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Supreme Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]
SCA NO. 149 OF 2017
BETWEEN
DEKENAI CONSTRUCTIONS LIMITED
Appellant
AND
TATI KEKE RESOURCES LIMITED
First Respondent
AND
ANDREW FEARI & PISAI FEAREKA
Second Respondents
Waigani: Mogish, Liosi & Anis JJ
2019: 30th April & 3rd May
PRACTICE AND PROCEDURE – Standing – whether respondents parties to the agreement – doctrine of privity of contract
Cased Cited:
Beno Maoko v. Kevin Ling (2008) N3293
Albert Areng v. Gregory Babia (2005) N2895
The Papuan Club Inc. v Nusaum Holdings Ltd (No. 2)(2004) N2603
Soka Toligai v. Sir Julius Chan and Ors (2012) N4842
Dumal Dibiaso Incorporated Land Group v. Kola Kuma (2005) SC 805
Vunaibu Incorporated Land Group Inc. v. Michael Wilson (2017) N6806
Nicholas Morris v. Francisco Panfilo (2017) N6976
Counsel:
Mr Pilamb, for the Appellant
Mr Puka, for the Respondents
3rd May, 2019
1. BY THE COURT: This is an appeal against the decision of the National Court made on 14 September 2017. It was heard at 9:30am on 30 April 2019. We reserved our decision to 9:30am today.
2. This is our ruling.
BACKGROUND
3. The respondents were plaintiffs in the National Court proceeding. They sued the appellant who was then the defendant, for outstanding land use rentals that were allegedly due under an agreement which they said they had entered with the appellant. The agreement is dated 8 July 2009 (the agreement). They also sought other damages, namely, environmental damages, special damages, general damages, interest and costs.
4. Both parties had relied on affidavit evidence before the National Court. There was no cross-examination, and the trial proceeded by tendering of affidavits by consent and by presentation of submissions by the parties, that is, on 7 July 2015. The National Court reserved and handed down its decision on 14 September 2017. The Court made the following orders:
(i) Liquidated sum of K71,920.00 for default on land rental payments and occupational fees.
(ii) Amount of K150,000.00 for environment damages and water rights, pursuant to provisions of the Environment Act 2000, and specifically Section 87 providing for compensation.
(iii) Special Damages in the amount of K8,500.00 for travel to and from the National Court in Waigani, NCD, and daily sustenance.
(iv) Exemplary Damages, under the circumstances of this case, are warranted, and, therefore, awarded against the defendant company in the sun of K5,000.00.
(v) Grand total: K235,420.00.
GROUNDS OF APPEAL
5. The appellant’s grounds of appeal are stated in its notice of appeal. In total, the appellant raises six (6) grounds of appeal. Some of the grounds of appeal overlap each other. We will summarise the main grounds as follows. Firstly, the appellant alleges that the trial judge erred in both mixed fact and law by making findings on both liability and quantum when the trial was conducted to determine only the issue of liability. Secondly, the appellant claims that the trial judge erred in fact and law in finding the agreement binding upon the parties when the respondents were not parties or privy to the agreement. Thirdly, the appellant claims that the trial judge erred in fact and in law because the land the subject of the agreement, which was customary land, was under dispute and as such the Court did not have jurisdiction to deal with the matter. Grounds four (4) and five (5) of the appeal cover damages. We may address them later together with the first ground, that is, subject to our findings in relation to grounds two (2) and three (3) as summarised above which we intend to address first in our decision.
WHO ARE THE PARTIES TO THE AGREEMENT?
6. We now deal with the second ground of appeal. And we ask ourselves this. Who are the parties to the agreement? The agreement may be located at pages 25 and 81 of the Appeal Book (AB). There are two (2) parties to the agreement. The first party is called Tapala Landowners Resources Group, and the second party is the appellant Dekenai Constructions Limited.
7. In the statement of claim (page 10 of the AB), the 1st respondent held itself out as a landowner company that was owned by the Tati Keke Clans of Tapala village in the Gulf Province. The 2nd respondents, at paragraph 2 of the statement of claim, held themselves out as shareholders and board members of the 1st respondent. At paragraph 6 of the statement of claim, the respondents claim that the appellant had on 8 July 2009 entered into the agreement with the 1st respondent company. The appellant’s defence may be found at page 16, Tab 4 of the AB. In the defence, the appellant denied these material facts as pleaded in the statement of claim. These, we note, were the material contested facts that were before the trial judge, and we note that the appellant’s then counsel had covered these extensively in his submissions before the trial Court. The appellant’s submission on point was that the respondents were not parties or privy to the agreement. And what was the respondents’ reply, we ask? The glaring evidence, in our view, is the agreement itself, and submissions by counsel for the respondents which may be found in the transcript of proceedings, that is, at paragraph 6, page 142 of the AB. It reads, and we quote:
So we say your Honour that we do concede that the first plaintiff was not and is not a party to this agreement and I receive my friend’s – I did see a copy of the IPA extract your Honour. But we still maintain that our cause of – my client’s cause of action arose from this MOA in which the chairman, Mr Andrew Havoa Feai has or is part of that party endorsed in this MOA in his representative capacity your Honour.
8. We note that despite the evidence that were before the trial Court including the respondents’ admissions through their counsel, the trial Judge did not acknowledge that in his decision. Instead, we note that His Honour proceeded to deal with the doctrine of privity of contract at paragraph 4, page 151 of the AB. His Honour then concluded that the doctrine was not applicable in the matter. We note that His Honour did not say or discuss why he had reached that conclusion. We therefore find that His Honour erred in fact and in law. We come to this conclusion for the following reasons. Firstly, the respondents were not parties to the agreement. The agreement, in our view, is express. The parties to it were Tapala Landowners Resources Group and the appellant Dekenai Constructions Limited. The second reason is the admission by the respondents that they were not parties to the agreement. We see that there was overwhelming evidence to that effect that were before the trial Judge. We note that the respondents were not parties or privy to the agreement. The law on privity of contract in this jurisdiction is settled, that is, only the parties to a contract or an agreement may sue or be sued under it. See cases: Beno Maoko v. Kevin Ling (2008) N3293; Albert Areng v. Gregory Babia (2005) N2895; The Papuan Club Inc. v Nusaum Holdings Ltd (No. 2)(2004) N2603; Soka Toligai v. Sir Julius Chan and Ors (2012) N4842. We note that the respondents had argued that the 2nd respondent was a signatory to the agreement therefore he had ostensible authority to represent the landowners at the material time. We note that the doctrine of ostensible authority was briefly mentioned by the trial Judge in his decision, that is, at paragraph 1 at page 151 of the AB. We note however that His Honour did not explain with clarity and with evidence to say how the doctrine could have applied in the matter to the benefit of the respondents. We note that the respondents had filed one affidavit to their claim in the National Court which is the affidavit of the 2nd respondent Andrew Feari. The affidavit is located at page 77, Tab 7 of the AB. There is however nothing there which shows or explains any express or implied ostensible authority, that justifies the basis for the respondents commencing the proceedings in the first place. If at all, and if we were to infer that implied ostensible authority had been sought and had by the respondents, then the 2nd respondent Andrew Feari would have had or would have been assumed to have had the ostensible authority of the Tapala Landowners Resources Group and not the ostensible authority of the 1st respondent who had no business whatsoever to the agreement. And still based on the said assumption, the obvious question one would have to ask is this. Where was Tapala Landowners Resources Group named in the proceedings at the National Court? We note that Tapala Landowners Resources Group was never named or was a party in the National Court proceedings. We also note that the 2nd respondent Andrew Feari had professed himself in the pleading, namely the statement of claim, that he was suing as a shareholder of the 1st respondent and that he could also sue as its agent. As it was and still is, the 1st respondent is a company that is established under the Companies Act which is a separate legal person to Tapala Landowners Resources Group, or is it not?
9. We note that we had queried with counsel for the respondents whether Tapala Landowners Resources Group was a recognised legal entity at the material time of the agreement or at its signing. Counsel submitted on this point that it was not a registered entity. Having now looked at the full transcript of the proceeding, we note that it was briefly covered in the trial Court below. We refer to paragraph 5 at page 142 of the AB, and we quote in part the submissions made by the then counsel for the respondents:
But we say your Honour, with due respect, yes, that Mr Feai was and is the chairman of the – Andrew Havoa Feai is the chairman of the Tapala Landowners Resources Group. Your Honour, we say that this landowner group is not formally incorporated according to the ILG the Land Group Act.....”
10. We note that section 11 of the Land Groups Incorporation Act Chapter No. 147 gives legal standing or name to an incorporated land group that is registered under the said Act. See also cases: Dumal Dibiaso Incorporated Land Group v. Kola Kuma (2005) SC 805; Vunaibu Incorporated Land Group Inc. v. Michael Wilson (2017) N6806, and Nicholas Morris v. Francisco Panfilo (2017) N6976. In this case, we note that this was not raised as a central issue in the trial Court below nor is it a ground of appeal that is before us, so we make these as mere observations.
11. Therefore, and in summary, we would uphold ground two (2) of the appellant’s notice of appeal filed on 24 October 2017.
SUMMARY
12. Given our findings, there would be no need for us to address the other grounds of appeal in these proceedings. We also note that given our findings that the respondents were not parties to the agreement, where based upon which various relief had been sought, the National Court proceedings, in our view, should be dismissed in its entirety.
COSTS
13. Cost is discretionary. We will order costs for both the Supreme Court proceedings and the National Court proceedings, to follow the event which is that they are to be assessed on a party/party basis to be taxed if not agreed.
REMARKS
14. We note that it had been brought to our attention as an issue, that is, whether the customary land where the agreement was signed over, had been the subject of dispute between the various landowners including the respondents at the time when the matter was before the trial Court. We note that we have also heard arguments from counsel on this matter.
15. In this instance, we have however decided against addressing it. The first reason is because of our findings in relation to ground two (2) of the notice of appeal. The second reason, which is to be treated as a remark, we make is this. We note that this issue was not properly pleaded in the pleadings before the trial Court. We make particular reference to the statement of claim and to the defence that are contained in the AB. We also note that the parties did not challenge the jurisdiction of the trial Court by raising it as a central issue. We note that it was raised as a side issue to the central issue which was in relation to the existence and enforcement of the agreement. This is further supported, in our view, by the conclusive summary made by the then counsel for the respondents where he had stated at paragraph 2 of page 143 of the AB, and we quote in part, The issue as to customary ownership, we should resolve the entire controversies your Honour is not properly before the Court. We will also add that the trial judge did not, and rightfully so in our view, make a determination on ownership of the customary land in question.
ORDERS OF THE COURT
16. We make the following orders:
____________________________________________________________
Mel & Henry Lawyers: Lawyers for the Appellant
Henao’s Lawyers: Lawyers for the Respondents
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