N11672

PAPUA NEW GUINEA 
[NATIONAL COURT OF JUSTICE]	
			
WS NO. 248 OF 2025

SAVEMART LIMITED
First Plaintiff

MONEY EXCHANGE LIMITED
Second Plaintiff

V

MASURINA AGENCIES SERVICES LIMITED
First Defendant

JEFFREY ABEL
Second Defendant

DAVID A KIL as Registrar of Companies
Third Defendant

ALOTAU: KARIKO J
16, 17 OCTOBER 2025

CIVIL PRACTICE & PROCEDURE – application to dismiss proceedings – capacity of parties - adequacy of pleadings – whether reasonable cause of action disclosed – whether claims tenable – Order 12 Rule 40, National Court Rules

A company duly authorised to deal in foreign currency exchange alleged that a security company with whom it had a verbal agreement for the provision of security services, breached the agreement when it lost foreign currency that had been collected from tourists on a cruise ship. The security company filed application to dismiss the proceedings on grounds that the currency exchange company was not a party to the agreement; and that the security company had been deregistered. 

Held

1.	A person cannot sue or be sued on a contract unless the person is a party to the contract: Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915] AC 847.
2.	A deregistered company lacks standing to sue or be sued as it ceases to be a legal entity: Ace Guard Dog Security Services Limited v Lindsay Lailai (2004) SC757.
3.	The pleadings do not disclose a reasonable cause of action.
4.	Application to dismiss the proceedings upheld.

Cases cited

Ace Guard Dog Security Services Limited v Lindsay Lailai (2004) SC757
Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915] AC 847
Evangelical Lutheran Church of Papua New Guinea v Gee (2019) N7635 
Kerry Lerro v Phillip Stagg & Ors (2006) N3050 
Kiee Toap v The State (2004) N2731
Phillip Takori & Ors v Yagari & Ors (2008) SC905 
PNGBC v Barra Amevo & Ors (1998) N1726
PNG Bible Church Inc v Paul Wagun (2013) N5297

Counsel

K Baloiloi, for the plaintiffs
P Tamutai, for the first and second defendants

1.	KARIKO J: This an application by the first and second defendants made pursuant to O12 r40 of the National Court Rules to dismiss the proceeding for disclosing no reasonable cause of action, for being frivolous and vexatious and for being an abuse of process.

PLAINTIFFS’ CLAIM

2.	The second plaintiff (Money Exchange), a wholly owned subsidiary company of the first plaintiff (Savemart), is a registered authorised dealer in foreign exchange. The business activities of Money Exchange include the exchange of foreign currency for PNG Kina when overseas tourist ships call into the port of Alotau. 

3.	In these proceedings, it is claimed that Money Exchange and the first defendant (Masurina Agencies) entered into an oral agreement whereby Masurina Agencies would provide transportation and security services to Money Exchange. 

4.	It is further alleged that after a P&O cruise ship called into Alotau on 6 October 2023, Money Exchange collected foreign currency the equivalent value of K137,547.00 which was delivered into the custody of Masurina Agencies where it went missing from its office.
 
5.	It is claimed that Masurina Agencies breached its legal obligations under the verbal agreement to provide security for Money Exchange’s monies, while it is pleaded that the second defendant Jeffrey Abel as the managing director of Masurina Agencies was negligent in allowing the monies to go missing. 

6.	 Money Exchange seeks repayment of the missing money, plus interest and costs. 

7.	The second defendant is sued in his capacity as a director of Masurina Agencies while the third defendant is being sued pursuant to the Companies Act as representative of Maurina Agencies since it has been removed from the register of companies or deregistered. 

APPLICATION TO DISMISS

8.     The first and second defendants urge the court to summarily dismiss the proceedings on grounds that:

•	Money Exchange was only registered as a company well after the occurrence giving rise to this action. It was therefore not a party to the verbal agreement and the principle of privity of contract does not permit it to sue on the agreement.
•	Masurina Agencies was deregistered and no longer exists as a legal entity and therefore it cannot be sued. 

LEGAL PRINCIPLES

9.    The relevant legal principles concerning applications made under O12 r40 are clearly set out in cases such as Kiee Toap v The State (2004) N2731; Kerry Lerro v Phillip Stagg & Ors (2006) N3050 and Phillip Takori v Simon Yagari & Ors (2008) SC905. 

10.    The relevant principles in relation to applications under this Rule are well settled and include: 

•	A plaintiff or claimant should not be driven from the judgment seat in a summary manner unless in a clear case and that the Court should be cautious and slow in exercising its discretionary power. 
•	In the originating document, a plaintiff must demonstrate it has a cause of action. The document must clearly set out the legal elements of the claim and the facts that support each element. Only if the plaintiff does that, is there a reasonable cause of action.
•	The Court has an inherent jurisdiction to protect and safeguard its processes from abuse.
•	The Court is granted power to terminate actions or claims which are plainly frivolous or vexatious or untenable.

CONSIDERATION

11. After hearing submissions, it seems to me that the motion before me is alleging that the plaintiffs do not have standing to commence these proceedings; the first and second defendants do not have the capacity to be sued; and no reasonable cause of action is disclosed as against the third defendant, the Registrar of Companies. 

12. For the moment, I am going to assume that Money Exchange was a party to the verbal agreement with Masurina Agencies and has the standing to sue for the alleged breach of the agreement. 

13. However, there is no pleading or evidence suggesting that the first plaintiff was a party to the agreement. It has been included as a plaintiff only because it is the parent company of Money Exchange. This does not give it standing to sue on the agreement. Pursuant to the doctrine of privity of contract, a person cannot sue or be sued on a contract unless the person is a party to the contract: Dunlop Pneumatic Tyre Co Ltd v Selfridge & Co Ltd [1915] AC 847. The doctrine has been considered and applied in many cases in this jurisdiction including PNGBC v Barra Amevo & Ors (1998) N1726. There are exceptions to this doctrine but none of these were pleaded or argued.

14. Evidence shows that Masurina Agencies was deregistered on 3 December 2023. When this action was filed on 25 June 2025, the company no longer had the legal capacity to be sued. The law is clear: a deregistered company lacks standing to sue or be sued as it ceases to be a legal entity; Ace Guard Dog Security Services Limited v Lindsay Lailai (2004) SC757. It is also relevant to note s 16 of the Companies Act which states that “A company is a legal entity in its own right separate from its shareholders and continues in existence until it is removed from the register”.

15. Under s 376 of the Companies Act, legal action may be commenced against former directors and shareholders for liability in respect of any act or omission that occurred before a company was deregistered. The evidence in this case is that the second defendant ceased to be a director of Masurina Agencies on 21 March 2022, well before the company became defunct. He therefore cannot be sued in that capacity.

16.   There is also no clear pleadings in the statement of claim as to a cause of action claimed against the second defendant in his personal capacity.

17.    At [15] to [19] of the statement of claim, there are brief and vague pleadings suggesting that the Registrar of Companies is liable as the representative of Maurina Agencies, a deregistered company. This claim appears to be based on s 372 of the Companies Act which provides that where a company is deregistered, and if it had not been deregistered it would have been legally or equitably obliged to carry out some administrative action to complete a transaction, the Registrar may act for the deregistered company and carry out the action. See for example Evangelical Lutheran Church of Papua New Guinea v Gee (2019) N7635 and PNG Bible Church Inc v Paul Wagun (2013) N5297 where the Registrar was obliged to complete transfer of properties as representative of deregistered companies.   

18.    However, Money Exchange does not plead s 372 and in any case the section would not apply because the Registrar is not obliged by law to represent the deregistered Maurina Agencies as defendant in a claim against it for breach of contract or the tort of negligence.  

19.   I briefly add that counsel for the plaintiffs argued a cause of action based on breach of fiduciary duties. That is a cause of action which is not properly pleaded either.   

20.    Given the foregoing discussions, I find these proceedings untenable and would uphold the application to summarily dismiss under O12 r40.

21.   As to costs, I am not persuaded to exercise my discretion in favour of ordering costs to be paid on an indemnity basis as submitted by Miss Tamutai. I do not regard the conduct of the plaintiffs or their lawyers as “so improper, unreasonable or blameworthy”. 
 
ORDER

22.    The Court’s orders are:

(1)	The first and second defendants’ application to summarily dismiss the proceedings is upheld.

(2)	These proceedings are dismissed in their entirety.

(3)	The plaintiffs shall pay the first and second defendants’ costs of and incidental to these proceedings on a party-party basis, to be taxed if not agreed.

(4)	Time is abridged
________________________________________________________________
Lawyers for the plaintiffs: Young & William Lawyers
Lawyers for the first and second defendants: Tamutai Lawyers