N8724

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 633 OF 2019

BETWEEN:
WEK NOKI
First Plaintiff

AND
CAMILUS RUMBA
Second Plaintiff

AND
THOMAS RAVEN – Operational Manager (HVT & LC)
First Defendant

AND
TIMON GEORGE – Company Accountant (HVT & LC)
Second Defendant

AND
HIDDEN VALLEY TRANSPORT & LOGISTIC COMPANY
Third Defendant

Lae: Dowa AJ
2020:  28th August & 11th September

PRACTICE AND PROCEDURE – application by defendant to dismiss plaintiffs claim for being frivolous and vexatious and for not disclosing a reasonable cause of action under Order 12 Rule 40 NCR – plaintiffs claim is based on damages arising out of theft of motor vehicle parts for a motor vehicle kept in the custody of the defendant – vehicle initially owned by plaintiff and involved in accident with another vehicle owned by defendant – plaintiff and defendant signed agreement for defendant to pay for damages including loss of business – part of agreement provides for plaintiff not to make further claims against the defendant over the vehicle the subject of the settlement agreement – plaintiff is estopped from making further claims from the defendant – plaintiffs claim against the defendant is therefore frivolous and vexatious  and does not disclose a reasonable cause of action– plaintiff’s claim is dismissed 

Cases Cited:

Theiss Watkins v PNGEC (1988-89) PNGLR 45
Mt Hagen Urban Local level Government v Sek No.15 (2009) SC 1007
Toap v PNG Products (2004) PNGLR 57

Counsel:

T Berem, for the Plaintiff
A Dalton, for the Defendant

RULING

11th September, 2020

1.	DOWA AJ:	 By Notice of Motion, the Defendant seeks to dismiss the proceedings under Order 12 Rule 40 of the National Court Rules for disclosing no reasonable cause of action and for frivolity.

	Facts

2.	On 5th December 2018, and at all material times the Plaintiffs were the owner of a 25-Seater Toyota Coaster Bus, Reg. No. P2686J.  The Plaintiff’s bus collided with the Defendant’s Motor Vehicle, a Toyota Land Cruiser, utility.  It is alleged the accident was caused by the negligent driving of the employed driver of the Defendant company.  As a result of the accident, the Plaintiffs bus sustained extensive damage, and was declared a write-off.

3.	Without admitting liability, the Defendant agreed to settle the damages suffered by the Plaintiffs.

4.	On 22nd February 2019, the parties entered into a Settlement Agreement whereby the Defendant agreed to pay the Plaintiffs K94,500.00 which comprise of the following heads of damages.

1.	K45,000.00	- per Ela Motors Pre Accident Valuation
2.	K39,500.00	- loss of income for 79 days
3.	K10,000.00	- compensation for injuries to driver and crew

5.	The Defendant settled the claim in instalments.  The last of the payment was made on 30th April 2019.

6.	Pending negotiation for settlement, the Plaintiffs Bus was kept at the Defendant’s yard.  After settlement, the Plaintiffs picked up the Bus from the yard and discovered parts were missing from the bus.  On the 29th May 2019, the Plaintiffs commenced the current proceeding claiming a sum of K20, 916.60 being for missing parts to the Plaintiffs bus.  The Plaintiffs allege, the parts to their bus went missing whilst in the custody of the Defendant at their yard.

7.	The Defendants filed a Defence denying liability, and specifically raised the Defence of Promissory Estoppel, and a Cross-claim.

Issue

8.	Whether or not the Plaintiffs proceedings disclose a reasonable cause of action.

Law

9.	The relevant rule is Order 12 and Rule 40(1) of the National Court Rules.  It reads:

40.	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.”

10.	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.”

Submissions by Counsel

11.	Ms Dalton for the Defendants submitted the Plaintiffs do not have a cause of action against the Defendant. The Plaintiffs’ claim against the Defendant arising out of the motor vehicle accident was fully settled under a settlement agreement executed by the parties on 22nd February 2019.  Ms Dalton submits, the settlement agreement contains a clause which specifically states that “There will be no other charges/claim by the owner of the bus towards HVT”.  Therefore, the Plaintiffs are estopped from making further claims arising out of the same accident, the subject of the Settlement Agreement.

12.	In response, Mr Berem for the Plaintiffs, submitted that the settlement agreement did not extend to the loss suffered by Plaintiffs for the missing parts.  Mr Berem submitted that despite the settlement agreement, the damaged bus/wreck remained the property of the Plaintiffs, and loss for the missing parts give rise to a new and fresh actionable tort.  

Reasons for Decision

13.	I have heard submissions of counsel and studied the pleadings, and evidence.  Here is my ruling.

14.	The claim by the Plaintiffs is for the missing parts.  It is alleged, the parts went missing, whilst the bus was kept in the yard of the Defendant company.  The question I ask is who owns the damaged bus and those missing parts.

15.	I note from the Plaintiffs, statement of claim, that they assert ownership of the damaged bus or the wreck in the Settlement Agreement.

16.	On the other hand, the Defendants plead in their Statement of Defence at paragraph 4(d) that on settlement, pursuant to the Settlement Agreement, the damaged bus/wreck became the property of the Defendants, and no longer remained a property of the Plaintiffs.

17.	I note from the Settlement Agreement that the sum of K45,000.00 was paid for the bus, based on a pre-accident valuation report from Ela Motors.  A copy of the pre-accident valuation report from Ela Motors is annexed to the Affidavit of Francis Mala which fixed the pre-accident value of the bus at K45,000.00.  The pre-accident value is dated 24th December 2018, obtained about 3 weeks after the accident, for a 2014 model.

18.	The Settlement Agreement was signed on 22nd February 2019, about 3 months after the accident.  Both parties knew and accepted the value of the bus on date of settlement, at K45,000.00.

19.	I accept the Defendants submission that upon payment of K45,000 being the pre-accident value of the bus, the damaged bus or wreck became the property of the Defendant.  The fact that the Plaintiffs were allowed to retrieve the wreck from the yard of the Defendant does not change this position.

20.	It follows therefore that the Plaintiffs cannot institute proceedings for the missing parts that they no longer own, as against the Defendants.

21.	Since the damaged bus/wreck is a subject matter of the settlement agreement, the terms of the agreement apply.  One of such terms as noted earlier in this judgment is, that there shall be no other charges or claims by the owners in respect of the bus against the Defendants.

22.	The Plaintiffs are now estopped from making a claim for the missing parts.  Ms Dalton has correctly submitted the law on estoppel.  The Plaintiffs have promised that after accepting full payment from the Defendants, they will not make any further claims.  It was on the basis of this promise, the Defendants have paid up in good faith. It appears the Plaintiffs by their conduct have gone back on their agreement and have now placed the Defendants at a disadvantage of defending the current proceedings.  

23.	The Defendants are therefore entitled to raise the issue of promissory estoppel.  In Theiss Watkins v PNGEC (1988-89) PNGLR 454, Justice Hinchliffe discussed the issue of estoppel, and the following principles are applied:

(i)	The party seeking to rely on an estoppel has placed himself in a position of material disadvantage as a result of reliance upon the representation….”

(2)		A representation must be clear before it can be found an estoppel…
(3)	It is essential to show that the statement was of such a nature that it 	would have misled any reasonable man and…was in fact misled by     
            it….
(4)	It must be such as will be reasonable understood in a particular sense 
	by the person to whom it is addressed.”

24.	Applying the above principles, in my view, the Defendants have merit in their application.  The Plaintiffs made a representation that they will not enforce their legal rights. The representation was very clear.  The Defendants relied on that promise and made a payment of K95,000.00 in full and final settlement.

25.	The defence of estoppel raised by the Defendants has merit and is supported by evidence.  This renders the Plaintiffs claim frivolous and vexatious. The Plaintiffs claim is frivolous because, they signed a Settlement Agreement, that they will not make a further claim and therefore this claim is bound to fail. The Plaintiff’s action is also vexatious, in that they have received money for the value of the bus.  In instituting proceedings to make an additional claim for the missing parts of a wreck which the Defendants have already paid for, are only harassing the Defendants.  

26.	In conclusion, I find the Plaintiffs do not have a reasonable cause of action.  It is plainly clear, the Plaintiffs will not succeed in their claim against the Defendants, even if it proceeds to trial.  (Toap v PNG Products (2004) PNGLR 57.  The proceedings be dismissed at this stage to avoid further cost of litigation.

27.	For these reasons, I am inclined to grant the orders sought by the Defendants, for the dismissal of the entire proceedings.

Cost

28.	The Defendants have submitted that cost be awarded against the Plaintiffs on Solicitor-Client basis.  Cost awarded on Indemnity basis have a punitive element.  In my view, this is not a clear case to award cost on indemnity basis.  I will use my discretion to award cost on party/party basis.

Orders

29.      The Court orders:

a)	The Plaintiffs proceedings are dismissed for disclosing no reasonable cause of action.

b)	The Plaintiffs shall pay the Defendants cost on party/party basis to be taxed, if not agreed.

c)	Time be abridged.
________________________________________________________________
Berem Lawyers:	Lawyer for the Plaintiff
Warner Shand Lawyers:	Lawyer for the Defendant