N10898
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS (COMM) NO. 23 OF 2023 (IECMS)

BETWEEN
POM INVESTMENT GROUP LIMITED
Plaintiff

AND:
ROWHANI LIMITED trading as MILLS DENTAL CARE
Defendant

Waigani: Carey J
2024: 10th April, 12th June & 18th July

CONTRACT LAW – Oral, Written, or Both – Existence of a Contract- Legally Binding Contract Breach of Contract/Agreement–- Capacity 

The Plaintiff asserts that there were three agreements entered into with the Defendant from which arises a breach of contract claim. The Plaintiff asserts in all three agreements that the Defendant failed to pay the balance owing for the collective agreements. The Plaintiff sought the balance owing. 

Held:

1.	The Plaintiff did not prove that there was an agreement between the Defendant and itself.

2.	 The Plaintiff operated illegally in carrying on business in Papua New Guinea pursuant to s. 25 of the Investment Promotion Act 1982.

3.	 This proceeding is dismissed and claims for relief by the Plaintiff are refused.

4.	 The Plaintiff shall pay the Defendant’s costs of and incidental to this proceeding, to be taxed if not agreed.

Cases Cited:
Derwent Ltd v Pakena [2020] N8294
Gene v Motor Vehicles Insurance (PNG) Trust [1995] PNGLR 344
Naki v AGC (Pacific) Ltd [2005] N2782
New Ireland Development Corporation Ltd v Arrow Trading Ltd [2007] N3240
Odata Limited v Ambusa Copra Oil Mill Limited and National Provident Fund Board of Trustees [2001] N2106
Seafreight Pty Ltd v Bishop Shipping Services Pty Ltd [1976] PNGLR 22
Shell Papua New Guinea Ltd v Speko Investment Ltd and Peandui Koyati [2004] SC767
Wama v Manihia [2014] PGNC 5; N549
Woodward v Woodward [1987] PNGLR 92

Legislation:
Investment Promotion Act 1982
National Court Rules

Counsel: 
Mr. H. Namani with Mr. J. Nalawaku, for the Plaintiff
Mr. T. Noki, for the Defendant

JUDGMENT
18th July 2024

1.	CAREY J: This is the judgment regarding POM INVESTMENT GROUP LIMITED (Plaintiff) and ROWHANI LIMITED trading as Mills Dental Care (Defendant) in which there is a dispute over the existence of a contract and whether there is a breach of contract in this regard.

2.	 The Plaintiff’s claim as pleaded is in the Amended Writ of Summons filed on 18th July 2023.

3.	 The Plaintiff relied on the evidence submitted in the affidavit of Roy Wang sworn on 17th April 2023 and filed on 19th April 2023 and Affidavit in response of Roy Wang sworn on 1st September 2023 and filed on 8th September 2023. 

4.	The Defendant relied on the Affidavit in Support of Dr. Naysan Hamadani sworn and filed on 22nd August 2023.

BACKGROUND

5.	The Plaintiff avers that the Defendant and the Plaintiff entered into three agreements indicated as follows:

•	Second Floor Renovation Agreement;
•	Third Floor Renovation Agreement; and 
•	Agreement for Furniture Supply and Installation.

6.	The Plaintiff contends that services were provided to the Defendant and the total cost of those services was K1,034,672.17.

7.	The Plaintiff asserts that Defendant made a payment K600,000.00 and has an outstanding balance of K434,672.17.

8.	Moreover, the Plaintiff indicates that failure of the Defendant to pay the balance of K434,672.17 has resulted in a breach of contract claim which now means the Defendant should be liable to settle this claim plus interest pursuant to the Judicial Proceedings (Interest on Debts and Damages) Act and costs. 

9.	The Defendant denies entering into the agreements in paragraph 5. 

10.	The Defendant submits that the there was fraudulent misrepresentation by the Plaintiff with regard to accuracy and transparency.

11.	The Defendant posits that the payment of K600,000.00 to the Plaintiff was as per the Budget and in “good faith” and not pursuant to the Proposal or any Agreement. 

ISSUES

(a)	Whether or not the Plaintiff is illegally carrying on business within Papua New Guinea?
(b)	Whether or not the Plaintiff is illegally operating as a local company?
(c) Whether or not the Plaintiff and Defendant entered into three Agreements?
(d) Whether or not there was a breach of contract?
DETERMINATION
 
12.	Section 25 of the Investment Promotion Act (IPA)1982 states:

(1)	The Registrar may, in accordance with this Part, grant a certificate permitting a foreign enterprise to carry on business in the country.
(2) Subject to Section 26, a foreign enterprise shall not carry on business, unless a certificate has been granted under this Part.
13.	 From the evidence submitted to the Court the Plaintiff did not have a certificate under s.25 of the IPA.

14.	Further, the Plaintiff did not have the authority to carry on business and a mandatory term as expressed in the word shall indicated same.

15.	The evidence of this fact came about during trial and under cross examination by the Defendant’s counsel, Mr. Roy Wang admitted that he was not a citizen of Papua New Guinea as stated in his affidavit of 19th April 2023 titled Exhibit A1.

16.	In addition, there was no evidence that the Plaintiff registered as a Foreign Enterprise. 

17.	However, this does automatically confirm that if there is a contract with the Defendant that it should be voided. 

18.	The Defendant is obligated to apply to the Court that per s.41A , “that foreign enterprise had not been issued a certificate at the time at which the contract, agreement or understanding was entered into” for the Court to affirm that “the contract is unlawful and void”. See Odata Limited v Ambusa Copra Oil Mill Limited and National Provident Fund Board of Trustees [2001] N2106.

19.	The Defendant did not seek relief per s.41A of the IPA in its defence and cannot have relief if it did not plead. See New Ireland Development Corporation Ltd v Arrow Trading Ltd [2007] N3240.

20.	Notwithstanding the failure of the defendant to seek relief per s.41A of the IPA , the Plaintiff was illegally operating as a local company at the time of the purported agreements.

21.	The Plaintiff submits that Order 8 Rule 14 of the National Court Rules (NCR) precludes the Defendant from invoking fraud or any fact showing illegality as the Defendant must specifically plead such matters so the opposing party is not taken by surprise. See Gene v Motor Vehicles Insurance (PNG) Trust [1995] PNGLR 344.

22.	However, the NCR provides in Order 1 Rule 7 that “The Court may dispense with compliance with any of the requirements of these Rules, either before or after the occasion for compliance arises”. 

23.	As such, the application of Order 8 Rule 14 does not operate as a shield for the Plaintiff to use to vitiate its obligation under the IPA to operate lawfully.

24.	Moreover, Order 8, Rule 11 states that:

 “A party need not plead a fact if —
(a)	the fact is presumed by law to be true; or
(b)	the burden of disproving the fact lies on the other party,
 except so far as may be necessary to meet a specific denial of that fact by the other party in his pleading.”

25.	The Plaintiff is unable to convince me that Derwent Ltd v Pakena [2020] N8294 is persuasive to contradict Order 8, Rule 11 as it was Mr. Roy Wang who admitted in court that as the sole shareholder, he was not a citizen of Papua New Guinea but on the Company Extract he deposes that he is a Papua New Guinea citizen.  

26.	Therefore, as a foreign enterprise without a certificate from the IPA to carry on business in Papua New Guinea the Plaintiff should not carry on such business in pursuit of purported contract with the Defendant. 

27.	I am not persuaded by the Plaintiff’s argument of unjust enrichment by the Defendant as it is the Plaintiff who has operated ultra vires to the law with the expectation of receiving a profit. 

28.	 There is no evidence that there was a written letter of acceptance by the Defendant in the submissions.  

29.	 As such there is no written agreement for which a determination can be made. 

30.	In this regard I turn my attention as to whether there was an oral agreement by the parties.

31.	The evidence of an oral agreement must be detailed as stated in Wama v Manihia [2014]    PGNC 5; N5499.

32.	In Naki v AGC (Pacific) Ltd [2005] N2782 the elements of a contract are indicated as follows:

•	agreement between the parties;
•	an intention to create legal relations; and 
•	support of the agreement with consideration.

33.	I have not seen in the evidence where there was a clear agreement between the parties.

34.	There was a proposal put forward by the Plaintiff and the Defendant made payments, however, it is clear to me that the Defendant did given final consent to the terms by which there could be a conclusion drawn that they were content to be bound as a complete and exhaustive statement of their rights and liabilities. See Seafreight Pty Ltd v Bishop Shipping Services Pty Ltd [1976] PNGLR 22.

35.	There was not a clear implied agreement as argued by the Plaintiff.

36.	The uncertainty and vagueness of the intention of the parties cannot be ascertained with reasonable certainty based on the evidence of both the Plaintiff and the Defendant. It would not be appropriate to apply Woodward v Woodward [1987] PNGLR 92 as there was no intention to create legal relations in the contractual perspective as the Defendant did not accept the offer as proposed by the Plaintiff. 

37.	I accept the argument based on the evidence presented in Court that the Defendant did not agree to the proposals and therefore there was no binding agreement.

38.	I also accept the argument that the payment of K600,000 made by the Defendant to the Plaintiff was for service rendered to the Defendant in relation to the budgeted amount and not pursuant to the proposals as there were no further invoices issued by the Plaintiff against those proposals. 

39.	In Shell Papua New Guinea Ltd v Speko Investment Ltd and Peandui Koyati [2004] SC767:

“Notwithstanding the absence of a formal written agreement, it is possible for a binding contract to be entered into either in writing, or oral, or by conduct, or a mixture of those methods. The question is whether it can be said that a binding contract was entered into in the circumstances of this case.”

40.	I have considered the evidence in its total context and I reject the argument by the Plaintiff that Plaintiff and Defendant entered into three agreements.  

41.	It is deduced that there was no breach of contract as there was no conclusive agreement which could lead to such an act by the Defendant. 

ORDERS
(a)	The Plaintiff did not prove that there was an agreement between the Defendant and itself.

(b)	 The Plaintiff operated illegally in carrying on business in Papua New Guinea pursuant to s. 25 of the Investment Promotion Act 1982.

(c)	 This proceeding is dismissed and claims for relief by the Plaintiff are refused.

(d)	 The Plaintiff shall pay the Defendant’s costs of and incidental to this proceeding, to be taxed if not agreed.

(e)	The time for the entry of these Orders is abridged to the time for settlement which shall take place forthwith

Ordered accordingly.

Lane Lawyers: Lawyers for the Plaintiff
Namani Lawyers: Lawyers for the Defendant