Opotio v Bare [2023] PGNC 228; N10400 (11 July 2023)

N10400

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 564 OF 2022

BETWEEN:
JOHN OPOTIO, General Manager of Ramu Transport Services Limited
Plaintiff

AND
TOBBY BARE, Outgoing Chairman of Ramu Transport Services Limited.
Defendant

Lae: Dowa J
2023: 07^th & 11^th July

PRACTICE AND PROCEDURE- application for dismissal of proceedings for disclosing no reasonable cause of action-pleadings fail to disclose reasonable cause of action-proceedings commenced for a company must be supported by a company resolution under section 138 of the Companies Act-case is untenable if allowed to proceed to trial-proceedings summarily dismissed.

Cases Cited.

Radio Taxis Ltd v Wano (2018) SC1768

Counsel:

T Berem, for the Plaintiff
W. Kume, for the Defendant

JUDGMENT

11^th July, 2023

1. DOWA J: The Defendant applies for the dismissal of proceedings for disclosing no reasonable cause of action against the Defendant pursuant to Order 12 Rule 40 of the National Court Rules.
   

Facts

2. The Plaintiff is the General Manager of Ramu Transport Services Ltd, a local landowner transport company. The Defendant, Tobby Bare, is the Chairman of the Board of Directors of Ramu Transport Services Ltd, hereinafter referred to as RTSL.

3. The Plaintiff was appointed General Manager by RTSL on 1^st April 2021. His employment was terminated on 15^th July 2022 in a RTS board meeting chaired by the defendant, Tobby Bare.

4. The Plaintiff alleges, Tobby Bare, has resigned from his post in April 2022 to contest the 2022 National Elections and had no authority to chair a Board meeting, and that his termination is therefore unlawful and invalid.

5. In the Statement of claim, the Plaintiff seeks the following reliefs:

1. A declaration that the Plaintiff validly reappointed by the board and is the current General Manager of RTSL.
2. A declaration that the Defendant vacated or stood down as the Chairman of RTSL and is no longer the Chairman.
3. An order that the actions of the Defendant in holding himself as the Chairman of RTSL and performing or conducting any business transaction or dealings of the RTSL is unlawful and void ab initio.
4. A permanent injunction be issued against the Defendant and his agents and servants in interfering into the operations of RTSL, and intimidating, harassing, disturbing,
   

Defendant’s position

6. The Defendant, Tobby Bare, avers that he stood down as chairman for RTSL for the 2022 National Elections, and after the elections, he resumed his position as chairman, and that the Plaintiff’s contract of employment was terminated by the Board of RTSL in a properly constituted Board meeting.

7. The Defendant alleges that the Plaintiff does not have a reasonable cause of action.

The Defendant’s Application

8. The Defendant, by Notice of Motion, seeks to dismiss the proceedings on the basis that the pleadings are embarrassing and discloses no reasonable cause of action.

9. The application was heard on 7^th July 2023, in the absence of counsel for Plaintiff. The matter was specifically fixed for hearing on 7^th July and the lawyer for Plaintiff was aware of the date but failed to appear, thus, the Defendant was allowed to proceed ex parte. The Court also notes that the Plaintiff has the balance of the Notice of Motion filed 23^rd February 2023 to be argued but was not available to pursue same.

Issues

10. The main issues for consideration are:

(1) Whether the pleadings disclose a reasonable cause of action.
(2) Whether the proceedings be dismissed.

Law

11. The relevant Rule under Order 12 Rule 40 (1) of the National Court Rules, is set out below:

Frivolity, etc. (13/5)

“(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.

(2) The Court may receive evidence on the hearing of an application for an order under Sub-rule (1).

12. The law on Order 12 Rule 40 of the National Court Rules is well settled in the Supreme Court in Mt Hagen Urban Local Level Government v Sek No.15 (2009) SC1007 in paragraphs 27-30.

“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 Otheres 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. Phillip Stagg, Valentine Kambori & The State (2006) N3050; Phillip 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 Phillip 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 on 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 is 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.”
    

Consideration

13. I have considered the reliefs sought in the statement of claim and submissions of counsel and am of the view that the pleadings are confusing and does not clearly disclose a cause of action.

14. The Plaintiff was employed by RTSL until his termination in July 2022. He was terminated by the Board of RTSL, chaired by the Defendant, Tobby Bare. It is not clear whether the Plaintiff is suing RTSL for unlawful termination or only against Tobby Bare as the Chairman of the company for chairing the Board meeting.

15. The first relief is for the validation of his employment contract with RTSL, but the company is not a party in the proceedings. It is pleaded in paragraphs 1 to 6 of the statement of claim that Tobby Bare is the sole defendant. The reliefs sought in paragraph 13(2) to (4) are orders against Tobby Bare in his personal capacity. It seems these reliefs are sought for the Plaintiff and on behalf of RTSL. Ramu Transport Services Ltd is a company, and under section 16 & 17 of the Companies Act it is a separate legal entity having capacity to sue and be sued in its corporate name. The company functions through its Board of Directors. Where a company intends to institute court proceedings, it must be authorized by the Board of Directors through a collective board resolution pursuant to section 138 and Schedule 4 of the Companies Act. Refer: Radio Taxis Ltd v Wano (2018) SC1768. I find there is no evidence of a resolution by the Board of Directors of RTSL supporting the proceedings initiated by the Plaintiff. On the other hand, there is overwhelming evidence that the defendant, Tobby Bare, is the incumbent chairman of RTSL. The company extract shows he is a director of RTSL. He is supported by other directors of RTSL. The Board of Directors made their intention clear in their subsequent resolution that the Plaintiff’s employment with RTSL is terminated and is no longer an employee of the company. The lawfulness of their decision is a separate issue between the Plaintiff and RTSL.

What ORDERS should the Court make?

16. It is clear the Plaintiffs proceedings is a mixed bag of claims. In the first instance, he seeks personal relief for a validation or affirmation of his employment contract with RTSL, and consequential to that he seeks other declaratory orders against Tobby Bare, for himself and on behalf of RTSL. As I have found, whilst he can mount an action against RTSL as employer, he cannot maintain the action against Tobby Bare in his personal capacity as the latter is not the Plaintiff’s Employer. On the other hand, the balance of the reliefs claimed is sought without the permission and authority of RTSL. In these circumstances, the Plaintiff has the option to amend the proceedings and pursue his personal case against Ramu Transport Services Ltd for unlawful termination.

17. However, to allow the Plaintiff to maintain the proceedings through an amendment is likely to cause confusion since the proceedings were specifically commenced against Tobby Bare, who is not the employer of the Plaintiff. The pleadings are already an embarrassment contrary to Order 8 Rule 27 of the National Court Rules. The proceedings are untenable and are likely to be dismissed as it has no valid foundation. Although the Plaintiff has filed an application for amendment to the statement of claim to join RTSL as a party, he has not attended Court on the appointed date for the hearing of his application. In the circumstances, the proceedings, must be struck out, and the Plaintiff be given liberty to institute fresh proceedings against RTSL if he desires.

18. The Court notes the Defendant and RTSL are seeking various other orders in the Notice of Motion for declaratory and restraining orders against the Plaintiff. However, the defendant has not filed any defence or cross claim forming the foundation for the orders he is seeking. It seems the orders he is asking are for the benefit of RTSL. Again, since RTSL is not a party to the proceedings, the orders cannot be made for its benefit.

19. For the foregoing reasons, the Court will uphold the defendant’s application and dismiss the proceedings against Tobby Bare in his personal capacity.

Costs

20. Cost is a matter of discretion. A successful litigant is entitled to cost. The Defendant is therefore entitled to his cost of defending the proceedings.

ORDERS

21. The Court orders that:
    
    1. The Plaintiff’s proceeding against Tobby Bare in his personal capacity is dismissed.
       
    2. The Plaintiff is at liberty to institute fresh proceedings against his employer, Ramu Transport Services Ltd, for unlawful termination, if he wishes.
       
    3. The Plaintiff shall pay the cost of the proceedings.
       
    4. Time be abridged.
       

________________________________________________________________
Berem Lawyers: Lawyers for the Plaintiff

G. Koare Lawyers : Lawyers for the Defendant