Mehere Security Services Pty Ltd v Coveg (PNG) Pty Ltd [1998] PGNC 121; N1792 (10 December 1998)

Unreported National Court Decisions

N1792

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

WS 130 OF 1997
BETWEEN: MEHERE SECURITY SERVICES PTY LTD
PLAINTIFF
AND: COVEG (PNG) PTY LTD
DEFENDANT

Waigani

Sevua J
23 September 1998
10 December 1998

Counsel

Mr P Ame for Plaintiff

Mr R Nonggorr for Defendant

10 December 1998

SEVUA J: This is an application pursuant to Order 12 Rule 40, by the defendant seeking an order that the plaintiff’s statement of claim be struck out on the ground that it disclosed no cause of action, and the proceedings be dismissed.

The cause of action relates to a contract for the provision of security services by the plaintiff to the defendant over four years from 3^rd August, 1996. Paragraph 11 of the statement of claim pleads that the “agreement has not been terminated and is binding on both parties. Thus if the eleven personnel employed by the defendant were the plaintiff’s guards, the plaintiff ought to have made, as of the date of this writ of summons, K 79,279.20”. The plaintiff therefore claims damages; the amount of K 79,279.20, specific performance, and costs.

The plaintiff’s claim is based on clause 5 of the agreement executed by the parties on 3^rd August, 1996. Clause 5 provides that, “ the number of security guards to be employed shall be determined from time (sic) by mutual consent between both contacting (sic) parties at which time and location as deem necessary to provide reasonable security”. The plaintiff alleges that, in breach of Clause 5, the defendant employed eleven security guards other than the plaintiff’s security guards, and therefore breached the agreement.

My understanding of the contractual arrangements between the parties is that the plaintiff provides security services to the defendant by providing static guards and other services pursuant to Clause 3. The defendant in turn pays the guards at the rate of K 1.65 per hour per static guard. The security guards hired or engaged by the defendant are not the defendant’s employees. They are employees of the plaintiff, who only hires them to the defendant.

On the basis of that understanding, my construction of Clause 5 of the agreement is that, in so far as the number of guards to be hired to the defendant by the plaintiff to provide security, is concerned, both parties are to agree. The parties are also to agree on the time the guards are hired and the location they will provide security.

In my view, the agreement does not apply to other security personnel or person whom the defendant wants to employ. That is, the defendant is not prohibited or restrained from employing any person it desires to employ. And why should the agreement be restrictive in that sense ? The defendant has the right to hire anyone it wants. What right has the plaintiff got to restrict the defendant’s right to hire ? The plaintiff has no right at all to control or influence the defendant from employing persons it wants to employ. The defendant is a legal entity of its own, it is not owned by the plaintiff therefore, the plaintiff could not have any right to dictate howsoever, who the defendant should employ.

I think the word “employed” in clause 5 is used in the wrong context because, as I understand, the guards provided by the plaintiff are not employed by the defendant in the sense that they are full time employees of the defendant and they are on the defendant’s payroll. The guards, in my view, provide a service. They are employees of the plaintiff providing a service to the defendant for remuneration, which goes to the plaintiff.

It is my opinion that the agreement between the parties applies on the basis of the arrangement I have adverted to above. Clause 5 can never be applied in the manner argued by the plaintiff. The proper construction of Clause 5, in my view is that, it applies where the plaintiff supplies or provides security guards to the premises of the defendant. In any other case, for example, where the defendant wishes to employ its own security guards, the agreement does not apply. The plaintiff has no control over the policy or management decision of the defendant company in respect of employment therefore, the plaintiff could not correctly insist that the defendant had breached its agreement.

In any event, the plaintiff maintains that the agreement has not been terminated. The remedy for a breach of contract is damages for breach of contract and/or specific performance. How could the plaintiff rightly claim these remedies when the agreement has not been terminated ?

I consider therefore that the plaintiff’s claim is misconceived. There cannot be a claim for breach of contract when the agreement is still in existence. The plaintiff’s claim for breach of Clause 5 is wrongly founded.

The defendant’s application is granted, and I order that the plaintiff’s statement of claim be struck out, and the whole proceedings dismissed for `disclosing no cause of action. The plaintiff shall pay the defendant’s costs.

Lawyer for Plaintiff: Ame Lawyers

Lawyer for Defendant: Warner Shand