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FHG Investments Ltd v Namah [2022] PGNC 534; N10042 (11 November 2022)

N10042

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 42 OF 2020

BETWEEN:
FHG INVESTMENTS LIMITED
- First Plaintiff-

AND:
VINCENT YANGWARI
as Managing Director for FHG INVESTMENTS LIMITED
-Second Plaintiff-

AND:
HONORABLE BELDEN NAMAH, MP,
in his former capacity as Deputy Prime Minister and Minister for Forest and Climate Change in the then-O’Neil Government
-First Defendant-

AND:
DR KEN NGANGAN
as the Secretary for the Department of Finance
-Second Defendant-

AND:
HONOURABLE SAM BASIL, MP
In his capacity as the Deputy Prime Minister for the time being
-Third Defendant-

AND:
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
-Fourth Defendant-

Waigani: Tamade AJ
2022: 12^th July; 11^th November

CONTRACT LAW & EQUITY– contract to hire vehicles – breach of contract – contract null and void – unenforceable – payment made by State – illegal contract – Public Finance (Management) Act – ss 39, 40, 47B, 59 and 61 – quantum meruit – unjust enrichment

PRACTICE AND PROCEEDURE – res judicata – principles of res judicata and issue estoppel discussed

Cases Cited:

Christian v Namaliu [1996] PGSC 34; SC1583
Telikom PNG Ltd v Independent Consumer and Competition Commission [2008] PGSC 5; SC906

Counsel:

Mr Steven Dadada, for the Plaintiffs
Ms Bathsheba Kulumbu, for the Defendants

11^th November, 2022

1. TAMADE AJ: This is a claim by the Plaintiff that during the political impasse that affected the country from August 2011 to August 2012, the Right Honourable Mr Belden Namah who was then Deputy Prime Minister and Minister for Forest and Climate Change entered into an agreement with the Plaintiff for the hire of a fleet of vehicles by the O’Neil/Namah government for operational purposes during this time.

2. Invoices were issued by the Plaintiff for the hire and use of these vehicles and a part payment of K900 000 from two separate payments was made to the Plaintiff in 2012 and 2013. The Plaintiff however claims that a sum of K4 287 965 was due and owing from the Defendants from the hire of these fleet of vehicles. The Plaintiff then instituted proceedings in WS 100 of 2014 where the Plaintiff claimed for breach of contract. The Court through Justice Polume-Kiele heard the matter and handed down an unpublished decision in that matter. I am privileged to read a copy of that decision handed up by Ms Kulumbu of the State.

3. The Plaintiff in these proceedings is again suing on this same debt they say is owing from the State however this time Mr Dadada of the Plaintiff argues that this is a claim seeking equitable relief in the form of quantum meruit, unjust enrichment and restitution.

4. I will address the fundamental issue in this matter of whether these proceedings are res judicata of the previous proceedings in WS 100 of 2014.

Are these proceedings an abuse of process as they are res judicata?

5. The principle of res judicata is a principle of law applied in many cases. Amet CJ (as he was then) in the Supreme Court seven-member bench in the case of Christian v Namaliu^[1] said this:

20. It is useful therefore to re-state as succinctly as possible the basic principle of the doctrine of res judicata and issue estoppel.

21. In the text the Doctrine of Res-Judicata by Spencer Bower and Turner, the following introductory statement succinctly summarise the effect of res judicata:

“A final judicial decision pronounced by a judicial tribunal having competent jurisdiction over the cause of matter in litigation, and over the parties thereto, disposes once and for all the matters decided, so that they cannot afterwards be raised for re-litigation between the same parties or their privies. The effect of such a decision is two-fold.

In the first place, the judicial decision estops or precludes any party to the litigation from disputing, against any other party thereto, in any later litigation, the correctness of the earlier decision in law and fact. The same issue cannot be raised again between them, and this principle extends to all matters of law and fact which the judgement, decree or order necessarily established as the legal foundation or justification of the conclusion reached by the court.

In the second place, by virtue of the decision, the right or cause of action set up in the suit is extinguished, merging in the judgement which is pronounced. The result is that no further claim may be made upon the same cause of action in any subsequent proceedings between the same parties or their privies.

22. Also in Halsbury Laws of England 4^th Ed Re-issue at para 973 the following statement is made:

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“The most usual manner in which questions of estoppel has arisen on judgements inter partes has been where the defendant in an action raised a defence of res judicata, which he could do where former proceedings for the same cause of action by the same plaintiff had resulted in the defendant’s favour, by pleading the former judgment by way of estoppel. In order to support that defence, it was necessary to show that:

(1) the subject matter in dispute was the same, namely that everything that was in controversy in the second suit as the foundation of the claim for relief was also in controversy or open to controversy in the first suit;

(2) it came in question before a court of competent jurisdiction; and

(3) the result was conclusive so as to bind every other court.”

23. At para 977 the following statement is made on issue estoppel:

“An estoppel which has come to be known as “issue estoppel” may arise where a plea of res judicata made not be established because the causes of action are not the same.

A party is precluded from contending the contrary of any precise point which, having once been distinctly put in issue has been solemnly and with certainty determined against him. Even if the objects of the first and second actions are different, the finding on a matter which came directly (not collaterally or incidentally) in issue in the first action, provided it is embodied in a judicial decision that is final, is conclusive in a second action between the same parties and their privies. This principle applies whether the point involved in the earlier decision, and as to which the parties are estopped, is one of fact or one of law, or one of mixed fact and law. The conditions for the application of the doctrine have been stated as being that:

(1) the same question was decided in both proceedings;
(2) the judicial decision said to create the estoppel was final; and

(3) the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised for their privies.

The scope of the doctrine depends on whether a court takes a narrow or wide view of the extent of the issue determined in the earlier case. Where a cause of action is held not to fall within the scope of issue estoppel, it may nonetheless be struck out as vexatious or frivolous; to relitigate a question which is substance has already been determined is an abuse of process.”

6. The Supreme Court also in the case of Telikom PNG Ltd v Independent Consumer and Competition Commission^, therefore, outlined the elements of the principle of res judicata as:

“16. In summary, in order for the defence of res judicata to succeed, a party relying on the doctrine must show:

1. The parties in both matters are the same;
2. The issues in both matters are the same;
3. The previous judgment or decision extinguished the foundations of the claim or the right to set up an action. The result is therefore final and conclusive, and it binds every other Court; and
4. A Court of competent jurisdiction made the first decision.

17. Issue estoppel although related to res judicata arises where the causes of action are different but the parties or their privies are the same and the same issue is raised and conclusively determined by the Court.”

7. In regard to whether the parties to the previous proceeding were the same, Mr Dadada submits that the First Defendant was not named in the previous proceeding as it was Hon. Leo Deon who was the Deputy Prime Minister who was named in the previous proceeding and the Late Hon. Sam Basil is named as the Deputy Prime Minister. Mr Dadada wants the Court to believe that these are separate legal persons occupying the seat of the Deputy Prime Minister and therefore the parties are different. I find this argument misconceived. Regardless of how Mr Dadada wants to swap the people occupying the seat, it is the same seat and I refuse this argument. I find that the parties to the previous proceeding and these proceedings are the same.

8. As to whether the issues in both matters are the same? I answer this in the affirmative. The cause of action WS 100 of 2014 was for a breach of contract. In the present proceedings, the Plaintiff is claiming quantum meruit, unjust enrichment and restitution. The law however is not blind. The age-old equitable maxim that “equity follows the law” applies to this case.

9. Justice Kiele-Polume in her decision in WS 100 of 2014 addressed the issue of whether the requirements of section 40, section 39, section 47B, section 59 and section 61 of the Public Finance (Management) Act were complied with prior to the hire of the Plaintiffs’ vehicles. Her Honour found that the parties to WS 100 of 2014 had failed to comply with the provisions of the law in the said agreement for the hire of the Plaintiffs vehicles and therefore the contract entered was null and void and unenforceable.

10. In regard to the Plaintiff’s claim for quantum meruit, unjust enrichment and restitution, Her Honour said this in paragraphs 45, 46 and 47 of her decision:

“...Where such a contract has been performed in part, a claim based on the principle of quantum meruit may be possible, provided the private party contracting with the State or any of its entities is innocent of the breaches of the requirements of the Act. In this case, I find that the contracting parties are not innocent of the breaches of the requirements of the Act and its intent and purpose. Clause 9 of the purported agreement binds them to compliance with the PF(M) Act. Both parties failed to ensure compliance and an illegal contract emerged resulting in the payment of the sum of K900 000 by the State.

46. In any case, the State has not filed a cross-claim for the value of the contract. It has however submitted that the payment of K900 000 is reasonable compensation for the alleged hire of the 11 vehicles and that the Plaintiffs are not entitled to any further payment as the contract entered into with the First Defendant is null and void and unenforceable against the State.”

47. Taking all these factors into account, I find that the Plaintiff’s have unjustly enriched themselves at the expense of the State in the sum of K900 000. As the State has not asked for a full reimbursement of the sum, I leave it there.

11. I am of the view that the Plaintiffs claim for quantum meruit can not stand as it is not only res judicata, but the Plaintiffs have also received State funds in the sum of K900 000 over an illegal contract. They have received compensation. The Plaintiffs claim that the Defendants have unjustly enriched themselves in benefitting from the hire car services is also res judicata as Her Honour had found that it was the Plaintiffs who have unjustly enriched themselves in the sum of K900 000 at the expense of the State. I am also of the view that her Honour’s decisions also canvased the principle of restitution and from the Plaintiff’s submissions, Mr Dadada is relitigating the issue of an illegal contract, in this case, his client has a right of avenue to the Supreme Court and not to revisit the same court.

12. I also find in this case that the previous judgment or decision in WS 100 of 2014 extinguished the foundations of the claim or the right to set up an action. The result is therefore final and conclusive, and it binds this Court. The last element of the principle of res judicata is also made out that a Court of competent jurisdiction made the first decision. The Plaintiffs have clearly abused the process of the Court by coming back to the same Court to relitigate the same issues. They should be penalised in terms of costs for these.

13. The Court, therefore, makes the following orders:

1. These proceedings are dismissed in their entirety as they are res judicata of the decision of the Court in WS 100 of 2014.
2. The Plaintiffs shall meet the State’s costs on a solicitor client basis to be taxed if not agreed.
   

Orders accordingly.
_____________________________________________________________
Kumbari & Associate Lawyers: Lawyers for the Plaintiff
Office of the Solicitor General: Lawyers for the Defendants

^[1] [1996] PGSC 34; SC1583 (18 July 1996)