Pupune v Makarai [1997] PGNC 201; [1997] PNGLR 622 (26 September 1997)

[1997] PNGLR 622

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

STEVEN PUPUNE, AUNGGAO UYASSI, PETER HERO, STAINER SAPU, GITENE SOSO, JAMES SAVE, MALO KINIAFA AND ROBIN KOSI
- judgment creditor/plaintiffs -

V

and: UBUM MAKARAI, ADMINISTRATOR EASTERN HIGHLANDS PROVINCIAL GOVERNMENT
(in suspension)
- judgment debtor/defendant; and

PAPUA NEW GUINEA BANKING CORPORATION, GOROKA BRANCH
- garnishee -

MOUNT HAGEN: INJIA J
20 June, 26 September 1997

Facts

The plaintiffs applied, by notice of motion seeking leave to issue garnishee notice against the garnishee in relation to an unsatisfied order for costs obtained previously. The said order was obtained against the present judgment debtor/defendant, Minister for Provincial Affairs and Village Services (second defendant) and the State (third defendant) in the substantive proceedings. As the costs, the subject of the present application, were not awarded against any particular defendant, all the three defendants in the substantive proceedings are jointly and severally liable to pay the costs. However, the applicants’ lawyers served their taxed bill of costs on the present judgment debtor/defendant only.

Held

1. In order for leave to be granted, the court must be satisfied of three things:
   
   • (a) There is an unsatisfied judgment or order;
     
   • (b) There is a debt due or accruing to the judgment debtor from the garnishee; and
     
   • (c) The issue of a garnishee notice by the court is subject to any Act, which may restrict or qualify the circumstances or conditions upon which a garnishee notice may be issued against the accounts or properties of a judgment debtor.
     
2. The Claims By and Against The State Act 1996 is of general application to all properties and revenue of "the State" which includes both the National Government and Provincial Governments.
   
3. Pursuant to s 13(1) of the Claims By and Against The State Act 1996, the property or revenue of a Provincial Government, in this case the operating bank account of the Eastern Highlands Interim Provincial Government cannot be garnished and accordingly, leave to issue garnishee notice under Order 13 rule 56 of the National Court Rules is refused.
   

Papua New Guinea case cited

Pato Lawyers v Enga Provincial Government [1995] PNGLR 469.

Counsel

A Kwimberi, for the plaintiffs.

No appearance for the defendant.

26 September 1997

INJIA J. This is an application by motion on notice by the plaintiffs seeking leave to issue a garnishee notice against the garnishee under Order 13 rule 56 of the National Court Rules. The judgment debtor is now the Eastern Highlands Interim Provincial Government. At the time the judgment debt was incurred, the Eastern Highlands Provincial Government was in suspension. The judgment debtor operates a bank account with the garnishee.

In order for leave to be granted, the court must be satisfied of three things: (1) that there is an unsatisfied judgment or order; (2) that there is a debt due or accruing to the judgment debtor from the garnishee; and (3) that the issue of a garnishee notice by the court is "subject to any Act" which may restrict or qualify the circumstances or conditions upon which a garnishee notice may be issued against the accounts or properties of a judgment debtor. The first and second requirements are stipulated by O. 13 r.56 (3). The third requirement is stipulated by O. 13 r. 56 (1) which provides:

"56. Garnishee Notice (46/3)

(1) A judgment creditor may, with the leave of the Court, but subject to any Act, file and serve on the garnishee a garnishee notice in form 60...."

By affidavit of the applicant’s counsel, Mr Kwimberi, the applicant in this case has shown that there is an order for costs against the judgment debtor obtained on 29 September 1995. That order was a general order for costs made against three defendants including the present judgment debtor who was the first defendant in the substantive proceedings. The other two judgment debtors are Castan Maibawa, Minister for Provincial Affairs & Village Services (second defendant) and The Independent State of Papua New Guinea (third defendant). As the order for costs was a general order, all these defendants were jointly and severally liable to pay the plaintiffs’ costs. The applicant’s lawyers obtained a taxed bill of costs in the sum of K5,020.00 which they only served on the present judgment debtor, (the first respondent), because (according to the applicant’s counsel), it was difficult to recover the costs from the other two judgment debtors. As of today, the order for costs for that amount is still unsatisfied. Mr Kwimberi in his affidavit says that the "judgment debtor is a statutory body and has an account with Papua New Guinea Banking Corporation and there is always sufficient fund in its account" for the garnishee to satisfy the judgment debt under a garnishee order. I accept this evidence on its face value although it lacks particularity as to the types of accounts and balance on those accounts. I am satisfied that the first two requirements under O. 13 r. 56 (3) have been satisfied by applicant.

The third requirement requires careful consideration. The judgment debtor in this case is a provincial government. In the substantive proceedings, Mr Makarai was sued in his official capacity as the Administrator of the Eastern Highlands Provincial Government (EHPG), which was, then under suspension. Since then, there has been reform of the constitutional laws governing provincial governments. Upon the enactment by Parliament of the Constitutional Amendment No. 16 - Provincial Governments and Local Level Governments 1995 (hereinafter "Const. Am. No. 16") and Organic Law on Provincial Governments and Local Level Governments No. 16 of 1995 (hereinafter "OLPG and LLG"), the suspended EHPG was abolished and it became the EHPG under (s 122 the new reform laws of OLPG and LLG). Today, pending the establishment of a permanent Provincial Government, there is an Interim Provincial government: s 123 of OLPG and LLG. By virtue of s 135 of the OLPG and LLG, all actions pending against the previous Provincial Government, in suspension or otherwise, do not abate or discontinue, but they may be "prosecuted, continued or enforced by, and against" the Interim Provincial Government. I presume that this present application is against the Interim EHPG (IEHPG) as allowed by s 135 of the OLPG and LLG. The issue is whether there is any provision in the OLPG and LLG or any other relevant statute enacted by the National Government or the IEHPG which affects the issue of a garnishee notice against the bank accounts of Interim Provincial Government, in particular IEHPG. I am not informed by Mr Kwimberi of any such statute enacted by the IEHPG or its predecessor, the suspended EHPG or the full EHPG (see s 132 of OLPG and LLG). I am also not informed by Mr Kwimberi of any such statute enacted by the National Parliament, which specifically applies to IEHPG or EHPG, which entitles his client to enforce its debt against the EHPG or IEHPG.

The only Act of relevance to the issue is the Claims By and Against the State Act 1996 (No. 52 of 1996) enacted by the National Parliament. This Act repealed and replaced the previous Claims By and Against the State Act (Ch. No. 30). The relevant provision of the new Act is s 13 (1) (which is identical to s 6 (1) of the old Act). Section 13 (1) provides:

"13. No execution against the State

(1) In any suit, execution or attachment, or process in the nature of execution or attachment, may not be issued against the property or revenue of the State."

The term "the State" is not defined in this Act. In Pato Lawyers v Enga Provincial Government [1995] PNGLR 469, Kapi, DCJ, held that the term "the State" for purposes of this Act means the National Government or an arm, department, agency or instrumentality of the National Government but does not include a provincial government. His Honour further went on to hold that any suit, execution or attachment, or process in the nature of execution or attachment such as garnishee notice in that case, may be issued against a Provincial Government but not the National Government. In arriving at this conclusion, His Honour reasoned at p. 470-47 as follows:

"The question is whether a provincial government comes within the meaning of the word State. This word is not defined by the Act. Interpretation Act (Ch. No. 2) defines "the State" as the Independent State of Papua New Guinea. This is consistent with the definition given by Interpretation Act 1990 (Enga)."

The Constitution does not define the word State, but it defines the name "Papua New Guinea" under Sch. 1.2 to mean the Independent State of Papua New Guinea. The Independent State of Papua New Guinea derives its legal existence or capacity from the Constitution of Papua New Guinea (see Preamble to the Constitution). The power and the authority of the people are vested in the State of Papua New Guinea, and this power is exercised by the National Government (see s 99 of the Constitution). Subject to any other provision of the law, the term "the State", for purposes of Claims By and Against the State Act, means the National Government or an arm, department, agency, or instrumentality of the National Government. This does not include a provincial government."

In that case, His Honour was dealing with a Provincial Government established under the old Organic Law on Provincial Government which had enacted a provincial law in respect of the manner and form in which the Enga Provincial Government would sue or be sued namely, the Legal Proceedings By and Against the Enga Provincial Government Act 1978 passed by the Enga Provincial Government. In that provincial Act, there was no provision, which prohibited any execution or attachment of process against the Enga Provincial Government. In the present case, however, as I have already said, I am not informed by Mr Kwimberi of any similar law passed by the IEHPG or by the previous IEHPG. In these circumstances, I do not accept Mr Kwimberi’s submission that I apply the reasoning of Kapi, Dep. CJ in that case.

In the absence of any definition of the term "the State" in the Claims By and Against the State Act 1996, the definition of "the State" in the Interpretation Act 1996 (Ch. No. 2) should apply. In this Act, the term "the State" is defined as the "Independent State of Papua New Guinea". The source of the term "the Independent State of Papua New Guinea" is the Constitution, which defines and establishes the Independent State of Papua New Guinea. The establishment of the Independent State of Papua New Guinea by the people is set out in the Preamble. The term "the State" or the Independent State of Papua New Guinea is the "government" of Papua New Guinea. The Government of Papua New Guinea or "the State" is the embodiment of the people of Papua New Guinea. The collective governing power of the people of Papua New Guinea is vested in the duly elected representatives who are elected by the people. The elected representative comprises two forms of government: the National Government and the Provincial and Local-Level Governments, both of which are established under the Constitution. The Preamble makes no distinction between the two types of governments, both of which have elected representatives. In other words, the Preamble does not say the "Independent State of Papua New Guinea" only means the National Government. The term "The Independent State of Papua New Guinea" is intended to be read liberally and fairly to mean all forms of government established under the Constitution, that is, the National Government and Provincial Governments and Local Level Governments. Therefore, it is clear in the Preamble that as far as the people are concerned, they have an elected government known as the "Independent State of Papua New Guinea" or "the State". The people’s collective governing power is vested in the "Independent State of Papua New Guinea", be it the National Government or a Provincial and Local-Level Government. The relationship between these two forms of governments in relation to the exercise of their respective powers is provided for by the Constitution and relevant Organic Laws in fine detail but, on the whole, those provisions do not derogate from the underlying fundamental principle that these two forms of governments are governments of the "people" or "the State". In relation to the power to acquire and hold property or receive and generate revenue of the State, both the National Government and Provincial Government are given the status of a legal entity and vested with the appropriate powers. But the property that they acquire and hold or revenue that they generate and expend ultimately belongs to the people of Papua New Guinea, who fund these institutions through the public purse.

The primary purpose of the Claims By and Against the State Act 1996 is to provide for the situations in which the State may sue or be sued in its corporate name, "the State". The purpose of s 13(1) is to protect the "property or revenue of the State" against interference by private interests. The underlying principle is that "the property and revenue of the State" belongs to all the people of Papua New Guinea and that all properties or revenues of the State should be properly planned, budgeted and equitably distributed to all the people of Papua New Guinea by "the State". On the same basis, satisfaction of judgment debts should also be planned and budgeted for out of money or properties "legally available to it". In other words, the public or people’s interest should be preserved and protected above private interests including the interests of judgment creditors.

In my view, the term "the State", in the context of "the property and revenue of the State", in the Claims By and Against the Act 1996 is of general application to the "property or revenue of the State", which includes the National Government or Provincial and local-level governments. There is nothing in this Act to restrict its application to the property or revenue of the National Government only. Both the National Government and the Provincial and Local Level Governments comprise "the State" and they deserve the protection accorded by s 13 (1). It would defy logic, commonsense and statutory purpose to accord a definition of "The State" in the context of "the property and revenue of the State" in this Act to permit the execution or attachment against the property or revenue of a Provincial Government but not the National Government when both governments are part of "the State" and both governments are funded by the people of Papua New Guinea through the public purse. In arriving at this conclusion, I have considered the decision of Kapi, DCJ in Pato Lawyers v Enga Provincial Government but with respect, I differ from his reasoning.

In the present application, the property or revenue of the IEHPG in the form of bank account with the Papua New Guinea Banking Corporation operated at Goroka Branch is sought to be garnished. For the reasons I have given, I refuse leave to issue the garnishee notice sought.

Lawyer for the plaintiffs/applicants: Paulus M Dowa Lawyers.
Lawyer for the defendants/respondents: Solicitor General.