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Peke Kuman (trading as Tribal Home Consultants) v KBM Motors Ltd [2022] PGNC 555; N10088 (21 December 2022)

N10088

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 387 OF 2022

BETWEEN:
PEKE KUMAN trading as TRIBAL HOME CONSULTANTS
Plaintiff

AND:
KBM MOTORS LIMITED
Defendant

Goroka: Mugugia, AJ
2022: 13^th & 21^st December

PRACTICE AND PROCEDURE – Application to dismiss proceedings – Grounds - Not disclosing a reasonable cause of action, National Court Rules, Order 12, Rule 40(1)(a) - Abuse of process, National Court Rules, Order 12, Rule 40(1)c) - Exercise of discretion - Application refused.

Counsels:

No appearance, for the Plaintiff
C. Nidue, for the Defendant

RULING

21^st December, 2022

1. MUGUGIA, AJ: The is my ruling on the Defendant’s application by way of Notice of Motion filed on 18^th October 2022 to dismiss the proceedings on the grounds that no reasonable cause of action is disclosed, and the proceedings is an abuse of process of the Court because the named Defendant does not have the legal capacity to be sued.

2. At the hearing on 13^th December 2022, Mr Nidue presented himself as the lawyer for the named Defendant KBM Motors Limited. He confirmed that he had communicated with the Plaintiff’s lawyer Mr Sino who advised him that he will withdraw his client’s proceedings, with costs to be paid to the Defendant on a Party and party basis. Mr Nidue informed the Court that he had instructions to proceed with his client’s application and ask for costs on a Solicitor and client basis which was a specific term in his client’s motion. He opted to make his client’s application to seek dismissal of the proceedings, and for costs of the application to be paid by the Plaintiff on a Solicitor and client basis.

3. Pursuant to Order 4, Rule 46 (b) of the National Court Rules, the Court may hear and dispose of a motion in the absence of any party where the notice of the motion has been duly served on the absent party. I was satisfied that the Plaintiff was duly served with the motion, and his lawyer Mr Sino was aware of the motion and the hearing date. He made no appearance at the hearing, so I proceeded to hear the motion in his absence. The application was made ex parte.

Background Facts

4. Sino & Company Lawyers filed the Plaintiff’s Writ of Summons on 13^th September 2022. The Plaintiff named KBM Motors Limited as the Defendant in these proceedings, claiming the sum of K391,200.00, a global sum of K10,000.00 in general damages for breach of contract, interest and costs. K391,200.00 is the amount under a written agreement entered into between the Plaintiff and the Defendant on 20^th August 2018, for the Plaintiff to pursue and recover accumulated service bills totaling K4.6 million from the Department of Police and the Department of Treasury and Finance. Part of the agreement was that upon successful recovery of K4.6 million either in part or full, the Plaintiff would be paid a total consultancy fee in the sum of K1.2 million which was equivalent to 26.08%.

5. The Defendant was paid K1.5 million on or about 22^nd December 2018. As per the agreement, the Plaintiff was entitled to be paid K391,200.00 for his consultancy and engagement fees. In January 2019, the Defendant paid the Plaintiff a sum of K10,000.00 (in cash) as part payment for his consultancy service. An additional sum of K3,000.00 was paid in July 2019. The Plaintiff alleged that the Defendant breached the agreement in that it failed to pay the Plaintiff K391,200.00 upon receipt of the K1.5 million from the Department of Treasury which equates to 26.08% of the recovered sum.

6. The Director of KBM Limited Mr Raymond Mili was served with the Plaintiff’s writ of summons. Nidue & Associates Lawyers filed a notice of intention to defend on behalf of the Defendant on 13^th October 2022. A defence and cross-claim was filed on 18^th October 2022.

Evidence in support of the Motion

7. In making the application, Mr Nidue relied on the Affidavit of Raymond Mili filed on 18^th October 2022. Raymond Mili deposes in his affidavit that he is the Director of KBM Limited. He confirms that he has been served with the Plaintiff’s writ of summons. He deposes that KBM Limited was incorporated as such under the Companies Act 1997, and not KBM Motors Limited. Annexure “A” is a copy of the Certificate of Incorporation of KBM Limited, and Annexure “B” is a copy of the Company Extract of KBM Limited.

8. Mr Mili further deposes that KBM Limited did not enter into any verbal or written agreement with the Plaintiff in January 2018, on 20^th August 2018, or at any time, and on 20^th August 2018, the Plaintiff erroneously entered into the Agreement with KBM Motors Limited as if it were KBM Limited. Annexure “C” is a copy of the Agreement of 20^th August 2018 between Tribal Home Consultants and KBM Motors Limited. Mr Mili gave evidence in paragraph five (5) that as Director of KBM Limited, he did not authorise Alphonse Jon or Catherine Mili to sign the Agreement of 20^th August 2018, nor did he sign the Agreement or affixed his company seal on the Agreement.

Issues

9. The issues are:

(i) Whether no reasonable cause of action is disclosed.

(ii) Whether the proceedings are an abuse of the process of the Court.

(iii) Whether the proceedings should be dismissed.

CONSIDERATION

The Law

10. Rule 40 of Order 12 of the National Court Rules provides for ‘Frivolity, etc.’. Rules 40(1)(a) and 40(1)(c) read:

“(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) ...

(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 purpose of Order 12, Rule 40 is to give the Court power to terminate actions or claims which are plainly frivolous or vexatious or untenable. The power conferred on the National Court to dismiss is discretionary and must be exercised based on proper principles.

Whether no reasonable cause of action is disclosed.

12. Mr Nidue advanced the argument that the proceedings does not disclose a reasonable cause of action as the Defendant is not named correctly in the Agreement, and the persons who signed the Agreement, namely, Alphonse Jon and Catherine Mili were not authorized by KBM Limited to sign the Agreement.

13. The National Court Rules relied on to confer jurisdiction on this Court to make the order sought was Order 12, Rule 40(1)(a). I noted that this ground relied on by the Defendant was not raised as a defence in its Defence and Cross-Claim filed on 18^th October 2022. The defence of non-disclosure of a reasonable cause of action warranting dismissal of the proceedings has to be pleaded before it can be raised. The pleadings in the defence form the foundation for grant of the relief sought if a defendant seeks dismissal of a plaintiff’s claim.

14. When I asked Mr Nidue about the evidence demonstrating non-dislosure of a reasonable cause of action, Mr Nidue referred me to Annexure “A” in Raymond Mili’s affidavit which is the Certificate of Incorporation of KBM Limited.

15. I noted that Raymond Mili’s supporting affidavit contained only five (5) short paragraphs. A supporting affidavit is supposed to contain evidence in support of the orders sought in the motion. I find Raymond Mili’s affidavit insufficient and lacking in substance. It did not clearly demonstrate how the proceedings failed to disclose a reasonable cause of action.

16. I have considered the pleadings in the Statement of Claim. The pleadings are set out above under the heading “Background Facts”. I find that there is a reasonable cause of action against the Defendant.

Whether the proceedings are an abuse of the process of the Court.

17. Mr Nidue argued that there is no such entity as KBM Motors Limited. The proceedings is an abuse of process because the named Defendant does not have capacity to be sued under that name since it is not registered as a company. The entity which is registered with its name under the Companies Act must be named in the proceedings. The naming of the wrong entity is a fatal mistake. To institute proceedings against a non-existent company is an abuse of process. Therefore, the proceedings must be dismissed. Counsel referred the Court to the case of Ace Guard Dog Security Services Ltd. v. Lailai (2004) SC757.

18. The Defendant relied on Order 12, Rule 40(1)(c) of the National Court Rules. I noted that the Defendant did not plead abuse of process warranting dismissal of proceedings as a defence in its Defence and Cross-Claim filed on 18^th October 2022. This defence has to be pleaded before it can be raised. I reiterate here that the pleadings in the defence form the foundation for grant of the relief sought if a defendant seeks dismissal of a plaintiff’s claim.

19. I noted that the address for service of KBM Motors Limited which was stated on the Plaintiff’s writ of summons is P.O. Box 975, Goroka, Eastern Highlands Province. Raymond Mili confirmed in his affidavit that he was served with the Plaintiff’s writ of summons. I noted from Mr Mili’s affidavit that the address for service used is the same address.

20. I find Raymond Mili’s affidavit insufficient and lacking in substance. It did not clearly demonstrate how the proceedings amounted to an abuse of process.

21. I find that there is no abuse of process of the Court.

22. The corporate name in the Certificate of Incorporation and Company Extract is KBM Motors. I find that the naming of the Defendant as KBM Motors Limited in this proceedings is a minor discrepancy in the naming of the Defendant. This can be cured by an amendment to the writ of summons to correct the name. Pursuant to Order 8, Rule 50(1) of the National Court Rules, the Court, may, at any stage of any proceedings, of its own motion, order, on terms that any document in the proceedings be amended in such manner as the Court thinks fit. I am of the view that the amendment will correct the error in the naming of the Defendant, and will not prejudice the Plaintiff.

Whether the proceedings should be dismissed.

23. It is my considered view that it will not be in the interest of justice to dismiss the entire proceedings just because the incorrect name is cited. The Plaintiff has disclosed a reasonable cause of action. I am reminded by case authorities that a plaintiff or claimant should not be driven from the judgement seat in a summary manner, and that the Court should be cautious and slow in exercising its discretionary power. Based on the findings and reasons stated above, I will not dismiss the proceedings.

Conclusion

24. In conclusion, I shall refuse the Defendant’s application to dismiss the proceedings.

25. I remind myself to consider the overall requirement to do justice in this case. Considering the circumstances, the way forward in dealing with this matter is to make an order for the Plaintiff to amend the name of the Defendant to its correct name as per the Company Extract.

26. In the exercise of my discretion, I make these Orders pursuant to Order 12, Rule 1 of the National Court Rules:

1. The Defendant’s application by Notice of Motion filed on 18^th October 2022 is refused.

2. Pursuant to Order 8, Rule 50(1) of the National Court Rules, the name of the Defendant cited on the Court documents as “KBM Motors Limited” is amended to “KBM Motors”.

3. The parties shall meet their own costs.

4. Time is abridged to the time of settlement to take place forthwith.

Ruling and Orders Accordingly.
________________________________________________________________
Sino & Company Lawyers: Lawyers for the Plaintiff
Nidue & Associates Lawyers: Lawyers for the Defendant