N6782

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 412 of 2016

BETWEEN:
HIWA TUGUBA JOINT 
VENTURE LIMITED
First Plaintiff

AND:
NOGOLI CAMP SITE DEVELOPMENT
 LIMITED
Second Plaintiff

AND:
NOKO YUKU DEVELOPMENT 
CORPORATION LIMITED
Third Plaintiff

AND:
H.T.Y. HIDES LIMITED
Fourth Plaintiff

AND:
DAIRI VELE, SECRETARY FOR 
DEPARTMENT OF TREASURY 
First Defendant

AND:
DR. KEN NGANGAN, SECRETARY 
FOR DEPARTMENT OF FINANCE
Second Defendant

AND:
HELA PROVINCIAL GOVERNMENT 
ADMINISTRATION
Third Defendant
AND:
INDEPENDENT STATE OF 
PAPUA NEW GUINEA
Fourth Defendant

Waigani: Hartshorn J.
         2016: 18th November
                 : 21st December 

Application to dismiss the proceeding

Cases Cited:

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
Louis Lucian Siu v. Wasime Land Group Incorporated (2011) SC1107

Counsel:

Mr. B. Lomai, for the Plaintiffs
Mr. A. Ayako, for the Third Defendant
Mr. M. Wangatau, for the other Defendants

21st December, 2016

1. HARTSHORN J. This is a decision on a contested application to dismiss this proceeding. The application is made by the Secretaries for the Departments of Treasury and Finance, and the State. They contend that the proceeding is frivolous, vexatious, discloses no reasonable cause of action and is an abuse of process. The application is made pursuant to Order 12 Rule 40(1)(a), (b) and (c) National Court Rules. 

Background

2. It is pleaded that amongst others:

a)	The four plaintiffs are duly registered landowner companies under the Companies Act which are “owned by Hides PDL1 area of Hela Province”;

b)	They each applied to the Department of Commerce, Trade and Industry for Business Development Grants (BDGs) for the Hides PDL1 licence area in or about 2010;

c)	The Secretary for the Department of Commerce Trade and Industry by letter dated 15th October 2015 (DCTI Letter), approved amongst others, the plaintiffs as recipients of the BDGs and requested payment to them by the first defendant;

d)	A letter of demand has been sent but payment has not been made. The plaintiffs’ claim the unpaid BDGs in the sum of K10 million or alternatively damages.

This application

3. The defendants submit that the proceeding should be dismissed as:

a)	All four plaintiffs lack standing to bring the proceeding and therefore do not have a cause of action against the defendants. This is because the Umbrella Benefits Sharing Agreement of May 2009 (UBSA), provides that BDGs are to be made available by the State to assist landowner companies in accordance with guidelines approved by the National Executive Council (NEC) and s.173 Oil and Gas Act. The correct landowner company that has standing to bring this proceeding is Hides PDL1 Holdings Limited by virtue of NEC decision NG53/2012. There is no evidence to suggest that the plaintiffs have been authorized by Hides PDL1 Holdings Limited to bring this proceeding. 

b)	The Secretary for the Department of Commerce Trade and Industry did not have responsibility for administering the payment of BDGs. He merely received expressions of interest that he forwarded to the first defendant. 

Order 12 Rule 40 National Court Rules

4. 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 Louis Lucian 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.”
Standing
5. I consider whether the plaintiffs have standing to bring this proceeding first.
6. The defendants contend that the UBSA provides that BDGs are to be made available by the State to assist landowner companies in accordance with the guidelines approved by the NEC and s.173 Oil and Gas Act. The NEC decision NG53/2012 dated 7th March 2012 specifically provides that the entity that is to receive K29.28 million in BDGs for Hides PDL1 is Hides PDL1 Holdings Limited. There is no provision for any other entity, including the plaintiff companies, to be paid BDGs as contended by the plaintiffs. As NEC decision NG53/2012 only recognises Hides PDL1 Holdings Limited as the PDL1 licensed based landowners Umbrella Company in accordance with the Hides PDL1 Landowner License Based Benefits Sharing Agreement, the plaintiffs lack standing and therefore fail to disclose a reasonable cause of action against the defendants. 
7. Counsel for the plaintiffs did not specifically address the above points, but it can be inferred that the plaintiffs contend that they have standing as a purportedly binding decision was conveyed in the DCTI Letter, for the plaintiffs amongst others, to be paid BDGs. 
8. If the DCTI Letter is put aside, then as:
a)	The UBSA provides that BDGs are to be made available by the State to assist landowner companies in business development activities in accordance with guidelines approved by the NEC; and 
b)	Section 173 (5) Oil and Gas Act provides:
“(5)	The State may, in addition to grants made to affected Local-level Governments or affected Provincial Governments under this section, make grants to project area landowners or customary owners of land in a petroleum project area.”; and

c)	NEC decision NG 53/2012 provides that one entity, Hides PDL1 Holdings Limited, is the entity that is to receive K29.28 million in BDGs for Hides PDL1; and

d)	There is no evidence that the plaintiffs have been authorized by Hides PDL1 Holdings Limited to bring this proceeding;

I am satisfied that the plaintiffs are not entitled to the BDGs and therefore do not have standing to bring this proceeding.
9. When the DCTI Letter is considered, and the plaintiffs plead in that regard that the DCTI Letter and the decisions conveyed therein, in relation to the disbursement of the BDGs to the plaintiffs, were and are, binding on all of the defendants, the NEC decision NG53/2012 is clear in that it directs the Department of Treasury and Department of Finance to allocate the BDGs. Any obligation that the Department of Commerce Trade and Industry may have had in administering the BDGs on behalf of the State had been discharged or superseded by the NEC decision. The Secretary of the Department of Commerce, Trade and Industry did not have the authority to bind the State and this is acknowledged by him in his evidence.
10. Further, when the content of the DCTI Letter is considered, it is clear that it is a submission of expressions of interest to the Secretary of the Department of Treasury. This is conveyed by the use of certain phrases in the letter such as: 
“… and wish to formally endorse, for your kind consideration”; 
“We understand that your Department as custodian of this public fund is currently overseeing the disbursement of funds totaling K19.28 million for Business Development Grants.”
“I will be grateful (sic) that you take the enclosed list of projects into consideration in the disbursement of the remaining balance of the BDGs for Hides PDL1.” 
11. Consequently, I am not satisfied that first, the Secretary for Commerce Trade and Industry had the ability to bind the defendants as pleaded by the plaintiffs, and secondly, the content of the DCTI Letter does not in any way purport to, or is capable of, binding the State. 
12. I am satisfied that the plaintiffs do not have the requisite locus standi or standing to bring this proceeding against the defendants and have not disclosed a reasonable cause of action against the defendants. This proceeding should be dismissed. Given this, it is not necessary to consider the other submissions of counsel. 
Orders
13.	The Orders of the Court are:
a)	This proceeding is dismissed,
b)	The plaintiffs’ shall pay the costs of the defendants of and incidental to this 	proceeding to be taxed if not otherwise agreed. 
__________________________________________________________________
Lomai & Lomai Lawyers:  Lawyers for the Plaintiffs                                        
Haiara Lawyers:    Lawyers for the Third Defendants                               
Office of the Solicitor General:  Lawyers for the other Defendants