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National Superannuation Fund Ltd v National Capital Ltd [2017] PGNC 258; N6952 (28 August 2017)

N6952

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 521 of 2013

BETWEEN:

NATIONAL SUPERANNUATION
FUND LIMITED
Plaintiff

AND:
NATIONAL CAPITAL LIMITED
First Defendant

AND:
INDEPENDENT STATE OF
PAPUA NEW GUINEA
Second Defendant

AND:
BANK OF PAPUA NEW
GUINEA
Third Defendant

Waigani: Hartshorn J.
2016: September 30^th,
2017: August 28^th

APPLICATION- for the release of funds prior to trial – Order 10 Rule 21 National Court Rules

Cases cited:
Papua New Guinea Cases

Albright Ltd v. Mekeo Hinterland Holdings Ltd (2013) N5774
Eddie Tarsie v. Ramu Nico Management (MCC) Ltd (2010) N4005
Independent Public Business Corporation of Papua New Guinea v. Motor
Green & Co Pty Ltd (Receiver Appointed) v. Roger Britain Green [1976] PNGLR 73
MAPS Tuna Ltd v. Manus Provincial Government (2007) SC857
Totamu v. Small Business Development Corporation (2009) N3702
Timothy Lim Kok Chaun v. Simon Goh Say Beng (2004) N2753

Vehicles Insurance Ltd (2017) N6664
Overseas Case :

Evans v. Bartlam [1937] AC473; 2 All ER 646

CBS Productions Pty Ltd v. O’Neill (1985) 1 NSWLR 601

Counsel:

Mr. I.R. Shepherd, for the Plaintiff
Mr. R. Mulina, for the First Defendant
Mr. K. Imako, for the Third Defendant

28^th August, 2017

1. HARTSHORN J: This is a decision on a contested application for the release of approximately K55 million held by National Capital Limited, the first defendant (NCL) (IBD Funds), to National Superannuation Fund Limited, the plaintiff (Nasfund). The application is made pursuant to Order 12 Rule 1 and Order 10 Rule 21 National Court Rules.

2. There was no representation on behalf of the State, the second defendant, and the Bank of Papua New Guinea, the third defendant (BPNG), supported the application of Nasfund for the release of the funds.

Background

3. In March 2010 the State offered to issue treasury bills to raise K125 million. NCL was appointed the agent of the State to issue, place or underwrite directly the series of treasury bills known as SCITB-1 (SCITB-1). Nasfund took all of the SCITB-1 and paid the subscription amount of K125 million to NCL as agent for the State. The SCITB-1 was to mature in 364 days. On 9^th March 2011 the SCITB-1 matured and the principal and interest were payable to Nasfund. The State refused to pay the principal and interest. Nasfund commenced this proceeding.

This application

4. Nasfund supported by BPNG, submits that the IBD Funds should be released to it prior to trial as:

1. NCL admits that Nasfund made payment in March 2010, that the SCITB-1 matured on or about 9^th March 2011, but denies that NCL is liable to pay as it was only acting as agent for the State;
   
2. NCL also admits that of the principal amount a sum of approximately K55 million remains on Interest Bearing Deposit in accounts to the credit of NCL, but says that those funds are held by it as agent for the State;
   

100. NCL admits that the funds were not paid back to Nasfund and also admits that of the principal funds paid by Nasfund, K55 million remains on IBD in its name but denies that it is held on trust for Nasfund;
     

4. The State pleads that the money held in the IBD accounts is Nasfund’s and that NCL is liable to pay that money to Nasfund;
   
5. BPNG pleads that the money was never paid into the Waigani Public Account and, instead, was dispersed by NCL and agrees that the money held on IBD belongs to Nasfund;
   
6. In summary, the pleadings disclose that the only claimant to the funds currently held on IBD is Nasfund and the State and BPNG agree that they belong to Nasfund. NCL appears to say that the funds are held by it as agent for the State;
   
7. Whilst there may be a dispute as to who ultimately is liable to pay or repay the balance to Nasfund, there can be no question that the funds held on IBD belong to Nasfund and ought to be repaid to Nasfund for the benefit of its members together with the accrued interest. There can be no prejudice to any party in a finding that this money belongs to Nasfund as no other party claims ownership to it.
   

5. NCL submits that the IBD Funds should not be released prior to trial as the pleadings filed by the respective parties raise the following legal issues which the court can only determine at a proper trial:

a) Whether the SCITB-1 is a valid instrument to be a treasury bill within the meaning of the Treasury Bills Act?

b) Whether the amount of K125 million belongs to the State or Nasfund?

c) Whether the Management Agreement between the State and NCL was legally valid?

d) Whether NCL is an agent of the State?

e) Whether another entity other than BPNG is able to be appointed as agent for the State for the purposes of the Treasury Bills Act?

6. These issues arise it is submitted, as amongst others:

a) The fundamental issue that will determine the status of the IBD Funds is whether SCITB-1 is a treasury bill within the meaning of the Treasury Bills Act. The State and BPNG deny that SCITB-1 is a treasury bill. This issue has to be determined for ownership of the K55 million to be determined;

b) BPNG issued a direction to Westpac for the IBD Funds not to be dealt with without the direction of BPNG. The intention of this was to preserve the status quo until the legal issues are determined;

c) Serious issues are raised which cannot be summarily determined by pleadings without the necessary evidence being adduced and tested at trial.

Law

7. Order 12 Rule 1 National Court Rules is as follows:

“The Court may, at any stage of any proceedings, on the application of any party, direct the entry of such judgement or make such order as the nature of the case requires, notwithstanding that the applicant does not make a claim for relief extending to that judgement or order in any originating process.”

8. Order 10 Rule 21 National Court Rules is as follows:

“The Court may make orders for –

(a) the decision of any question separately from any other question, whether before, at or after any trial or further trial in the proceedings; and

(b) the statement of a case and the question for decision.”

9. Counsel for Nasfund and NCL relied upon the Supreme Court decision in MAPS Tuna Ltd v. Manus Provincial Government (2007) SC857. In that case the Supreme Court approved and adopted the following principles that were set out in Timothy Lim Kok Chaun v. Simon Goh Say Beng (2004) N2753 as to the circumstances under which certain issues or questions arising in proceedings may be determined separately from issues on the main trial. They include:

“1. Where there is a preliminary question of fact or law that is critical to the disposition of the proceedings, so that if decided one way, it will necessarily dispose of the proceedings.

2. Where (the) resolution of (a) separate question may result in (the) early resolution of the proceedings or by narrowing the disputed issues, avoid additional expenses or delay.

3. Where issues are clearly separable.

4. Where (a) liability issue can be determined ahead of the final assessment of damages.”

10. Reference was also made by counsel for Nasfund to the case of Eddie Tarsie v. Ramu Nico Management (MCC) Ltd (2010) N4005 in which Cannings J. recognised that the court has a discretion and may order that there be a decision on certain questions prior to trial in any appropriate circumstances particularly where the other parties would not be prejudiced by having certain questions decided separately.

Consideration

11. In this instance, by seeking the release of the IBD Funds, Nasfund is seeking a decision on a question prior to trial, which will not necessarily dispose of this proceeding. That this may be the case is referred to by Nasfund in its submissions where reference is made to the dispute and to who ultimately is liable to pay or repay ‘the balance’ to Nasfund.

12. That this court may make a decision on a question prior to trial which will not necessarily dispose of a proceeding, in my view, is permitted in Order 10 Rule 21(a) National Court Rules, there not being any fetter on the court’s discretion in the wording of that Rule, in this regard.

13. In support of my view, I refer to the exercise of this court’s discretion, as I did in Albright Ltd v. Mekeo Hinterland Holdings Ltd (2013) N5774 and Independent Public Business Corporation of Papua New Guinea v. Motor Vehicles Insurance Ltd (2017) N6664. In those decisions I make reference to the House of Lord’s decision of Evans v. Bartlam [1937] AC473; 2 All ER 646 referred to in Green & Co Pty Ltd (Receiver Appointed) v. Roger Britain Green [1976] PNGLR 73 and recently referred to in the decision of David J in Totamu v. Small Business Development Corporation (2009) N3702.

14. In Evans v. Bartlam (supra), Lord Wright at 488 quoted with approval the following statement of Bowen, LJ in Gardner v. Jay (1885) 29 Ch 50, at p59:

“When a tribunal is invested by Act of Parliament or by Rules with a discretion, without any indication in the Act or Rules of the grounds upon which the discretion is to be exercised, it is a mistake to lay down any rules with a view of indicating the particular grooves in which the discretion should run, for if the Act or the Rules did not fetter the discretion of the Judge why should the Court do so?”

15. That this court may make a decision on a question prior to trial which will not necessarily dispose of a proceeding is reflected in the second principle set out in Maps Tuna (supra) by use of the word ‘may’, and in the decision of CBS Productions Pty Ltd v. O’Neill (1985) 1 NSWLR 601 at 607 in which it was stated that a separate hearing may be appropriate where a determination would not dispose of the proceedings completely, but the parties would then be likely to settle the proceedings as a whole.

16. Further, in Ritchie’s Supreme Court Procedure NSW Vol 1, [31.2.1], it is stated that:

“..... the court retains an inherent power to determine issues separately in relation to the separate trial of questions of fact. That inherent power is simply an incident of the court’s power to control its own procedure: Landsal Pty Ltd (in liq) v. REI Building Society (now Co-op Building Society of South Australia) (1993) 41 FCR 421; 113 ALR 643; Arrowcrest Group Pty Ltd v. Gill [1993] FCA 541; (1993) 46 FCR 90; 50 IR 270.”

Then at [31.2.3]:

“.... the court’s ability to order the separate determination of questions of law is undoubted; ......”

17. In this instance, the only party who opposes the application for the release of the IBD Funds is NCL. NCL in paragraph 23 of its defence admits that a sum of approximately K55 million remains on IBD with Westpac Bank Ltd to its credit. Also in its defence, NCL pleads that at all times it acted as agent of the State, that it acted solely on the State’s instructions and that it acted at all times under the direction of the State.

18. In its written submissions, NCL submits, amongst others, that it admits that the transaction is a treasury bill thus the funds belong to the State, that the State has already spent K70 million of the K125 million that was raised by the SCITB, that if the money still on deposit with Westpac Bank does not belong to the State, on what basis did the State spend the K70 million, that it was the State’s responsibility to pay the K125 million into consolidated revenue and not NCL’s responsibility, that the fact that the money was not paid into consolidated revenue does not make the money any less the State’s money as evidenced by the State spending K70 million of the K125 million and that the failure to pay the K125 million into consolidated revenue is an administrative failure on the part of the State which the State needs to address, and not NCL.

19. Nowhere in its pleading or submissions does NCL make any claim to the IBD Funds. There is no evidence to the effect, and no submissions were made, that NCL would be prejudiced if the IBD Funds were released to Nasfund.

20. The IBD Funds are in the name of NCL but that is NCL as agent of the State. The State however, pleads that the money in the IBD Funds is Nasfund’s and NCL is liable to pay that money to Nasfund. So as submitted by Nasfund, it is the case that the pleadings disclose, and the written submissions support, that the only claimant to the IBD Funds is Nasfund. The State and BPNG agree that the IBD Funds belong to Nasfund. It is quite apparent that NCL takes the position that the funds are held by it as agent of the State and that the State owns the IBD Funds, however no claim is made to the IBD Funds by NCL, and as mentioned, the State pleads that the money is Nasfund’s.

21. After considering the law, the submissions of counsel and from a perusal of the pleadings, I am satisfied that this court is able to, and it is appropriate that it should, make the orders sought. There is no evidence to the effect that, and no submissions made that NCL will be prejudiced if the order is made, and the disposition of the substantive proceeding will not be adversely affected. It may be that the granting of the orders sought may result in an early resolution of the proceeding. Given this it is not necessary to consider the other submissions of counsel apart from costs. Nasfund seeks costs on an indemnity basis, however I am not of the view that it has satisfactorily made out its claim in that regard.

Orders

22. The orders of the Court are:

1. The amount of approximately K55 Million referred to in paragraph 23 of the Plaintiff’s Statement of Claim, held on interest-bearing deposit with Westpac Bank (PNG) Limited and/or any other commercial bank and admitted to be so held by the Defendants in their respective defences shall be immediately released to the Plaintiff;
   
2. The Plaintiff’s costs of this application shall be paid by the First Defendant on a party party basis;
   

100. The balance of the Statement of Claim, and the matter generally is adjourned to a date to be fixed for further directions and the allocation of a hearing date;
     

4. The time for entry of these orders is abridged to the date of settlement by the Registrar which shall take place forthwith.

_____________________________________________________________
Ashurst: Lawyers for the Plaintiff
Leahy Lewin Lowing Sullivan: Lawyers for the First Defendant
Office of the Solicitor General: Lawyers for the Second Defendant
Allens: Lawyers for the Third Defendant