Ray (trading as Bara Construction) v Numara [2018] PGNC 257; N7380 (21 February 2018)

N7380

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 1518 of 2015

BETWEEN:
JHELSON RAY trading as
BARA CONSTRUCTION
Plaintiff

AND:
TIMOTHY NUMARA,
in his former capacity as the Manager –
Corporate Services, Office of National
Libraries and Archives and Literacy
First Defendant

AND:
JACOB HEVELAWA,
in his former capacity as the Director
General, Office of National Libraries

and Archives & Literacy

Second Defendant

AND:
KASI KAKAITO,
Acting Director General,
Office of National Libraries
and Archives & Literacy
Third Defendant

AND:
DR. UKE KOMBRA,
As the Acting Secretary,
Department of Education
Fourth Defendant

AND:
THE INDEPENDENT STATE
OF PAPUA NEW GUINEA
Fifth Defendant

Waigani: Hartshorn J.
2017: 20^th June,
2018: 21^st February

Application to dismiss proceeding

Cases Cited:
Papua New Guinea Cases

Ronny Wabia v. BP Exploration Operating Co Ltd [1998] PNGLR 8
Kiee Toap v. The State (2004) N2731, N2766
Kerry Lerro v. Stagg & Ors (2006) N3050
Takori v.Yagari & Ors (2008) SC905
Mt Hagen Urban Local Level Government v. Sek No. 15 (2009) SC1007
Siu v. Wasime Land Group Incorporated (2011) SC1107

Overseas Cases

Hubbuck & Sons, Ltd v. Wilkinson, Heywood & Clarke, Ltd [1898] UKLawRpKQB 176; [1899] 1 Q.B. 86
Tampion v. Anderson [1973] VicRp 32; [1973] VR 321

Counsel:

Mr. R. Kasito, for the Plaintiff

Mr. M. Wangatau, for the Third, Fourth and Fifth Defendants

21^st February, 2018

1. HARTSHORN J: This is a contested application to dismiss this proceeding. It is made by the third, fourth and fifth defendants, the Acting Director General of the Office of the National Libraries, Archives and Literacy, the Acting Secretary of the Department of Education and the State (State defendants).

Background

2. The plaintiff Jhelson Ray trading as Bara Construction (Jhelson) alleges that he entered into a written agreement with the first and second defendants to perform amongst others, general building and maintenance services for the Office of National Libraries, Archives and Literacy from time to time (contract). The first defendant requested for, and accepted a quote from, Jhelson for K299,815 for certain work. The work was performed, a certificate of completion issued and part payment of K84,361.30 made to Jhelson. The balance has not been paid and Jhelson sues on the basis of breach of contract for amongst others, the balance and damages.

This application

3. The State defendants apply pursuant to Order 12 Rule 40(1)(a) and (b) National Court Rules to dismiss this proceeding for being frivolous, vexatious and for not disclosing a reasonable cause of action as amongst others:

a) The contract is null and void and unenforceable for non-compliance with s. 47C and s. 47D Public Finances (Management) Act 1995 (PFMA);

b) The contract is null and void and unenforceable for non-compliance with s. 2A Claims By and Against the State Act (Claims Act);

c) The National Executive Council (NEC) by its decision 54/2015 directed the Education Department not to pay any contractor engaged from 2008 to 2013 for various reasons such as illegality, fraud and failure to comply with the procurement process under the PFMA;

d) The purported signatory to the contract does not have financial authority pursuant to s. 32 PFMA and pursuant to the Gazettal Notice G444 relating to financial delegation and officers authorised pursuant to s. 32 PFMA;

e) The value of the contract is suspicious.

4. Jhelson submits that the dismissal application should not be granted as:

a) The NEC decision directing non-payment was in 2015. The services were rendered in 2012 pursuant to a valid contract and part payment was made;

b) A General Expenses form and Requisition for Goods and Services were endorsed and a Certificate of Completion was issued in respect of the contract

Law

Order 12 Rule 40 National Court Rules

5. There are numerous authorities in respect of the principles which apply to applications under Order 12 Rule 40 National Court Rules and I refer to the following cases in this regard: Kerry Lerro v. Stagg & Ors (2006) N3050, Takori v.Yagari & Ors (2008) SC905, Mt Hagen Urban Local Level Government v. Sek No. 15 (2009) SC1007 and Siu v. Wasime Land Group Incorporated (2011) SC1107. The Court in Mount Hagen v. Sek (supra) in paragraphs 27 to 30 conveniently sets out the requirements of Order 12 Rule 40 (1) (a), (b) and (c) as follows:

“27. The terms “vexatious”, “frivolous”, “abuse of the process of the Court” and “reasonable cause of action” under O.12 r.40 of the National Court Rules have been judicially considered, defined and expounded in a number of decisions in both the National and Supreme Courts. These cases include Ronny Wabia v. BP Exploration Co. Limited & 2 Others [1998] PNGLR 8 (N1697); PNG Forest Products Pty Ltd and Another v. The State and Genia [1992] PNGLR 85; Gabriel Apio Irafawe v. Yauwe Riyong (1996) N1915; Eliakim Laki and 167 Others v. Maurice Alulaku and Others (2002) N2001; Kiee Toap v. The Independent State of Papua New Guinea & Another (2004) N2766; Kerry Lerro trading as Hulu Hara Investments Limited v. Philip Stagg, Valentine Kambori & The State (2006) N3050; Philip Takori & Others v. Simon Yagari & 2 Others (2008) SC 905. These cases say the same thing.

28. The law with regard to an application for dismissal of proceedings based on O.12 r.40 is settled in our jurisdiction. We note that the principles are succinctly set out in Kerry Lerro’s case (supra) and which has more recently been approved and applied by the Supreme Court in Philip Takori’s case (supra).

29. The phrase ‘disclosing a reasonable cause of action’ consists of two parts; cause of action and form of action. A cause of action is defined as a legal right or form of action known to law whereby a plaintiff in a statement of claim must plead all necessary facts and legal elements or ingredients to establish or prove his claim. The principles stated by these cases can be summarized as follows:

(i) A plaintiff or claimant should not be driven from the judgment seat in a summary manner and that the Court should be cautious and slow in exercising its discretionary power.

(ii) The Court has an inherent jurisdiction to protect and safeguard its processes from abuse.

(iii) The purpose of O.12 r.40, is to give the Court power to terminate actions or claims which are plainly frivolous or vexatious or untenable.

(iv) A frivolous claim is one that is characterized as a claim that is plainly and obviously untenable, that cannot possibly succeed and bound to fail if it proceeds to trial.

(v) A vexatious claim is one that is said to be a sham and cannot succeed where it seeks to merely harass the opposing party and put that party to unnecessary trouble and expense in defending or proving the claim.

30. In an application under O.12 r.40 of the NCR, the Court may dismiss a proceeding or action where it is satisfied that the pleading in the statement of claim is seriously wanting where a necessary fact or legal element has not been pleaded.”

6. Notwithstanding all of the various judicial pronouncements since, the position is succinctly summarised in Hubbuck & Sons, Ltd v. Wilkinson, Heywood & Clarke, Ltd [1898] UKLawRpKQB 176; [1899] 1 Q.B. 86. At 90-91 the Court of Appeal said:

“The second and more summary procedure is only appropriate to cases which are plain and obvious, so that any master or judge can say at once that the statement of claim as it stands, is insufficient, even if proved, to entitle the plaintiff to what he asks.”

Public Finances (Management) Act 1995

7. Sections 47B, 47C and 47D Public Finances (Management) Act 1995 (PFMA) are as follows:

“47B. Authority to pre-commit expenditure.

(1) The Finance Departmental Head may issue to a Departmental Head an Authority to Pre-commit Expenditure in relation to the purchase of real or personal property or for the supply of goods or services where the Finance Departmental Head is satisfied that —

(a) in the case of proposed expenditure exceeding K100,000.00 —
(i) the provisions of this Part have been complied with in relation to the purchase or supply; and

(ii) funds will be available to meet the proposed schedule of payments for the purchase or supply; and

(b) in the case of proposed expenditure not exceeding K100,000.00, the circumstances of the proposed expenditure are such that it is appropriate to authorise the Departmental Head to enter into a contract for the purchase of real or personal property or stores or for the supply of goods or services notwithstanding that the full amount of funds to meet the payment required under the contract is not immediately available.

(2) An Authority to Pre-Commit Expenditure under Subsection (1) shall specify —

(a) the purchase of real or personal property or stores or the supply of goods or services to which it relates; and

(b) the maximum amount to which the Authority extends.

(3) An Authority to Pre-Commit Expenditure under Subsection (1) authorises the Departmental Head to enter into a contract for the purchase of public property or for the supply of goods and services specified in the Authority to the extent of an amount not exceeding the maximum amount specified in the Authority.

47C. Certain contracts null and void.

(1) In this section—

"Authority to Pre-commit Expenditure" means an Authority to Pre- commit Expenditure issued under Section 47B;

"Integrated Local Purchase Order and Claim (ILPOC)" means Finance Form 4A—Integrated Local Purchase Order and Claim issued in accordance with the Financial Instructions.

(2) A contract for the purchase of property or stores or for the supply of goods or services entered into, or purported to have been entered into, by or on behalf of the State, in respect of which purchase or supply no Authority to Pre-commit Expenditure has been issued or no Integrated Local Purchase Order and Claim has been issued, is null and void.

(3) The provisions of this section apply in respect of contracts entered into, or purported to have been entered into, by or on behalf of the State, on or after 1 March 2003.

47D. Claim against State not enforceable in certain circumstances.

(1) A contract purportedly entered into for and on behalf of the State without full compliance of this Act is null and void and shall not be enforced in any court.

(2) Any property, goods or services supplied under a contract referred to in Subsection (1), may not be sued upon and no claim is enforceable in respect of them, in any court.”

Claims By and Against the State Act

8. Section 2A Claims By and Against the State Act (Claims Act) is as follows:

“2A. Claim against the State not enforceable in certain circumstances.

(1) In this section—

"Authority to Pre-commit Expenditure" an Authority to Pre-commit Expenditure issued under Section 47B of the Public Finances (Management) Act 1995;

"Integrated Local Purchase Order and Claim (ILPOC)" means Finance Form 4A—Integrated Local Purchase Order and Claim issued in accordance with the Finance Instructions under the Public Finances (Management) Act 1995.

(2) A claim for the price arising from the sale of property or stores or for the supply of goods or services to the State shall not be enforceable, through the courts or otherwise, unless the seller of the property or stores or the supplier of the goods or services produces—

(a) a properly authorized Integrated Local Purchase Order and Claim (ILPOC); or

(b) an Authority to Pre-commit Expenditure,

relating to the property or stores or goods or services, the subject of the claim, to the full amount of the claim.

(3) The provisions of this section apply to an alleged sale of property or stores or to an alleged supply of goods or services after 1 March 2003.”

Consideration

9. In regard to the submission by Jhelson that a General Expenses Form and a Requisition for Goods and Services were endorsed in support of the contract, that a Certificate of Completion was issued and therefore the contract is valid and enforceable, s. 47D PFMA and 2A Claims Act are quite clear. A contract purportedly entered into for and on behalf of the State without full compliance of the PFMA is null and void and shall not be enforced in any court and any property, goods or services supplied under such a contract may not be sued upon and no claim is enforceable in respect of them, in any court. Further, such a claim shall not be enforceable through the court unless the supplier of the services produces the requisite Integrated Local Purchase Order and Claim (ILPOC) or Authority to Pre-commit Expenditure (APC).

10. Here, there is not in evidence an APC or ILPOC issued under s. 47B PFMA. There is no pleading in the statement of claim to the effect that either an APC or ILPOC were issued for the contract. The General Expenses form and Requisition for Goods and Services are not the necessary APC or ILPOC. I note further that the General Expenses form and Requisition were both purportedly signed after services were purportedly provided. Jhelson has not produced the requisite APC or ILPOC. His claim is unenforceable under s. 47D PFMA and s. 2 Claims Act.

11. As Jhelson has failed to meet the requirements of s. 47B, 47C, 47D PFMA and s. 2A Claims Act, a reasonable cause of action is not disclosed and his claim is frivolous as it is bound to fail. When a proceeding is bound to fail, it has been held to be frivolous: Ronny Wabia v. BP Exploration Operating Co Ltd [1998] PNGLR 8, Kiee Toap v. The State (2004) N2731, N2766, Lerro v. Stagg (2006) N 3050 and Tampion v. Anderson [1973] VicRp 32; [1973] VR 321. Consequently the proceeding should be dismissed. Given this it is not necessary to consider the other submissions of counsel.

Orders

12. It is ordered that:

a) This proceeding is dismissed;

b) The plaintiff shall pay the costs of the third, fourth and fifth defendants of and incidental to this proceeding;

c) Time is abridged.
____________________________________________________________
Paul Paraka Lawyers: Lawyers for the Plaintiff
Office of the Solicitor General: Lawyers for the Third, Fourth and Fifth Defendants