and Pagasa Pembaro v. Garry Baki as Commissioner for Police & The State (2015) N6224.
    
74. In Dalin More v. The State & Ors (1998) N1736, Injia J (as he then was ) dismissed a civil claim for damages for personal injuries by a plaintiff who alleged vicarious liability on the part of the State for a rape committed by two policemen. In the course of his decision His Honour stated:
    

"If a policeman departs from his lawful instructions and goes on a frolic of his own and commits a crime, then the State cannot be held liable for the crime for the reason that it would never form part of the State's lawful instructions to the policeman concerned to commit a crime in the course of performing [his] duties. The individual policemen concerned, if identified, would become criminally liable for the crime."

This proposition was expressly approved by Kandakasi J in Kolta Development Ltd v. The State (2013) N5954.

75. The common law position on vicarious liability is elaborated on in Clerk & Lindsell on Torts:^[9]
    

"It is not enough that the misconduct should have occurred in the course of doing an act of a kind which the employee was usually authorised to do, unless at the time the employee was engaged on the employer's business and not merely on his own. However deviations from the task to be performed, for the employee's own purposes, may still be within the course of employment. It is a question of degree: at some point the deviation may be such that it can be regarded as a separate activity and the employee can then no longer be considered to be acting in the course of his employment."

76. The fact that the employment of an employee provides the opportunity for theft by an employee is not sufficient per se to impose vicarious liability for the theft on the employer. Theft of money by an employee amounts to the dishonest performance of that which an employee is employed to do honestly. Citing Clerk & Lindsell on Torts ^[10] again:
    

"In cases of theft by an employee the first sensible question to ask is whether or not the stolen goods had been put in the custody of the employee by the employer. If they had, then the theft will have been committed by the employee in the course of his employment and the employer will be vicariously liable. If they were not, then the employer will not be vicariously liable for the theft."

[underlining supplied]

77. Applying these principles to the present case, I make the following findings:
    

(1) Here the stolen goods are represented by the K15,000 in cash which Mr Nola gave to Mr Alipet for Mr Nola's intended purchase of the Toyota utility but which Mr Alipet wrongfully failed to deliver to Ela Motors' cashier and kept for himself. This was not a situation where Ela Motors had put K15,000 of Mr Nola's money into the custody of Mr Alipet, which he then misused.

(2) Mr Alipet pleaded guilty at his criminal trial to having stolen Mr Nola's money. Ela Motors would never have authorised Mr Alipet to withhold Mr Nola's purchase money for the Toyota utility after receiving that money. Mr Alipet knew it was part of his duties as Used Cars Manager and employee of Ela Motors that he had to ensure Mr Nola's' purchase monies of K15,000 were handed in to Ela Motors' cashier and an official receipt generated by the cashier, which receipt then had to be given by the cashier or by Mr Alipet to Mr Nola.

(3) By failing to account to Ela Motors' cashier for Mr Nola's purchase money, Mr Alipet was not acting in the course of his employment, nor was he acting in furtherance of the business interests of Ela Motors. Mr Alipet intentionally embarked on a plan of deception designed to defraud Mr Nola of his money. This is evidenced by the print-out of the screen shot which Mr Alipet gave to Mr Nola and on which Mr Alipet in his own handwriting had written the words: "K15,000.00 plus commission K2,000.00 Thousand Cash Total K17,000.00" and on which Mr Alipet had then affixed a stamp with the name Ela Motors, all of which actions were obviously designed by Mr Alipet to give the deceptive appearance of an interim receipt to what was otherwise a mere printout of a pre-sale computer record of a pending transaction.

(4) Mr Nola knew, or ought to have known, because of his previous three purchases of used vehicles from Ela Motors at Badili, that it was Ela Motors' standard sales procedure for all purchase monies for a vehicle to be delivered either by the customer or by the customer accompanied by a salesman to Ela Motors' cashier and that Mr Nola was entitled to receive an official receipt on Ela Motors' letterhead for all monies paid by him on account of his purchase in this instance of the Toyota utility.

(5) The degree of deviation from Ela Motors' standard sales procedure which Mr Alipet intentionally took when retaining Mr Nola's purchase monies for the Toyota utility was so serious and of such fraudulent and criminal nature that it is abundantly clear Mr Alipet was acting well outside his actual or ostensible duties or authority as an employee of Ela Motors. Mr Alipet's wrongful conduct was intentional and criminal. Mr Alipet's actions were in furtherance of his own fraudulent plans in defiance of Ela Motors' business interests. Ela Motors derived no benefit at all from Mr Alipet's wrongful retention of Mr Nola's purchase monies of K15,000.

Negligence – the evidence

78. The elements of the tort of negligence are well established.^[11] The elements are these:
    

(1) that the defendant tortfeasor owed a duty of care to the plaintiff;

(2) that the defendant acted unreasonably or negligently in breach of its duty to the plaintiff; and

(3) that as a result of that breach the plaintiff suffered injury, for which the plaintiff is entitled to compensation from the defendant.

79. The particulars given by Mr Nola in paragraph 25 of his statement of claim in support his averral of negligence on the part of Ela Motors, grammatical and typographical errors included, are set out below:
    

a) that Ela Motors (erroneously referred to in para. 25 of the statement of claim as the first defendant, i.e. Mr Alipet) "has a duty to ensure that its Sales employees tasks are segregated from accepting cash deposits and negotiating disposal/sale of Motor Vehicles";

b) that Ela Motors has a duty "to do surprise audits on all transactions undertaken by its employees including salesman at any one time";

c) that Ela Motors breached these duties "when it allowed the First Defendant to accept cash during business hours at its workstation at the Sales Office at badili, and providing a computer generated printed out as pleaded in paragraph 10 above and affixing its official stamp on the said Printout"; and

d) "the damage occasioned to the Plaintiff is not too remote as the Plaintiff as lost K17,000 to the Second Defendant through the First Defendant has its employee during business hours at the Official business property of the said Second Defendant".

80. The evidence adduced by Mr Nola's counsel at trial fell far short of proving on the balance of probabilities that any of the elements of the tort of negligence on the part of Ela Motors were made out. I make the following findings in respect of the evidence given by Mr Nola and Ela Motors at trial when applied to the particulars of negligence pleaded in Mr Nola's statement of claim:
    

(1) At all material times Ela Motors did have in place proper business procedures to ensure that its salesmen's duties when negotiating and completing the sale of used vehicles were "segregated" from the duties of its cashier staff and that cash deposits received by its salesmen, including Mr Alipet, were required to be forthwith delivered by the salesmen to a cashier whose duty it was to issue an official receipt to the customer, in this instance Mr Nola. I accept in this regard the evidence given by George Buka, Ela Motors' National Used Vehicles Operations Manager, who described in detail the procedures required by Ela Motors to be observed by its salesmen, including Mr Alipet, from commencement to finalization of the sale of a vehicle, including the issuance by Ela Motors' cashier of an official receipt to the customer. This evidence of Mr Buka was not challenged by Mr Nola at trial.

(2) The evidence of Pius Tapu, Ela Motors' Business Review Manager, established that Ela Motors regularly conducts internal audit investigations into the company's business operations, including internal investigations when a customer lodges a complaint against one of Ela Motors' employees. Mr Tapu deposed that in this instance he conducted an investigation involving Mr Alipet which comprised an internal audit of monies receipted against vehicle sales, which resulted in Mr Tapu concluding that the monies received by Mr Alipet from Mr Nola were not receipted by Ela Motors' cashier and were not deposited into Ela Motors' bank account but were kept by Mr Alipet for himself. It was following this investigation, which involved fraud committed by Mr Alipet against other customers of Ela Motors as well, which led to Mr Tapu's referral on behalf of Ela Motors of Mr Alipet's criminal conduct to the Police and Mr Alipet's subsequent conviction. This evidence of Mr Tapu was not challenged by Mr Nola at trial.

(3) Ela Motors by its executives and senior management did not knowingly or negligently "allow" Mr Alipet to accept cash from Mr Nola during business hours, nor did Ela Motors authorise Mr Alipet to provide Mr Nola with a computer-generated print-out, nor did Ela Motors authorise Mr Alipet to affix Ela Motors' official stamp to that print-out. This was fraudulent conduct on the part of Mr Alipet which had nothing to do with furthering the business interests of Ela Motors or of benefitting Ela Motors in any way. It had everything to do with criminally enriching Mr Alipet for his own purposes.

(4) Mr Nola's evidence failed to explain in view of his past dealings with Ela Motors not only why he agreed to pay a commission of K2,000 in cash to Mr Alipet but also why he paid K15,000 in cash to Mr Alipet for his intended purchase of the Toyota utility without insisting on being issued with any official receipts by Ela Motors' cashier. Mr Alipet acted well outside the scope of his actual and his ostensible authority as an employee of Ela Motors when accepting those cash monies from Mr Nola without ensuring that official receipts for those monies were issued to Mr Nola by Ela Motors' cashier.

(5) The financial losses suffered by Mr Nola as result of Mr Alipet's fraudulent conduct were a direct consequence of that misconduct. However Mr Nola's financial losses were not, in my considered opinion, reasonably foreseeable by Ela Motors. Had Mr Alipet observed Ela Motors' standard operating procedures when receiving cash monies from Mr Nola by ensuring that an official receipt was issued to Mr Nola by Ela Motors' cashier, no loss of Mr Nola's purchase monies of K15,000 for the Toyota utility would have occurred.

81. In view of these findings, I conclude that the evidence for Mr Nola at trial failed to establish on balance of probabilities that Ela Motors breached any duty of care it had to Mr Nola to ensure that proper procedures were in place to prevent Mr Alipet from criminally defrauding Mr Nola of the private commission of K2,000 in cash and the purchase monies of K15,000 in cash which Mr Nola gave to Mr Alipet in connection with Mr Nola's intended purchase of the Toyota utility.
    
82. Furthermore, I repeat that nowhere in Mr Nola's statement of claim is it averred that Ela Motors owed any duty of care to Mr Nola personally in the circumstances of this case. It was assumed by the draftsman of the statement of claim that such a duty existed but that duty was never pleaded except as a general statement with no reference or connection to Mr Nola.
    

CONCLUSION

83. For the reasons given, Mr Nola's claim in this civil suit against Ela Motors fails, both from a pleading perspective and from analysis of the totality of the evidence adduced for Mr Nola and for Ela Motors at trial. Neither of the two causes of action alleged by Mr Nola against Ela Motors can be sustained. Ela Motors was not tortiously negligent vis-á-vis Mr Nola, nor can Ela Motors be held vicariously liable for the criminal conduct of its employee Mr Alipet. Even if Mr Nola's statement of claim had properly pleaded vicarious liability and tortious negligence on the part of Ela Motors, which it did not, the evidence presented for Mr Nola at trial did not establish that either of those two causes of action had been proved on balance of probabilities. Mr Nola's claim against Ela Motors must therefore be dismissed pursuant to Order 12 Rule 40 (1)(a) National Court Rules because no reasonable cause of action against Ela Motors was disclosed on the pleadings or on the evidence.
    
84. As to costs, these normally follow the event. But the Court has a discretion as to what order it should make as to costs. Mr Nola has suffered enough at the hands of the unscrupulous Mr Alipet. Mr Nola has also suffered because of poor legal advice and a statement of claim that was defective in so many respects. Mr Nola's two causes of action against Ela Motors, based on the tort of negligence and on vicarious liability, even if properly pleaded, could not, on the evidence adduced at trial, have been maintained. However the relative economic positions of Mr Nola and Ela Motors do not warrant an award of costs against Mr Nola. Ela Motors and Mr Nola are to each bear their own costs of this proceeding.
    
85. If Mr Nola wishes to pursue judgment of the Court for the balance of the monies stolen from him by Mr Alipet, being K15,000 for Mr Nola's intended purchase of the Toyota utility and the K2,000 commission for the purchase which never eventuated, less the K1,000 already received by Mr Nola from Mr Alipet's father in part reimbursement, Mr Nola can do so either by seeking leave of the Court to amend his statement of claim in this proceeding or by commencing fresh civil suit against Mr Alipet. Mr Nola may have other legal avenues open to him as regards his financial losses at the hands of Mr Alipet in view of the legal advice which Mr Nola has received in connection with this proceeding in the past, but Mr Nola would be well advised to obtain independent competent legal advice in that regard.
    

O R D E R

THE COURT orders that:

1. The whole of the plaintiff's statement of claim against the second defendant is struck out.
2. It is declared that the plaintiff has failed to prove any cause of action against the second defendant.
3. The plaintiff's claims against the second defendant in this proceeding are dismissed.
4. The plaintiff and the second defendant shall each bear their own costs.
5. The plaintiff's claims against the first defendant in this proceeding shall return before the Court for directions on Friday 19 July 2019 at 1.30 pm.
   

Orders accordingly

Konjib & Associates: Lawyers for the Plaintiff
William Igo and Gomara Gorua: In-house lawyers for the Second Defendant

^[1] The doctrine of issue estoppel as a variant of res judicata is expressed in criminal proceedings as the pleas of autrefois acquit and autrefois convict: R v. Wilkes [1948] HCA 22; (1948) 77 C.L.R. 511 per Dixon J at 519; cited with approval by Lalor J in Sebulon Wat v. Peter Kari [1975] PNGLR 325 at 334.
^[2] Halsbury's Laws of England 4^th Ed. Vol. 16 para. 1530 at p.1030.

^[3] The plaintiff here is precluded from making any application for summary judgment against the non-responsive first defendant under Order 12 Rule 38 National Court Rules because claims by a plaintiff based on an allegation of fraud are expressly excluded from the summary disposal provisions of Division 4 National Court Rules by operation of Order 12 Rule 37(b). See Kappo No. 5 Pty Ltd v. James Chi Kung Wong (1997) SC520, Kapi DCJ, Los J, Salika J.

^[4] The claim for money had and received is a common law action in equity, not in tort: Chesworth v. Farrar [1967] 1 Q.B. 407. Money paid by a plaintiff for a consideration that has wholly failed may be recovered as money had and received to the use of the defendant, e.g. money paid as deposit on a contract of sale which has been rescinded otherwise than for default of the purchaser: Blackburn v. Smith [1848] EngR 712; (1848) 2 Ex. 783.

^[5] The equitable remedy of restitution can often offer a more favourable remedy than that which is available in tort: see Clerk & Lindsell on Torts 19^th Ed. (2006) Sweet & Maxwell at para. 1-07.
^[6] www.businesdictionary.com/definition/teeming-and-lading.html

^[7] Shorter Oxford English Dictionary (3^rd Ed) Clarendon Press

^[8] Oxford Paperback Dictionary and Thesaurus (3^rd Ed) Oxford University Press

^[9] (supra) para. 6-36 at p.342.
^[10] (supra) para. 644 at pp.347-348.
^[11] See for example Kiee Toap v. The State (2004) N2731, which is but one of many cases that outline the elements of the tort of negligence.