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National Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
WS NO. 1219 OF 2010
BETWEEN:
ROSA GABRIEL
Plaintiff
AND:
MOTOR VEHICLE INSURANCE LIMITED
Defendant
AND:
BANK SOUTH PACIFIC LIMITED
Second Defendant
Mount Hagen: Foulds, J
2017: 20 June
PRACTICE AND PROCEDURE – notice of motion by plaintiff/judgment creditor – application seeking leave of court to serve Garnishee notice on second defendant –whether defendant or judgement debtor is “the State” for the provisions of Claims Act – consideration of - garnishee proceedings not available to judgement creditor against judgement debtor - ss 2, 5,13 and 14 Claims By And Against The State Act 1996
Facts
This is a notice of motion by the plaintiff/judgement creditor for leave to be granted to serve a Garnishee Notice on Bank South Pacific Ltd filed on 20 January 2017. It seeks the following orders:
Cases Cited:
SCR No 1 of 1988; Re Enga Provincial Sales Tax [1988] PNGLR 225
PNG Power Limited v Ian Augerea (2013) SC1245
Public Curator of PNG & The State –v Konze Kera (2014) SC 1420
Legislations Cited:
Papua New Guinea Legislations
Claims By and Against the State Act 1996
Supreme Court Act 2001
Motor Vehicles (Third Party Insurance) (Amendment) Act 1997
Motor Vehicles (Third-Party Insurance) (Basic Protection Compensation) Bill 1974
Overseas Legislations
Motor Accident Injuries Act 2017 (NSW)
Motor Accidents (Liabilities And Compensation) Act 1973 (Tasmania)
Counsel:
Mr. Piam, for Plaintiff
Mr. Peri, for the Defendant
20th June, 2017
1. FOULDS, J: Background: As a preliminary point to deciding the application on its merits, I am required to determine whether the defendant or judgement debtor is “ the State” for the purposes of sections 2, 5, 13 and 14 of the “Claims By and Against the State Act 1996”. (“CBASA”) The consequences of an affirmative determination are that the garnishee proceedings are not available to the judgement creditor and the application must be dismissed. The judgement creditor will then need to explore other avenues of recovering the judgement debt. On the other hand, if I decide that the judgement debtor is not part of the State and the application is in every other respect in order and meritorious, I should exercise my discretion to grant the application and the garnishee proceedings will commence.
2. Beginning with the Reservation pursuant to s.15 of the Supreme Court Act (2001) SC672 (Amet CJ, Los J, Sheehan J, Salika J, Sakora J) SCR No 1 of 1988 where the trial judge applied the six criteria test referred to below and which was approved by that Supreme Court bench and concluding with the judgement of Kandakasi, Manuhu and Kawi, JJ. also in the Supreme Court in the judgement of PNG Power Limited v Ian Augerea (2013) SC1245 in a detailed discussion on the meaning of “governmental bodies” in Schedule 1.2 (1) of the Constitution and “the State” in sections 5, 13 and 15 of the Claims By and Against the State Act 1996 at paragraphs 51 to 70 inclusive, their Honours, in paragraph 61 of the latter judgement said:
“In the particular context of the issues before the Supreme Court in the reservation pursuant to section 15 of the Supreme Court act, (2001), the Supreme Court was in our humble view, correct in taking the following factors into account to arrive at its decision that provincial governments are part of the State:
(1) They are established by the Constitution;
(2) They are part of the three tier structure of government enshrined in the Constitution;
(3) Like the other tiers of government they are constituted by elected representatives;
(4) The national government exercises some control over provincial governments in political, administrative and financial matters;
(5) They fall within the definition of “governmental body” contained in the Constitution; and
(6) Judgement debts are recoverable from monies allocated in the budgetary process of provincial governments.”
3. And in paragraph 63 they said:
“In our country, we started off as a Nation with most of these key service areas remaining as key Government Departments. Later without much careful consideration and debate, the Government moved to Corporatisation and Privatisation. Except for the cases in which there has been full privatisation as in the case of the former Papua and New Guinea Banking Corporation being sold to the Bank South Pacific, most of the other key service areas remain in Government owned and controlled entities. This is necessary and important to maintain so the people of Papua New Guinea and are well served rather than being driven by profit and they are charged with all sorts of outrageous fees and charges only seen in our country as is done by Bank South Pacific Ltd and other banks operating in our country. For instances, despite declarations and substantial profits each year, fees and charges even for deposits and customers withdrawing their own funds and clearing cheques issued by that bank are being charged. Given these, an important and determinative test in our view to determine whether an entity is part of the State or not is the nature or kind of service and or duties the entity consideration has or owes to a particular part of the country or the whole country. If the kind of duties and responsibilities the entity has, falls into one of the traditional critical functions and or duties and responsibilities of the State, and that entity is not operating as a private enterprise purely for profit with all of the features of a private enterprise present, such an entity should easily qualify to be part of the State”.
4. Critically, in paragraph 68, their Honours say:
“notwithstanding the differences in opinions as noted above, all the above authorities and others agree that, all entities established by the National government or a provincial government or a local level government, with some form of government control and ownership and funding is a governmental body. This should be the test to determine if an entity or a body is a governmental body. To this, we add the purpose for which the entity has been established. (The underlining is mine). If it is for an important public purpose, the kind that traditionally were the function of welfare states governments is (sic) in the case of telecommunications, electricity, public transport, water and sanitation, health and education, this would render the entity a governmental body. This would be the case even if the entity appears to have private corporate status and structure.”
5. Thus, the Supreme Court reduced the six criteria test to one limb with three criteria and added a second limb to determine whether or not a statutory entity or governmental body was “the State” for, in particular, the purposes of sections 5,13 and 15 of the Claims by and Against the State Act 1996 (which I shall refer to as the “two limb test”). The Supreme Court no doubt found it necessary to propound the second limb because as it said in paragraph 62: “The very nature of most governmental bodies or entities other than the national government, provincial governments and local level governments established by the State or a provincial government would not easily meet all of the above factors, especially the first there factors,” and the other special requirements of government corporate-like entities, the most important of which (above) forms the basis of the second limb.
6. The key criteria in the first limb of the two limb test are:
“40.We respectfully adopt and endorse the further test propounded by the Supreme Court in PNG Power Limited and the reasons behind the formulation of the test. Applying that test, we find that the Public Curator of Papua New Guinea which is a statutory corporation with perpetual succession pursuant to section 2 (2) (a) (b) of the Public Curator Act and consequently capable of suing and being sued in his corporate name and style is deemed the “State” within the meaning of the CBASA more specifically for the purposes of section 2.”
SCHEDULE 1 – OATH AND AFFIRMATION OF OFFICE.
10. This schedule provides the form of the oath or affirmation to be taken by the Director of the Motor Vehicle Insurance (PNG) Trust (“the Trust”). The Trust was created by section 3 of the Act before the section was repealed along with many other sections by the Motor Vehicles (Third Party Insurance) (Amendment) Act 1997 (No. 27 of 1997) section 2. Prior to its repeal, subsection 3 (2) provided:
(2) The Trust –
(a) Is a body corporate, with perpetual succession; and
(b) Shall have a seal; and
(c) Subject to this Act, may acquire, hold and dispose of real and personal property; and
(d) May sue and be sued in its corporate name.
11. It is of considerable and particular significance when considering control of the company by the State that the repeal of subsection 3 (2) on its face, further limits the independence of the company from the State. Moreover section 4 sets out the constitution of the trust to include four directors each of whom must, under Schedule 1, swear or declare that he or she will well and truly serve the Independent State of Papua New Guinea, not the company (the underlining is mine).
12. Probably the most determinative example of ownership to satisfy the requirement for ownership by the government in paragraph (b) of the first limb of the two limb test, is to be found in section 66 of the Act which says:
(1) The successor company shall, on the transfer date, be wholly owned by the State.
(2)The shares in the successor company shall be held by the Minister on behalf of the State.
13. Section 66 therefore puts ownership of the company by the government beyond doubt.
14. The remainder of Part 11 of the Act provides the procedure enabling the Minister to divest himself of ownership of the company and the means by which he has to do it. Those sections serve to illustrate and emphasise the control that the Minister and therefore, the State, has over the company.
15. For the reasons I have given above, I am in no doubt that the company (MVIL) satisfies the first limb of the two limb test. That is to say it is a “Governmental Body” within the meaning ascribed to it by the Supreme Court in PNG Power (supra) for the purpose of section 225 of the Constitution because there is clearly some form of governmental control; ownership and funding. Finally, it is quite clear from reading the Act as a whole and equally applicable in determining whether or not it falls within the second limb of the two limb test, that the company is an entity “which has to deal with a specific National Government agenda, program, duty or service more than being established purely for the purposes for making profits for the government”: See PNG Power (supra at Para. 68). There is nothing in the Act which suggests or by which it could be inferred that the company was established “purely for the purposes for making profits for the government”.
16. As to the second limb of the two limb test, it is notable that the Act does not contain a provision that sets out the objects of the Act. If it did, it would be far less difficult to determine whether or not the company is the State for the purposes of the CBASA. As it is, consideration of THE SECOND READING SPEECHES and CLAUSE NOTES for the Act, its immediate legislative predecessor and related PNG laws, is largely unhelpful. I have concluded that the best way to solve the problem is to consider parts of the history of the development of the motor car, and the problems arising therefrom in a “welfare state:” See PNG Power (supra at paragraphs. 62 and 68), and similar enactments in other jurisdictions.
17. At the risk of appearing repetitive, I refer to the last part of paragraph 63 of the Supreme Court’s reasons for judgement in PNG Power (supra) in which it says:
“If the kind of service or duties and responsibilities the entity has, falls into one of the traditional critical functions and or duties and responsibilities of the State, and that entity is not operating as a private enterprise purely for profit, with all of the features of a private enterprise present, such an entity should easily qualify to be part of the State.”
And at paragraph 68:
“If it is for an important public purpose, the kind that traditionally was the function of welfare states governments is (sic) in the case of telecommunications, electricity, public transport, water and sanitation, health and education, this would render the entity a governmental body. This would be the case even if the entity appears to have private corporate status and structure”.
18. It is self-evident that what may traditionally have been an important public purpose may not be in future. Conversely what was not an important public purpose may be today or in the future. For example, before the discovery and reticulation of electricity, particularly domestically, it was probably not an important public purpose. Likewise, sanitation, education, public health, both private and public transport and environmental control. Before the invention of the motor car the government control of horse drawn carriages was, I suggest, not necessary. It was not a priority since they could not go faster than about 45 km an hour and had at least two minds concentrating on avoiding collisions, being the horse and the coachman. Moreover, very few ordinary people owned or had access to a horse or horses drawn carriage.
19. However, as ownership of and access to motorcars came within the reach economically of a much wider section of the population (e.g. The T Model Ford), cars became faster and road networks increased, so too did the risk of serious injury and death as a driver or a passenger, increase ballistically. It necessarily followed that the control of every aspect of the ownership and use of motorcars became an important public purpose. In terms of use, I refer in particular to the damage to life and limb of other road users.
20. In that regard it is apposite to consider legislation similar to the Act in other jurisdictions. Viz:
Motor Accident Injuries Act 2017 (NSW). Section 1.3 (OBJECTS OF THE ACT) provides:
(2) For that purpose, the objects of this act are as follows:
(a) To encourage early and appropriate treatment and care to achieve optimum recovery of persons from injuries sustained in motor accidents and to maximise their return to work or other activities,
(b) To provide early and ongoing financial support for persons injured in motor accidents,
(c) To continue to make third party bodily insurance compulsory for all owners of motor vehicles registered in New South Wales,
(d) To keep premiums for third party policies affordable by ensuring that profits achieved by insurers do not exceed the amount that is sufficient to underwrite the relevant risk and by limiting benefits payable for minor injuries,
(e) To promote competition and innovation in the setting of premiums for third-party policies, and to provide the Authority with a role to ensure the sustainability and affordability of the compulsory third party insurance and fair market practices,
(f) To deter fraud in connection with compulsory third party insurance,
(g) To encourage the early resolution of motor accident claims and the quick, cost-effective and just resolution of disputes,
(h) To ensure the collection and use of data to facilitate the effective management of the compulsory third party insurance scheme.
21. It is interesting to note that subsection (3) (d) provides that “insurers, as receivers of public money that is compulsorily levied, should account for their profit margins, and their records should be available to the Authority to ensure that accountability.
22. Section 3A of the Motor Accidents (Liabilities and Compensation) Act 1973 (Tasmania) provides:
3A. Objects of Act
The objects of this act are –
(a) To provide for the payment of compensation in respect of personal injury resulting from a motor accident; and
(b) To allow the contribution of funds to any all of the following programs:
(i) Programs designed to reduce the incidence of motor accidents in Tasmania;
(ii) Programs designed to enable better and more effective care and treatment of persons who suffer personal injury as the result of a motor accident.
23. Save an additional objective peculiar to Papua New Guinea which I shall mention below, I am in little doubt that the objectives of the Act would include a large proportion of the objectives of the New South Wales and Tasmanian Acts.
24. The addition to which I have referred above is described by the then Minister for Finance, Mr Julius Chan in Hansard in his updated Second Reading Speech in support of the Motor Vehicles (Third-Party Insurance) (Basic Protection Compensation) Bill 1974 in paragraphs 2 and 3 where he says:
“Mr Speaker, this bill is the first piece of legislation implementing certain recommendations contained in the Rutherford report on non– life insurance in Papua New Guinea which was tabled in the House last November.
It is designed to speed up the payment of compensation for road deaths and should go a long way to reducing the likelihood of ‘payback’ trouble arising out of road accidents. It therefore has the strong support of those departments most concerned with maintaining law and order.” (The underlining is mine.)
25. I hasten to add that is NOT the Second Reading Speech for the Act. I have included it only as a guide as to the seriousness with which the government of the day treated third-party compulsory death insurance, its control over it and the reasons for it.
26. Taking all those reasons into consideration there is no doubt in my mind that the company’s creation and operation is for an important public purpose, of the kind that traditionally was the function of welfare states governments as in the case of telecommunications, electricity, public transport, water and sanitation, health and education, and it is not operating as a private enterprise purely for profit. Therefore it “easily qualifies” to be part of the State for the purposes of the second limb of the two limb test: PNG Power (Supra at para. 63).
27. It necessarily follows that I hold that the defendant or judgement debtor is “the State” for, in particular, the purposes of sections 2, 5, 13 and 14 of the Claims By and Against The State Act 1996 and garnishee proceedings are not, therefore, available to the judgement creditor against the judgement debtor.
28. The plaintiff’s notice of motion filed on 20 January 2017 for leave to be granted to the plaintiff to serve a garnishee notice on Bank South Pacific Ltd, pursuant to Order 13 Rule 56 of the National Court Rules and section 155 (4) of the Constitution should therefore be dismissed.
_______________________________________________________________
Paulus M. Dowa Lawyers: Lawyers for the Plaintiffs
Warner Shand Lawyers: Lawyers for the Defendant
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