SC1369
PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA 28 of 2011

BETWEEN:

KOYASI PRINTING LIMITED
Appellant

AND:

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Respondent

Waigani: Kirriwom, Manuhu and Hartshorn JJ
2013: December 16th,
2014: March 28th

Appeal against a dismissal of an application for an extension of time to comply with s. 5 Claims By and Against the State Act 

Cases cited:

Rawson Construction Ltd v. Department of Works (2005) SC777

Counsel:

Mr. T. Cooper, for the Appellant
Ms. I. Mugugia, for the Respondent

28th March, 2014

1. BY THE COURT: This is an appeal against a National Court dismissal of an application for an extension of time to comply with s. 5 Claims By and Against the State Act (Claims Act). The appeal is opposed by the respondent, the State.

Facts

2. The appellant rendered an invoice for the sum of K 111,969.00 to the Department of Health on 23rd February 2009. The invoice was for the provision of printing services. The invoice was not paid notwithstanding that the appellant had a contract for the provision of printing requirements to the Department of Health that expired on 31st December 2009. The appellant sought an extension of time from the Attorney General to issue a notice of intention to make a claim against the State pursuant to s. 5 Claims Act, by letter dated 17th August 2010. By letter dated 30th September 2010 the Attorney General refused the extension sought. On 15th November 2010 the Department of Health informed the appellant by letter that it would not be paying the invoice for K 111,969.00. On 31st December 2010 the appellant filed an application in the National Court seeking an extension of time within which it could comply with s.5 Claims Act. The application was heard and dismissed on 9 March 2011.

3. The appellant submits in essence that although the trial judge was correct in finding that a cause of action was disclosed, he fell into error in dismissing the extension of time application as:

a) there was a reasonable explanation for the delay in giving a notice pursuant to s. 5 Claims Act; and

b) the State would not have suffered prejudice if the extension of time had been granted.

4. The respondent submits that the appellant has not established its grounds of appeal, the appeal lacks merit and the trial judge did not fall into error when he dismissed the extension of time application.

Law

5. As to the principles applicable on an application for an extension of time to comply with s. 5 Claims Act, in Rawson Construction Ltd v. Department of Works (2005) SC777, the Supreme Court held that an applicant must show sufficient cause for not meeting the requirements under the Claims Act. Sufficient cause would be shown if the applicant is able to:

a) provide by appropriate evidence a reasonable explanation for not giving notice within the period stipulated under s. 5 Claims Act and where there is a delay in applying for an extension of time, provide a reasonable explanation for that delay;

b) demonstrate a reasonable cause of action to be pursued on the merits; and

c) show by appropriate evidence that the delay in giving notice was not and or would not result in any prejudice to the State.

Discussion

6. As to whether there was a reasonable explanation for the delay in giving notice pursuant to s. 5 Claims Act - the appellant in the National Court contended, and there was evidence to the effect that, as the parties had an ongoing business relationship and that the appellant had a contract with the Department of Health that, had commenced in November 2007, been extended in December 2008 and which was to expire in December 2009, the appellant did not want to jeopardise and to prejudice the business relationship it had with the Department of Health by giving a notice pursuant to s. 5 Claims Act. When it became clear that the appellant would no longer receive business from the Department of Health, it decided to apply for an extension of time to file the requisite notice.

7. The trial judge did not accept this argument and in essence said that a businessman took a calculated risk if he decided not to comply with time requirements. The appellant submits that its decision to wait for payment and the renewal of its contract was made for business and economic reasons. It was a legitimate decision made so that any prospect of its contract being renewed and of it being paid would not be jeopardised. Whilst it was a calculated risk to take, it was a legitimate and rational economic decision in respect of its business and thus is a reasonable explanation for not giving notice within the prescribed time.

8. This decision to wait, in our view, should be considered in the context that the contract between the appellant and the Department of Health was open ended but the business practice that had developed between the appellant and the Department of Health was for the contract to be renewed or reviewed every 12 months. The Department of Health had renewed the contract annually and so it was reasonable to expect that the contract would be renewed. It was also reasonable to assume that giving the requisite notice in time may have jeopardised a renewal occurring. 

9. Further, it is important to note that the Department of Health did not inform the appellant of its refusal to pay the sum of K 111,969.00 until it did so by letter dated 15th November 2010, one a half months after the Attorney General's letter refusing to accede to the appellant's application for an extension of time. It can be argued that this supports the stance of the appellant in not wanting to take any action that may have jeopardised the business relationship as the decision whether to pay the amount owing by the Department of Health was not made until at least 18 months after the subject invoice was rendered. All of this evidence was before the trial judge.

10. Given the above, we are satisfied that the appellant did give a reasonable explanation for not giving notice within the requisite time. In deciding otherwise, we are of the view that the trial judge fell into error.

11. As to whether the State would have suffered prejudice if the extension of time had been granted - the trial judge stated that there was no specific reference in the affidavit filed in support of the extension of time motion as to the names of the individuals with whom the appellant had been dealing and who would be in a position to assist the State if the State had to defend the claim after a period of more than one year had elapsed. As a result of this the trial Judge found that the State would be prejudiced.

12. It is the case though that all of the persons who were aware of the dealings between the appellant and the Department of Health were listed as being copied in the letter from the Department of Health to the appellant dated 15th November 2010 informing that the sum of K 111,969 would not be paid. This was only three months before the hearing for an extension of time. This letter was annexed to the affidavit filed in support.

13. Given this, we are satisfied that notwithstanding that there was no specific reference in the body of the affidavit to the persons with whom the appellant had been dealing at the Department of Health, the fact that most of them were listed in the letter from the Department of Health is evidence that the State would not have been prejudiced if the extension of time had been granted. In deciding otherwise, we are satisfied that the trial judge fell into error.

14. We have found that the appellant had disclosed a reasonable explanation for not complying with the requisite time period in s.5 Claims Act and that the State would not have been prejudiced if the extension of time was granted. This, together with the finding of the trial judge that a cause of action was disclosed, the principles applicable that are required to be met for an extension of time to be granted have been satisfied. Consequently this appeal should be allowed.

Orders

15. The formal Orders of the Court are:

a) this appeal is upheld and the decision of the National Court in proceeding OS 907 of 2010 Waigani dated 9th March 2011, is quashed.

b) the appellant is granted leave to give a notice in writing of its intention to make a claim against the State pursuant to s.5 Claims By and Against the State Act, within 21 days from today.

c) the respondent shall pay the appellant's costs of and incidental to this appeal and the application before the National Court that was the subject of this appeal.
_____________________________________________________________
Mirupasi Lawyers: Lawyers for the Appellant 
Office of the Solicitor General: Lawyers for the Respondent