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Travellers Rent A Car Ltd v Gamato [2021] PGNC 418; N9158 (24 September 2021)

N9158

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 1767 OF 2019

BETWEEN
TRAVELLERS RENT A CAR LIMITED
Plaintiff

AND
PATILIAS GAMATO as the COMMISSIONER FOR
PNG ELECTORAL COMMISSION
First Defendant

AND
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Second Defendant

Lae: Murray, J
2021: 24^th September

PRACTICE AND PROCEDURE - application to dismiss proceedings for failing to disclose a reasonable cause of action - relevant principles considered and applied - National Court Rules, Order 12 Rule 40(1).

PRACTICE AND PROCEDURE- Dismissal of action- Action for Breach of Hire of motor vehicle Agreement & Recovery of Debt – Agreement unenforceable – Grounds - failure to comply with Public Finance Management Act 1995 – Sections 47C & 47D – failure to comply with Claims By and Against the State Act – Section 2A

Cases Cited:
Papua New Guinea Cases

Ray v Numara (2018) N7380
Jack Livinai Patterson v NCDC (2001) N2145
FRPG v PHS (2003) SC705
Glennel G. Mari trading as Wani Connection v Numara & Ors (2019) N8089
Kerry Lerro v Philip Stagg (2006) N3050
Philip Takori v Simon Yagari (2008) SC905
PNG Forests Products v The State [1992] PNGLR 85

Overseas Cases:

Republic of Peru vs. Peruvian Guano Company (1887) 36
Hubbuck and Sons Ltd vs. Wilkinson, Heywood & Clerk Ltd [1898] UKLawRpKQB 176; [1899] 1 QB 86
Lonrho plc vs. Fayed (1991) 3 All ER 303

Counsel:
-------------
Mr. L. Vava, for the Plaintiff
Mr. B. Tomake, for the Second Defendant

RULING ON MOTION

24^th September, 2021

1. MURRAY J: The Plaintiff is a hire car company. On 17^th December 2018, it instituted this proceeding claiming that between 2013 and 2017, it entered into various vehicle hire agreements with the First Defendant. It claims further that pursuant to those agreements, the First Defendant hired numerous vehicles from it. Pursuant to the said agreements, invoices were issued for various amounts totalling to K712,340.00. The Defendants made part payments totalling to K182,777.00. The balance of K529,563.00 remains unpaid to date. That is what the Plaintiff seeks to recover in this proceeding.

2. On 30^th April 2020, State filed its defence. In its defence State claims that the Plaintiff’s claim is null, void and unenforceable on the basis of non compliance of Section 2A of the Claims By and Against the State Act 1996 and Section 47 of the Public Finance and Management Act 1995.

3. Whilst the matter was pending directions hearing before this Court, State filed a motion on 3^rd June 2021 for dismissal of the entire proceeding. That motion came before on 21^st June 2021. I heard the application and reserved my ruling to a later date. This is my ruling on that.

4. The motion is supported by the affidavit of Ms. Maliaki sworn on 3^rd May 2021 and filed 3^rd June 2021.

5. The said affidavit contains mostly submissions and not facts which is what an affidavit should contain. The only facts deposed to in the said affidavit are in paragraphs 3 and 4. Paragraph 3 speaks of the date of filing of the Writ of Summons and date of service of the Writ on the Office of Solicitor General whilst paragraph 4 speaks of dates of the filing of the Notice of Intention to Defend and Defence.

6. Relying on the said affidavit, the State in seeking the dismissal under Order 12 Rule 40 (1) submitted that the proceeding filed by the Plaintiff should be dismissed for failing to disclose a reasonable cause of action because the contract which is the subject of the Plaintiff’s action is illegal, null, void and unenforceable in that, firstly, the Plaintiff has failed to plead reliance on an Integrated Local Purchase Order and Claim (ILPOC) and an Authority to Pre-commit Expenditure (APC) as prerequisites to a valid contract under the Claims By and Against the State Act (CB & ASA) and Public Finance and Management Act (PFMA) and secondly, that it has failed to comply with those mandatory prerequisites.

7. In support of its submissions, State referred to and relied on the following cases: Ray v Numara (2018) N7380; Jack Livinai Patterson v NCDC (2001) N2145; FRPG v PHS (2003) SC705 and Glennel G. Mari trading as Wani Connection v Numara & Ors (2019) N8089 which followed Ray v Numara (supra).

8. In opposing the application, Mr. Vava for the Plaintiff submitted that, the Defendants’ Notice of Motion is confusing and must be dismissed in that, on the one hand, the Defendants are seeking an order to dismiss for disclosing no cause of action and on the other hand, they are making submissions that the Plaintiff has not complied with Section 47 of the Public Finance Management Act and Section 2A of the Claims By and Against the State Act, something which the State has raised as a defence in its defence to the Plaintiff’s claim. In the circumstances, Mr. Vava submits, the defence raised gives rise to a triable issue and therefore it is a matter for trial where evidence will be called to prove.

9. It was also Mr. Vava’s submission that, the Plaintiff’s statement of claim as it is has sufficiently pleaded a cause of action and relying on the case of FRPG (supra), it was further submitted that, in the event this Court finds there is a breach of the PFMA, the Plaintiff can still claim damages on quantum meriut basis.

10. Order 12 Rule 40 (1) of the National Court Rules reads:
    

“40. Frivolity, etc.

(1) Where in any proceedings it appears to the Court that in relation to the

proceedings generally or in relation to any claim for relief in the proceedings-

(a) no reasonable cause of action is disclosed; or
(b) the proceedings are frivolous or vexatious; or
(c) the proceedings are an abuse of the process of the Court,

the Court may order that the proceedings be stayed or dismissed generally or in relation to any claim for relief in the proceedings.”

11. The Court’s power to dismiss proceedings under Order 12 Rule 40 (1) is a discretionary one. The applicable principles are set out in the case of Kerry Lerro v Philip Stagg (2006) N3050, which was endorsed by the Supreme Court in Philip Takori vs. Simon Yagari (2008) SC905. The principles in so far as they apply to an application to dismiss for failure to disclose a reasonable cause of action are as follows:

1. Our judicial system should never permit a plaintiff or a defendant to be “driven from the judgment seat” in a summary way, “without a Court having considered his right to be heard.” A party has a right to have his case heard, as guaranteed by the Constitution and the laws of the land. The Rules are designed to enhance those rights and to ensure the prompt and fair disposal of matters coming before the Court. That right cannot be lightly set aside.
   
2. The Court must be clear that there are two (2) parts to the phrase “cause of action”. First, it entails a right given by law such as an entitlement to reasonable damages for breach of human rights under s.58 of the Constitution, commonly referred to as the “form of action”. Secondly, it entails the pleadings disclosing all the necessary facts which give rise to the form of action.
   
3. The phrase “cause of action” could thus be defined in terms of a legal right or form of action known to law with:

“every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the court. It does not comprise of every piece of evidence which is necessary to prove each fact, but every fact is necessary to be proved.”

4. A statement of claim or a defence (as the case may be) must therefore

clearly plead the form of action by pleading the necessary legal elements or ingredients of the action and relevant and necessary facts (not the evidence) giving rise to the form of action. It follows therefore that, where a statement of claim or a defence is so ambiguous or lacking in particularity that it does not facilitate orderly and rational pleadings, which would enable the real issues to be identified, and instead leaves it to guess work, it should be struck out.

5. These rules provide a summary judgment procedure or remedy which is available to a plaintiff or a defendant, and one which vests and calls for an exercise of a discretion by the Court.
   
6. The discretion must be exercised sparingly and only in a case where the statement of claim or the defence (as the case might be) is “obviously and almost incontestably bad.” In other words this discretion can be exercised only in cases that “are plain and obvious so that the master or Judge can say at once that the statement of claim [or defence] as it stands, is insufficient, even if proved, to entitle the plaintiff [defendant] to what he asks for.
   

12. The State’s motion in the present case seeks an order that, pursuant to Order 12 Rule 40 (1) (a) & (b) of the National Court Rules, the entire proceedings be dismissed for disclosing no reasonable cause of action in that, the contract is null, void and unenforceable because it failed to comply with Section 47C & Section 47D of the Public Finance Management Act 1995 and Section 2A of the Claims By and Against the State Act.

13. The question that immediately comes to mind having had regard to the basis or ground upon which the State seeks to dismiss is:

Is Or. 12 r. 40 (1) an appropriate jurisdictional basis for the dismissal order being sought by the State, given the ground or the basis it relies on?

14. Justice Sheehan in discussing the extent to which Order 12 Rule 40 (1) can or cannot be used, in the case of PNG Forests Products v The State [1992] PNGLR 85, held inter alia that:

There is a distinction between seeking to have an action decided on a preliminary point of law and moving to have it struck out for want of reasonable cause of action. See Hubbuck and Sons Ltd vs. Wilkinson Heywood and Clerk Ltd [1898] UKLawRpKQB 176; (1899) 1 QB 86 per Lord Lindly MR; Lonrho plc vs. Fayed (1991) 3 All ER 303 per Lord Bridge".

10. His Honour arrived at this conclusion after having had regard to the case of Republic of Peru vs. Peruvian Guano Company [1887] UKLawRpCh 186; (1887) 36 Ch D 489, where Chitty, J said:

"if, notwithstanding defects in the pleading, ... the Court is of the view that a substantial case is presented the Court should, I think, decline to strike out that pleading: but when the pleading discloses a case which the Court is satisfied will not succeed, then it should strike it out and put a summary end to the litigation".

and the decision of the Court of Appeal in Hubbuck and Sons Ltd v Wilkinson, Heywood & Clerk Ltd [1898] UKLawRpKQB 176; [1899] 1 QB 86 at 91, where Lord Lindley MR emphasized the distinction between seeking to have an action decided on a preliminary point of law and moving to have it struck out for want of a reasonable cause of action, in the following terms:

"Two courses are open to a defendant who wishes to raise the question whether, assuming a statement of claim to be proved, it entitled the plaintiff relief. One method is to raise the question of law as directed by Order XXV, r 2; the other is to apply to strike out the statement of claim under Order XXV, r 4. The first method is appropriate to cases requiring argument and careful consideration. The second and more summary procedure is only appropriate to cases which are plain and obvious, so that any master or judge can say at once that the statement of claim as it stands is insufficient, even if proved, to entitle the plaintiff to what he asks."

15. From the judgement of Sheehan J in PNG Forest Products (supra) it is abundantly clear that, there is a distinction between seeking to have an action decided on a preliminary point of law and moving to have it struck out for want of a reasonable cause of action.

16. In the case before me, the motion seeks a dismissal on the grounds that the contract is null, void and unenforceable because it failed to comply with certain legislative provisions.

Applying the consideration in PNG Forests Product case, that to my mind is clearly a cause taken up by the State to have the plaintiff’s action decided on a preliminary point of law which is not the same as an application seeking to dismiss for want of reasonable cause of action under Or. 12 r.40 (1).

17. For an application under Or.12 r.40 (1), seeking a dismissal for want of reasonable cause of action, the principles which are set out in the Supreme Court Judgement in the case of Philip Takori are clear. In essence, a Court exercising its powers under Or.12 r.40 must do so sparingly and only in a case where the statement of claim or the defence (as the case might be) is “obviously and almost incontestably bad.”

18. That is not what the State is seeking in this case. Instead, it is seeking to dismiss on the ground that the plaintiff does not have a valid and an enforceable contract. That in my view is a substantive relief which requires careful consideration of evidence and full argument.

19. In other words, a determination of the validity of a contract and having to make a finding that it is unenforceable, is a matter that requires production of evidence. As it is, there is no evidence of noncompliance. The affidavit of Ms. Maliaki says nothing. How do I then decide if there was compliance or not? Also, State has taken issue with that and has raised it as a defence. This makes it more appropriate for the matter to proceed to trial.

20. Thus, following the decision in PNG Forests Products case, I consider such matter is appropriate to be dealt with as a preliminary point of law either on its own or at the trial proper where the plaintiff is given the opportunity to prove its claim.

21. Accordingly, given the grounds relied upon by the State for dismissal, Order 12 Rule 40 (1) cannot be used as this is in my view, not a plain and obvious case where any master or judge can say at once that the statement of claim as it stands is insufficient, even if proved, to entitle the Plaintiff to what he asks.

22. The cases of: Ray v Numara; Jack Livinai Patterson v NCDC; Glennel G. Mari v Numara & Ors are distinguishable. They were all decided following consideration of evidence before the Court.

23. As to the Defendants’ submission that it is a pre-requisite that any claims for provision of goods and services to the State, ILPOC or APC must be pleaded in the Statement of Claim, I find this proposition unmeritorious. The National Court cases referred to and relied upon by the State do not assist as they do not stand for that proposition. The Supreme Court Judgement in FRPG v PHS offers no support on this argument either.

24. On the other hand, I am of the view that the judgement in FRPG v PHS does support the argument by Mr. Vava that, this proceeding should be allowed to proceed to trial because, even if the contract is found to be unenforceable, the Plaintiff can still seek recourse in quantum meriut.

25. For all those reasons, the orders sought by the Defendants in their Notice of Motion are refused with costs.

________________________________________________________________
Luke Vava Lawyers: Lawyer for the Plaintiff
Solicitor General: Lawyer for the Second Defendant