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National Information & Communications Technology Authority v Tape [2025] PGNC 6; N11129 (14 January 2025)

N11129


PAPUA NEW GUINEA
[NATIONAL COURT OF JUSTICE]


WS (COMM) 28 OF 2020 (IECMS)


NATIONAL INFORMATION & COMMUNICATIONS TECHNOLOGY AUTHORITY
Plaintiff


AND
TIMIL TAPE
First Defendant


AND
STANIS JAPSON
Second Defendant


WAIGANI: KANDAKASI DCJ
18 MAY 2021; 14 JANUARY 2025


CONTRACT - Formal Contract of Sale and Purchase of land prepared by plaintiff – Aside from sale and purchase and payment of agreed consideration, no additional provision on requirements to be completed by each of the parties made– Vendor discharged all duties specified in the Contract – Application of “contra proferentem” rule – No extrinsic evidence can be supplied – No pending steps to be completed by vendor – All remaining steps to be completed by Purchaser - Land Act, s7, s10 and s11 - Claim against Vendor dismissed.


LAND LAW – Acquisition of customary land converted into a Special Agricultural and Business Development Lease (SABL) – Proper process – Land Act, s7, s10 and s11 - Department of Lands and Physical Planning (DLPP) administering the process – Process incomplete – Formal Contract of Sale and Purchase prepared by plaintiff - No provision on requirements to be completed by each of the parties – Vendor discharged duties specified in the Contract – Applicant on “contra proferentem rule – No extrinsic evidence can be supplied – No pending steps to be completed by vendor – All remaining steps to be completed by Purchaser - Land Act, s7, s10 and s11.


LAWYERS – Duty of lawyers – Lawyer client relationship – Extend of duty – Whether lawyers owe a duty to parties other than their own clients in a transaction – Application of general position at common law on negligent statement – Relevant principles already adopted and applied in the country – Need to consider common law principles together with the relevant provisions of the Professional Conduct Rules (PCR) for lawyers – Undivided fidelity to clients and prohibition against advising nonclients under r8 and r10 (1) and (6) of PCR – Meaning and effect of – No exceptions – Claim for development of underlying law to include exceptions – Claim not in accordance with the Underlying Law Act and no mention or foundation in the pleadings – No case made out neither against common law position on negligent statement or PCR for lawyers - Claim dismissed.


NEGLIGENCE - Negligent statement – Relevant test - Whether it was reasonable to foresee a representee of a statement relying upon the statement and for the representor to reasonably foresee that the representee would rely upon the statement and act on it to his or her detriment – Consideration of 3 categories in which a lawyer could make statements – Lawyer would be liable if the lawyer took responsibility for personally saying or doing something which only the lawyer is able to do and the representee was not able to know – Need to consider application of r8 and r10(1) and (6) of the PCR – Lawyer not liable as a lawyer to a third party.


PRACTICE & PROCEDURE – Pleadings – Importance and purpose of – Pleadings not laying the foundation for a claim based on the tort of negligent statement or a breach of a duty under the PCR pleaded and made out – Appropriate amendment not sought – Effect of – No disclosure of a reasonable cause of action disclosed.


PRACTICE & PROCEDURE – Application for summary judgment – relevant principles and considerations considered – Pleadings not laying the foundation for a claim based on the tort of negligent statement or a breach of a duty under the PCR pleaded and made out – Appropriate amendments not sought – If amendment were sought and granted it would still fail to disclose a reasonable cause of action to pursue - Effect of – No disclosure of a reasonable cause of action disclosed – Proceedings dismissed.


The Plaintiff (NICTA), which is a statutory corporation having a legal section headed by its manager, entered into a contract for Sale and Purchase of a customary land that was converted into a Special Agriculture and Business Development Lease (SABL) (Land). The Land was registered in the name of the original customary landowners duly incorporated as customary land group, under the name, Logaloto Incorporated Land Group (Logaloto ILG). In the transaction, the Purchaser was represented from start to finish by its manager, legal, an experienced lawyer, while the Vendors were initially not legally represented. Later the Vendor engaged the services of the Defendant lawyers. The Defendants sought advice from the Department of Lands & Physical Planning (DLPP) as to the process to employ for a complete and proper sale of the Land to the Purchaser. The Defendants passed on the information they obtained from the DLPP and requested a letter of guarantee from the Purchasers that it will pay the agreed purchase price once the process of acquiring a customary land by the State for the Purchaser was completed. The same information was sought by NICTA from the DLPP and essentially the same information was provided to them.


The Purchaser and its lawyer drew up the relevant Contract for the Sale and Purchase of the Land. Aside from including the agreement for the Sale and Purchase, the agreed purchase price to be paid over to the Vendor by the Purchaser, no other provision was made to provide for each of the parties’ duties and responsibilities for full and complete sale and transfer of the Land from the Vendor to the Purchaser. The parties executed the Contract for the Sale and Purchase of the Land. Thereafter, the Vendors surrendered to the DLPP their SABL title for cancellation together with their consent for the cancellation of the title and for the State to compulsory acquire the Land for the Purchaser. In return, they received the full agreed purchase price of K10 Million.


There was much delay in the processing of the cancellation and acquisition of the Land. The Purchaser wrote to the DLPP more than once following up on the due completion of the acquisition process. Eventually by letter dated 04 April 2019 the DLPP apologized for the long delay and outlined the steps that must be taken to complete the process which was essentially no different to the one the Defendants stated in their letter of 14 April 2014. At the same time, it added a few additional requirements that must be met for the complete acquisition of the Land by NICTA.


Through a new law firm instructed by NICTA, this proceeding was commenced and pursued against the Defendants’ claiming NICTA was owed a duty of care by the Defendants which was breached. That was despite having no lawyer client relationship but based on the common law tort of negligent statement, in terms of the information the Defendants communicated to NICTA in their letter of 13 October 2014. The Defendants denied having such a duty of care and its breach, the information they passed on was true and correct and is information NICTA in any case had or could have received from the DLPP. Proceeding on that basis, the Defendants requested a withdrawal of the proceedings and failing that they would file their defence and apply for a dismissal of the proceeding. At the same time, they warned against costs on an indemnity basis. On NICTA deciding not to withdraw the proceeding, the Defendants applied for a dismissal of the proceedings pursuant to O.12, r40 the National Court Rules for a failure to disclose a reasonable cause of action against them.


Held:


  1. Lawyers owe a duty of care to their clients in a lawyer and client relationship which duty is codified and strengthened by the lawyers Professional Conduct Rules 1989 (PCR) especially by r8 and r10(1) and (6) which provides for lawyers to be faithful to their clients, render undivided fidelity to their clients and are prohibited from advising third parties who are not their clients.
  2. The common law principles governing negligent statements in terms of a representor of a statement’s need to foresee the representee to reasonably rely on the representation and for the representor to reasonably foresee that he would do so as elaborated and enunciated by the decision in Hedley Byrne & Company Limited v. Heller & Partners Limited [1963] UKHL 4; [1964] AC 465 is part of the underlying law in Papua New Guinea, per the decision in Wahgi Savings & Loan Society Ltd v. Bank of South Pacific Ltd [1980] SC185 and others.
  3. The correct English case precedents involving statements or representations made by lawyers are the decisions represented by the decisions in Dean v Allin and Watts [2001] EWCA Civ 758; [2001] 2 Lloyd’s Rep 249 and Steel & Anor v. NRAM Limited [2018] UKSC 13; [2018] 1 WLR 1190 and the line of authorities they represent.
  4. The general common law principle as represented by the decision in Hedley Byrne and adopted into Papua New Guinea per the decision in the Wahgi Savings case, does not automatically apply to lawyers making a statement to the other party in a transaction who is represented by that party’s own briefed or in-house lawyer.
  5. Also, unlike the lawyers’ position in England as represented by the decision in Dean v. Allin & Watts and Steel & Anor v. NRAM Ltd, lawyers in PNG have the provisions of r8 and r10 (1) and (6) of the PCR, which obligates lawyers to be faithful to their clients, have unbroken fidelity to their clients and not to advise third parties who are not their clients. Consequently, claims such as the one by NICTA in this case, would be effectively asking a lawyer to breach the provisions of r8 and r10 (1) and (6) of the PCR.
  6. If there is an exception to the provisions of r8 and r10(1) and (6) of the PCR and that needs to be adopted into PNG as part of the underlying law, that exception with its justifications needs to be properly pleaded with particulars in accordance with the s6 and s7 of the Underlying Law Act 2000.
  7. In the present case, NICTA has not properly pleaded with particulars how the Defendants owed it a duty of care when it had its own lawyers, how the information provided by the Defendants letter of 13 October 2014, amounted to an advice to NICTA, how NICTA relied upon it, how it acted to its detriment when the correct process was disclosed and could be disclosed again, if not clear by the DLPP, how could the Defendants be liable given the provisions of r8 and r10 (1) and (6) of the PCR and how NICTA suffered damages of K10 Million when the Land is still available for NICTA to acquire it through the process of acquiring the Land which remains to be concluded by NICTA.
  8. The lacking in pleadings referred to in holding 7 above, cannot be cured by any amendment which is why NICTA has not asked for any such amendment and most importantly because no cause of action known to law in the particular circumstances of this case is disclosed or can be disclosed because the tests under Hedley Byrne and Steel & Anor v. NRAM Ltd have not and cannot be met and in any case that would go against the provisions of r8 and r10(1) and (6) of the PCR.
  9. Having regard to the foregoing, NICTA has failed to properly plead and disclose in its statement of claim the Defendants owing it a duty of care which was breached resulting in it suffering demonstrable damages. Accordingly, the claim was dismissed for a failure to disclose a reasonable cause of action.
  10. Based on the Defendants forewarning and a complete lack of any counter claim or argument against the Defendants submissions for costs to be ordered in their favour was upheld with costs ordered on an indemnity basis.

Cases cited:


Akai v. Reeves (2014) SC1393
Al-Kandari v. J R Brown and Co [1988] EWCA Civ 13; [1988] QB 665
Allied Finance and Investments Ltd v. Haddow and Co [1983] NZLR 22
Application by Ila Geno (2014) SC1313
Bluewater International Ltd v. Mumu (2019) SC1798
Caparo Industry plc v. Dickman [1990] UKHL 2; [1990] 2 AC 605
Church of Jesus Christ of Latter-Day Saints Inc v. Kimas (2022) SC2280
Connell v. Odlum [1993] 2 NZLR 257
Curtain Brothers (Queensland) Pty Ltd & Kinhill Kramer Pty Ltd v. The State [1993] PNGLR 285
Dean v Allin and Watts [2001] EWCA Civ 758; [2001] 2 Lloyd’s Rep 249
Donoghue v. Stevenson [1932] A.C. 562
Futolsi v. Turi (2018) N7147
Geroro v. Coffee Industry Corporation [1999] PNGLR 521
Gran Gelato Ltd v. Richcliff (Group) Ltd [1992] Ch 560
Haiyot v. David (2018) N7367
Hedley Byrne & Company Limited v. Heller & Partners Limited [1963] UKHL 4; [1964] AC 465
Igiseng Investments Ltd v. Starwest Constructions Ltd [2003] PNGLR 27
Illius v. Bias (2018) N7618
James McNaughton Paper Group Ltd v. Hicks Anderson & Co [1990] EWCA Civ 11; [1991] 2 QB 113
Jimmy Malai v. PNG Teachers Association [1992] PNGLR 568
Kanda International Ltd (trading as Kanda International Insurance Brokers) v Emeck (trading as Emeck Lawyers) (2020) N8700
Kapi v. Sheppard & Maladina (2003) N2323
Kerry Lerro v. Philip Stagg (2006) N3050
Limitopa v. The State [1988-89] PNGLR 364
Mount Hagen Urban Local Level Government v. Sek No 15 Ltd (2009) SC1007
Mutual Life & Citizens’ Assurance Co Ltd v. Evatt [1968] HCA 74; (1968) 122 CLR 556
New Britain Oil Palm Ltd v. Vitus Sukurami (2008) SC946
Odata Ltd v. Ambusa Copra Oil Mill Ltd [2001] PNGLR 344
Opi v. Telikom (PNG) Ltd (2020) N8290
Papua New Guinea Forest Authority v. Concord Pacific Ltd (No 2) (2003) N2465
Philip Takori v Simon Yagari (2008) SC905
Pija Grannies Ltd v. Rural Development Bank Ltd (2011) SC1327
Ross v. Caunters [1980] Ch 297
Smith v Eric S Bush and Harris v. Wyre Forest District Council [1990] UKHL 1; [1990] 1 AC 831
Steel and another v. NRAM Limited [2018] UKSC 13; [2018] 1 WLR 1190
Sukuramu v. NBPOL (2007) N3124
Tigam Malewo v. Keith Faulkner (2009) SC960
Tjandranegara v. BSP Financial Group Ltd (2021) N9353
Wahgi Savings & Loan Society Ltd v. Bank of South Pacific Ltd [1980] SC185


Counsel:


Mr. T. Tape, first defendant, in person
Mr. J. Holingu for the plaintiff


  1. KANDAKASI DCJ: This is an unprecedented claim at least in Papua New Guinea by the National Information & Communications Technology Authority (NICTA). The claim is against Mr. Timil Tape and Mr. Stanis Japson (together, the Defendants) who acted in a conveyancing transaction for the vendor, a Logaloto Incorporated Land Group Inc. (LILG). The claim is based on an alleged breach of a duty of care NICTA claims the Defendants owed it.
  2. The Defendants dispute the claim in its entirety and say, as lawyers they owed no duty of care to NICTA but their own client, in the transaction. Additionally, they say, there is nothing in NICTA’s statement of claim that discloses a reasonable cause of action against them. Proceeding, on that basis, they asked NICTA to withdraw the proceeding. Failing a withdrawal of the proceeding, they warned NICTA’s lawyers, Jonathan Holingu, trading as Holingu Lawyers (Holingu), that they will file for dismissal of the proceeding and seek costs on a full indemnity basis. Holingu and NICTA refused to withdraw the proceeding. Consequently, the Defendants filed their defence and filed a motion for a dismissal of the proceeding claiming a failure to disclose a reasonable cause of action against them. I heard the parties on that application and reserved a decision.
  3. From the parties’ arguments, the issues for the Court to determine are as follows:
  4. The first two issues can be dealt with together. Then depending on how these issues are determined, the remaining issue can be dealt with. I will thus deal with the questions in that order.
  5. But before delving into those issues, it is necessary to be informed of the background and the relevant facts from which the issues arise. Hence, we go into the relevant background and facts now.

Background and relevant facts


  1. The relevant facts and the factual background are not in dispute. They are presented in various affidavits filed by the parties. Having decided in favour of a staff home ownership scheme project for its staff, NICTA searched for land to buy and deliver the project. Eventually, NICTA settled for a piece of land known as Maha land, which is also described as Portion 2676C (Badihagwa) Granville (the Land). The Land was originally customary land. Later, its owners by custom organized themselves into an incorporated land group called, Logaloto Incorporated Land Group (Logaloto ILG) and had the Land converted into a Special Agriculture and Business Lease (SABL), registered in the name of Logaloto IILG.
  2. It was NICTA’s intention to acquire the Land via the process of the State acquiring the Land from the customary owners by agreement. The costs or compensation for acquisition was to be met by NICTA. Initially, Logaloto ILG was represented by an agent, JNG Agencies Limited, who wrote to NICTA and offered to sell the Land for a sum of K10 Million and asked for a deposit of K150,000.00. NICTA agreed to those terms and the parties entered into a written agreement on 18th April 2013. The front page of the agreement reveals the document was prepared by NICTA, using its own letter head with its slogan “Your one Stop ICT Converged Regulator” appearing at the bottom of each of the pages of the agreement.
  3. By letter dated 03 April 2014, NICTA wrote to the Department of Lands & Physical Planning (DLPP) seeking confirmation of the legitimacy of the SABL title for the Land as vested in Logaloto ILG. Five months later, on 06 August 2014, the DLPP responded, confirming the legitimacy of the title and Logaloto ILG, being the registered owner. The DLPP also advised of two ways in which NICTA could legally acquire the Land. These were:

(1) compulsory acquisition by agreement of the customary landowners, that is the members of Logaloto ILG at the price, the parties agreed too; or


(2) by Logaloto ILG leasing the Land to NICTA.


  1. In the meantime, by letter dated 23 April 2014, the Defendants informed NICTA that they were acting for Logaloto ILG in the transaction. They then referred to a meeting their clients have had with NICTA, that informed of a competing landownership claim, which was dealt with in their client’s favour, there being nothing else for their clients to attend to and asked for the transaction to be completed as soon as possible.
  2. By letter dated 16 May 2014, the Defendants wrote to NICTA, pointing out a failure to respond by NICTA to their earlier letter and suggested the parties proceed to complete the transaction in the usual conveyancing process. They then suggested:

(1) Contract of sale and purchase be completed within 7 days;

(2) Upon the execution of the contract, NICTA pay 10 % of the sale and purchase price and stamp duty;

(3) Upon settlement, NICTA pays the balance of the sale and purchase price into the Defendants’ trust account.


  1. The letter concluded with a request for NICTA to consider and let them know of NICTA’s position.
  2. After the DLPP’s letter of advice dated 06 August 2014, the Defendants by letter dated 13 October 2014, informed NICTA of a conference Mr. Tape had with Miss Shiela Sukwianomb, Director of Legal Services of the DLPP and noted the following:

(1) Since the Land was a SABL, the customary landowners (the members of the Logaloto ILG) were required to surrender the original title for cancellation.


(2) The State would then acquire the Land from the customary landowners pursuant to section 7 (a) of the Land Act 1996 by agreement of the landowners and the Minister for Lands and Physical Planning on behalf of the State.


(3) NICTA would then be required to pay the agreed sale and purchase price of K10 Million on behalf of the State to the landowners as compensation for the acquisition.


(4) The Land would then be converted to an Urban Development Lease (UDL), to then remain forever thereafter as a State land with the PNG Land Board granting the UDL to NICTA which would be the owner of the Land forever.


(5) To achieve the above, the Defendants would make an appropriate submission to the DLPP. But before doing so, the following needed to be done:


(a) The customary landowners need to consent to both a surrender of the SABL and allow the State to acquire the Land by agreement. This was delivered by the landowners through a meeting held in Hanuabada Village on 12 October 2014. A document evidencing the decision and consent of the landowners was enclosed.


(b) NICTA was required to give a letter of guarantee which guarantees and or undertakes to pay for the Land on behalf of the State to acquire the land and for NICTA to be given a UDL title for the Land. Hence, NICTA was requested to write the letter of guarantee addressed to the DLPP, which letter could be attached to the submission the Defendants would make on behalf of their clients to the DLPP.


  1. On or around 6 November 2014, the First Defendant wrote to the Registrar of Titles and conditionally surrendered the Original Owner’s copy of the SABL Title. The letter also communicated the landowners and Logaloto ILG’s consent for the State to acquire the Land on the terms agreed between NICTA, the landowners through Logaloto ILG and the DLPP.
  2. By letter dated 24 November 2014, the Defendants, expressed appreciation for NICTA sending them the draft Contract of Sale and informed of having explained the terms of the Contract to the landowners. The letter also indicated, the landowner’s accepting the terms of the Contract and the executives of the Logaloto ILG having signed it in triplicate. It then enclosed the executed Contract for counter signing by NICTA’s executives. Finally, the letter indicated once the Contract was thus executed by all the parties, it will be taken to the DLPP to complete the acquisition of the Land by NICTA.
  3. An examination of the Contract shows NICTA created it. The paper is in NICTA’s letter head. There is no evidence of the Defendants having any part in its drafting and forwarding the contract to NICTA. The Contract was executed under seal of NICTA by its Board Chairman, Ansgar Palauva, its Manager Legal Services, Ian Mileng as a witness, Logaloto ILG’s Chairman, Gari Sisia Lohia, Deputy Chairman, Gari Lohia, and Secretary, Rakatani Sale for the landowners and Mr. Timil Tape of Japson Lawyers, as witness. The Contract was also executed by the then Secretary of the DLPP, Mr. Romily Kila Pat.
  4. There is no clear evidence on who was to deliver the Contract to the DLPP with all the relevant requirements completed for the agreed acquisition of the Land by NICTA. It is also not clear when the Contract (if at all) was delivered to the Defendants and or the DLPP. But in a letter dated 19 November 2015, NICTA wrote to the DLPP, seeking the Department’s assistance. In so doing, it indicated amongst others the process for a proper acquisition of the land may have been bypassed. It then enclosed a copy of the Contract and other relevant documents.
  5. By 06 September 2016, NICTA still did not acquire the Land. It therefore wrote to the Secretary of the DLPP seeking an audience with him to discuss the matter. At the same time, it sought the Department’s assistance in the acquisition of the Land and enclosed a further copy of the Contract.
  6. It seems in early 2019, NICTA engaged Holingu Lawyers to assist it in the acquisition of the Land. By letter dated 04 April 2019 to Holingu Lawyers, the DLPP, informed NICTA of the reasons for the delay in completion of the acquisition of the Land by NICTA in the following terms:

“This letter is a response to your enquiries on the status of the acquisition process the Department of Lands & Physical Planning has undertaken and further explains the reasons for delay in concluding the process.


The task was delegated to the Director, Customary Land projects in and around mid-2018 to conclude the land acquisition process then refer the Lands File to the land Allocation Section to process NICTA’s application for Land Board hearing.


The progression and conclusion of the land acquisition was delayed due to non-availability of specific documents or requirements to compile Native Land Dealing (NLD) files for registration. A manilla folder containing various correspondence and a copy of the Sale and Transfer Instrument to conclude the acquisition process were furnished to the Director. The documents contained in the manilla folder were not sufficient ... to prepare the NLDs for registration. Lands file containing all the land acquisition specific requirements was not furnished to the Director to finalize the process. Searches were made to locate the lands file, however, the file was not located and furnished to the Director, hence, the delay.”


  1. The letter then outlined the steps that must be taken to complete the acquisition of the Land by NICTA in the following terms:

“The procedural requirements in the land acquisition process to convert or alienate any customary land to State Land is as follows:


  1. Survey Plan must be registered with legal description given to the customary land;
  2. Land Investigation Report must be compiled and approved by the Motu-Koita Assembly;
  3. Valuation Certificate indicating the recommended purchase price of the Land;
  4. Certificate of Alienability must be issued by the Secretary, Department of Provincial & Local Level Government Affairs;
  5. A Sale and Transfer Instruments pursuant to Section 10 (1) of Land Act 1996 must be executed between the State and the Landowners and endorsed by the Minister in accordance with Section 10 (2) of the Land Act 1996;
  6. NLD files must be prepared in duplicate (normally 6 copies) and referred to the Surveyor General’s Office for registration. The contents of the NLD file include:

(a) Copy of the registered survey plan

(b) Land Investigation Report

(c) Copy of the Valuation Certificate

(d) Copy of the Certificate of Alienability and

(e) Sale and Transfer Instruments”


  1. The letter went on to advice:

“The conclusion of the acquisition process for this parcel of land will depend on the availability of the documents listed in point 6, excluding (e) as there is a copy at hand.


In order to expedite the process, I wish to confirm from your client (NICTA) on the name of the particular Lands Officer who was tasked to facilitate this particular land acquisition process in the first instance. Similarly, confirm whether they have copies of the documents outlined in Points 1-6. Also, in the absence of the Lands file, can NICTA and the landowners be able to confirm whether there was compliance with the land acquisition process as highlighted above?


Until all the pre-requisites to the land acquisition process are availed for compilation of the NLD files, the process will not be progressed and concluded. It is important to note that the NLD file is a very important document that attests to the manner in which the State acquired this particular customary land.


Therefore, In the absence of these required documents and the Lands files, the way forward is to immediately re-do the Land Investigation Reports, a valuation certificate to be re-issued with the correct purchase price or amount inserted in the Sale and Transfer Instrument and reissuance of Certificate of Alienability. It would be appropriate also if an urgent meeting can be convened with all parties concerned to discuss and resolve this outstanding issue.”


  1. Finally, the letter concluded:

“Finally, I sincerely apologise for the long delay and mishandling of the Lands File by Officers engaged in this particular acquisition previously.”


  1. I note that the above outline of the requirements or steps for successful acquisition of a customary land is correct where the relevant land has not been the subject of prior dealing or acquisition. As noted, the Land in the present case concerns a piece of customary land that was converted into a SABL. That would have been under s7 (a) and s10 and s11 of the Lands Act 1996. Section 102 of the same Act provides for additional terms and conditions for SABLs. Section 121 provides for the surrender of State Leases. That includes SABLs. Given these, the same considerations applying to an acquisition of customary land by agreement under ss7 (a) and 10 and 11 for the first time may not be relevant and applicable in the case of voluntary surrendering of a SABL for a specified condition. This is a matter that was open to be taken up by NICTA through its lawyers and the DLPP.
  2. There is neither any pleading, nor is there any evidence of what has become of any taking of the steps recommended and where they are at regarding the final objective of NICTA acquiring the Land. It is also not clear as to what has become of the Land and what is its status now. In the absence of any such information, it is reasonable to assume that the process for a proper acquisition of the Land as outlined in the above letter remains to be taken and completed by NICTA. In fact, the Defendants plead that is the case in their defence to the claim, which NICTA has not displaced by any of the affidavit evidence it has filed and relies upon.

The Allegation or Claim


  1. At paragraphs 18 to 22 of its statement of claim, NICTA claims the Defendants owed it a duty of care which they failed to discharge and therefore breached it. The failure was in NICTA failing to comply with specific procedural requirements for the acquisition of customary land by the State. By way of particulars, NICTA claims at [18]:

“(i) The First Defendant as the lawyers acting for Logaloto ILG owes a duty of care towards his client to ensure correct and proper process of acquisition of the Land by agreement is followed and the transaction completes successfully; that is the SABL title is surrendered and cancelled; the Land reverts to being customary land; State acquire the customary land; issues a valid title to the Plaintiff; and money passes over to his client.


(ii) Such duty of care of the First Defendant towards his client also extends to the Plaintiff.


(iii) The First Defendant is a professional lawyer equipped with knowledge of law legal skills and techniques of research and analysis of law and facts. The First Defendant owes a duty of care to his client and also the Plaintiff:

(a) To ensure correct process of surrender and cancellation of the SABL pertaining to the Land was followed per the Land Act 1996.

(b) To verify the correct process of acquisition of the customary land by agreement as set out under the Land Act.

(c) To ensure compliance of specific procedural requirements under the Land Act relation to cancellation of the SABL and ultimate acquisition of the Land by the Plaintiff.

(d) To ensure that the process of surrender of SABL, conversion of customary land and acquisition of that customary land is correct in law.

(e) To ensure that the process is in accordance with the current practice of acquisition of customary land by the State by agreement prevailing in the country.”


  1. Then for particulars of the alleged breach of duty of care by the First Defendant, NICTA pleads at [19] and [20] as follows:

“19. The First Defendant breached his duty of care as a professional lawyer when he wrote to the Plaintiff and provided advice on the process without first:

(a) verifying the correctness of the process of acquisition of customary land by the State by agreement.

(b) ensuring that the process is correct in law.

(c) ensuring that the process is in accordance with the practice of acquisition of customary land by the State by agreement prevailing at the relevant time.


  1. Had the First Defendant conducted a verification of that process; he would have discovered that the advice he provided on the process for the acquisition of customary land by agreement was wrong in law. The correct process in law under the Land Act 1996 is:

(1) as soon as SABL title is surrendered the Land becomes a customary land. Plaintiffs need to make a formal application for acquisition of the Land to the Minister for DLPP attaching a survey may of that Land.

(2) Upon receiving the application, the Minister through DLPP will request Motu-Koita Assembly to prepare and furnish to them a Land Investigation Report concerning the land area.

(3) once the DLPP received the Land Investigation Report, the Secretary will make recommendation for alienation of the land and forwarded to Secretary for Department of Provincial and Local Level Government Affairs for issue of Certificate of Alienability.

(4) as soon as Certificate of Alienability is issued, it is then forwarded to Office of the Valuer General for issue of Certificate of Valuation which will indicate the purchase price of the Land.

(5) after issue of Certificate of Valuation, everything returns to the DLPP for preparation of necessary documents for sale and purchase of the Land.

(6) Secretary for the DLPP executes the sale and transfer instruments on behalf of the State.


  1. As for the claim against the Second Defendant who was the Principal of Japson & Associate Lawyers had a direct supervisory authority over the First Defendant as his employed lawyers had the duty:

“(a) To supervise all professional work carried out by the First Defendant.

(b) To supervise all the work of the First Defendant.

(c) To ensure all advice going out of his law practice are correct in law and facts.

(d) To ensure all advice prepared by the First Defendant are correct in law and facts.

(e) To ensure correct and competent advice is given to his clients and other parties dealing with his clients.”


  1. These duties, NICTA claims were breached by the Second Defendant by a failure to:

“(a) supervise all professional work carried out by the First Defendant.

(b) supervise all the work of the First Defendant.

(c) ensure all advice going out of his law practice are correct in law and facts.

(d) ensure all advice prepared by the First Defendant are correct in law and facts.

(e) ensure correct and competent advice is given to his clients and other parties dealing with his clients.”


  1. Finally, NICTA claims at [22] that it suffered loss and damages and pleads without more:

“The Plaintiff suffered:

(a) Loss of K10, 000, 000.00.

(b) General damages.

(c) Special damages.”


The defence of the Defendants


  1. The Defendants deny the claim in its entirety and plead, the whole claim is misconceived, frivolous, vexatious and or incompetent and should be dismiss on the following basis:
  2. Specifically, in response to the matters pleaded at [20] of the statement of claim, the Defendants say:

“The procedures stated in paragraph 20 of the Statement of Claim was complied with when the land was acquired by the State as a Special Agriculture and Business Lease (SABL) and as per verbal advice by the Department of Lands and Physical Planning there was no need to follow those procedures again which was the reason why the Agreement on 06th December 2014 was signed and witnessed by Romily Kila Pat, the then Secretary for Department of Lands and Physical Planning based on the agreement format provided by his Department and finalized by the Plaintiff’s Lawyer.”


  1. Then in the alternative, the Defendants plead, if there was any negligence, it was NICTA’s own negligence and points to the following as strengthening their defense:

“(i) The Plaintiff’s lawyer prepared the agreement for the purchase of the said land dated 06th December 2014 which was witnessed by Romily Kila Pat, the then Secretary for Department of Lands and Physical Planning and signed by all parties.


(ii) All the signed documents including the original title were given to the Plaintiff and its lawyer for the acquisition process, but they appear to have not taken steps to acquire the land.


(iii) The First Defendant offered to assist in the acquisition of the land by his respective letters dated 26th July 2016 and letter dated 12th June 2018, but the Plaintiff has never responded to those letters.”


  1. As for the claim against Mr. Japson, the Defendants say:

“(a) The first Defendant was employed by Japsons & Associates Lawyers only up to the first part payment of K5 Million made through Japsons & Associates on the 19th of December 2014; and


(b) The First Defendant was practicing under his own Unrestricted Practicing Certificate under his own firm known as Kandawalyn Lawyers when the balance of payment sums of K5 Million was paid through Kandawalyn Lawyers on the 06th of May 2015.”


  1. About the claim of lack of supervision of Mr. Tape by Mr. Japson, the Defendants say:

“...the First Defendant was then and now a competent lawyer and therefore it was not really necessary for the Second Defendant to give close supervision of his professional work, but this is not to say that there was no supervision at all.”


Lawyer’s duty of care and disclosure of a cause of action


  1. With these facts in mind, we now turn to a consideration of the first and second issues with the relevant law on point. These issues revolve around a lawyer’s duty to third parties or persons that are not their clients.

(i) Lawyers’ duty of care


  1. It is well settled law that lawyers owe a duty of care to their respective clients and not third parties. The only known exception to that is the courts, for those who appear in courts. This is the position both at common law and case law in PNG. Additionally, the Professional Conduct Rules 1989 for lawyers (PCR) in PNG has codified the duties and responsibilities of lawyers.
  2. Rules 3, 4, 8 – 10, 14 and 20 of the PCR are most relevant. Rule 3 provides for the general duty of lawyers. Rule 3 (a) provides against lawyers engaging in conduct, whether in pursuit of their clients, their own or others interest, that is:

(1) illegal; or

(2) dishonest; or

(3) unprofessional; or

(4) prejudicial to the administration of justice; or

(5) otherwise, likely to bring the legal profession into disrepute.


  1. Then in r3 (b) – (f), relevantly require lawyers to:

(1) observe the ethics and etiquette of the legal profession; and

(2) be competent in all professional activities; and

(3) comply with the Lawyers Act (the Act), the Rules and the common law on the duty of lawyers.


  1. Additionally, r4 prohibits lawyers from (a) attempting to further their client’s case by unfair or dishonest means and (b) knowingly assist or seek to induce a breach of the rules by another lawyer. Subrule (2) imposes a further duty upon lawyers to take reasonable care to ensure that their partners, associates or employees do not commit an act or omission of the type in question. This is backed up by the statement that any such breaches will be treated as breaches by the lawyers. Given this, lawyers are required by Sub-rule (3) to properly supervise all professional work carried out for them and on their behalf by a non-lawyer. Sub-rule (4) then imposes a duty on lawyers to report any breaches of the Act or the Rules to the Lawyers Statutory Committee.
  2. Then r8 specifically provides for the duty of lawyers only to their respective clients under the heading “diligence”, in the following terms:

“8. DILIGENCE.

(1) A lawyer shall treat a client fairly and in good faith, giving due regard to–

(a) the dependence by the client upon him and his special training and experience; and
(b) the high degree of trust which the client is entitled to place in him.

(2) A lawyer shall always be frank and open with his client and with all others so far as his client’s interest may permit and shall at all times give his client a candid opinion on any professional matter in which he represents that client.

(3) A lawyer shall take such legal action consistent with his retainer as is necessary and reasonably available to protect and advance his client’s interests.

(4) A lawyer shall at all times use his best endeavours to complete any work on behalf of his client as soon as is reasonably possible.

(5) If a lawyer receives instructions from a client and it is or becomes apparent to him that he cannot do the work within a reasonable time, he shall so inform his client.

(6) A lawyer shall not–

(a) take unnecessary steps or do his work in such a manner as to increase his proper costs to his client; or
(b) accept instructions which are beyond his competence.

(7) A lawyer shall, when in his client’s best interests, seek his client’s instructions to endeavour to reach a solution by settlement out of court rather than commence or continue legal proceedings.”

(Underlining supplied)


  1. The next rule, r9 provides for confidentiality in the relationship of lawyers and their respective clients. Sub-rule (1) provides for lawyers to always strife to establish and maintain a relationship of trust and confidence with their clients. The next provision, Sub-rule (2) provides for lawyers to impress upon their clients to fully disclose to them all information concerning their case or the matter in which lawyers are engaged, even if they are embarrassing or harmful to the client’s interests for the lawyers to properly assist the clients. Sub-rule (3) then prohibits lawyers from directly or indirectly disclosing or revealing their clients’ confidence or use the confidence in any way that is detrimental to a client’s interest without the client’s consent or approval. Exceptions to this requirement is also spelt out in this subrule.
  2. Then most importantly, r10 emphasises the point that, subject only to the duty that lawyers have to the court, they have a paramount duty to their clients against all others. This is apparent from the wording in sub-rule (1) which is in the following terms:

“(1) Subject to the duty of a lawyer to the court, a lawyer shall give undivided fidelity to his client’s interests, unaffected by–

(a) any interest of the lawyer; or

(b) any interest of any other person; or

(c) the lawyer’s perception of the public interest.

(Underlining supplied)


  1. This is elaborated upon and strengthened by providing for several settings in which an incident of conflict of interest might arise and what the lawyers should do in the respective settings. In this context, sub-rule (5) importantly provides against a lawyer acting for two or more parties in any matter other than in litigation if:

“(a) to do so is not likely to prejudice the interests of the client; and

(b) the client is fully informed of the nature and implications of the conflict; and (c) the client voluntarily assents in writing to the lawyer or firm of lawyers acting or continuing to act; and
(d) in the case of any town in which there are two or more firms of lawyers practising, the client has declined to place his instructions with another firm.”


  1. Turning then to the provision of legal advice, subr6 stipulates in clear terms:

“A lawyer shall not give advice, other than the advice to secure the services of another lawyer, to a person who is not his client, where he knows the interests of that person are in conflict with or likely to be in conflict with the interests represented by him of his client.”


  1. Going further, the rules provide for professional courtesy in r20. Aside from the obvious of professional courtesy between and amongst lawyers, sub-rule (2) and (3) most relevantly provide:

“(2) If a lawyer observes that another lawyer is making or is likely to make a mistake or oversight which may involve the other lawyer’s client in unnecessary expense or delay, he shall not do or say anything to induce or foster that mistake or oversight and shall, except where so doing might prejudice his own client, draw the attention of the other lawyer to that mistake or oversight.


(3) A lawyer shall not communicate regarding a legal matter in which he is acting with a person whom he knows is represented in that matter by another lawyer.”

(Underlining supplied)


  1. We have numerous cases in our own and overseas jurisdictions that have dealt with the duty of lawyers. Most of them are only on a lawyers’ professional duty of care owed to their clients. Some of the local cases as cited by counsel for the Defendants include the decisions in Limitopa v. The State [1988-89] PNGLR 364; Kapi v. Sheppard & Maladina (2003) N2323; Akai v. Reeves (2014) SC139; Futolsi v Turi (2018) N7147; Haiyot v. David (2018) N7367 and Kanda International Ltd (trading as Kanda International Insurance Brokers) v. Emeck (trading as Emeck Lawyers) (2020) N8700.
  2. The case law as represented by the above cases, make it abundantly clear that lawyers owe a duty of care to their clients, that is, from persons from whom the lawyers receive their instructions. In Kapi v. Sheppard & Maladina (supra), I explained what that duty and any breach of that duty entails in the following terms:

‘‘...A lawyer is always under a duty to conduct his client’s case to the best of his abilities based on his instructions and anything falling short of that would amount to professional negligence. That may form the foundation for a former client to sue his lawyer for professional negligence. This is why it is a requirement before the issuance of practice certificates to lawyers in the country for them to first have insurance covers in place to cover for any possible case of professional negligence...’’

(Underlining supplied)


  1. This position of the law is consistent with the position at common law which, as we have already noted, is codified by the Professional Conduct Rules 1989.

(ii) Lawyers’ duty of care to third parties

(a) General duty of care


  1. Through its learned counsel, Mr. Holingu, NICTA claims there exist a duty of care outside a lawyer client relationship. Such a relationship NICTA claims, existed between itself and the Defendants in this case which it further claims, the Defendants breached. The breach it claims was in the provision of wrong legal advice in respect of the transaction between NICTA and the Logaloto ILG for the Sale of the Land the subject of this proceeding. This was despite NICTA and the Defendants not having a lawyer client relationship, in a transaction, where NICTA was represented by its own in-house lawyer, Mr. Mileng.
  2. In support of its claim, NICTA’s learned counsel, Mr. Holingu cites, the common law position generally on the law of torts, namely negligence as initially developed by Lord Atkin in his decision in Donoghue v. Stevenson [1932] AC 562 at page 599 in the following terms:

“You must take reasonable care to avoid acts or omissions which you can reasonably foresee would be likely to injure your neighbour. In the eyes of the law your neighbour is a person who is so closely and directly affected by your act that you ought reasonably to have him in contemplation as being so affected when you are directing your mind to the acts or omissions which are called in question”.


  1. That was in the case of a manufacturer of consumable products, which caused harm and injury to a consumer who consumed one of the products. Applying the principle, the Court held:

“The manufacturer of an article of food, medicine or the like, is under a duty to the ultimate consumer to take reasonable care that the article is free from defect likely to cause injury to health”.


  1. Counsel for NICTA, also cited and relied upon the decision of the House of Lords in the case of Hedley Byrne & Company Limited v. Heller & Partners Limited [1963] UKHL 4; [1964] AC 465. That case involved negligent use of words resulting in economic loss. The following passage from Lord Morris with whom Lord Hodson agreed was cited:

“...it should now be regarded as settled that if someone possessed of a special skill undertakes, quite irrespective of contract, to apply that skill for the assistance of another person who relies upon such skill, a duty of care will arise. The fact that the service is to be given be [it by] means of or by the instrumentality of words can make no difference. Furthermore, if in a sphere in which one is so placed that others could reasonably rely upon his judgment or his skill or upon his ability to make careful inquiry, a person takes it upon himself to give information or advice to, or allows his information or advice to be passed on to, another person who, as he knows or should know, will place reliance upon it, then a duty of care will arise”.


  1. There, a customer, Hedley Bryne, sought financial information from its bank about another company, an advertising company with whom Hedley Bryne wanted to place some advertisement orders. The bank provided the information required both orally and in a letter with a head note saying, “without responsibility”. Hedley Bryne relied on that information and entered a contract with the advertising company. Unfortunately, that company went into liquidation and Hedley Bryne was unable to recover the cost of advertising orders it placed with the company. It also turned out the information the bank provided was inaccurate.
  2. Hedley Bryne sued the bank for damages on the basis that the information on the financial status of the advertising company was given negligently and in breach of the banks duty to exercise care in giving them the information. The court of first instance found that the bank owed no duty of care to Hedley Bryne. An appeal against that decision to the Court of Appeal was unsuccessful and so was a further appeal against the Court of Appeal’s decision. The main reason for each of the decisions was the disclaimer in the phrase, “without responsibility”.
  3. NICTA’s counsel further cited the decision, of the High Court of Australia in the case of Mutual Life & Citizens’ Assurance Co Ltd v. Evatt [1968] HCA 74; (1968) 122 CLR 556, by the majority of Barwick CJ, Kitto and Menzies JJ. They also cited the decision of our Supreme Court in Wahgi Savings & Loan Society Ltd v. Bank of South Pacific Ltd (1980) SC185. These cases respectively adopted the decision in Hedley’s case into the Australian and PNG jurisdictions. In the Australian case, the High Court added:

“...there can be no doubt, at least since the Hedley Byrne Case, that one who gives information or advise to another, being guilty of no fraud, breach of contract or breach of fiduciary duty but without having used reasonable care and skill to ensure that in the case of information it was correct and in the case of advise it was sound, is liable in tort for damages if the other incurs loss by acting in reliance upon the information or advise, provided that he stood in such a relationship to the other that the law holds him to have owed a duty to the other to use care and skill in the giving of the information or advise, and the other’s loss was not too remote from the careless or unskillful giving of the information or advice to be treated in law as having been caused thereby.”

(Underlining supplied)


  1. That was a case in which the plaintiff sought investment advice from an insurance company. His reason for doing so was that the company in which he intended to invest was a co-subsidiary of the company from which he sought advice. The insurance company negligently advised that its co-subsidiary was a sound investment, which was in fact not. Acting on that advice, the plaintiff invested, and lost, his money. He brought an action against the insurance company, claiming that its negligent advice had caused his loss. In the High Court of Australia, it was held that the relationship between the plaintiff and the defendant insurance company was such that the latter owed the former a duty to take care in the giving of advice. Also, the Court by the majority held, it was not important that the defendant was not in the business of giving investment advice.
  2. In the Wahgi Savings, it was a case in which Wahgi Savings, provided a written letter in support of one of its members applying for a loan from the Bank South Pacific. Based on that support letter, the Bank loaned the money. As it turned out, the information in the letter was false. The Bank sued to recover the money lent. The trial judge found in the bank’s favour against Wahgi Savings. Aggrieved by that decision Wahgi Savings appealed to the Supreme Court.
  3. The then Deputy Chief Justice in dismissing the appeal held:

“Hedley Byrne ... set the law on a sounder principle, by breaking the nexus between liability and the nature of the damage. It is to be noted that Hedley Byrne ... did not decide that foreseeability of economic loss, without more, gives rise to a duty of care. The question is, what “more” is required? Hedley Byrne ... looked to the nature of the relationship between the parties and considered whether the various elements of that relationship led to a conclusion that the defendant assumed responsibility for what he wrote.

It appears to me from the English case-law that, at Independence, the common law in England was that there could be recovery when pure financial loss was caused by negligent misstatement, if such loss was foreseeable and the relationship was such that the proper conclusion was that the defendant assumed responsibility to the plaintiff for what he had said or written.”


  1. Kapi J (as he then was) also dismissing the appeal and added:

“I consider that these principles are applicable in the circumstances of this country. I can do no better than adopt the trial judge’s remarks:


‘I would observe that in a country like this the law as to negligent misstatements is properly applicable, for so much business is done by word of mouth, and very many people, lacking great education, must needs rely on representations made by experts such as lawyers and bankers, and so on.’”


(iii) Lawyers’ duty of care to third parties

(b) Lawyers’ specific duty of care


  1. The above cases and the law they represent, concerns relationships other than in a case where a lawyer provided information or advice. But the most directly relevant cases also cited by NICTA’s learned counsel, are the decisions of the English Courts in Dean v. Allin & Watts [2001] EWCA Civ 758 and Steel & Anor v. NRAM Limited [2018] UKSC 13; [2018] 1 WLR 1190. These cases concerned the provision of legal services by lawyers.
  2. In Dean v. Allin & Watts, the Supreme Court of England, held a lawyer liable to a third party. There, Mr. Dean, who carried on business as a car mechanic, agreed to lend initially a sum of £20,000 which increased over time to £50,000. The loan was to a Mr. Beasley and a Mrs. Young for investment in a firm called Citizen Homes, which specialised in buying run-down or re-possessed houses and refurbishing them for re-sale. The loan was to be secured by a property (flat) owned by third parties, namely a Mr. and Mrs. Sharman who were also involved in Citizen Homes. The defendant, Allin & Watts, a firm of solicitors, through a Mr. Dolan were instructed by the said Mrs. Young to handle the transaction on behalf of Citizen Homes. The loan was structured in the form of a promissory note, signed by Mr. Beasley and Mrs. Young and the security was constituted by depositing the deeds of the property with Allin & Watts, who undertook to hold them to Mr. Dean’s order. This arrangement was repeated on three subsequent occasions on which the initial loan got increased up to the final amount of £50,000. Allin & Watts were aware that Mr. Dean was an unsophisticated investor who would not be taking independent legal advice and was relying on them to secure his loans. The solicitor handling the matter at Allin & Watts Mr. Dolan did not advice the parties to enter into a signed written agreement regarding the form of security and required or asked Mr. Dean to seek independent legal advice.
  3. Subsequently, Mrs. Young was declared bankrupt, while Mr. Beasley had no funds. The third-party owners of the property intended to be the security brought an action against Mr. Dean to recover their deeds, on the grounds that the ‘equitable charge’ represented by the deposit of the deeds was invalid under the Act of 1989, which Mr. Dean settled by agreeing to surrender the deeds. As a result, Mr. Dean sustained a loss of £50,000, with interest. He sued the solicitors, Allin & Watts on the grounds that they owed him a duty of care to put in place an effective security for his loan, which they had breached. The trial court dismissed his claim. He appealed to the Supreme Court and succeeded there.
  4. The crucial question of law that arose in the circumstances of the case was, did Allin & Watts owe a duty of care, not merely to the borrowers, but also to Mr. Dean, to set in place an effective security or to warn both parties of the validity of the security was open to serious question. The trial Court answered the question negatively. The appellate Court answered the question in the affirmative. The Supreme Court was of the view that, although a solicitor is not normally liable to third parties who were not his clients, he could acquire such duties. Here, it was fair and reasonable to impose such a duty. The lawyers should have known that the third party was relying upon him to set an effective security in place, which the lawyers failed to secure. Consequently, they were liable for negligence when they failed to do so.
  5. In the Court’s own words in allowing the appeal per, Justice Lightman with whom Lord Justice Sedley and Lord Justice Robert Walker agreed, said:

“In my judgment by parity of reasoning and in the analogous situation which arose in this case, the law can and should impose a like duty of care on A&W towards Mr. Dean in respect of the provision of an effective security, the benefit of which to his knowledge the Borrowers wished to confer on Mr. Dean, and which was fundamental to the loan transactions. There is the necessary foreseeability of damage and the necessary relationship of proximity for the law to impose such a duty of care and it is fair, just and reasonable that such a duty should be imposed”.


  1. Specifically, on the question of independent legal advice for Mr. Dean, Justice Lightman observed:

“The mere fact that Mr. Dean did consult Mr. Greenwood (his lawyer) is also relevant. But on the findings of fact by the judge this does not and should not preclude the court from holding that the imposition of a duty in this case is fair, just and reasonable. The judge held that the reliance of Mr. Dean on Mr. Dolan continued as previously: it is not as though Mr. Dolan could or did reasonably believe that the reliance upon him had come to an end. The provision of effective security was fundamental to the transactions which Mr. Dolan was instructed to effect.”


  1. Lord Justice Walker added at [60] – [67]:

“Mr. Dolan did not explain to Mr. Dean (as he had to Mrs. Young the day before) that he could not act for Mr. Dean, or that Mr. Dean should consider taking independent advice. He told Mr. Dean that he would hold the deeds to Mr. Dean’s order, an undertaking which he repeated in a letter to Mr. Dean on 23 March 1993.

...

[65] ...But to my mind the most significant feature of these exchanges was that Mr Dean was making it clear that he was relying on Mr. Dolan for advice (“if you think a new promissory note is required, then I would like you to obtain one for me”). Mr. Dolan accepted in evidence that Mr. Dean could have got the wrong impression. In my judgment it was by then obvious, even if it had been no more than conjectural before, Mr. Dean was relying on Mr. Dolan to look after his interests so far as the form of the security was concerned.

...

[67] ...Had Mr. Dean had his own solicitors, they could have been expected to know just how much protection the undertaking gave their client, and to have given him separate advice about it. But Mr. Dolan knew that Mr. Dean was not instructing solicitors; and he knew or should have known ... that Mr. Dean’s overriding concern was to obtain reliable security.”

(Underlining supplied)


  1. In Steel & Anor v. NRAM Limited, the Supreme Court of the United Kingdom per Lord Wilson with whom Lady Hale, Lord Reed, Lord Hodge and Lady Black agreed reviewed all the cases concerning negligent statement or advice by a lawyer, including the case of Dean v. Allin & Watts above and concluded:

“Perhaps it helps only slightly for us to have been reminded in the authorities cited above that Ms Steel and the firm are liable to Northern Rock only if it was a special case. Probably of greater assistance is the analysis in the Al-Kandari case that the solicitors owed a duty of care to the opposite party because they had stepped outside their normal role. But the six authorities cited above demonstrate in particular that the solicitor will not assume responsibility towards the opposite party unless it was reasonable for the latter to have relied on what the solicitor said and unless the solicitor should reasonably have foreseen that he would do so. These are two ingredients of the general liability in tort for negligent misrepresentation; but they are particularly relevant to a claim against a solicitor by the opposite party because the latter’s reliance in that situation is presumptively inappropriate. Thus the reasonableness of the claimant’s reliance and of the defendant’s foreseeability of it comprised the special feature which gave rise to the liability in the Allied Finance case and in the Dean case and to the arguable liability in the Connell case; and, although the claim in the Midland Bank case failed for other reasons, the fourth of the requirements valuably identified in Lord Jauncey’s judgment was that the solicitor should have been aware that the pursuer was likely to rely on what he had said.”

(Underlining supplied)


  1. I have been greatly assisted by a case note on this judgment by Nicola Rushton QC[1] which helps highlight important parts of the judgment. First up is the point that this judgment reaffirmed the primacy of the test: was the reliance of the other party reasonable and was it foreseeable? This was also a case of lending and borrowing of funds. Their Lordships concluded that the lender’s reliance on statements by the borrowers’ solicitors, without independently checking those statements against its own records, was neither. They therefore restored the decision of the Lord Ordinary that the lender’s claim failed.
  2. The facts giving rise to the case were this. Ms. Steel and her firm Bell & Scott LLP (together the Appellants) acted over many years as solicitors for the Borrower company. In 2005, the Borrower owned 4 units on an industrial estate. NRAM made a loan to the Borrower secured by an all-monies charge registered against all the properties and a floating charge. In 2006 the Borrower wished to sell part of the security. NRAM agreed on condition that £495,000 of the loan was repaid, with the balance to be secured by the existing security over the remaining 2 units. The sale was to be completed on 23 March 2007. At 5 p.m. on the day before, Ms. Steel emailed NRAM (who were not represented by solicitors) asking for execution of two draft deeds of discharge which were attached and asked for a letter of non-crystallisation of the floating charge. She stated in her email that the whole loan was to be paid off and she had a settlement figure for this. These statements were wholly mistaken and made without any authority from her client. However, her request was not queried by NRAM, nor checked by them against their records of their agreement with the Borrower. Instead, NRAM simply arranged for the discharges to be executed, and the letter provided. The charges were all discharged without anyone noticing the error, and the other units were subsequently sold free of the bank’s charges. The Borrower continued to pay the interest on the outstanding loan until 2010 when it went into liquidation. Only then was the mistake discovered by NRAM. NRAM brought a claim for negligent misstatement against Ms. Steel and her firm. The bank was unsuccessful before the Lord Ordinary, who held that NRAM’s reliance on the solicitor’s email, without any independent checks, was neither reasonable nor foreseeable. However, the Inner House allowed the Bank’s reclaiming motion or an appeal, on the basis that there had nevertheless been an assumption of responsibility by Ms. Steel towards NRAM. Accordingly, damages of £369,81.18 were awarded. The solicitors appealed to the Supreme Court. There was no dispute that, if a duty of care was owed to NRAM, then it had been breached.
  3. The Supreme Court took the opportunity to review and restate the general principles which apply in determining whether a duty of care is owed in relation to negligent statements that cause economic loss and reviewed the cases on when a solicitor for one party may owe a duty of care to another party. Their Lordships’ starting point was Hedley Byrne. They emphasised that at the heart of that decision was the need for the representee to reasonably rely on the representation and for the representor to reasonably foresee that he would do so. While likely to be linked, these are two separate enquiries that would amount to an assumption of responsibility.
  4. Their Lordships also noted that subsequently, it has become clear that not all cases of negligent misstatement could be dispatched simply by reference to the question of whether the representor had “assumed responsibility” to the representee. An important example was the three-way relationship in the cases of Smith v Eric S Bush and Harris v. Wyre Forest District Council [1990] UKHL 1; [1990] 1 AC 831. This had led Lord Griffiths in those cases to propound the threefold test of whether: (1) it was foreseeable that, if the information was given negligently, the claimants would likely suffer damage; (2) there was a sufficiently proximate relationship between the parties; and (3) it was just and reasonable to impose the liability.
  5. Their Lordships also went on to note that, this test was considered shortly afterwards by the House of Lords in Caparo Industry plc v. Dickman [1990] UKHL 2; [1990] 2 AC 605, another decision, Mr. Holingu relies upon. However, far from approving the threefold test, the House in Caparo had queried its utility, as several recent decisions of the Supreme Court on duty of care have noted. Their Lordships reaffirmed that, it is preferable for the law to develop novel categories incrementally and by analogy with established categories. Most importantly, they said, Caparo had reasserted the need for a representee to establish that it was reasonable for him to have relied on the representation and for this to have been foreseeable. Salient features, according to Caparo, would be that the representor knew that it was very likely that the representee would rely on the statement and do so without independent inquiry.
  6. Their Lordships then cited with approval the statement of Neill LJ in James McNaughton Paper Group Ltd v. Hicks Anderson & Co [1990] EWCA Civ 11; [1991] 2 QB 113 that it is necessary to consider whether the representee should have used their own judgment or sought independent advice, especially in business transactions conducted at arm’s length, where it might be very difficult to prove that it was reasonable to do otherwise. In practice, they said, the concept of assumption of responsibility remains the foundation of liability in negligent misstatement cases, even though it may require cautious incremental development to fit some cases. For the case then before their Lordships, they were of the view that it fitted the concept of “assumption of responsibility” perfectly, and there was no need to consider incremental development.
  7. Their Lordships were mindful of the fact that the case before them was unusual in that the case concerned a claim by one party in an arm’s length transaction against the solicitor for the other party. They affirmed the general principle in Ross v. Caunters [1980] Ch 297 that a solicitor generally owes no duty of care to the opposite party. Their Lordships then reviewed six authorities considering situations in which a solicitor had, or had not, been held to owe a duty of care to an opposing party. Sometimes this was because the solicitor had stepped outside their normal role, for example where solicitors for a father had promised the mother, they would not allow his passport out of their sight if she agreed to it being taken to the Kuwaiti embassy: See Al-Kandari v. J R Brown and Co [1988] EWCA Civ 13; [1988] QB 665. In general, however, their Lordships said, a solicitor will not assume responsibility towards the opposite party unless it was reasonable for the latter to have relied on what the solicitor said and the solicitor should reasonably have foreseen that he would do so. This was especially relevant in a claim against a solicitor by the opposing party because “the latter’s reliance in that situation is presumptively inappropriate”.
  8. On this point, the Lord Ordinary had held that the crucial point was that NRAM had failed to check the accuracy of Ms. Steel’s representations against its own records prior to executing and returning the deeds of discharge. The Lord Ordinary had concluded that Ms. Steel had generally expected NRAM to check her requests before complying with them and had not foreseen that they would rely on her assertions without checking their accuracy. Further, it was reasonable that she had not foreseen this. Any prudent bank taking the most basic precautions would have checked the accuracy of her representations by reference to their own file, or asked for clarification, before complying with her requests.
  9. Their Lordships said this raised an interesting question as to the extent to which the Inner House was entitled to go behind what was, an evaluative conclusion by the Lord Ordinary. The Supreme Court could bypass this because they could simply hold that he was right. A commercial lender about to implement an agreement with a borrower relating to its security does not act reasonably if it simply relies on a description of terms put forward by or on behalf of the borrower. The lender knows the terms of the agreement. Here the bank’s officers had immediate access to the correct terms literally at their fingertips. No decided case had been identified where an adviser had been held to have assumed responsibility for a careless misrepresentation of a fact which was wholly within the knowledge of the representee. This was because in such a case, it would not be reasonable for the representee to rely on the representation without checking its accuracy, and it was reasonable for the representor not to foresee that he would do so.
  10. From this judgment it appears clear that one can divide into three categories the cases where a party has suffered loss through relying on a statement made by the lawyer for an opposing party. The first are cases in which a lawyer is essentially passing on information from the opposing party which is not known to the claimant. In such cases, the opposing party may have liability for the misrepresentation, but the solicitor is unlikely to have: See for example Gran Gelato Ltd v. Richcliff (Group) Ltd [1992] Ch 560. Secondly, are cases in which a lawyer takes on responsibility for personally saying or doing something which they are peculiarly able to do, and which the claimant cannot know or control, such as certifying that a security is binding on the opposing party or that legal advice as to the meaning of the document has been given to the opposing party. In such cases, the solicitor may well have liability to the claimant because the two-stage test of reasonable reliance and foreseeability is met: See for examples Allied Finance Ltd v. Haddow (supra), Connell v. Odlum [1993] 2 NZLR 257, Dean v. Allin & Watts (supra) and the Al-Kandari cases. Third and finally are cases in which the information is either also within the knowledge of the claimant, or which the claimant could check by instructing its own advisers. In such cases the claimant will not succeed, because it will not be able to show that its reliance was either reasonable or foreseeable.

Consideration of the applicability of the above decisions
(i) All cases distinguishable on the facts


  1. The decisions in the foregoing cited cases are distinguishable from the present case based on several factors. In Donoghue v. Stevenson, there was a relationship between the parties. One of them was a manufacturer of a consumable product and the other was a consumer or customer of a product produced by the manufacturer. The manufacturer knowingly produced a product that was meant to be consumed by consumers or customers of the product. It, therefore, had a duty to ensure the product was safe and would not cause any harm or injury to customers or consumers. That was both reasonable and foreseeable. Such a situation and relationship did not exist in the present case between NICTA and the Defendants.
  2. In Hedley Bryne’s case, it was a case of a banker and a customer where there already exists a relationship in which the bank owes a duty of care to the customer. Our Supreme Court in its decision in Pija Grannies Ltd v. Rural Development Bank Ltd (2011) SC1327, confirmed that position in these terms:

“Allowing ourselves to be guided by the decision of the Supreme Court in Rage Augerea & Maureen Augerea v. Bank South Pacific Limited (2007) SC869 and many decisions that have followed that decision and other decisions like the one in Otto Benal Magiten v. Rural Development Bank Ltd (2006 unreported) and David Nelson v. Credit Corporation (PNG) Ltd (2011) N4368, we are firmly of the view that banks owe a duty of care to their customers to act reasonably and with much care. Contrary to the learned trial Judge’s view on this point in this matter, we are of the firm view that, in addition to the banks’ general duty of care, where the banks have an agreement, they have a duty to act fairly and in accordance with the terms of the agreement...”

(Underlining supplied)


  1. Here too, there was no such pre-existing or other relationship between NICTA and the Defendants. Additionally, unlike Hedley Bryne who sought a particular kind of information peculiarly within the knowledge of the bank, NICTA did not seek and received the information provided by the Defendants. Instead, NICTA had already sought the information from the relevant authority, namely, the DLPP which administers the Lands Act and the process of acquiring customary land. The DLPP subsequently provided the requested information which did not differ in any significant way from those provided by the Defendants.
  2. The decision in Mutual Life & Citizens’ Assurance, can also be contrasted based on no special relationship existing between NICTA and the Defendants. Based on a special relationship that existed, the plaintiff in the Mutual Life & Citizens’ Assurance case sought information that was peculiarly within the knowledge of the defendant. Also, unlike NICTA, the plaintiff in that case sought information for the purposes of investment in a company which was a co-subsidiary of Mutual Life & Citizens’ Assurance. The information sought and provided was within the peculiar knowledge of Mutual Life & Citizens’ Assurance. That presented a special relationship between the plaintiff and Mutual Life & Citizens’ Assurance. The information sought and provided was not readily available and could not be ascertained through due search and inquiry.
  3. The decision in Wahgi Savings is similar to Mutual Life & Citizens’ Assurance case, although not on all fours. That case also concerned the provision of specific information. It was about the financial position of one of Wahgi Savings’ members who was applying for a loan from the Bank South Pacific. The bank granted the loan based on the information provided by Wahgi Savings. Later as it turned out, the information provided was inaccurate and the Bank suffered loss and damages. The Bank therefore successfully sued Wahgi Savings to recover the funds advanced. As with the Mutual Life & Citizens’ Assurance case, the information provided by Wahgi Savings was information peculiarly within the knowledge and control of Wahgi Savings. It was no information capable of easy ascertainment by due search and inquiry by the Bank.
  4. Comparing the Wahgi Savings case with the present case, there was no existing relationship between the Defendants and the NICTA or between the DLPP and the Defendants. Also, NICTA did not seek any specific information or advice from the Defendants and the Defendants responded to any such request which NICTA acted upon. Additionally, the Defendants did not provide any information that was only known and within their peculiar knowledge. As noted, the relevant information was within the DLPP which administers the relevant provisions of the Lands Act. Prior to the information provided by the Defendants NICTA had already sought the same information from the DLPP, which was provided in similar terms to those provided by the Defendants. Further, the Defendants passed on information they received from the lawyer in charge of the legal section of the DLPP. Furthermore, unlike the bank in the Wahgi Savings case and Hedley Bryne case, NICTA had its own legal team to check and confirm the accuracy of the information by looking up the relevant law and process and cross check the information provided by the Defendants with the DLPP as NICTA had already done. Finally, there is neither any pleading nor is there any evidence of NICTA acting solely or at all based on the information provided by the Defendants. Instead, the evidence clearly shows, NICTA had already decided to acquire the Land from the Logaloto ILG knowing the kind of land it was well before the Defendants came onto the scene. It, therefore, had reason and the duty to ensure and inform itself of the relevant substantive law and process requirements under the Lands Act as administered by DLPP. The Defendants got involved to assist the vendor, Logaloto ILG, on their own clients’ instructions.
  5. Clearly, these factors alone fail to qualify this case to be in the category of cases in which the maker of a statement can be liable. As was clarified in the decision in Caparo, where the House of Lords applied the law as enunciated in Heldley Bryne’s case explained:

“Liability for economic loss due to negligent misstatement was confined to cases where the statement or advise had been given to a known recipient for a specific purpose of which the maker was aware and upon which the recipient had relied and acted to his detriment.”


  1. The present case is also distinguishable from the two cases of Dean v. Allin & Watts (supra) and Steel & Anor v. NRAM (supra) where lawyers were involved. As already noted, in first of these two cases, Mr. Dean was an unsophisticated lender. He was not represented by any lawyer specifically on several loan transactions. The defendant law firm through Mr. Dolan, did not advice, Mr. Dean to seek and secure the services of a different lawyer. The lawyer did all the relevant paperwork. The lender, Mr. Dean, trusted and expected the lawyer to take the appropriate steps to ensure the various advances he made were legally secured, but the lawyer failed.
  2. In the present case, as already noted, NICTA had initiated the steps to purchase the Land from its owners, prior to any engagement of the Defendants as lawyers for the vendors and owners of the Land. The legal section or division of NICTA through its manager, Mr. Mileng was involved from the beginning. A real estate agent initially represented the landowners with whom NICTA signed an initial contract for the sale and purchase of the Land. Well after those initial actions, the Defendants came onto the scene. As with the initial contract, NICTA drew up the main Contract for the Sale and Purchase of the Land. The Defendants no doubt had a duty to explain and advice the owners of the Land of the terms of the Contract which they did. There is neither any pleading nor is there any evidence of what NICTA trusted the Defendants with or expected the Defendants to do for them. Similarly, as already noted, there is neither any pleading nor any evidence of the kind of advice NICTA required of the Defendants and was provided. Instead, NICTA had requested the relevant information on the process and procedure from the DLPP, which was subsequently provided. Additionally, the information provided by the Defendants was not anything within their peculiar knowledge. NICTA’s own in-house lawyers were reasonably expected to cross-check the information provided by the Defendants before acting on them, if indeed NICTA relied and acted upon the information provided by the Defendants. But that is not what the pleadings and the evidence suggest.
  3. Turning to the second case, Steel & Anor v. NRAM was a case in which only one lawyer was involved, Ms. Steel. The other party, NRAM did not have a lawyer. The lawyer with her firm acted for only the borrower who made a statement which were wholly inaccurate and made without any authority from her client. NRAM had the opportunity to check its accuracy against its records of the agreement between the borrower and itself. This is why NRAM failed both before the Lord Ordinary and the Supreme Court at the highest.
  4. In the present case, like NRAM, NICTA was able to check the accuracy and the reliability of the information provided by the Defendants before acting on that information if ever NICTA did. The pleadings and the evidence fail to disclose that. Additionally, there is neither any pleading nor is there any evidence of what NICTA’s own in-house lawyers did or why they did not check on both the accuracy and the reliability of the information provided by the Defendants. Similarly, there is neither any pleading, nor is there any evidence that the information provided by the Defendants was inaccurate, false or misleading as was the case in the Steel & Anor v. NRAM case, which was beyond NICTA’s ability to cross-check before acting upon it, if ever they did. Furthermore, there is neither any pleading nor is there any evidence of how NICTA relied upon and acted on the information provided by the Defendants, especially when NICTA sought and obtained the same information from the DLPP and if further clarity was required it would have to go back to the DLPP.

Application of the Lawyers Professional Conduct Rules


  1. In addition to all the foregoing, there is a further distinguishing factor. This concerns the PCR or the lawyers professional conduct rules. Neither counsel assisted the Court with any submissions on whether the English have a lawyers’ set of professional conduct rules like the PCR for lawyers in PNG. They also did not assist the Court with any submissions on any consideration of any such rule by the two English decisions NICTA relies upon or any other authoritative decision of the English Courts. My reading of the above two English cases fails to reveal any reference to or any consideration of any lawyers’ professional conduct rules.
  2. For lawyers in PNG, we have the PCR, which provides for the rules governing lawyers’ conduct. Earlier in this judgment, I discussed the relevant provisions of the PCR. Of specific relevance in this case given NICTA’s submissions are the provisions of r8 and r10 (1) and (6). At paragraphs 39, 41 and 43 above, I reproduced the relevant provisions, by reason of which I need not reproduce them here. Rule 8 makes it abundantly clear that a lawyer owes a duty only to his or her client to the exclusion of third parties. Rule 10 (1) strengthens that provision by stating clearly that a lawyer has undivided fidelity to his or her own client only. This is further strengthened and reinforced by r10(6) which prohibits a lawyer from providing any advice to a person who is not his or her client. These provisions are there without any exceptions.
  3. Learned counsel for NICTA did not assist with any submissions as to the meaning, effect and application of these provisions of the PCR to the present case. Counsel merely asked for an adoption and application of the principles enunciated in the Hedley Bryne case. Further, NICTA’s counsel submits in the alternative for the Court to develop an underlying law pursuant to s60 and Sch2.3 and 2.4 of the Constitution as well as s7(4) of the Underlying Law Act 2000 (ULA).
  4. There are three problems with this submission. Firstly, as we already noted, the decision in Hedley Bryne’s case concerned a case in which there exists a relationship recognised by law, namely a banker and customer. In any case, as already noted also, on the facts of that case, the current case is distinguishable.
  5. Secondly, the Underlying Law Act 2000, governs the development of any underlying law principle. In my decision in Tjandranegara v. BSP Financial Group Ltd (2021) N9353, I considered the issue of developing the underlying law. That followed submissions by counsel for the plaintiff for the Court to develop an underlying law principle. The principle to be developed was to allow for an imposition upon banks of an obligation to first hear customers and provide reasons before exiting them. That was without any foundation in the pleadings. I expressed the view that, there must be proper foundation in the pleadings for any such development. That was based on the decisions of the Supreme Court in Application by Ila Geno (2014) SC1313, Tigam Malewo v. Keith Faulkner (2009) SC960 and New Britain Oil Palm Ltd v. Vitus Sukarman (2008) SC946. These decisions also direct that a party seeking a development of an underlying law, must do so not under sch2.3. or any other provision of the Constitution but only under the Underlying Law Act.
  6. In the case then before me, I considered the provisions of s7 (4) and (5) and s9 of the ULA and held these provisions were instructive. Having regard to the provisions in question and the relevant case law I held:

“...a party wishing the Court to come to a decision that a current applicable ‘underlying law is no longer appropriate to the circumstance of the country’ or is inadequate is required to plead his case with sufficient clarity and particulars. Such pleadings in my view must plead in clear and precise terms the:


(1) current law on point or lack thereof;

(2) current circumstances of the country which render an application of a principle of the common law or the underlying law inappropriate and inapplicable;

(3) harm or mischief the current law or the lack thereof is causing;

(4) relevant and applicable principles of the:

(a) National Goals and Directive Principles;

(b) basic rights;

(c) analogies from any written and customary law;

(d) laws of a foreign country relevant to the subject matter of a proceeding, which the Court must consider in order to formulate a new underlying law principle;

(5) new principle or law being proposed; and

(6) proposed new principles benefits or how it will eliminate the harm or mischief caused by the current law or a lack thereof.”


  1. The law on pleadings and the purpose of pleadings is well settled law in our jurisdiction. The Supreme Court in its decision in Bluewater International Ltd v. Mumu (2019) SC1798 at [62] to [64] restated the principles in these terms:

“62. It is trite law in our jurisdiction that, parties must properly plead their claims with the relevant and appropriate particulars to sufficiently disclose a cause of action known to law and or disclose a defence to the matters pleaded, unless a plaintiff’s claim is not contested. This is because, it is the pleadings with particulars that drive the evidence that needs to be adduced and form the foundation for a grant of the reliefs sought if a plaintiff is successful in his claim, or a dismissal of a plaintiff’s claim if a defendant is successful. There are numerous Supreme Court decisions on the role and function of pleadings with particulars.


63. In The Central Bank of PNG v. Gabriel Tugiau (2009) SC1013, this Court, stated in summary the relevant principles in the following terms:


‘The law requires proper pleadings with particulars before any claim or prayer for relief can be granted. For as this Court said in Motor Vehicles Insurance (PNG) Trust v. James Pupune...pleadings with particulars have the useful function to:

‘1. furnish a statement of the case sufficiently clear to allow the other party a fair opportunity to meet it;

  1. define the issues for decision in the litigation and, thereby, enable the relevance and admissibility of evidence to be determined at the trial; and
  2. give a defendant an understanding of a plaintiff's claim in aid of the defendant’s right to make a payment into court.’

64. Clearly, therefore the function of pleadings is to eliminate any element of surprise and enable each of the parties to fully disclose their respective claims and where possible have the matter resolved. This is important now in the light of emphasis being placed on parties resolving their disputes as promptly as possible to minimize costs, avoid strains on any existing relationships and to enable the parties to focus on their business or other things in life rather than being bogged down in unnecessary and prolonged litigation.”


  1. In the present case, there is not a single pleading for a development of the underlying law as argued for by NICTA and his learned counsel. Given these, NICTA is precluded from arguing for a development of the underlying law in the way it suggests, and the Court has no foundation in the pleadings and the law to do what it is asked to do.
  2. Thirdly, we have the expressed provisions r8 and r10 (1) and (6) of the PCR. If exceptions to what is prohibited by these provisions exist and needs to be included, that can only be by way of amendments to the PCR through the process and by the authority that is authorised by the Lawyers Act, namely the Council of the Law Society. Counsel for NICTA has not assisted this Court with any submission as to what powers the Court is vested with to impose a rule into the PCR outside the process provided for in the Lawyers Act. In that regard, I consider what the Supreme Court did in its decision in New Britain Oil Palm Ltd v. Vitus Sukarman (supra) is relevant. There, Cannings J in his decision in the National Court in Sukuramu v. NBPOL (2007) N3124 decided to impose a requirement as an implied term in contracts of employment for an employer to first, give an employee an opportunity to be heard before terminating him or her. That was contrary to the decision of the Supreme Court in Jimmy Malai v. PNG Teachers Association [1992] PNGLR 568, which already adopted and applied the common law principle of an employer having the right or power to hire and fire employees anytime with or without giving any reason. On appeal the Supreme Court upheld and overturned the National Court decision. In so doing, the Court reasoned amongst others that, there was no vacuum in the law or there was a need to change the law per the decision in Jimmy Malai’s case and the requirements for the development of the underlying law under the ULA were not met.

Determination of the first two issues in the present case


  1. To determine the first two issues presented in the present case, I adopt and apply the three categories enunciated by the decision of the English Supreme Court in Steel & Another v. NRAM Limited for two reasons. Firstly, the decision represents the latest position on the law that has developed over the years since the initial development and enunciation by the decision in the Hedley Byrne case and its adoption and application in PNG. Secondly, the case specifically concerns the liability of lawyers to third parties as opposed to their clients. This is in addition to the test enunciated by the decision in Hedley Byrne case of whether it was reasonable to foresee a representee of a statement relying upon the statement and for the representor to reasonably foresee that the representee would rely upon the statement and act on it to his or her detriment.
  2. Going by the decision in Steel & Another v. NRAM Limited, the three categories to consider the current case are whether the Defendants were:

(1) essentially passing on information communicated to them by their client or others which was not known to NICTA; or


(2) taking on responsibility for personally saying or doing something which only they were able to do, and which NICTA could not know; or


(3) giving information which was also within the knowledge of NICTA, or it could check and obtain by instructing its own lawyers?


  1. If the case falls under the first category, the Defendants would not be liable but the source of the information, namely, the client or a third party. Similarly, if the information provided falls under the third category, the Defendants would not be liable. But if the information provided falls under the second category, the Defendants could be liable to NICTA. Consequently, there will be a cause of action for NICTA to pursue against the Defendants. Examining the present case against the three categories based on the facts discussed above, I find the Defendants:

(1) merely passed on information they sought and received from the DLPP through the latter’s director of the legal division or section; and


(2) did not communicate information to NICTA which information were not peculiarly within the Defendants’ knowledge and were personally generated and could take responsibility for; and


(3) gave information which was also within the knowledge of NICTA after having sought and receiving the same from the DLPP. If there were anything new or different, NICTA had the opportunity to inquire and received the relevant information or confirmation from the DLPP. It would have also researched the law through its legal division and allow itself to be properly guided.


  1. Additionally, I observed here that no issue is raised against the sufficiency or otherwise of the Contract of Sale between NICTA as the purchaser and Logaloto ILG as the Vendor. What is in issue is the completion of the transaction, with NICTA ultimately registered as the owner of the Land. Under a normal conveyancing transaction, usually at settlement, the owner’s copy of a title with a duly signed Transfer Instrument would be passed onto a purchaser by the vendor in exchange for the balance of the purchase price after allowing for the usual 10% deposit and any outings allowed by the vendor. It would then be in the hands of the purchaser and his lawyer to see to a completion of the process of having the title to the land, the subject of the sale, transferred and registered to the purchaser. The vendor would no longer have any interest in the land and would not be required to do anything else.
  2. In the present case, the Land was a customary land converted into a SABL. Based on advice from the DLPP, the parties understood and agreed that the vendors will surrender the owner’s copy of the SABL for cancellation. That would then facilitate acquisition of the Land by the State with the agreement of the customary landowners through Logaloto ILG and NICTA would pay the agreed purchase price or compensation for the Land so acquired. Thereafter, NICTA would become the registered owner of the Land.
  3. The Contract of Sale and Purchase does not provide for the obligations of the parties other than only the agreement for the sale and purchase with the purchase price. There is no provision in the Contract specifying the process the parties agreed to follow to successfully complete the sale, purchase and transfer of the Land to NICTA. Since, the Contract was drawn up by NICTA, the common law doctrine of contra proferentem, which says where a provision in a contract or a legal document has more than one meaning, it will be interpreted against the interests of the person who proffered or put forward the clause in question would apply against NICTA: See Geroro v Coffee Industry Corporation [1999] PNGLR 521 and Illius v. Bias (2018) N7618 at [11].
  4. Applying the doctrine of contra proferentem, to the present case, it is safe to infer that the Defendants were not required to do anything more than that which was stipulated in the Contract. In the absence of any pleading and evidence of the Contract being amended or there being another contract imposing more duties and responsibilities upon the Vendor and hence the Defendants, the law on extrinsic evidence will preclude NICTA from talking about duties and responsibilities that are not in the Contract: See Curtain Brothers (Queensland) Pty Ltd & Kinhill Kramer Pty Ltd v. The State [1993] PNGLR 285; Odata Ltd v. Ambusa Copra Oil Mill Ltd [2001] PNGLR 344; Papua New Guinea Forest Authority v Concord Pacific Ltd (No 2) (2003) N2465 and Igiseng Investments Ltd v. Starwest Constructions Ltd [2003] PNGLR 27
  5. Going by the letter from the DLPP 04 April 2019 to NICTA’s lawyer, Holingu, the process to have the Land acquired by NICTA remains to be completed. The Defendants and their client have done what is required of them. There is neither any evidence nor is there any pleading as to what NICTA has done or is doing to complete the process. If, however, there is any impediment to that, there is also neither any pleading, nor is there any evidence of that. Similarly, neither is there any pleading nor is there any evidence as to how NICTA has allegedly sustained a loss of K10 Million, which is the purchase price. From the Defendants pleadings and the evidence, that money has been paid for the Land and the Land is waiting for NICTA to complete the process of its acquisition.
  6. Based on the observations I made in the foregoing discussions, I answer the first two issues or questions presented as follows:

(1) Whether NICTA’s statement of claim discloses a reasonable cause of action against the Defendants?


Answer: No, the statement of claim does not disclose any course of action known to law in the circumstances of this case against the Defendants.


(2) Subject to an answer to question (1), did the Defendants owe any duty of care to NICTA who was not their client?


Answer: No, the Defendants did not owe any duty of care to NICTA in the circumstances of this case.


  1. What effect should these answers have on the proceeding. The Defendants argue for a dismissal of the proceedings whilst NICTA argues to the contrary. In support of their submissions, the Defendants cite and rely on my decision in Kerry Lerro v. Philip Stagg (2006) N3050. There, I reviewed almost all the case law on summary determination of proceedings pursuant to O.12, r40(1) and or O.8 r27 (1) of the National Court Rules and said at [13]:

“As far as I am able to tell, the principles emerging from these lines of cases are as follows:


  1. Our judicial system should never permit a plaintiff or a defendant to be ‘driven from the judgment seat’ in a summary way, ‘without a Court having considered his right to be heard.’ A party has a right to have his case heard, as guaranteed by the Constitution and the laws of the land. The Rules are designed to enhance those rights and to ensure the prompt and fair disposal of matters coming before the Court. That right cannot be lightly set aside.
  2. At the same time however, the law such as the Rules under consideration provide for and the Court has an inherent jurisdiction to protect and safeguard against any possible abuse of the processes of the Court.
  3. The object of these rules are therefore ‘to stop cases which ought not to be launched — cases which are obviously frivolous or vexatious or obviously unsustainable.’ In other words ‘the object of the rule was to get rid of frivolous actions.’
  4. A claim may be frivolous if it can be characterized as so obviously untenable that it cannot possibly succeed or that the claim or defence is bound to fail if it proceeds to trial.
  5. A claim or defence may be vexatious if the case amounts to a sham or one which cannot succeed and is one that amounts to harassment of the opposing party who is unnecessarily put to the trouble and expenses of defending or proving the claim.
  6. With regard to the issue of disclosing a reasonable cause of action or defence, the Court must be clear that there are two (2) parts to the phrase ‘cause of action’. First, it entails a right given by law such as an entitlement to reasonable damages for breach of human rights under s.58 of the Constitution, commonly referred to as the ‘form of action’. Secondly, it entails the pleadings disclosing all the necessary facts which give rise to the form of action.
  7. The phrase ‘cause of action’ could thus be defined in terms of a legal right or form of action known to law with:

‘every fact which it would be necessary for the plaintiff to prove, if traversed, in order to support his right to the judgment of the court. It does not comprise of every piece of evidence which is necessary to prove each fact, but every fact is necessary to be proved.’


  1. A statement of claim or a defence (as the case may be) must therefore clearly plead the form of action by pleading the necessary legal elements or ingredients of the action and relevant and necessary facts (not the evidence) giving rise to the form of action. It follows therefore that, where a statement of claim or a defence is so ambiguous or lacking in particularity that it does not facilitate orderly and rational pleadings, which would enable the real issues to be identified, and instead leaves it to guess work, it should be struck out.
  2. These rules provide a summary judgment procedure or remedy which is available to a plaintiff or a defendant, and one which vest and calls for an exercise of a discretion by the Court.
  3. The discretion must be exercised sparingly and only in a case where the statement of claim or the defence (as the case might be) is ‘obviously and almost incontestably bad.’ In other words, this discretion can be exercised only in cases that ‘are plain and obvious so that the master or Judge can say at once that the statement of claim [or defence] as it stands, is insufficient, even if proved, to entitle the plaintiff [defendant] to what he asks’ for.”
  4. This statement of the principles has been adopted and applied by many National and Supreme Court decisions as in the Supreme Court decisions in Philip Takori v Simon Yagari (2008) SC905 and Mount Hagen Urban Local Level Government v. Sek No 15 Ltd (2009) SC1007. The decision in Takori v. Yagari considered what could amount to bad pleadings and a failure to disclose a reasonable cause of action. On the one hand are cases in which a cause of action known to law is pleaded, and on the other hand, cases which fail to do so. The Court held that, in the earlier category any insufficiency in the pleadings could be cured by better and further particulars or by amendment to the pleadings. However, the same does not apply in the latter case because no cause of action known to law is pleaded. The latter will attract an application of the summary judgment powers under O.12, r40(1) of the National Court Rules.
  5. In the present case, NICTA and the Defendants did not have a lawyer and client relationship to form the necessary foundation for a cause of action in favour of NICTA against the Defendants. The facts as pleaded and disclosed in the various affidavits filed and relied upon by the parties do not take this case any closure to or within the ambit of any of the local and overseas cases NICTA relies upon for the reasons I have earlier given. There is no contest that NICTA is a modern statutory authority with a legal division headed by its manager, which provides legal advice and services to NICTA. In the transaction, the subject of this proceeding, the legal division through its manager was involved from start to finish. If despite these factors, the Defendants still owed a duty of care to NICTA that was breached, there is no pleading and or evidence disclosing NICTA suffering a detriment or damage because of any such breach. As earlier observed, neither the pleadings nor the evidence produced by NICTA disclose, what if any, damages it has suffered. The evidence does show that, after NICTA paid the agreed purchase price of K10 Million, the process remains to be completed by NICTA with the DLPP to eventually have the land acquired and registered in favour of NICTA, something that has been confirmed by the DLPP letter 04 April 2019. The customary owners of the Land personally and through their incorporated land group and holder of the SABL title, Logatolo ILG, have given their required consent and have also surrendered there SABL titled for cancellation as advised by DLPP. There is no pleading or evidence of the Land being sold or disposed of to a third party. Indications are that the Land is still there for acquisition by NICTA following the process outlined in the mentioned letter.
  6. The above factors demonstrate no pleading or evidence disclosing a cause of action that is known to law that is likely to succeed. Instead, there is a likelihood of NICTA failing in its claim on the pleadings as they stand and the evidence before the Court. Submissions for NICTA does not address the lack of pleadings and how that could be remedied. Instead, it proceeds on the basis that the pleadings are sufficient and are not in any need of any amendment to plead the matters that should have been pleaded as indicated in the foregoing. I consider this to be a deliberate decision by NICTA because the defects highlight are matters incapable of remedying by any amendment given the various factors highlighted against NICTA’s claim, which includes the provisions of r8, r10 (1) and (6) of the PCR, the Land is still available, and the process remains to be completed by NICTA for its successful acquisition.
  7. Having regard to all the foregoing, I am persuaded by the submissions of the Defendants to have this proceeding dismissed for failing to disclose a reasonable cause of action against them. Accordingly, I order a dismissal of the proceeding.

Issue 3: Should Holingu meet the Defendants’ costs on a full indemnity basis?


  1. The next and final question to resolve is the question of costs. Costs normally follow the event on a party/party basis. In this case however, the Defendants are asking for costs on a full indemnity basis against counsel for NICTA, Mr. Holingu or in the alternative against NICTA. In support of their submissions, the Defendants point to their forewarning letter dated 04 September 2020. In that letter they briefly outlined the relevant facts (as referred to in the earlier parts of this judgment) and pointed out that, this proceeding was unnecessary litigation, and they requested:

“We therefore request you to withdraw this claim within 7 days from the date of this letter.”


  1. They then warned:

“However, if you fail to do so, WE PUT YOU ON NOTICE that we shall claim costs on indemnity basis in the event your client’s claim fails.”


  1. There are no submissions on the issue of costs for or by NICTA. It is settled law that, no order for costs other than the usual party/party costs, and in particular costs on solicitor and own client or indemnity or similar cannot be made unless, the party seeking costs on such terms, has forewarned that, costs at such a rate will be sought.
  2. In his decision in Opi v. Telikom (PNG) Ltd (2020) N8290, Shepherd J (as he then was) extensively reviewed almost all the judgments on costs on an indemnity basis and summarized the position of the law in the following terms at [235]:

“The salient principles which I consider can be distilled from these Australian cases and the cases in our jurisdiction which I have referred to are these:


(1) The purpose of a costs award on an indemnity basis, although compensatory is primarily punitive. As was stated by the Supreme Court in the Rex Paki case, an award of costs on an indemnity basis can be made where the conduct of a lawyer or a party to the proceedings is so improper, unreasonable or blameworthy that punishment is warranted.


(2) An award of costs on a solicitor/client basis is made to compensate the receiving party for the fees and disbursements that the lawyer charges the client, to the extent that those fees and disbursements, if taxed, were “reasonably” incurred. They do not include unreasonable or unusual fees and disbursements.


(3) Because a costs award on an indemnity basis is more generous than a costs award on a solicitor/client basis, its scope extends beyond that to which a receiving party is entitled had a solicitor/client cost been ordered. It is intended as a full indemnity for all costs and expenses incurred preparatory to and during the proceedings, not just the legal fees and associated disbursements charged by that party’s lawyer(s). So for example a receiving party, if an individual, is entitled to claim for loss of income or the value of time wasted when attending to matters relating to the proceedings. Similarly, a corporation or business can claim for the value of time spent by its officers and employees when attending to the proceedings.


(4) An award of costs on a solicitor/client basis is intended to compensate the receiving party for legal fees and disbursements charged by that party’s lawyer in having to unnecessarily defend proceedings which were an abuse of process, where there was no defence on the merits, where the other party failed to explore and exhaust all prospects of having the matter settled without the need for court action or delay, where there has been defiance by the other party in complying with court orders and or where the receiving party has generally had to incur unnecessary expense through unmeritorious litigation.


(5) Forewarning in writing or by electronic means should always be given that costs will be sought on a solicitor/client basis if proceedings are wrongly instituted and then dismissed as being without merit, or if the circumstances are sufficiently egregious to warrant not just the disapproval by the Court but also punishment, that costs will be sought on a full indemnity basis.”


  1. Recently, the decision of the Supreme Court in the case of Church of Jesus Christ of Latter-Day Saints Inc v. Kimas (2022) SC2280 at [43] per Kandakasi DCJ and at [146] per Dowa J endorsed, adopted and applied Shepherd J’s summation of the relevant principles of law on indemnity costs.
  2. In the present case, the Defendants by their letter dated 04 September 2020 informed NICTA and its lawyer, Mr. Holingu of the problems attending the case and invited them to withdraw the proceedings. At the same time, the letter forewarned that, if NICTA fails to withdraw the proceeding and the proceedings fail at the end, costs on an indemnity basis will be sought. This met the requirements of the law and set the basis for the Defendants to claim costs on an indemnity basis. NICTA and its lawyer failed to heed the warning and pressed on with the claim. The Defendants applied to have the proceeding dismissed and have asked for costs consistent with their forewarning. This Court decided to dismiss the proceedings for the reasons given. There is no submission against the Defendants application for costs to be ordered on an indemnity basis. In these circumstances, an order for costs on an indemnity is properly made out. Accordingly, I order costs against the plaintiff, NICTA, on an indemnity basis. In making that order, I note that, if its lawyers, Holingu did not properly advise NICTA of the risks of its claim being dismissed with the forewarning on costs on indemnity basis, NICTA will have recourse against the lawyers.
  3. The formal orders I thus make are as follows:
    1. This proceeding is dismissed for failing to disclose a reasonable cause of action against the Defendants.
    2. Costs are ordered against the Plaintiff on an indemnity basis, to be taxed if not agreed.
    3. Subject to any enforcement of the costs order, Court file to be closed and archived.

Judgment and orders accordingly.
_____________________________________________________________________
Lawyers for the plaintiff: Holingu Lawyers
Lawyer for the first to fifth respondents: Solicitor General

[1] Hailsham Chambers, dated: Wednesday 28th February 2018, appearing at: https://www.hailshamchambers.com/images/uploads/resources/Steel-v-NRAM-Nicola-Rushton-QC.pdf

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