Comfort Management Services Limited v Lae Urban Local Level Government Council [2013] PGDC 9; DC2055 (21 March 2013)

DC2055

PAPUA NEW GUINEA

[In the Civil Jurisdiction of the District Court Held at Lae]

DC No 01 of 2013

BETWEEN:
COMFORT MANAGEMENT SERVICES LIMITED
(Complainant)

AND:
LAE URBAN LOCAL-LEVEL GOVERNMENT
(Defendant)

Lae & Bulolo: C Inkisopo

2013: 9th January, 21st February & 21st March,

District Courts Act, Chapter 40 – Jurisdictions of District Courts set out under Act – practice & procedure defined by Act – Section 21 sets out jurisdictions in civil claims & demarcates parameters of application of jurisdictions – Practice & procedure – substantive cause of action - claim to compel party to submit to and exhaust 'arbitration' term of MOA – ancillary jurisdiction of District Courts under s 22 of Act – interim restraining order against interference, interruption & eviction pending 'arbitration' - Claims By and Against the State Act – application of s 5 notice requirements – claim to exhaust 'arbitration' clause in MOA – claim to submit dispute & cause for settlement by 'arbitration' –

Legislations/Rules/Regulations:
1: Claims By and Against the State Act, 1997
2: District Courts Act, Chapter 40
3: Organic Law on Provincial & Local-Level Governments of 1997

PNG Cases Cited:
1: Mision Asiki -vs- Manasupe Zurenuo & Ors (2005) SC797 (applied)
2; Rimbink Pato Trading as Pato Lawyers -vs- Enga Provincial Government [1995] PNGLR 469 (considered)
2: Reservation Pursuant to Section 15 of the Supreme Court Act (2001) SC 672 (applied)
4: Maps Tuna Limited -vs- Manus Provincial Government (2007) SC 857 (considered)

Appearances:
1: Pr Luke Yawau, Managing Director: For the Complainant.
2: Mr Alex Maribu, in-house Counsel: For the Defendant

Held:
1: The Court is not convinced that the Complainant's 'rezoning application' offends provisions of the MOA and thus can not be an 'act of serious misconduct' under Clause 14:3(iii) or any other provision of the MOA.

2: The Cause or matter of dispute appropriate to submit for arbitration as provided for under Clause 20 of MOA.

3: Defendant by itself, servants and/or agents is restrained forthwith from evicting, threatening and harassing to evict or disturbing and interfering with the Complainant, its servants and/or agents in engaging in its lawful activities from and at the Eriku Public toilet and shower facilities pending the 'arbitration' or until further orders.

4: The Complainant shall have the costs of these proceedings to be paid by the Defendant; if not agreed, they are to be taxed.

21st March, 2013

JUDGMENT

C Inkisopo: The Complainant initiates these proceedings against the Defendant seeking orders compelling the Defendant to pursue settlement of its perceived grievance through arbitration pursuant to Clause 20 of their (Parties') MOA including an interim restraining order against the Defendant.

Parties, Background & Overview of case:

2: The Complainant is a corporate entity established under the Company laws of Papua New Guinea whilst the Defendant is also a corporate personality established under the Organic Law on Provincial & Local-Level Governments (OLP & LLG) as the third-tier form of governments in Papua New Guinea.

3: The Defendant as such is also the local municipal authority for the City of Lae and is responsible for the provision of all municipal services in the City of Lae and its surrounds. The municipal services it delivers are in the area of the provision, care, maintenance and upkeep of all public amenities and utilities within the City of Lae for the city public's benefit and convenience.

4: The Complainant is an entity specializing in the business and art of keeping, maintaining and providing public toilet and shower services in towns and cities; in the particular instance of our case, at the Eriku Public Toilets and shower facilities on the 'user-pay' concept basis.

5: The parties have a written Memorandum of Agreement (MOA) in place in which they agreed for the Complainant to control, operate and manage the public toilet and shower facilities at Eriku on the novel and untried "user-pay" concept basis.

6: In the course of business and time, Defendant seemingly discovered the Complainant to have lodged a rezoning application purportedly without its knowledge and consent to the National Physical Planning Board which fact, it seems, agitated the Defendant's ire into forming the opinion that the Complainant had committed "an act of serious misconduct" thereby bringing it (Defendant) "into disrepute". The Defendant hence did not take too kindly the Complainant's such actions and claimed same to be a breach of the MOA Clause 14:3(iii). The Defendant consequently served on Complainant a termination notice of the MOA (that incorporated and encompassed the Eriku Public Toilet and shower facilities' management and control) by way of a letter dated 22nd November, 2012.

7: As a result of the Defendant's Notice of Termination, the Complainant took out these proceedings seeking an order requiring the parties to submit to and exhaust Clause 20 of the MOA being the built-in mechanism for dispute resolution through the avenue of 'arbitration'.

Complainant's Case:

8: The Complainant claims that the Defendant's reason cited as basis for the Notice of Termination had no basis in and under any terms of the MOA and thus is not founded on any legal basis and therefore seeks orders compelling the Defendant into performing a specific act under the MOA. The Complainant earlier sought and successfully obtained a corollary order for restraint against the Defendant from carrying out its intentions as envisioned in its letter of 22nd November, 2012.

Defendant's case:

9: The Defendant claims that the Complainant applied to the National Physical Planning Board without its knowledge and consent. It further claims that the Complainant without its knowledge engaged a private surveyor to survey the land where the toilet is located (reserve land) and applied for planning permission to rezone same "into a commercial zone with the intention to claim the land" (Paragraph #6 of Roy Kamen's affidavit dated 19th February, 2013). This revelation, the Defendant claims, prompted it (through the a/City Manager) into forming the opinion that the Complainant's action in applying for Planning Permission was an 'act of serious misconduct' thereby forming a ground for termination of the Memorandum of Agreement pursuant to Clause 14:3(iii) of the MOA. It therefore says that it was perfectly within its rights and powers to issue the notice of termination on the Complainant and that the Complainant simply has nothing to neither argue nor talk about!

Section 5 Notice Requirements?

10: Mr Maribu speaking for the Defendant in argument made a by-the-way submission that the Court should, in dealing with this matter, keep in mind the issue of the application of s 5 notice requirements of the Claims By and Against the State Act as there is no evidence of its compliance prior to the commencement of this proceeding. I noted that Mr Maribu did not take this issue to any length emphatically; but alerted the Court only to bear same in mind when dealing with the matter. I can understand and appreciate Mr Maribu's dilemma in not pressing this point emphatically because of the type of claim and the cause of action involved that I am about to address a little below.

11: Though Counsel reminded the Court only as a matter of a by-the-way submission, the s 5 notice issue is always a crucial and fundamental consideration in any Court proceeding involving the "State" as a defendant as it impacts on the Court's jurisdiction to deal with matters that come before it especially when the Defendant is the 'State' or a State agency or a State entity by operation of the Claims By and Against the State Act, 1997.

12: The Defendant herein, the Lae Urban Local-Level Government (LULLG) is one of the third tier forms of governments in Papua New Guinea established under The Organic Law on Provincial and Local-Level Governments (OLP & LLG). All Provincial and Local-Level Governments have been held to be "State" in a number of Supreme Court case determinations notably; Reference Pursuant to Section 15 of the Supreme Court Act (2001) SC 672, Maps Tuna Limited -vs- Manus Provincial Government ( 2007) SC 857 and a number of others; in all of which the term "State" was held to include Provincial Governments and Local-Level Governments for purposes of the Claims By and Against the State Act.

13: That being so; does the notice requirements of s 5 of the Claims By and Against the State Act apply to our instant case? In order to answer this, one needs to consider the actual cause of action founding the proceeding including the particular relief sought. The cause of action in our instant case is a claim for something somewhat akin to a 'specific performance' under the Memorandum of Agreement and not a claim for damages or the like. If this case is one of a claim for damages upon a contract then the s 5 notice requirements would certainly apply. "The notice requirements of the Claims By and Against the State Act apply only to actions that are founded on contract or tort or breaches of Constitutional rights". See Mision Asiki vs Manasupe Zurenuoc & Ors (2005) SC 797. Our instant case is but one seeking to have the Defendant compelled to pursue and exhaust the process of 'arbitration' under the MOA together with corollary restraining orders against it. The Supreme Court in Mision Asiki vs Manasupe Zurenuoc(supra) said on p.2 of its numbered judgment; "Section 5 does not apply to actions seeking orders in the nature of prerogative writs commenced under Order 16 of the National Court Rules..." Here the Complainant is not seeking damages arising out of a contract but a restraining order and an order to have the Defendant pursue and exhaust a specific provision and term of the MOA. Though this case is not one strictly speaking, seeking orders in the nature of a prerogative writ properly so-called, rather a restraining order and a 'specific performance' kind of order which in my view is somewhat likened to a District Court version of the 'prerogative writ of mandamus' that is available only in the hands of the superior courts.

14: Consequently, I find that s 5 notice requirements do not apply to our instant case and that this matter is competently before this Court to be adjudicated upon and a determination made.

Assessment of Case.

15: Both parties filed, served and cross-served on each other supporting affidavits with annexure in support of their respective cases and I have had the benefit of accessing them in my efforts to dealing with this matter.

16: I note the Complainant's argument as contending that if the Defendant grieved the fact of its rezoning application as being 'serious misconduct'; then that purported grievance must have to be based on or come to within a specific term of the MOA. That is; as the Complainant contends, because the alleged rezoning application is outside of the MOA's terms and conditions and besides; the Defendant has not proven nor has it shown to the Court the basis of its right and the entitlement that gives it the special and exclusive privilege to be consulted first and consent sought from even before the rezoning application was ever made.

17: The Defendant counter argues that when Complainant went behind its back and carried out a survey of the Eriku Public Toilets land and then lodged a rezoning application, it breached a certain provision of the MOA. It contends that Defendants such actions fell to within the ambits of Clause 14:3(iii) of the MOA. Hence, it was within its rights to take the kind of action it took. The Defendant therefore contends that the termination notice served on the Complainant should not be a cause for argument!

18: Having have considered both arguments, this Court considers it appropriate to take a broader-picture overview of the parties themselves and their relationship to each other under the MOA in terms of the public interests at stake and what they are supposed to provide and to bear same in mind at all times; i.e., this important public service should not become subject to the whims of parties battling competing interests but must primarily be for them jointly a matter of shared responsibility and focus to responsibly serve in providing a cleaner, professionally managed public toilet and shower service to the general public of Lae; and to extend the same treatment to the other parts of the City like the now demolished Top-Town Public Toilet that lies in waste and remains flattened for many years now as well as the Main Market Public Toilet facilities.

Finding & Conclusion

1: I do not consider the Complainant's rezoning application to offend any provision of the parties' MOA in order to become an act of serious misconduct on the part of the Complainant such that it was likely to bring the Defendant into disrepute. I say this because of the fact that there is no provision in the parties' MOA covering the stated allegation to have been offended in order to bring it to within the ambit of Clause 14:3(iii) of the MOA. On hindsight, it would seem to me that what Complainant is alleged to have done actually operated to the Defendant's advantage in that it assisted towards achieving what it overlooked putting place to protect the public interests in this vital area of a public need.

19: I say this because (and I stand corrected if I am in error on this view) the facility, though a public one, is operated on a commercial basis and by that fact, I believe the subject facility ought in my view to be allocated a commercial/industrial zone status if one likes to say it.. Hence, in my humble view, I do not consider the fact of the application for rezoning to be a valid cause under any provisions of the current MOA that confers on the Defendant an exclusive right to unilaterally take the action it took without first fully exhausting the provisions of Clause 20 of their (Parties') very own MOA.

20: On the material before me, this Court is satisfied that the Complainant has made out its case against the Defendant and it is therefore entitled to the reliefs it seeks.

[A Passing Comment

21: Before passing, I'd wish to make an observation here. The Parties are involved in dealing with and providing an extremely a vital facility for the public's use and convenience and so all stake-holders and authorities should support the Parties operate this well-working concept without further disruptions. This user-pay public toilets and shower facility, though an untried and a novel one, seems to be a success story for the Parties in terms of the type of service being provided. I can attest to this fact; as a member of the public I have witnessed people flooding into the facility at Eriku to access the services provided there and I too have accessed them on a number of occasions and consider this concept to be working very well at the Eriku facilities. This concept should be supported and extended to the other parts of the city like the Top-Town toilet and the Main Market facility. This concept is working extremely well and should be supported by all concerned. Getting bogged down with disputes concerning the facility and its management does little to help; albeit an anti-climax. Issues that are likely to derail such a working program should not be allowed to prop up its ugly head when such can best be resolved through mutual dialogue and consultation. Public amenities and service providers getting bogged down with issues that can otherwise be settled by talking rather than causing relations to sour should where possible be avoided. Therefore, it behoves of all right-thinking persons in authority to do well bearing this ideal in mind. With this user-pay facility, a once-upon-a-time usually filthy, messy and smelly place is now rendered a decent place to visit to relieve unlike previously when the place was always a messy sight with human feaces all over, not to mention the stomach-wrenching stench emanating wherefrom. All of this is now a thing of the past at the Eriku facility and this is so because of the parties' combined input and they should proudly hold their heads high, pick up and move on forward.

22: The Parties should seriously consider settling their issues, resolve and continue on with their good work thus far and extending the concept to the Top-Town and the Main Market facilities. The general populace of Lae City deserves nothing better than this. That is a task that is not and never difficult to scale and achieve as it is evident to this Court that the Parties are handsomely capable of delivering them; if only they can get over this one, reconcile and move forward with the quality public amenities and service they are providing. And any organizations and authorities tasked to support and fund them provide these have a moral responsibility to continue to help them deliver the services and of course the public will pay to access the services and this all-important service will definitely prove to be self sustaining].

23: FORMAL ORDERS OF COURT

23:1: The Parties shall submit to and exhaust the process of "Arbitration" under the provisions of Clause 20 of the MOA.

23:2: Pending the 'Arbitration' process or exercise, the Defendant by itself, its servants, agents or whoever, whether named or unnamed is restrained forthwith from evicting, threatening to evict, interrupting, harassing and preventing the Complainant, its employees, servants and agents from normally carrying on its business activities in and at the Eriku Public Toilets and Shower facilities.

23:3: Costs are awarded to the Complainant; to be taxed; if not agreed.

______________________________________________________________________________
Appearances:
1: Pr Luke Yawau, Managing Director: for the Complainant.
2: Mr Alex Maribu, LULLG In-house Lawyer: for the Defendant.