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JA Construction Ltd v Wanega [2007] PGNC 73; N3243 (29 November 2007)

N3243

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 752 of 1999

BETWEEN

J.A. CONSTRUCTION LIMITED
Plaintiff

AND

IPISA WANEGA
First Defendant

AND

HONA JAVATI
Second Defendant

AND

EASTERN HIGHLANDS
PROVINCIAL GOVERNMENT
Third Defendant

Goroka: Davani. J
2007: 9th, 29 November

PRACTICE AND PROCEDURE – breach of contract – proceedings filed before issue of s. 5 Notice under Claims By and Against State Act – proceedings void.

PRACTICE AND PROCEDURE – Supreme Court decision – always has a retrospective effect.

Facts

The plaintiff filed proceedings against the defendants for alleged breach of contract whereby the plaintiff alleges that although it did renovation work to the Goroka Demonstration School’s toilet and showers, that the third defendant did not pay monies owing to it in the sum of K37,119.93.

The plaintiff did not give notice under s. 5 of the CBASA and proceeded to file Writ of Summons and Statement of Claim. About 5 years later, the third defendant applied to dismiss proceedings for lack of s. 5 notice which application did not get heard until 2 years later. The plaintiff argues that it need not give notice under s. 5 of the Claims By and Against the State Act because it filed court proceedings prior to Supreme Court decision SCR 1 of 1998: Reservation pursuant to section 15 of the Supreme Court Act (2001) SC 672 and that therefore, that decision is not retrospective.

Held;

1. That s. 5 Notice should have been issued before court proceedings were filed;
2. Any decisions by the Supreme Court are deemed to be retrospective. In the absence of a clear indication of a contrary intention in an enactment, the substantive rights of the party to an action falls to be determined by the law as it existed when the action was commenced and this is so whether the law is changed before the hearing of the case at the first instance or while an appeal is still pending.

Cases Cited

Federal Huron v Ok Tedi Limited [1986] PNGLR 5
Rimbink Pato v Enga Provincial Government [1995] PNGLR 469;
Steven Pupune and Others v Ubum Makarai and PNGBC [1997] PNGLR 22;
Kayapas Ruta v EHPG [1998] PNGLR 157;
Tohian and the State v Tau Liu (1998) SC566;
SCR 1 of 1998: Reservation pursuant to section 15 of the Supreme Court Act
(2001) SC672;
Treid Pacific (PNG) Ltd v EHPG (2004);
Caspar Kandi v Provincial Administrator, Department of Western Highlands Province (2004) N2755;
Koi Antonius v Fantson Yaminen & East Sepik Provincial Government
(2004) N2774;

Texts cited

Halsbury’s Laws of England (4th edition) Volume 44(1), Butterworths, London,
1995;

Counsel
N. Asimba, for the Third Defendant/Applicant
E. Hampalikie, for the Plaintiff/Respondent

29 November, 2007

1. DAVANI. J: This is an application by the Eastern Highlands Provincial Government (‘applicant’) moved by Notice of Motion filed by O’Briens Lawyers on 9 November, 2007. The Motion seeks to;

- set aside default judgment entered against the defendant on 22 August, 2000 and 11 June, 2003;

- Set aside the court order of 14 December, 2006;

- Dismiss the plaintiff’s action for failure to give Notice under s. 5 of the Claims By and Against the State Act (‘CBASA’);

- Or alternatively, to seek leave of the court to file the third defendants Defence out of time.

2. The applicant only moves the application to dismiss proceedings for lack of notice under s. 5 of the CBASA as this determines whether the action will continue or not, a threshold/preliminary issue.

3. The application is opposed by the plaintiff.

Issue of s. 5 Notice

4. First, I note that the plaintiff does not deny that it did not issue a s. 5 notice. I deal with its reasons for not doing so, later below.

5. In support of its application, the applicant relies on the affidavits of Nathaniel Asimba, Lawyer, sworn on 1 March, 2007 and filed on 13 March, 2007; Hitelai Polume-Kiele, former Acting Solicitor-General, sworn on 31 August, 2006 and filed on 13 December, 2006 and Fred Tomo, former Acting Attorney-General, sworn and filed on 31 July, 2006. The plaintiff relies on the affidavit of Engelbert Hampalekie, Lawyer, sworn on 29 October, 2007 and filed on 15 November, 2007.

6. To understand the background of this matter, I set out a brief chronology of the proceedings.
These are;

7. This Court is now faced with 3 issues. These are;

(i) Whether the plaintiff should have given the s. 5 notice?

(ii) Whether the s. 5 Notice has retrospective effect?

(iii) Should the proceedings be dismissed for lack of the s. 5 Notice.

8. Issue No. 1 – Whether the plaintiff should have given the s. 5 notice?

The claim by the plaintiff against the defendants is for an alleged breach of contract, whereby on or about 27 May, 1998 the plaintiff claims to have done maintenance and renovation work to the Goroka Demonstration School’s toilet and shower blocks worth K37,119.93. The first defendant is sued in his capacity as the principal of the Goroka Demonstration High School. The second defendant is sued in his capacity as the chairman of the Board of Governors of that school. The third defendant is being sued in this manner as pleaded in the statement of claim;

"4. The third defendant is a body established pursuant to the Organic Law on Provincial and Local Level Governments and is required by law to provide funds for the administration, infrastructures and maintenance of the school facilities."

9. The plaintiff was represented by a firm of lawyers when the Writ of Summons and Statement of Claim was filed. The plaintiff was still represented by the same firm of lawyers when default judgment was taken out against all the defendants. In fact, the plaintiff has always been represented by lawyers. I have not heard submissions from the plaintiff’s lawyer as to the enquiries or attempts it made (if any) in relation to ascertaining whether the s. 5 notice should be given to the third defendant prior to the issuing of these proceedings. I have also not heard whether there is legislation issued by the third defendant to deal with claims against it. Issues in relation to whom a s. 5 notice can be issued upon where there is separate legislation dealing with it, in the case of provincial governments, was discussed by Cannings .J in Caspar Kandi v Provincial Administrator, Department of Western Highlands Province (2004) N2755. But this was not raised as an issue by both counsel, so I will not take it any further, although I must admit it is a relevant issue.

10. For the purposes of this ruling and the issue now posed before me, I am of the view that with the benefit of learned counsel, the plaintiff was in a position to obtain or solicit appropriate legal advice to assist it in determining whether s. 5 Notice should be issued or not. If the plaintiff was not sure, then it must put before the court evidence of the steps it took in relation to ascertaining this. But it has not done that. Furthermore, at the time the writ of summons was filed (21 July, 1999), there were already decisions by the National Court on whether provincial governments were entities of the State. (see Rimbink Pato v Enga Provincial Government (1995) PNGLR 469; Steven Pupune and Others v Ubum Makarai and PNGBC [1997] 22; Kayapas Ruta v EHPG [1998] PNGLR 157). This would obviously have alerted the plaintiffs lawyers to whether s. 5 Notice should issue or not. But it appears they just filed court proceedings without considering that.

11. Even after the 2001 Supreme Court Reservation, the plaintiff’s lawyers could have taken steps to rectify this serious procedural anomaly. But they did not. For 7 years, the plaintiff took no steps. It even proceeded to list the matter for listings even though it was aware that this application was pending.

12. In the absence of material that would convince me that the plaintiff did enquire into the giving of notice by a provincial government, and noting the existence of National Court decisions on this issue, I find that the plaintiff should have given the s. 5 notice.

13. Issue No.2 - Does the s. 5 Notice have retrospective effect? –

The plaintiff submits that it was unaware or that it was not the position at law prior to the Supreme Courts decision in SCR 1 of 1998: Reservation pursuant to section
15 of the Supreme Court Act (2001) SC 672, that Provincial Governments were entities of the State and that all claimants suing provincial governments, must give notice to the State.

14. Mr. Hampalekie for the plaintiff submits that prior to SCR 1 of 1998, Provincial Governments were not required to give notice under s. 5 of the Claims By and Against the State Act. He submits that SCR 1 of 1998 was decided on 9 November, 2001 and that therefore, it does not apply to this action because this action was filed on 21 July, 1999. However, the plaintiffs submissions are in direct contradiction with the actions it took in relation to the giving of notice. This is because the evidence is that the plaintiff’s lawyer did write to the Solicitor-General seeking an extension of time to give notice but the application was refused by the Solicitor General because the plaintiffs did not show cause why notice was not given within the prescribed time limit. This is deposed to on paragraphs 5 and 6 of Hitelai Polume-Kiele’s affidavit and Fred Tomo’s affidavit and is not disputed by the plaintiff. Additionally, prior to 1999, there were already National Court decisions on whether Provincial Governments were entities of the State, as I discussed above. For that submission to hold, the plaintiff’s lawyers must show the steps it took.

15. After that refusal by the Solicitor-General, the plaintiffs lawyers did not apply to the Court for an extension of time which process is available to any plaintiff under s. 5 (2)(c)(ii) of the CBSA. I say this because this process is similar to the notice process under s. 54 of the Motor Vehicles (Third Party Insurance) Act. (MVIA Act). Chapter 295. S. 54 (6) of the MVIA Act which in very similar terms to s. 5 of the CBASA, reads;

"54. Claims for damages.

...

(6) No action to enforce any claim under this section lies against the successor company unless notice of intention to make a claim is given by the claimant to the successor company within a period of six months after the occurrence out of which the claim arose, or within such further period as—

(a) the Commissioner; or

(b) the court before which the action is instituted,

on sufficient cause being shown, allows."

16. It now appears the plaintiffs lawyer left it till the filing and hearing of this application to then raise a technical issue, being the retrospectivity of a s. 5 Notice.

17. In my view, the Supreme Court division in SCR No. 1 of 1998 is a declaratory ruling which merely states what the law is from the date of inception of

the CBASA. This principle was discussed at length in Federal Huron v Ok Tedi Limited [1986] PNGLR 5 by the Supreme Court consisting of Kidu CJ, Pratt and Woods JJ.

18. In that case, the facts were that the ship, Federal Huron, berthed in Port Moresby. The Plaintiff was the consignee and owner of 420 crates of modular houses sent from USA. Five (5) of these modular houses were damaged during unloading. The Plaintiff issued a Writ for K200,000.00 for damages. The National Court decided that the Colonial Courts of Admiralty Act 1890 (Imp) ceased to operate in Papua New Guinea when the country obtained Independence on 16 September 1975. Consequently, action in rem in the admiralty jurisdiction with respect to damages to cargo was not available under Papua New Guinea law. The trial judge then formulated a law pursuant to Schedule 2.3(1) of the Constitution to allow the action by the Respondent to proceed.

19. On appeal, the Appellant argued that the law laid down or declared should be the law as and from the date of the decision and not one which will affect the
parties before the Court. The Supreme Court refused this argument and said at page 35;

"Such would be a surprising conclusion and would be at odds with the normal principle that any decision of the Supreme Court will act retrospectively"

20. The Supreme Court then went on to say at page 37;

"We have been driven inexorably to the conclusion that despite the Court finding a gap in existence at some anterior point in time, it must fill such gap retrospectively".

21. ـ The Supreme Come Court dismissed the Appeal with costs.

22. In Koi Antonius v Fantson Yaminen & East Provincial Government (2004) N2774, the plaintiff submitted that the Supreme Court dect decision in SCR No.
1 of 1998 does not have a retrospective effect on any action filed prior to 8 November, 2001 (the date of the decision) but a prospective effect. His Honour
David AJ rejected this argument and held that the Supreme Court decision in SCR No. 1 of 1998 was retrospective to the date of the Act. He ruled that the Plaintiff
was required to give Notice. His Honour dismissed the proceedings with costs.

23. The applicant submits that the proper law applicable in this case is that, the Supreme Court decision of SCR No. 1 of 1998 is retrospective to the date of the CBASA, being 20 February, 1997. The law speaks for itself, that any decisions by the Supreme Court are deemed to be retrospective. In the absence of a clear indication of a contrary intention in an enactment, the substantive rights of the party to an action falls to be determined by the law as it existed when the action was commenced and this is so whether the law is changed before the hearing of the case at the first instance or while an appeal is still pending. Halsbury’s Laws of England (4th edition) Volume 44(1), Butterworths, London, 1995 at paragraph 1283 states;

"An amending enactment is generally presumed to change the relevant law only from the time of the enactment’s commencement. In absence of a clear indication of a contrary intention in an amending enactment, the substantive rights of the party to an action thus fall to be determined by the law as it existed when the action was commenced; and this is so whether the law is changed before the hearing of the case at the first instance or while an appeal is pending. However, an amending enactment may say expressly or by implication that its effect is retrospective.

A declaratory enactment, since it does not change the relevant law, operates from the commencement of that law (where it is statute law) or from an indefinite time (where it is common law or other unenacted law)"

24. Section 21 of the CBASA states the position in relation to the filing of actions before the commencement of and upon the commencement of the CBASA. In relation to proceedings that were commenced before the coming into operation of the CBASA, the proceedings on the actions shall be taken up and continued under and in conformity with the provisions of the CBASA as consistently may be. It means that if notice was not given, before the coming into operation of the CBASA an astute practitioner must immediately give notice. (s. 21(1) of CBASA). (my emphasis)

25. If upon the coming into the operation of the CBASA, no action to enforce a claim against the State has been commenced in respect of an occurrence that took place before the coming into operation of the CBASA, the notice shall be given in accordance with s. 5(1) within a period of 6 months after the coming into operation of the CBASA or within further extended period. (s. 21(2) of CBASA).

26. I do not accept submissions by Mr. Hampalekie. I also am not in agreement with decision by my brother Hinchliffe. J in Treid Pacific (PNG) Ltd v EHPG (2004) WS 1052 of 2000 referred to me by Mr Hampalekie, where he said that it was not necessary for the plaintiff to serve the notice because at the time of the issuing of the writ, there was no requirement on the plaintiff to serve such a notice on the State. He said the plaintiff did not fall into error when it issued proceedings against the defendant without giving that notice.

27. I find that the plaintiff’s lawyer has failed in his duties, as a lawyer, to diligently pursue this matter after having inherited the file from Acanufa Lawyers. The plaintiffs lawyer was aware of the intended application to dismiss for lack of s. 5 Notice since 2004. Prior to that, the plaintiff’s lawyers then, were aware of the requirement to give notice. Even if the case has moved on and the defendant is well notified and informed of the plaintiffs claim, as was held in Treid Pacific (PNG) Ltd v EHPG (supra), nothing can change the fact that the giving of notice is a condition precedent. (see Tohian and the State v Tau Liu (1998) SC566). In light of Tohian and the State v Tau Liu (supra), the plaintiffs lawyers should have given notice to the State. In any event, In this case, the evidence is that the plaintiff knew it was required to give notice. It demonstrated this by applying to the Solicitor-General for an extension of time to give the s. 5 notice, but because it was well out of time, the application was refused. The plaintiffs lawyers could have then applied to the Court for an extension of time, and if the application failed, to appeal the orders of the National Court. However, the plaintiff’s lawyers did not do that. Instead, the plaintiffs lawyers allowed the proceedings to come this far. It cannot now say that because the proceedings have come this far, that it need not give notice to the State (re Treid Pacific (PNG) Ltd (supra)). A party must come to court with clean hands for equity to prevail. Obviously, equity cannot prevail here because the plaintiff has not come to court with clean hands.

28. Furthermore, if the defendant Provincial Government had its own legislation governing the issuing of proceedings against it, then I assume plaintiffs counsel would have had recourse to it. However, I have not heard submissions on that aspect from both counsel so I will not dwell on this.

(ii) Issue No. 2 - Should the proceedings be dismissed for lack of the s. 5 Notice.

29. The Supreme Court in Tohian and the State v Tau Liu (1998) SC 566 said that the giving of notice is a condition precedent. Notwithstanding action taken by the plaintiff this far, the law is well settled, that the failure to issue such notices makes a writ void (Tohian and the State v Tau Liu (supra). The writ in this case is void.

30. Clearly, the plaintiff’s recourse now is against his lawyers for professional negligence.

Formal orders

1. The action is dismissed in its entirety;

2. The plaintiff shall pay the third defendants costs of the proceedings on a party/party basis, to be taxed if not agreed.

__________________________

Narokobi Lawyers: Lawyer for the Plaintiff/Respondent
O’Briens Lawyers: Lawyer for the Third Defendant/Applicant