Kolta Development Ltd v The State

• Jurisdiction: Papua New Guinea
• Judge: Kandakasi, J
• Judgment Date: 20 September 2013
• Citation: (2013) N5954
• Court: National Court
• Year: 2013
• Judgement Number: N5954

Full : WS. NO. 1565 of 2002; Kolta Development Limited and Margin Pty Ltd and Patrick K. Kolta v Independent State of Papua New Guinea (2013) N5954

National Court: Kandakasi, J

Judgment Delivered: 20 September 2013

N5954

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS. NO. 1565 of 2002

BETWEEN:

KOLTA DEVELOPMENT LIMITED

First Plaintiff

AND:

MARGIN PTY LTD

Second Plaintiff

AND:

PATRICK K. KOLTA

Third Plaintiff

AND:

INDEPENDENT STATE OF PAPUA NEW GUINEA

Defendant

Waigani: Kandakasi, J.

2012: 23rd August

2013: 20th September

CAUSES OF ACTIONS - success of a court action dependent on two fundamentals apart from meeting the requirements for proper pleading, and all other procedural matters – first is the need to have and pursue only a cause of action known to law - second is proving the claim by, relevant, appropriate and admissible evidence – effect of - Court can strike out or dismiss claim for failure to disclose a reasonable cause of action - - National Court Rules provisions like Order 12 Rule 40

EX – GRATIA PAYMENT –an out of favour payment to someone which is not compelled by law - no legal right or obligation is vested in the promise to sue for enforcement of the promise - no legal or factual basis for the Plaintiffs to claim they are entitled to an ex gratia payment - to pursue claim against State will be futile and unnecessary - proceeding is dismissed – costs awarded to State.

Cases cited:

Igiseng Investments Limited v. Starwest Constructions Limited and Igiseng–Okmanip (PNG) Trust [1993] PNGLR 485.

Counsel:

T. Kirio, for the Plaintiffs.

S. Tiankin, for the Defendant.

20th September, 2013

1. KANDAKASI J: This case presents an interesting question. The question is, can the plaintiffs sue on a recommendation of ex gratia payment following dismissal of their claim against the State?

Background and Facts

2. The background to the question is simply this. On 03rd April 1993, certain members of the PNG Defence Force went to the Plaintiffs’ property then of substantial value known as the Germania Club situated along the Waigani Drive, in the nation’s capital city, Port Moresby and set fire to it. The fire completely destroyed the property. At the relevant time, the offending soldiers were fully armed with military issue firearms and equipment. The Plaintiffs claimed damages against the State under WS No. 411 of 1993. Their claim then was based on the common law doctrine of vicarious liability for the actions of the soldiers resulting in their losses. The National Court per Salika J., (as he then was) conducted a trial. His Honour found that the soldiers were drunk and were on a frolic and detour of their own whilst off duty.

3. After having dismissed the plaintiffs’ claim, His Honour strongly recommended the State to make an ex-gratia payment to the Plaintiffs. Based on that recommendation, the plaintiffs sought payment over K2 million from the State. At different times, to different Attorney Generals and two Ministers for Justice in 1999 and 2001 respectively agreed to settle the claim. However, no actual settlement took place. That caused the Plaintiffs to issue this proceeding. They then filed an application for summary judgment, which they did not pursue. Instead, they pursued further out of Court settlement negotiations through the office of the Solicitor General. That resulted in a deed of release being executed for the sum of K2.5 million in favour of the plaintiffs. That was without prior approval of the National Executive Council (NEC) as the amounts exceeded the relevant departmental heads and their respective Minister’s financial delegation limits under the Public Finance (Management) Act. Yet the Department of Finance through its Secretary made a payment of K25,000.00.

4. Upon receiving no payment of the balance of K2.475 million, the plaintiffs issued this proceeding. They claim that the State with its servants have breached a duty of care owed to them in that, they failed to facilitate the ex gratia payment. They further claim that the failure to meet their claim has resulted in loss of business and income and have suffered medical and psychological problems. They thus make a claim for K3.5 million for ex gratia payment after allowing for devaluation of the Kina plus interests and costs.

5. The plaintiffs through their learned counsel’s submission argue that, their claim is based on two legal foundations. The first is that, the parties executed a deed of Release for a sum of K2.5 million which has not been honored. The second basis is that, by entertaining and entering into the deed of release, the defendant created a legitimate expectation in the plaintiffs that they would be paid the sums set out in the deed of release.

6. When the matter eventually came before me at case management directions hearing, I enquired as to what was the plaintiffs’ cause of action. During the course of directions hearing, the parties informed me of the background to this proceeding as noted above. I therefore suggested and the parties agreed to address by way of a preliminary point the question of whether the Plaintiffs have a valid cause of action particularly when their earlier cause of action was dismissed after a trial. Learned counsel on both sides ably assisted me with their respective submission, for which I am grateful.

Consideration of relevant and applicable law

7. The success of a court action is dependent on two fundamentals apart from meeting the requirements for proper pleading, and all other procedural matters. The first is the need to have and pursue only a cause of action known to law. The second is proving the claim by, relevant, appropriate and admissible evidence. Of the two, the first is relevant for our purposes and is also most critical because without having a cause of action known to law there can be no prospects and hope of success. Speaking of the subject, in my dissenting decision in the matter of The Independent State of PNG v. Downer Construction (PNG) Ltd (2009) SC979 I said this:

“…the issuance of any court proceeding does not grant any person with a cause of action. Instead, a cause of action forms the foundation for a claim and or a suit or court proceedings. Hence, no person can issue and successfully pursue any suit or proceeding in court unless he has a ‘claim’ that is well founded in law and the law can have it enforced. Technically this is called having a ‘cause of action’ which must be disclosed in all proceedings filed in court… Our law reports and numerous decisions of the National and Supreme Courts are loaded with cases that speak about ‘cause of action’ and dismissal of cases for failure to disclose a ‘reasonable cause of action.’

8. Given that importance we have in the National Court Rules provisions like Order 12 Rule 40, which empowers the Court to strike out or dismiss a claim for amongst others a failure to disclose a reasonable cause of action. However, this should not be confused with a person’s right to come to the court for redress of any harm or damage done to him or her.

9. In Kerry Lero trading as Hulu Hara Investments Ltd v Philip Stagg & Ors (2006) N3050, speaking of the need to disclose a reasonable cause of action and the courts power to dismiss a claim for failure in that regard, I noted after reviewing the relevant cases on point that:

“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 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 providing 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 parts to the phrase “cause of action”. First, it entails a right given by law, such as...