Pacific International Hospital Ltd v The 2018 APEC Coordination Authority [2023] PGNC 511; N10929 (24 November 2023)

N10929

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 993 OF 2019

BETWEEN:
PACIFIC INTERNATIONAL HOSPITAL LIMITED
Plaintiff

AND:
THE 2018 APEC COORDINATION AUTHORITY
First Defendant

AND:
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Second Defendant

Waigani: Bre, AJ
2023: 11^th October, 24^th November

CIVIL PRACTICE AND PROCEDURE - Application to summarily dismiss proceedings– pleadings - not disclosing a reasonable cause of action – tort or contract claim – vicarious liability

Cases Cited
Kerry Lerro v Philip Stagg, Valentine Kambui & The State (2006) N3950
Kuk Kuli v The State (2004) N2592
Papua Club Inc v Nusaum Holdings Ltd [2002] PGNC 50; N2273
Praise Hire Cars Ltd v Leka [2023] PGNC 41; N10140

Legislation
APEC Papua New Guinea 2018 Co-ordination Authority Act 2014, ss20, 5 and 6
Claims by and Against the State Act 1996, s2A
National Court Rules 1989 Order 12 rule 40(1)(a), Order 5 rule 9(a)
Public Finance (management) Act 1995 s47D
Wrongs (Miscellaneous Provisions) Act Chapter 297, ss1 and 2

Reference
John G Fleming ‘The Law of Torts’ 1998, 9^th edn

Counsel
No Appearance for the Plaintiff
No Appearance for the First Defendant
Ms P Ohuma, for the Second Defendant

RULING

24^th November 2023

1. BRE, AJ: INTRODUCTION: The State is seeking to dismiss the entire proceedings for failing to disclose a reasonable cause of action or alternatively, for the State to be removed as a party.

The Plaintiff’s lawyers were served with the application on 22 September 2023 but were not in attendance. I was satisfied with the service and proceeded to hear the motion.

BACKGROUND

2. On 20^th August 2019, the Pacific International Hospital commenced proceedings to recover alleged outstanding monies for medical services rendered during the APEC 2018 meetings hosted by Papua New Guinea and senior officials meeting ahead of the APEC leaders meeting in 2017 and 2018. The Plaintiff alleges it was engaged by the First Defendant to set up health care and first aid centers at the Stanley Hotel in NCD and in Goroka, Eastern Highlands Province. The costs alleged outstanding is K1,565,419.51 and covers various periods from October 2017 to 17 April 2019 and February to March 2018.

EVIDENCE

3. The Second Defendant relies on:

1. The Affidavit of Service of Sonny Yogomin sworn on 26 September 2023 and filed on 27 September 2023, and
2. The Affidavit of Priscilla T Ohuma sworn on 01 September 2023 and filed on 12 September 2023.
   

SUBMISSION

4. Counsel for the Second Defendant, Ms Ohuma, raised three grounds to support the State's application to dismiss the substantive pleadings. These include the Plaintiff not pleading the jurisdictional basis of a suit against the State under the Wrongs (Miscellaneous Provisions) Act Chapter 297, not pleading the scope of duty and course of employment of the First Defendant's officials to ascertain how the State is vicariously liable for the actions of State employees and not clarifying details of the authority to contract with ILPOC or authority to precommit details to prove a valid claim against the State as required by Section 47D of the Public Finance Management Act 1996 and Section 2A of the Claims by and Against the State Act 1996.

5. Ms Ohuma submits that alternatively, the State be removed as a party because the APEC Authority has legal personality under the APEC Papua New Guinea 2018 Co-ordination Authority Act 2014 (‘APEC Act’) and can defend the proceedings in its own capacity, while the State is a nominal Defendant.

ISSUE

1. Whether the entire proceedings be dismissed for not disclosing a reasonable cause of action, or alternatively;
   
2. Whether the Second Defendant should be removed as a party to the proceedings.
   

LAW

National Court Rules 1989 Order 12 rule 40(1)(a), Order 5 rule 9(a) the Wrongs (Miscellaneous Provisions) Act Chapter 297 and the Public Finance (Management) Act 1995 provide the legal basis for the Defendant's application.
Order 12 rule 40(1)(a) NCR reads:-

"40. Frivolity, etc.

(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; "

Order 5 rule 9(a) NCR reads:-

"9. Removal of parties.

Where a party—

(a) has been improperly or unnecessarily joined;"

Wrongs (Miscellaneous Provisions) Act Chapter 297 (‘WMPA’)

“1. General liability of the State in tort.

(1) Subject to this Division, the State is subject to all liabilities in tort to which, if it were a private person of full age and capacity, it would be subject–

(a) in respect of torts committed by its servants and agents; and

...
(2) Proceedings do not lie against the State by virtue of Subsection (1)(a) in respect of an act or omission of a servant or agent of the State unless the act or omission would, apart from this Division, have given rise to a cause of action in tort against the servant or agent or his estate.”

CONSIDERATION

6. The relief sought to dismiss the proceedings require an exercise of discretion on proper principles. Proper principles require the Court to have regard to the public interest of finality to litigation and equally preserving the right of the plaintiff to litigate and not to shut out or have the plaintiff “driven from the judgment seat” in a summary way. Kerry Lerro v Philip Stagg, Valentine Kambori & The State (2006) N3950; Philip Takori v Simon Yagari (2007) SC905 and George Solomon v David Raim (2020) N8428.

7. Discretion may be exercised against dismissal of a proceeding even where there is lack of particulars or lack of proper pleadings to identify the cause of action. Where there is an opportunity, the plaintiff should be allowed to have the deficiencies cured by appropriate amendments to the pleadings. See Papua Club Inc v Nusaum Holdings Ltd [2002] PGNC 50; N2273 (16th August 2002).

8. I shall firstly consider the nature of the claim and whether it is a claim in tort or contract to address the issue of specifically pleading the WMPA. Section 2 WMPA states that no proceedings lie against the State for torts committed by its employees or agents unless the cause of action arises in tort.

9. Section 1 WMPA subjects the State to the law of torts and provides that it can be held liable for torts committed by itself or its agents, representatives or employees as if it were a natural person.
A tort is defined in very general terms as:

''a wrong, an injury other than breach of contract, which the law will redress with damages"^[1]

10. Although, the claim obviously looks like a claim based in contract, where the legal basis of the contract and the financial authority to bind the State for the unpaid invoices are not sufficiently pleaded as alleged by the State, the claim could easily shift into a claim for restitution for quantum meruit which requires specific pleading of the WMPA to hold the State liable for the actions or omissions of Second Defendant.

11. The Plaintiff purports a breach of contract for services rendered. A contract in its simplest terms is a mutual agreement between people for performance in exchange for consideration. The Plaintiff's claim appears to be based in contract as pleaded in paragraph 6 of the Statement of Claim that: -

"During the APEC 2018, the Plaintiff was engaged to provide medical services to the participants and officials of APEC 2018 by the First and Second Defendants. "

(emphasis mine)

12. I turn now to consider the principles guiding the exercise of discretion.

13. His Honour Deputy Chief Justice Kandakasi ably considered the long line of case authorities and set out the principles guiding the application of Order 12 rule 40 in Lerro v Stagg (2006) N2936 as:
“1) A plaintiff or defendant should not be driven from the judgement seat in a summary way. The rules are designed to enhance parties’ rights and to ensure a prompt and fair disposal of matters.
2) Simultaneously, the Court also has a duty to protect and safeguard its processes from abuse.
3) The object of this rule is to stop cases which ought not to be launched.
4) In terms of a claim not disclosing a 'reasonable cause of action’; two considerations apply: one, the legal form of action and second all necessary facts proving the legal form of action must be disclosed in the pleadings.
5) The Court must exercise its discretion sparingly and only in very clear cases where the pleadings are ‘obviously and almost incontestably bad' or is 'plain and obvious’ or 'so bad or vague’ that even if the claim is proved will not entitle the Plaintiff to the remedy it seeks.
6) A lack of particulars can be cured by amendment to the pleadings”.

14. In terms of pleading the legal authority to bind the State financially and the legal capacity of the First Defendant, I accept Ms Ohuma's submissions to an extent.
The APEC Authority has specific financial authority to procure goods and services for up to K1million with the financial authority to bind the First and Second Defendant by the Chief Executive Officer to K500,000.00 and the Chairperson of the Board to K1million. Beyond that, procurements must be approved by the National Procurement Authority. See sections 20, 5 and 6 of the APEC Act.

15. There is nothing pleaded about any agreement executed with the First Defendant as approved by its Chief Executive Officer or Chairman or the National Procurement Commission and the State, where applicable, according to the financial limits of the authorising official of the First Defendant. This goes to the legal form of the action.

16. I find the Plaintiff has not sufficiently particularized details of its engagement with the First Defendant as to the date of the engagement, the officers who engaged the Plaintiff, the duration of the engagement, the total agreed value for the types of services the Plaintiff was to provide.

17. I also find the absence of wrongful actions or omissions of the First Defendant's officials in failing to pay the invoices that the Second Defendant will be vicariously liable for. The invoices are unpaid, which officer failed in his duty to pay the invoices and are the payments sourced from a lawfully executed contract. These are fair issues to be raised by the State.
Further no ILPOC or authority to precommit has been pleaded as well. The lack of pleadings disadvantages the State in preparing its Defence and position for trial.

17. In Jhelson Ray (trading as Bara Construction) v Numara [2018] PGNC 257; N7380 (21 February 2018) the Court dismissed the Plaintiff's cause of action for not disclosing a reasonable cause of action and being frivolous in not pleading an Integrated Local Purchase Order and Claim (ILPOC) or an Authority to Pre-commit Expenditure to disclose a reasonable cause of action. Also see Praise Hire Cars Ltd v Leka [2023] PGNC 41; N10140 (28 February 2023) where liability was not proven because no proof was provided of an ILPOC or authority to precommit and contract was not pleaded at [55].

18. I also note from the Affidavit of the Plaintiff's Col Sandeep S Shaligram sworn on 16 July 2021, filed on 29 July 2021 that on 15 September 2020 part payment of K1,000, 000.00 was raised by the Department of Treasury 's drawing account and paid to the Plaintiff. The total amount sued for is K1,565,419.51.
The pleadings do not indicate this payment nor the total contract value nor whether this amount is included in the total sum claimed.

19. Although the part payment may indicate there is an acceptance, it does not demonstrate that the engagement complied with the procurement and payment rules of the Public Finance Management Act 1998 nor the APEC Act to legally bind the State and form the legal basis for the State's responsibility to pay the invoices. This goes to the legal form of action.

20. It is a fundamental principle of civil litigation that a plaintiff must plead his or her causes of action with accuracy. In Kuk Kuli v The State (2004) N2592, Manuhu J stated:

"In a statement of claim ... sufficient particulars of the cause of action must be pleaded. The duty imposed upon a defendant must be sufficiently particularized. The nature of the breach must be sufficiently particularized. The nature of relief sought must also be specified. Where liability is based on the principle of vicarious liability, it will be necessary to establish, first, a cause of action against the principal defendant; second, the relationship between the principal defendant and the party vicariously liable; and third, that the tort in question was committed in the course of employment of the principal defendant."

21. The Court has a duty to safeguard its process from actions that do not sufficiently disclose a reasonable cause of action.

22. The Plaintiff ought to have taken steps as a prudent business to ensure proper contractual documents were in place between itself and the First Defendant given the substantial value of the transactions, and it ought to be aware of the National Government’s procurement processes to do business with the State.

23. Ultimately, I find that the legal form or basis of the claim to hold the State vicariously liable for the unpaid bills and the financial authority for the engagement are crucial matters going to the substance of the pleadings and have not been sufficiently pleaded. The legal basis of the claim, whether in contract or tort, is also unclear in the absence of specific details about the contract with the First Defendant.

24. I find the pleadings are obviously bad against the State and cannot be cured by amending the pleadings as the defect goes to the legal form of the action and the pleadings must be struck out.

25. For the foregoing reasons, I grant the State's application for summary dismissal.

ORDER

26. The formal ruling of the Court are:

1. The Plaintiff's statement of claim is struck out for want of legal form and is defective against the Second Defendant.
   
2. The Plaintiff shall pay the reasonable costs of the Second Defendant in accordance with the scale of costs in Order 22 of the National Court Rules to be taxed if not agreed.
   
3. Time of entry is abridged to the date of settlement by the Registrar of the National Court which shall take place forthwith.
   

Orders Accordingly.

__________________________________________________________________
Tamutai Lawyers: Lawyers for the Plaintiff
Solicitor General: Lawyer for the Second Defendant

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^[1] John G Fleming ‘The Law of Torts’ 1998, 9edn p36.