Rumbam Engineering Ltd v HIRI 152 Developments Ltd [2019] PGNC 320; N8113 (21 November 2019)

N8113

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO. 392 OF 2018 (COMM)

BETWEEN
RUMBAM ENGINEERING LIMITED
First Plaintiff

AND
PERELO & ASSOCIATES CONTRACTORS
Second Plaintiff

AND
HIRI 152 DEVELOPMENTS LTD
First Defendant

AND
PAPA RESOURCE DEVELOPMENTS LTD
Second Defendant

AND
BURIA REAREA CAUTION BAY LTD
Third Defendant

AND
BOERA ENTERPRISES LTD
Fourth Defendant

AND
POREBADA INVESTMENTS LTD
Fifth Defendant

AND
CENTRAL PROVINCIAL ADMINISTRATION
Sixth Defendant

Waigani: Anis J
2019: 8^th & 21^st November

NOTICE OF MOTION – dismissal of proceeding – Order 12 Rule 40(1) - National Court Rules – frivolous, vexatious and abuse of court process – deed of release – indemnity – consent order – effect upon the 6^th defendant

Cases cited:

Davidwestern Advertising Group Ltd v. Hiri 152 Developments Ltd and Ors (2019) N7952

Counsel:

Mr S Kil, for the Plaintiffs
Mr T M Rei, for the Third Defendant
Mr E Hampalekie, for the Sixth Defendant

RULING

21^st November, 2019

1. ANIS J: The 6^th defendant applied to dismiss the proceeding against it, on 8 November 2019. Its application was contested. I heard the application on that day and reserved my ruling.

2. Parties have been notified so I will rule on it now.

BACKGROUND

3. The background of this claim is the same or similar to the other related proceedings including proceeding WS 1075 of 2018 Davidwestern Advertising Group Ltd v. Hiri 152 Developments Ltd and Ors. Proceeding WS 1075 of 2018 is also pending before the National Court. The reason why these claims have been filed and pursued separately is somewhat puzzling as I will explain.

4. The plaintiff in proceeding WS 1075 of 2018, the plaintiffs herein and the defendants who are also, except for the Central Provincial Government, the same defendants in proceeding WS 1075 of 2018, had various business dealings in construction in 2012. Various developments had been undertaken at various Hiri villages or areas in the Central Province. The plaintiff in proceeding WS 1075 of 2018,Davidwestern Advertising Group Ltd, appeared to have been the principal contractor who had been engaged by the defendants to carry out various civil works including engineering, construction, road grading and sealing to and from the various Hiri villages that were within the Liquefied Natural Gas (LNG) impact area in the Central Province. In turn, Davidwestern Advertising Group Ltd had engaged sub-contractors which included the plaintiffs in this proceeding, to carry out the work.

5. But there had been an earlier proceeding filed with the same parties herein including Davidwestern Advertising Group Ltd and the Central Provincial Government. The proceeding was WS 654 of 2014. The plaintiffs were Davidwestern Advertising Group Ltd and the 2 plaintiffs herein. The defendants were the 5 defendants named herein plus the Central Provincial Government. They had alleged that despite the work that they had undertaken as agreed to under various pleaded contracts in their pleadings, the defendants and the Central Provincial Government, had failed to settle their claims or invoices that had been submitted. They had claimed a total sum of K9, 122,101.40 against the defendants in the said proceeding. Later and after some negotiations, proceeding WS 654 of 2014 was discontinued. A consent order and a deed of settlement and release were signed between the parties whereupon a sum of K4, 500,000 was paid out by the Central Provincial Government, to Davidwestern Advertising Group Ltd and the 2 plaintiffs herein including the other contractors whose names had appeared in the attached schedule of plaintiffs in proceeding WS 654 of 2014.

6. The plaintiffs herein now commence this new proceeding. They allege that despite the deed of settlement and release, the consent orders that had been entered into, and the payment of K4.5 million as a result of proceeding WS 654 of 2014, the defendants still own them other payments. They claim that their rights have not been totally extinguished.

MOTION

7. The 6^th defendant’s notice of motion was filed on 26 June 2019 (motion). It seeks orders under Order 12 Rule 40(1)(a), (b) and (c) of the National Court Rules. Order 12 Rule 40(1) reads, and I quote in part:

(1) Where in any proceedings it appears to the Court that in relation to the proceedings generally or in relation to any claim for relief in the proceedings

(a) no reasonable cause of action is disclosed; or

(b) the proceedings are frivolous or vexatious; or

(c) the proceedings are an abuse of the process of the Court,

the Court may order that the proceedings be stayed or dismissed generally or in relation to any claim for relief in the proceedings.

EVIDENCE

8. The 6^th defendant relies on 2 affidavits, namely, the affidavits of Gei Guni Raga filed on 26 June 2019 and 17 July 2019.

ISSUE

9. There are various issues raised by the 6^th defendant to argue why this proceeding should be dismissed. The main argument appears to revolve around the Deed of Settlement and Release dated 10 June 2015 (the deed) and the Consent Orders dated 12 June 2015 (consent orders) in proceeding WS 654 of 2014. Let me deal with that first.

COMMON GROUND

10. The parties are at common ground in relation to the existence of the deed, its execution and its validity, and the K4.5 million payment that was paid out by the Central Provincial Government pursuant to the deed. The parties are also at common ground in relation to the validity of the consent order that had been obtained in proceeding WS 654 of 2014. And parties are also at common ground that they were parties in proceeding WS 654 of 2014 together with Davidwestern Advertising Group Ltd and the Central Provincial Government.

THE DEED & CONSENT ORDERS

11. The deed and the consent orders are attached as annexures “B” and “C” respectively, to the affidavit of Mr. Raga filed on 26 June 2019. The consent orders were signed first in time so let me set them out in part herein:

1. The Sixth Defendant will settle the Plaintiffs’ invoices for actual work done in the agreed sum of Four Million and Five Hundred Thousand Kina (K4,500,000) being for the full and final settlement of the part of the Plaintiffs’ claim as accepted by the Sixth Defendant.
2. That the payment mention in item 1 shall be paid to the Plaintiffs’ Lawyers Trust Account upon parties executing the Deed of Settlement and Release.
3. The Plaintiffs’ Lawyers shall file and serve a Notice of Discontinuance of the whole of the current proceedings together with an Affidavit in Support which shall contain the duly signed Deed of Settlement and Release within 7 days from execution of the Deed of Settlement and Release which shall take place forthwith.
4. The Plaintiffs are at liberty, either jointly or severally, to pursue any outstanding part of their respective claims that they may have against the First, Second, Third, Fourth and Fifth Defendants as arising from a contractual arrangement entered directly between the Plaintiffs and the Defendants.

.....

(Underlining mine)

12. The deed has 13 pages which are un-numbered. I will set out its relevant parts for this purpose. Firstly and under sub-heading BACKGROUNDat page 4, paragraphs L, M, N and O read, and I quote:

50. In principle, the Central Provincial Government despite non-compliance of the process and guidelines set out in the UBSA and LBSA by the Landowners, have agreed to settle the Plaintiffs’ invoices (on behalf of the Landowners), relating to actual work done only.
    

13. Central Provincial Government has not engaged the services of the Plaintiffs nor is Central Provincial Government a party to any formal and/ or legal agreement. Therefore, Central Provincial Government is not legally obliged to meet the entire claim made by the Plaintiffs.
    
14. Negotiations for an Out of Court Settlement commenced on 01^st May 2015 and ended on 01^st June 2015. As a result of the negotiations, the Releassors have agreed to release and/or indemnify Central Provincial Government from all legal obligations and/or further claims, suits etc., in so far as it relates to Central Provincial Government holding in trust, the IDG Funds.
    
15. The Releasors further agrees to release and/or indemnify the Landowners, Landowner Companies, Incorporated Associations and/or Landowner ILGs from further claims, suits etc., that arises from this background facts. The Landowners further agree to release and indemnify the Central Provincial Government from any claims arising out of its engagement with the Plaintiffs. Moreover, in particular the Landowners release and indemnity Central Provincial Government from any claims, suits, obligations and/or duties Central Provincial Government owes to the Landowners by virtue of the Trust Deed in relation to the IDG Funds held in Trust.
    

13. I refer next to clause 1 Definitions at page 5. The relevant words defined therein include the following:

Claims include all sums of money, actions, suits, cause of action, proceedings, accounts, liability, losses, assessments, demands, legal and non-legal costs, expenses, notices, demands, or any other type of claim in connection with the Consultancy Agreements including National Court proceedings WS No. 654 of 2014.

......

Landowner refers to Hiri 152 Development Limited, Papa Resources Development Limited, Buria ReaRea Caution Bay Limited, Boera Enterprises Limited and Porebada Investments Limited.

......

Releasee means Central Provincial Government and its successors and assigns including the Trustees for the IDG Funds.

Releasor means David Western Advertising Group Limited, Rumbam Engineering Limited, Hiri 152 Development Limited, Papa Resource Development Limited, Buria ReaRea Caution Bay Limited, Boera Enterprises Limited and Porebada Investments Limited and its successors and assigns.

Settlement sum means the sum of K4.5 million (K4 500 000.00) inclusive of any income tax or other charges that may be payable by the Releasor on receipt of that sum.

14. At page 7 and under clause 2, sub-heading RELEASE BY RELEASORS, it reads:

2.1 Payment of Settlement Sum

The Releasee agrees to pay in the manner set out in Schedule A on delivery of this Deed and the Releaseor agrees to accept the Settlement Sum in full and final settlement of any Claims made in W.S No. 654 of 2014: Davidwestern Advertising Group Limited &Ors –v- CPG &Ors and any future claims, legal suits, Complaints etc., that arising from the Court proceedings by the Releasors against the Releasee

2.2 Release and Indemnity

The Releasor unconditionally and irrevocably releases and indemnifies and keeps indemnified, the Releasee and each of its present, former and future administration, officers, servants and agents from and against all past, present or future Claims and Complaints brought by the Releasor against the Releasee.

2.3 Plea as bar to suit

This deed may be pleaded as a bar to any suit, action or legal proceeding by the Releasor and each of the present, former and future administration, officer, servants and agents against the Releasee in respect of any claims and complaints referred to in clauses 2.1 and 2.2.

15. The final part of the deed is at pages 7 and 8 under clause 4. It states, and I quote in part:

The Releasor and the Releasee acknowledges to each other that:

(a) It enters into this Deed fully and voluntary based upon on its information and investigation.

(b) It is aware that it is or its advisors, agents or lawyers may discover facts different from or in addition to the facts that they now know or believe to be true with respect to the subject matter of the Deed and that it is their intention to and they do, fully, finally, absolutely and forever settle according to the provisions of the Deed any and all liabilities, Claims, disputes, differences which now exist, or may exist or have ever existed between them relating in any way to the matters the subject of this Deed; and

(c) It has obtained independent legal advice in relation to this Deed before executing this Deed.

WHETHER THE 6^th DEFENDANT IS INDEMNIFIED

16. With these, I have to ask myself this. “Is the 6^th defendant indemnified from the present claim?”First of all and as a preliminary matter, I note that the 6^th defendant is named as Central Provincial Administration. The Organic Law on Provincial and Local-level Government (OLPLLG) does not recognize a provincial administration as a legal person. Rather, it establish and create provincial governments as legal persons with rights to acquire assets; rights to sue or be sued under their respective names. Section 6 of the OLPLLG states:

A Provincial Government or a Local-level Government—

(a) may acquire, hold and dispose of property of any kind; and

(b) may sue and be sued,

and a provincial law or a local-level law may make provision for and in respect of the manner and form in which each respective government may do so.

17. It seems obvious that the 6^th defendant may not be a legal person who could qualify to be named as a party to this proceeding; that it may not have the capacity or standing to be named as a defendant in this proceeding. But when I look at the statement of claim, I note that the plaintiffs have at paragraph 7 pleaded the 6^th defendant to be the Central Provincial Government. I note that no major challenge was raised on that at the hearing. For this purpose, I will proceed on the basis that the 6^th defendant is the Central Provincial Government.

18. Having clarified that, I begin by perusing the pleadings. In my view, the pleadings in this claim clearly shows that the claim had arose from the same background as the claim that had been filed by the first and second plaintiffs herein and David Western Advertising Group Ltd, that is, in proceeding WS 654 of 2014. This fact is not disputed (i.e., same background). However, in this case, the plaintiffs’ argument put forward by counsel is this. Counsel submits that the consent orders obtained did not restrain the plaintiffs from pursuing other debts that were still owing. Counsel submits that the consent orders actually permits his clients to make other outstanding claims which they may or may not have sought in proceeding WS 654 of 2014. Counsel referred the Court to term 4 of the consent orders which I will re-state for clarification:

4. The Plaintiffs are at liberty, either jointly or severally, to pursue any outstanding part of their respective claims that they may have against the First, Second, Third, Fourth and Fifth Defendants as arising from a contractual arrangement entered directly between the Plaintiffs and the Defendants.

19. I note that in so far as the 6^th defendant is concerned, it is not subject to term 4 of the consent orders. In other words, actions commenced against the 6^th defendant were discontinued by consent and it has been agreed that the plaintiffs,including the plaintiffs herein, will not bring any actions against the Central Provincial Government.

20. If the terms of theconsent orders are not clear enough, and I must say that they are, the terms of the deed concerning the 6^th defendant are, in my view, express. In short, the Central Provincial Government has been indemnified and released from any further actions concerning the matter. The deed itself is proof of the indemnity and it constitutes, in my view, a bar against any actions by the plaintiffs against the Central Provincial Government. I make particular references to clauses N and clauses 2.1, 2.2 and 2.3 of the deed.

21. It is therefore my view that the plaintiffs’ claim against the 6^th defendant must fail. I am inclined to dismiss the claim against the 6^th defendant or more precisely, the Central Provincial Government on the basis of want of reasonable cause of action, frivolity and abuse of the Court process.

SUMMARY

22. I will dismiss the proceedings against the 6^th defendant. I am disinclined to dismiss the proceedings against the other defendants, and I will refer to my comments under the sub-heading REMARK below.

COST

23. I will order cost of the proceeding against the 6^th defendant to be met by the plaintiffs on a party/party basis which may be taxed if not agreed.

REMARK

24. The remark I make is this. I have not made any determination concerning the consent orders as well as the deed and as to how they may affect the plaintiffs and the 1^st, 2^nd, 3^rd, 4^th and 5^th defendants. As I have ruled in my decision in Davidwestern Advertising Group Ltd v. Hiri 152 Developments Ltd and Ors (2019) N7952, I will say the same here, that is, that these are matters that may be addressed at the substantive hearing.

THE ORDERS OF THE COURT

25. I will make the following orders:

1. The proceeding against the 6^th defendant, namely, the Central Provincial Government, is dismissed.
   
2. The plaintiffs shall pay the cost of the proceeding of the 6^th defendant,namely, the Central Provincial Government, on a party/party basis which may be taxed if not agreed.
   
3. Time for entry of these orders is abridged to the date of settlement by the Deputy Registrar of the National Court which shall take place forthwith.
   

The Court orders accordingly.

_______________________________________________________________
Yansion Lawyers: Lawyers for the Plaintiffs
T M Rei Lawyers: Lawyers for the Third Defendant
Mordelai Lawyers: Lawyers for Sixth Defendant