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Gotell Ltd v Avenell Engineering Systems Ltd [2015] PGNC 300; N6605 (19 May 2015)

N6605

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS No. 359 OF 2002

BETWEEN:
GOTELL LIMITED trading as Executive Hire Cars
Plaintiff

AND:
AVENELL ENGINEERING SYSTEMS LIMITED
First Defendant

AND:
DAVID WESTERN ADVERTISING GROUP LIMITED
Second Defendant

Waigani: Kariko, J
2015: 12^th & 19^th May

PRACTICE & PROCEDURE – application to strike out List of Documents – List filed out of time without leave – exercise of discretion – relevant considerations
PRACTICE & PROCEDURE – application to dismiss proceedings – whether reasonable cause of action disclosed – whether frivolous or vexatious
CONTRACT – doctrine of privity of contract

Cases cited:
Ace Guard Dog Security Services Limited v Lindsay Lai (2003) N2459
Kerry Lerro v Phillip Stagg& Ors (2006) N3050
Mt Hagen Urban Local Level Government v Sek No. 15 Ltd (2009) SC1007
OpreWamabiang v Alica Palme (2012) N4715
Phillip Takori&Ors v Yagari&Ors (2008) SC905
PNGBC v Barra Amevo&Ors(1998) N1726

Counsel:
Mr C Gagma, for the Plaintiff
Mr R Ababa, for the first Defendant

RULING

19^th May, 2015

1. KARIKO J: The first defendant Avenell Engineering Systems Limited (Avenell) has applied to have the List of Documents filed by the plaintiff Gotell Limited (Gotell) struck out and there upon the proceedings dismissed. In the alternative, Avenell seeks dismissal of the proceedings for being frivolous and vexatious and for not disclosing a reasonable cause of action.
   

Background

2. In these proceedings, Gotell which operates a vehicle hire business registered as Executive Hire Cars claims it entered into an oral agreement with David Western Advertising Group Limited (David Western) acting as agent for Avenell, for Gotell to supply vehicles through David Western for the use of Avenell on the LNG Project site at Napa Napa. The payment terms of that oral agreement was for Avenell to pay Gotell direct for the hire less 10% as commission for David Western. Gotell alleges it hired out some trucks to Avenell via David Western but has not been paid by Avenell. Gotell has sued Avenell and David Western for damages for breach of contract.
   
3. Of the defendants, only Avenell has entered an appearance and filed a Defence denying the claim by Gotell on the bases that it was not party to any agreement between Gotell and David Western and further that David Western was never its agent. Avenell however admits to a contractual relationship it had with David Western pursuant to a written contract for David Western to hire trucks to Avenell for payment. Avenell further states that payment has been duly made to David Western for vehicles hired under that written agreement. It denies it owes any money to Gotell as claimed.
   

Application to strike out List of Documents

4. Avenell served a Notice of Discovery on Gotell giving it 14 days to file its List of Documents which time-limit lapsed on 12^th March 2015. On 23^rd March 2015 the plaintiff was forewarned by Avenell’s lawyers allowing it seven days to seek leave of the Court to give discovery out of time. Three days later the plaintiff gave discovery without that leave. For that reason, application has been made to strike out the List of Documents filed by the plaintiff.
   
5. The explanation for not giving discovery within time must be reasonable; Opre Wamabiang v Alica Palme (2012) N4715. The Court shall be slow to enter judgement but may do so where the failure to give discovery is intentional or the defaulting party is avoiding to give discovery; Ace Guard Dog Security Services Limited v Lindsay Lai (2003) N2459. Gotell has explained by affidavit evidence that its lawyers were unable to confirm instructions earlier regarding discovery as its directors were in Alotau and were unable to sign the affidavit verifying the list of documents. I am satisfied that is a reasonable explanation. I am not convinced the failure to comply with the time-limit to give discovery was intentional nor was it an attempt to avoid giving discovery. Although leave was not first obtained, I note that discovery was nevertheless given and within the “forewarning period” allowed by Avenell.
   
6. In the circumstances, I exercise my discretion against striking out the List of Documents filed by the plaintiff on 26^th March 2015.
   

Application to dismiss proceedings

7. In relation to the second part of Avenell’s notice of motion, I have considered the submissions by counsel and critically reviewed the Statement of Claim.
   
8. Order 12 Rule 40 (1) of the National Court Rules gives power to the Court to dismiss proceedings where no reasonable cause of action is disclosed; or the proceedings are frivolous or vexatious; or the proceedings are an abuse of the process of the Court.
   
   9. The relevant principles in relation to applications under Order 12 Rule 40 are well settled; see for example Kerry Lerro v Phillip Stagg& Ors (2006) N3050 and Phillip Takori &Ors v Yagari &Ors (2008) SC905. In Mt Hagen Urban Local Level Government v Sek No. 15 Ltd (2009) SC1007 at paragraph 29 the Supreme Court restated the principles as set out in Kerry Lerro’s case and Phillip Takori’s case as follows:
      

“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 (is) 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.” (My underlining)

10. There is a general assertion in the Statement of Claim (paragraphs 6(a) and 9) that David Western acted as agent for Avenell when it entered into the oral agreement with Gotell. No further facts concerning the principal/agent relationship are pleaded. Having read the affidavit material for the plaintiff I am unable to see the principal/agent relationship alleged against the defendants. It is clear that Avenell was not a party to the agreement between Gotell and David Western. According to the doctrine of privity of contract, a person cannot sue or be sued on a contract unless that person is a party to the contract;

PNGBC v Barra Amevo&Ors(1998) N1726.

11. It appears from the evidence filed by the plaintiff that it may have been deceived or conned by David Western into supplying its trucks for payment that did not eventuate as promised by David Western. I am satisfied the Statement of Claim does not disclose a reasonable cause of action against Avenell and that the claim against it is frivolous and vexatious. It is a claim that is clearly untenable and is bound to fail.
    

Conclusion

12. Accordingly, I dismiss the proceedings against the first defendant with costs.
    

______________________________________________________________

Gagma Lawyers: Lawyer for the Plaintiff
Rageau Manua Kikira Lawyers: Lawyer for the first Defendant