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CJ Transport & Hire Cars v Madang Provincial Government [2020] PGNC 145; N8383 (24 June 2020)

N8383

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO 650 OF 2015

CJ TRANSPORT & HIRE CARS
Plaintiff

V

MADANG PROVINCIAL GOVERNMENT
First Defendant

RAMA MARISAN, FORMER DEPUTY PROVINCIAL GOVERNOR
Second Defendant

BOB WATI, DEPUTY PROVINCIAL GOVERNOR
Third Defendant

YABU LOCAL-LEVEL GOVERNMENT
Fourth Defendant

SUMGILBAR LOCAL-LEVEL GOVERNMENT
Fifth Defendant

DAVID WERI, DISTRICT OFFICER,
MIDDLE RAMU DISTRICT OFFICE
Sixth Defendant

YAWAR LOCAL-LEVEL GOVERNMENT
Seventh Defendant

SUMKAR LOCAL-LEVEL GOVERNMENT
Eighth Defendant

DANIEL ALOI, ADMINISTRATOR,
MADANG PROVINCIAL ADMINISTRATION
Ninth Defendant

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Tenth Defendant

Cannings J

Madang: 10 December 2019, 18 February 2020
Waigani: 24 June 2020

CONTRACTS – written contract for provision of hire cars – contract apparently entered into by legal non-entities – trial on liability – enforceability of contract.

The plaintiff, an entity engaged in the business of hiring cars and other vehicles, commenced proceedings against three defendants, a provincial government, the provincial administrator and the State, claiming debt and damages for breach of a hire agreement. The writ and statement of claim were later amended to add a further seven defendants and to particularise the debt claim in the sum of K1,024,490.32. Two of the first three defendants, but not the State, filed a defence. The proceedings were referred to mediation, and at one stage there was a mediated agreement signed between the plaintiff and the provincial government (the first defendant) to progress to a final agreement. However, the mediation ultimately failed and the proceedings returned to court for a trial on liability. The provincial government was represented during the pre-trial process and at the start of the trial when most of the evidence was adduced but made no appearance at the hearing of submissions. All other defendants were absent throughout the trial.

Held:

(1) The proceedings against the second, third, fourth, fifth, sixth, seventh and eighth defendants were summarily dismissed as there was no evidence that those defendants had been served with the writ or any court documents putting them on notice of the proceedings against them and no notice of intention to defend had been filed on behalf of any of them.

(2) The proceedings against the ninth defendant (the provincial administrator) were summarily dismissed as, though a notice of intention to defend had been filed on his behalf, he was not a party to the contract, breach of which is pleaded to have given rise to liability, and did not sign or authorise the contract, and bears no vicarious liability for any breach of contract that was committed.

(3) The proceedings against the tenth defendant (the State) were dismissed as there was no evidence of service on the State of a notice of intention to make a claim under s 5 of the Claims By and Against the State Act and no evidence of service of the writ and it did not file a notice of intention to defend, and the State was not a party to the contract, breach of which is pleaded to have given rise to liability, and bears no vicarious liability for any breach of contract that was committed.

(4) The proceedings against the first defendant (the provincial government) were dismissed as: it was not a party to the contract, the contract was illegal and unenforceable (as it was entered into by two legal non-entities, the person who purported to sign the contract on behalf of the provincial government had no actual or ostensible authority to do so, there was no evidence of adherence to the public tender requirements of the Public Finances (Management) Act or any tender procedures), and the terms of the contract were vague and ambiguous and incapable of giving rise to liability.

(5) The entire proceedings were dismissed and the parties were ordered to bear their own costs.

Cases Cited

The following cases are cited in the judgment:

Awaincorp Ltd v Kas& Madang Provincial Government (2015) N5862
Fuliva v Wagambie & Madang Provincial Government (2013) N5221
Madang Cocoa Growers Export Co Limited v Gunar & Madang Provincial Government (2013) N5324
Madang Cocoa Growers Export Co Ltd v Gunar & Madang Provincial Government (2012) N4703
Madang Cocoa Growers Export Co Ltd v Lange& Madang Provincial Government (2016) N6161
Madang Provincial Government (2013) N4956
Manus Fuel Distributors Ltd v Madang Provincial Government (2019) N7789

STATEMENT OF CLAIM

This was a trial on liability for breach of contract.

D F Wa’au, for the Plaintiff
B Lomai, for the First Defendant

24^th June, 2020

1. CANNINGS J: The issue in this case is whether the plaintiff, CJ Transport & Hire Cars, has proven liability in breach of contract against any or all of the 10 defendants. The contract in question is, according to the plaintiff, an agreement for the hire of motor vehicles to Madang Provincial Government (the first defendant) and various local-level governments and public officials in Madang Province (the second to ninth defendants).

2. The plaintiff pleads that the contract has been breached by the failure of the first to ninth defendants to settle invoices for vehicles they hired from the plaintiff. The plaintiff argues that those defendants, as well as the State (the tenth defendant, which is pleaded to be vicariously liable for the breaches of contract committed by the other defendants) are liable in debt in the sum of K1,024,490.32 (the total value of the various invoices) and damages.

THE CONTRACT

3. The contract on which the plaintiff’s case is based is expressed to be a “contract for lease of motor vehicle” between the “Renter” and the “Lessee”.

4. The “Renter” is described as:

The Office of Deputy Governor
Madang Provincial Government
PO Box 2139
MADANG
MADANG PROVINCE
A Government office that leased a motor vehicle from the Renter [sic]
(“The Renter”)

5. The “Lessee” is described as:

CJ Transport and Hire Cars
PO Box 611
MADANG
MADANG PROVINCE
A private business entity that offers and grants motor vehicle for lease [sic]
(“The Lessee”)

6. The “term of hire” is expressed to be:

5 years
Commencing: 01^st January 2014
Terminating: 31^st December 2017

7. The contract was signed on 1 December 2013 by Rama Marisan, the then Deputy Governor of Madang Province, for the Office of Deputy Governor, and by Catherine Kila for CJ Transport and Hire Cars. Rama Marisan’s signature was not witnessed, while Catherine Kila’s signature was witnessed.

PROCEDURAL HISTORY

8. The writ of summons was filed on 25 May 2015 and named three defendants, including one “Madang Provincial and Local-level Governments”, which is a legal non-entity. Other original defendants were the Provincial Administrator (second defendant) and the State (third defendant). The first and second defendants filed a defence on 6 July 2015. The writ was amended on 30 September 2015, to name Madang Provincial Government as first defendant and add other defendants. The statement of claim was also substantially amended.

9. On 27 June 2016 the whole proceedings were referred to mediation. That resulted in a mediated agreement, which was expressed to be executed as a deed,being signed on 20 September 2017 by Peter Torot, Acting Deputy Provincial Administrator, on behalf of Madang Provincial Government, and Catherine Kila, on behalf of CJ Transport and Hire Cars, in the presence of the accredited mediator, Justice Jeffrey Shepherd. The agreement did not purport to settle the proceedings. Rather it was an agreement for the parties to the agreement (the plaintiff and the first defendant) to do certain things to clarify the particulars of the plaintiff’s claim, with a view to working towards agreement of the actual amounts owed for hire of vehicles in respect of each of the first to ninth defendants, and to progress the mediation to settlement.

10. The mediator attempted to progress and finalise the mediation in July 2019 but was thwarted by, according to the mediator’s certificate, issued under the ADR Rules, “administrative neglect and staff failures regarding the actioning by the Madang Provincial Government of the mediated process agreement dated 20 September 2017”. The mediator noted that Madang Provincial Government “did not make reasonable efforts to meaningfully participate in the resumption of the mediation” and terminated the mediation on 27 July 2019.

11. The proceedings subsequently returned to court in late 2019 for a trial on liability. Madang Provincial Government was represented during the pre-trial process and at the start of the trial when most of the evidence was adduced, but made no appearance at the hearing of submissions. All other defendants were absent throughout the trial. The plaintiff was represented by Mr Wa’au of DFW Lawyers throughout the trial, including the hearing on submissions.

APPROACH TO DETERMINATION OF LIABILITY

12. I will determine liability by considering the defendants in four categories:

13. First, the second to eighth defendants, namely:

• Rama Marisan, former Deputy Provincial Governor (second defendant)
• Bob Wati, Deputy Provincial Governor (third defendant)
• Yabu Local-level Government (fourth defendant)
• Sumgilbar Local-level Government (fifth defendant)
• David Weri, District Officer, Middle Ramu District Office (sixth defendant)
• Yawar Local-level Government (seventh defendant)
• Sumkar Local-level Government (eighth defendant)
  

14. Secondly, the ninth defendant, who is described as:

• Daniel Aloi, Administrator, Madang Provincial Administration
  

15. Thirdly, the tenth defendant:

• The Independent State of Papua New Guinea
  

16. Finally, the first defendant:

• Madang Provincial Government
  

LIABILITY OF SECOND TO EIGHTH DEFENDANTS

17. The proceedings against these defendants must be dismissed, because:

• there is no evidence that any of them has been served with the amended writ or any court documents, putting them on notice of the proceedings against them;
  
• no notice of intention to defend had been filed on behalf of any of them;
  
• the amended statement of claim of 30 September 2015 fails to adequately particularise the claim against each of them;and
  
  • none of them was a party to the contract of 1 December 2013, on the basis of which their liability is pleaded to arise.
    

LIABILITY OF NINTH DEFENDANT

18. The proceedings against the Provincial Administrator must be dismissed as, though a notice of intention to defend was filed on his behalf and he is reasonably presumed to have therefore been given notice of the proceedings against him:

• he was not a party to the contract of 1 December 2013, on the basis of which his liability is pleaded to arise; and
  
• it is not pleaded and it has not been proven that he bears any vicarious liability for any breach of contract that was committed.
  

LIABILITY OF TENTH DEFENDANT

19. The proceedings against the State must be dismissed, because:

• there is no evidence of service on the State of a notice of intention to make a claim under s 5 of the Claims By and Against the State Act;
  
• there is no evidence of service of the writ on the State;
  
• the State did not file a notice of intention to defend;
  
• the State was not a party to the contract, breach of which is pleaded to have given rise to liability; and
  
• though the State’s vicarious liability has been generally pleaded, the elements of such liability have not been pleaded, and there is no evidence to show and therefore it has not been proven how the State would be vicariously liable for any breach of contract that was committed.
  

LIABILITY OF FIRST DEFENDANT

20. The proceedings against Madang Provincial Government must be dismissed as, though it has been served with the writ and filed a notice of intention to defend and filed a defence and participated in the mediation and in the trial, and although it suggested during the mediation that was prepared to admit liability, and although it has paid some amounts said to be due and owing to the plaintiff under the contract:

• it was not a party to the contract of 1 December 2013;
  
• none of its conduct amounts to a binding admission of liability; and
  
• even if it were regarded as being a party to the contract, the contract, I find, is irregular, illegal and unenforceable.
  

21. The reasons that I consider the contract is irregular, illegal and unenforceable are:

1. it was entered into by two legal non-entities: the Office of Deputy Governor is not a legal person, nor is CJ Transport and Hire Cars, the name ascribed to the plaintiff in the writ and all subsequent court documents, without the suffix “Limited”, which suggests that the plaintiff is a business name and not a company or any other legal entity;
   
2. the person who purported to sign the contract on behalf of Madang Provincial Government had no actual or ostensible authority to do so;
   
3. there is no evidence of adherence to the public tender requirements of the Public Finances (Management) Act or any tender procedures, giving rise to the reasonable inference that the contract is tainted with impropriety;
   
4. the description of the parties to the contract – expressed to be between a renter and a lessee – makes no legal or common sense;
   
5. the contract is expressed to be for five years, from 1 January 2014 to 31 December 2017, which is only a period of four years; and
   
6. the terms of the contract are so vague and ambiguous as to be incapable of giving rise to liability.
   

CONCLUSION

22. The entire proceedings will be dismissed. I will order the parties to bear their own costs as the proceedings have been unnecessarily delayed by the shilly-shallying of Madang Provincial Government and the various lawyers who have acted on its behalf.

REMARKS

23. This case is yet another example of what I said many times during my ten years as resident Judge for Madang Province: Madang Provincial Government is poorly represented, and the interests of the People of Madang are routinely not properly protected, in court proceedings against Madang Provincial Government.

24. History shows that Madang Provincial Government is a prolific and costly court loser. Here are just a few examples, but there are many more: Fuliva v Wagambie & Madang Provincial Government (2013) N5221, Awaincorp Ltd v Kas & Madang Provincial Government (2015) N5862, Madang Cocoa Growers Export Co Ltd v Lange & Madang Provincial Government (2016) N6161, Madang Cocoa Growers Export Co Limited v Gunar & Madang Provincial Government (2013) N5324, Madang Cocoa Growers Export Co Ltd v Gunar & Madang Provincial Government (2012) N4703, Manus Fuel Distributors Ltd v Madang Provincial Government (2019) N7789.

25. As it has turned out, Madang Provincial Government has not lost this case. But that is the exception to the rule. And it has not avoided losing because of the dexterity and diligence of the succession of different private law firms it has had representing it, which have been dithering in their defence of the provincial government, highlighted by their failure to appear and assist the Court at the critical time when submissions were made.

26. Madang Provincial Government needs a properly resourced Legal Office, staffed with a cadre of competent and committed lawyers, to manage its legal affairs.

ORDER

(1) The proceedings are entirely dismissed.

(2) The parties shall bear their own costs.

Ordered accordingly.
__________________________________________________________________
DFW Lawyers: Lawyers for the Plaintiff
Lomai & Lomai Attorneys: Lawyers for the First Defendant