Wamena Trading Company Ltd v Civil Aviation Authority of Papua New Guinea [2006] PGNC 57; N3058 (10 May 2006)

N3058

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

OS NO.848 OF 2005

WAMENA TRADING LIMITED
Plaintiff

V

CIVIL AVIATION AUTHORITY OF PAPUA NEW GUINEA
Defendant

WAIGANI: Lay J
2006: 3 and 10 May

PRACTICE AND PROCEDURE– ex parte injunction – application to set aside – considerations

PRACTICE AND PROCEDURE – ex parte injunction – whether interim injunctive relief must be pleaded before it can be obtained

STAMP DUTIES ACT – s 19 – admission of unstamped document into evidence

CLAIMS BY AND AGAINST THE STATE ACT – whether the Civil Aviation Authority is "the state" for the purposes of s 5 of the Claims By and Against the State Act.

Cases Cited:
SCR 1 of 1998; Reservation Pursuant to s 15 of the Supreme Court Act SC672; Kemp Ada v Lin Wen Beau & Ors [1996] PNGLR 172; SCR No. 9 of 1990; Application by the Principle Legal Adviser Bernard M. Narokobi [1991] PNGLR 239; The National Housing Corp. v. Vicki John N2770; Mainland Holdings Ltd v Paul Stobbs N2522; National Housing Corp. Yama Security Services Pty Ltd N1985; Mark Ekepe v William Gaupe N2694; Sioti Bauf and Lovoi Nadai v Poliamba Pty Ltd [1990] PNGLR 278; Golobadana No 35 Ltd v Bank of South Pacific Limited N2309; Craftworks Niugini Ltd v Allan Mott SC525; Milton McMahon & Louis Aitsi v Port Moresby Real Estate Pty Ltd [1986] PNGLR 208; Putput Logging Pty Ltd v Philip Ambolis [1992] PNGLR 159; Wahgi Security Services Pty Ltd v John Tenlon and Western Highlands Provincial Government Suspension [1994] PNGLR 136; Spirit Haus Ltd v Robert Marshall N2630; Jay Mungo Pty Ltd v Steamships Trading Co. Ltd (1995) PNGLR 129; Acting Public Prosecutor v Uname Aumone [1980] PNGLR 510; Rowland and Angela Chang, trading as Red Rose Restaurant v Aviat Social and Sporting Club (Lae) Inc. N913; Hollington v Hewthorn [1943] KB 587; Mesulam Tomalana v Rabaul Pharmacy [1991] PNGLR 65; AGC Pacific Ltd. v Woo International Pty Ltd [1992] PNGLR 100; Ume More v University of Papua New Guinea [1985] PNGLR 401; Siskina (Cargo Owners) v Distos SA [1975] AC 210; Films Rover International Ltd. v Cannon Film Sales Ltd. [1987] 1 WLR 670; Mount Hagen Airport Hotel Pty Ltd v Gibbs & Anor [1976] PNGLR 216; Mount Hagen Urban Local Level Government v NHC (WS 1194 of 2002, unreported decision of Mogish J 20 April 2004); Okam Sakarius v Chester N2355; Albert Areng v Gregory Babia N2895.

Counsel:
D. Stevens, for the Applicant Defendant
P. Parkop, for the Respondent Plaintiff

Facts:

The Plaintiff claimed it had entered into three (3) lease agreements with the Defendant in 2001 for premises at Jacksons Airport each for a period of ten (10) years. By letter sent to the Plaintiff by the Defendant in August 2005, the Defendant demanded that the Plaintiff vacate the premises. The Plaintiff immediately commenced proceedings for declarations as to the existence of the leases and an order for quiet enjoyment thereof and obtained an ex parte injunction preventing its eviction. In April 2006 the Defendant applied to set aside the injunction.

Held:

1. Pursuant to the Evidence Act s 19, neither party could produce in evidence the unstamped lease documents;
2. There was other sufficient evidence on the existence of the leases to establish an arguable case for the Plaintiff;
3. The various submissions of the Defendant, as indicated below, could not succeed:
   
   1. the non-disclosure to the Court granting the interim injunction of an injunction granted to the Plaintiff against the Defendant in OS 252 of 1999, in 1999, was not relevant as the injunction related to different lease agreements and had expired at the time of the application.
   2. the non-disclosure to the Court granting the interim injunction of a 1999 conviction of the Plaintiff of two (2) counts of trading as a foreign enterprise without certification contrary to the provisions of Investment Promotion Act s 28 was irrelevant;
   100. that the Public Accounts Committee had requested a review of the granting of the leases was not a relevant matter which should have been disclosed to the Judge on the ex parte application;
   4. an interim injunction is not a cause of action and therefore does not need to be pleaded before the Court can grant the relief;
   5. the undertaking as to damages was sufficiently executed by the General Manager of the Plaintiff because he was the directing mind and will of the Plaintiff;
   6. the Defendant is not the State for the purposes of the Claims by and Against the State Act s 5 and consequently a notice pursuant to that section was not required;
      
4. The balance of convenience favours the Plaintiff because damages is not an adequate remedy, the Plaintiff is in the premises paying rent, the Defendant points to no pecuniary loss if the Plaintiff remains in the premises, the best course is that which does least damage and in this case that is to maintain the status quo.
5. Delay by a party affected by an interim order, in applying to set aside is ordinarily a factor against interfering with the order; delay by a party enjoying an interim injunction, in proceeding with its action is a factor against continuing the interim order; neither delay taken into account as not raised by counsel;
6. Application to dissolve the injunction and dismiss the proceedings refused orders for matter to proceed by way of pleadings with directions.
   

1. LAY J: By an Originating Summons filed on 2 September 2005, the Plaintiff seeks declarations that there are valid and legally binding lease agreements between the Plaintiff and the Defendant over three (3) concessions or premises situated at Jackson’s International Airport, Port Moresby.

2. On 12 September 2005, by ex parte application, the Plaintiff obtained orders preventing the Defendant from evicting the Plaintiff from the premises. Those orders have been extended from time to time by further applications, some made in the absence of the Defendant. On 3 April 2006, in the absence of the Defendant, the court ordered that those orders be extended until the matter is determined at the substantive hearing.

3. The Defendant now applies by motion originally filed on 14 March 2006, then amended and re-filed on 6 April 2006 to set aside the order and also to dismiss the proceedings for failing to comply with the provisions of s 5 of the Claims by and Against the State Act.

4. The Plaintiff’s evidence is that it was issued with the concessions in 1998 for a period of three (3) years and in 2001 the three (3) lease agreements were renewed for a period of ten (10) years to 2012 with an option to renew every three (3) years during the term of the lease the total term not to exceed ten (10) years (sic). The Plaintiff asserts it has complied with every term of the agreements and has not defaulted. By letter dated 29 August 2005, the Defendant instructed the Plaintiff to "......to vacate these premises effective today (29 August 2005)". The Plaintiff estimates that, if it is forced out, its damages would exceed K600,000 and it does not believe that the Defendant is in a position to pay damages of that order. The Plaintiff is a nationally owned company. No undue influence was used to obtain the leases and it was unaware that Damarish Kaminiel, its Director, was the wife of Anthony Simitab, an officer of the Defendant and it never dealt with him directly. In WS 252/1999, the Court ordered permanent injunctions preventing the Defendant from evicting the Plaintiff until its leases expired.

5. The evidence for the Defendant is that none of the leases is registered with the Registrar of Titles and none of the leases has been stamped. No notice of proceedings has been given to the Solicitor General pursuant to s 5 of the Claims by and Against the State Act. Anthony Sumitab, an officer of the Defendant and husband of Damarish Kaminiel was actively involved in the issues surrounding the grant of the leases in his capacity as Principal Business Development and Concessions Officer. There is no record of him informing the management of the Defendant of his wife’s involvement in the Plaintiff. Clause 1.19 of the leases requires the Plaintiff to observe all Acts of Parliament, rules and regulations. The Plaintiff’s undertaking for damages is not signed by an officer of the Plaintiff. On 5 December 1999, Salika J found the Plaintiff guilty on two (2) counts of being a foreign enterprise trading without certification contrary to s 28 of the Investment Promotion Act.

Submissions

6. The Applicant Defendant’s submission is that having regard to the Civil Aviation Act 2000 s 8, 19 and 34, it is clear that the Defendant is an instrumentality of the State whose finances are derived from the State and which is subject to policy directions of a Minister of the State. Counsel relied on SCR 1 of 1998; Reservation Pursuant to s15 of the Supreme Court Act SCSC672; and Kemp Ada v Lin Wen Beau & Ors [1996] PNGLR 172 (Andrew J.) for the proposition that a statutory body is the State if it is subject to policy directions of a Minister; and is not the State if it operates without directions from the State, for which proposition I was referred to SCR No. 9 of 1990; Application by the Principle Legal Adviser Bernard M. Narokobi [1991] PNGLR 239 (Doherty J). It is necessary to look at the intention of the Act and why the protection afforded by s 5 was necessary. There is an admission by the Plaintiff that it forgot to give the notice. As to the interim relief, it was not pleaded in the Originating Summons; damages are an adequate remedy, relevant material was not disclosed to the court including:

A. Public Accounts Committee asked the Defendant to look into granting of 10-year leases;

B. in 1999 a finding of the court of guilty on IPA prosecutions of the Plaintiff.

7. The Applicant Defendant also submitted the premises appear to have being sublet in breach of the terms of the leases. Taking into account the prejudice suffered by the Defendant the balance of convenience did not favour the Plaintiff. The undertaking as to damages was inadequate considering that it was given by a person neither a shareholder nor director, nor is it under the seal of the Plaintiff and there is no evidence that the signatory was authorized by the Plaintiff to sign on its behalf.

8. The Respondent Plaintiff submitted the Plaintiff was compelled to come to court as soon as possible so that the urgency might explain the omission of any documents. All relevant information was disclosed to the court on the application for the injunction. The charge of being a foreign enterprise was not relevant. The Defendant does not assert that it can pay damages, therefore damages is not an appropriate remedy. The leases on their face are signed. It is conceded there is no evidence that the Plaintiff paid the stamp duty. On the question of notice pursuant to s 5 of the Claims By and Against the State Act, the Defendant does not meet the tests set out in The National Housing Corp. V. Vicki John N2770. There is no evidence of how the Defendant operates. Under its Act, it has a Board of Directors, a Chief Executive Officer and is making money. The Supreme Court has not dealt with s 5. It dealt with s 13 of the Claims by and Against the State Act. Statutory bodies are separate legal personalities and they have the power to sue the State. It would be incongruous to allow them to claim that they are the State. This Court might refer the question to the Supreme Court.

The Application to Set Aside the Injunction

9. The following principles have been found to apply to an application to vary or discharge an interlocutory order:

1. The court has wide powers to grant or refuse to grant, vary or set aside, dissolve or discharge an interlocutory order;
2. an application to dissolve an injunction should not simply be an opportunity for the parties to reargue an earlier inter parties order;

100. if the interlocutory order is the subject of an appeal the court should be slow to make an order which is likely to interfere with the review powers of the appellate Court;

4. some of the circumstances in which an interlocutory order might be set aside are:
   
   1. where the conditions or stipulations of the order have been met and the order is no longer necessary.
   2. If it is subsequently discovered by the Court that the interlocutory order was founded on wrong principles;
   100. changes in relevant circumstances, including the failure of the party enjoying the order to act responsibly after obtaining it;
   4. it is shown that the party obtaining the order has not come to the Court with ‘clean hands’; See Mainland Holdings Ltd v Paul Stobbs N2522 (Injia DCJ)
   5. where the plaintiff has failed to prosecute its’ action after obtaining an injunction: See National Housing Corp. v Yama Security Services Pty. Ltd N1985 (Sevua J);
   6. if the Court finds that it was misled on the earlier application: See Mark Ekepe v William Gaupe N2694 (Cannings J);
   7. on an ex parte interlocutory application there has been a failure to make a full disclosure of relevant material both for and against the applicant’s case: See Sioti Bauf and Lovoi Nadai v Poliamba Pty. Ltd [1990] PNGLR 278, Golobadana No 35 Ltd v Bank of South Pacific Ltd N2309 (Kandakasi J);
      
5. An interlocutory order should not be set aside if the application is merely the opportunity for the applicant to produce evidence which was available and could have been produced when the injunction was first argued inter parties: See Mainland Holdings Ltd v Paul Stobbs (supra).
   

Delay by the Defendants

10. I note from the file endorsements that both parties were represented by counsel on 3 October 2005, 10 April 2006 and 12 April 2006 and on those occasions the Defendant did not move to set aside the interim orders. The latter two dates occurred after the return of the Plaintiff's motion on 3 April 2006 when the injunctive order was extended "until matter is determined at substantive hearing ".

11. The Plaintiff did not rely on the Defendant's delay in seeking to set aside the interim order, and so the causes of the delay were not explored in detail. The Defendant did assert that some of the extensions to the interim orders were obtained without notice to it. In the circumstances I do not propose to take into account the apparent delay on the part of the Defendant. However, to my mind ordinary delay in applying to set aside an interim order must be a factor against interfering with the order, unless the delay is satisfactorily explained.

12. This is the first occasion on which the interim injunction has been argued inter parties. Under those circumstances the usual considerations for the grant of injunction should apply, where the delay in seeking to set aside the order is not a factor:

"The principles applicable in interim injunctions are well settled in our jurisdiction. These principles are set out in Employers Federation of Papua New Guinea v Papua New Guinea Waterside Workers and Seaman's Union and Arbitration Tribunal (Unreported judgment of Kapi DCJ, N393 dated 11 October 1982) at pages 3-4:

"However, the House of Lords had the opportunity to reconsider this principle in the case of American Cyanamid Company v Ethicon Limited [1975] UKHL 1; (1975) 1 All E.R. 504). The House of Lords laid down the following principles in this case.

1. Is there an action not frivolous or vexatious?

Is there a serious question to be tried?

Is there a real prospect that the applicant will succeed in the claim for an injunction at the trial?

All these questions laid down the same test." See Smith v Inner London Education Authority (1978) 1 All ER. 411 at 419

2. The Court must then consider whether the balance of convenience lies in favour of granting or refusing interlocutory relief.
   
3. As to the balance of convenience the court should first consider whether if the applicant succeeds, he would be adequately compensated by damages for the loss sustained between the application and the trial, in which case no interlocutory injunction should normally be granted.
   
4. If damages would not provide an adequate remedy the Court should then consider whether if the applicant fails, the defendant would be adequately compensated under the applicant’s undertaking in damages, in which case there would be no reasons on this ground to refuse an interlocutory injunction.
   
5. Then one goes on to consider all the matters relevant to the balance of convenience, an important factor in the balance should, other things been even, preserve the status quo; and
   

6. When all other things are equal it may be proper to take into account in tipping the balance the relative strength of each party’s case as reviewed by the evidence before the Court hearing the interlocutory application." See Crafts Work Niugini Pty Ltd v Allan Mott SC525 (per Amet CJ (as he then was) and Los J)

The Stamp Duty Issue

13. The Defendant asserts and it is not contested that the copy of leases produced to the court by itself and the Plaintiff are not stamped and evidence was given on behalf of the Defendant that inquiries made with the Stamp Duties Office elicited the response that the original leases have not been submitted for stamping. Counsel for the Plaintiff conceded that there is no evidence that the Plaintiff has paid the stamp duty. Neither counsel raised the specific relevant provisions of the Stamp Duties Act, or what the consequences of non stamping should be, although during argument the court raised the issue of s 19 with counsel.

14. The Stamp Duties Act 1952, s 8 provides:

8. Liability for duty.

(1) Subject to this Act—

(a) the person or persons specified in the Schedule are liable for stamp duty payable in respect of an instrument; and

(b) if Paragraph (a) does not apply, or if a person referred to in Paragraph (a) cannot, after reasonable efforts have been made by the Collector of Stamp Duties, be located in Papua New Guinea, the person by whom or on whose behalf the instrument is held is liable for any stamp duty payable in respect of the instrument.

Schedule 1 Item 9 provides duty is payable by the parties or any one or more of them.

Stamp Duties Act, s 19 provides as follows:

19. Unstamped instruments produced in evidence.

(1) Subject to this Act, an instrument shall not—

(a) be pleaded or given in evidence, except in criminal proceedings; or

(b) be admitted to be good, useful or available in law,

unless it is duly stamped in accordance with the law in force at the time when—

(c) it was first executed; or

(d) it came into the country,

whichever is the later.

(1A) Subsection (1) applies to and in respect of an unexecuted copy of an instrument referred to in that subsection, in the same way as it applies to the instrument unless—

(a) the court is satisfied that the instrument of which it is a copy is duly stamped; or

(b) the instrument is a copy referred to in Section 58C.

(2) Where an instrument that is not duly stamped is produced in evidence in any proceedings other than criminal proceedings, the officer of the court whose duty it is to read the instrument shall inform the court that the instrument is not duly stamped.

(3) Where an instrument referred to in Subsection (2) is one that may be stamped after it has been executed, it may be received in evidence on payment to the officer referred to in Subsection (2) of—

(a) a fee of K190.00; and

(b) the stamp duty, or so much of the stamp duty as has not been paid; and

(c) the penalty payable on stamping the instrument.

(4) The officer receiving the duty and penalty shall—

(a) give a receipt; and

(b) make an entry in a book kept for the purpose showing the amount and particulars of the payment; and

(c) advise the Collector of Stamp Duties of—

(i) the name or title of the cause or proceedings; and

(ii) the name of the party from whom he received the money; and

(iii) the amount and date of receipt of the money; and

(iv) the date and description of the instrument; and

(d) pay the amount to the Collector of Stamp Duties.

(5) When—

(a) an instrument in respect of which money has been paid under Subsection (3); and

(b) the receipt showing that payment,

are produced to him, the Collector of Stamp Duties shall denote on the instrument the payment of the duty and of the penalty (if any), and the instrument shall be deemed to be duly stamped.

15. The interpretation and application of the provision has had a slightly chequered history in our jurisdiction. In the case of Milton McMahon & Louis Aitsi v Port Moresby Real Estate Pty, Ltd p1986] PNGLR 208, Wilson J followed a statement from Halsbury’s Laws of England and ruled that it was also applicable in PNG to follow that authority and to hold that no appeal lay from a decision to admit a document into evidence allegedly erroneously because of its non stamping. That case has not been followed in this jurisdiction. The reasons for decision do not indicate that any consideration was given to the wording of s.19 of the Stamp Duties Act and the duty of the Court to interpret and apply Acts of the Parliament.

16. Then in PutPut Logging Pty, Ltd v Philip Ambolis [1992] PNGLR 159 Sheehan, J. held that an unstamped document cannot be relied upon. Woods, J was of the same view in the case of Wahgi Security Service Pty Ltd v John Tenlon and Western Highlands Provincial Government Suspension [1994] PNGLR 138. Kandakasi, J was also of that view in the case of Spirit Haus Ltd v Robert Marshall N2630 (2/9/00).

17. In Jay Mongo Pty Ltd v Steamship Trading Co. Ltd [1995] PNGLR 129, Sevua, J applying the then equivalent of s. 19(3) admitted an unstamped document into evidence and incorporated into his formal orders the requirement that the plaintiff pay the penalty and duty. I would not follow that case. As Kearney, DCJ said in relation to another Act in Acting Public Prosecutor v Uname Aumone [1980] PNGLR 510 (Kidu CJ, Kearny DCJ, Greville-Smith, Andrew and Kap JJ) "It is of course the primary duty of the Court to give effect to the intentions of Parliament as manifested in the Act". It is, on the plain words of s 19(3), the intention of the Parliament that an unstamped document not be admitted into evidence until after the duty and penalty have been paid. With respect I cannot see that the subsection warrants an interpretation that it authorizes the admission into evidence of an unstamped document with the duty and penalty to be paid at some later date ordered by the Court.

18. I consider I should follow PutPut Logging, Wahgi Security Services and Spirit Haus as being more consistent with the duty of the Court, and hold that in this case neither party had authority to rely upon the unstamped lease document until the duty was paid.

19. The position might have been different, if the Plaintiff's evidence showed not only that the Defendant had undertaken to see to the stamping of the leases, but that the Plaintiff had done everything contemplated to be done by it by paying the stamp duty moneys to the Defendant as was the case in Rowland and Angela Chang, trading as Red Rose Restaurant v. Aviat Social and Sporting Club (Lae) Inc.N913, Hinchliffe J., if the revenue could be protected. However that is not the position.

20. Not being able to rely on the unstamped leases does not prevent a witness from asserting that such documents exist and have been executed as is asserted in the evidence for the Plaintiff.

Relationship between the Director of the Plaintiff and an Officer of the Defendant

21. The Defendant made no submission in relation to the evidence of the relationship between the Director of the plaintiff and Andrew Simitab, an officer of the Defendant. In the absence of a submission as to how the evidence is relevant to this application supported by authority, I will not deal in these reasons with this evidence. I note however that the Defendant's evidence of the involvement of Andrew Simitab in the granting of the leases is vague. And the Plaintiffs General Manager's assertion that the Plaintiff did not know of the relationship is unsustainable.

Non-Disclosure of Prior Injunction

22. The 1999 injunction ordered in proceedings OS 252 of 1999 related to the leases granted in 1998 for three (3) years. It was expressed to expire when those leases expired. There is no evidence of precisely when those leases expired, but it was obviously the intention of the parties that those leases should be superseded by the leases commencing on 1 January 2001. Accordingly, I find that the 1999 injunction expired at the end of 2000 and it has no bearing on the current position or the ex parte application for the interim injunction.

23. The Defendant did not explain just how the fact that the Public Accounts Committee had asked the Defendant to look into the granting of ten-year leases was relevant to this application or these proceedings. Ultimately these proceedings will succeed or fail on whether or not the Plaintiff has a valid claim to the three leases. Matters which are disclosed in a review of how the leases were granted may be relevant to their validity. But the fact that a public body has asked for a review is not evidence going towards proving or disproving any of the matters in dispute between the Plaintiff and the Defendant. Not disclosing the request for a review was not a failure to make material disclosure.

Failure to Disclose 1999 Conviction

24. In relation to the submission of the Defendant that there was a failure of the Plaintiff, when making its ex parte application, to disclose its conviction under the Investment Promotion Act, during submissions counsel for the Defendant conceded that Hollington v. Hewthorn [1943] KB 587 was still good law in Papua New Guinea, there having been no amendments to the Evidence Act affecting that common-law. In that case the court held that the facts which were necessarily found by another court in finding the defendant guilty of a driving offence could not be admitted as evidence against the defendant in civil proceedings arising out of the same motor vehicle incident. 25. Apart from the common law rules, I can take judicial notice of a judgement (Evidence Act, s 44(a)(i) but the reasons for judgement of that court are not a judgement for the purposes of s 44(a) of the Evidence Act: Mesulam Tomalana v Rabaul Pharmacy [1991] PNGLR 65 (Ellis J).

26. What then is properly before me is the bare fact that the Plaintiff was found guilty of several offences of being a foreign company trading without certification pursuant to s 28 of the Investment Promotion Act in 1999. I find that those convictions had no bearing on the application for the injunction in 2005, they had no relation to the application; if disclosed to the court they would have had no bearing on whether or not the injunction ought to have been granted or on whether the Plaintiff was coming to the court with clean hands in respect of that application. It cannot be inferred from a conviction in 1999 that there is a continuing offence.

Adequacy of the Undertaking as to Damages

27. As submitted by the Defendant I find that the undertaking as to damages is not signed by a director or shareholder of the Plaintiff. It is signed by the General Manager. If, as it appears from the evidence, the General Manager was the directing mind and will of the Plaintiff, and I find he was, then the execution of the Undertaking as to Damages by him must be taken to be the act of the Plaintiff itself: See AGC (Pacific) Ltd. V. Woo International Pty. Ltd. [1992] PNGLR 100 (Sakora J). I find therefore that the Undertaking as to Damages filed sufficiently fulfils that requirement.

Damages as an Adequate Remedy

28. Counsel for the Defendant advanced no authority for the proposition that damages would be an adequate remedy in this case. The court raised with counsel during argument the difficulty of calculating damages over a long period of time representing loss of profits from an ongoing trading concern. Counsel was content to say in McGregor on Damages cases would be found up for the propositions that the law can make that calculation. There is no doubt that a calculation can be made, but in practical terms the longer the period over which the calculation has to be made, the greater the difficulty. At this preliminary stage I am not satisfied that damages is an adequate remedy.

Injunctive Relief Not Pleaded

29. Counsel for the defendant submitted that by obtaining the interim relief by way of injunction, the Plaintiff had obtained relief not pleaded, and cited Ume More V University of Papua New Guinea [1985] PNGLR 401 (Pratt, Amet & Los JJ) for the proposition that a Plaintiff cannot obtain relief not pleaded: see particularly the judgment of Pratt J. at page 405. In my opinion that case and the authorities cited therein are referring to the cause of action pleaded and the final relief sought, and not interim relief. Counsel did not refer me to any authority specifically on point in respect of interim relief. It seems to me that it would be highly inconvenient and possibly defeat the whole purpose of urgent interim relief, if pleadings had to be amended every time a party took or threaten to take some action, unanticipated by the other party, but with potential to damage that other party so that it wished to seek injunctive relief.

"A right to obtain an interlocutory injunction is not a cause of action. It cannot stand on its own. It is dependent upon there being a pre-existing cause of action against the defendant arising out of an invasion, actual or threatened by him, of a legal or equitable right of the plaintiff for the enforcement of which the defendant is amenable to the jurisdiction of the court. The right to obtain an interlocutory injunction is merely ancillary and incidental to the pre-existing cause of action. It is granted to preserve the status quo pending the ascertainment by the court of the rights of the parties and the grant to the plaintiff of the relief to which his cause of action entitles him, which may or may not include a final injunction." Siskina (Cargo Owners) v Distos SA [1979] AC 210, per Lord Diplock at p256.

30. If it is accepted that a right to obtain an interlocutory injunction is not a cause of action, it follows surely that there can be no need to plead it, or the facts on which it relies. On the authority of Siskina (supra) it is also not necessary that the final relief sought include a permanent injunction. I therefore reject the submission that interlocutory relief by way of injunction must be pleaded before it can be obtained.

Allegation of Subletting

31. I find that there is no credible evidence to support the submission that the leased premises are being sublet contrary to a prohibiting covenant.

Plaintiff's Delay

32. I am concerned that over seven months after the Plaintiff obtained its initial order, it appears to have not moved these proceedings any closer to trial. Had that issue been raised and argued by the Defendant, which it was not, the lack of progress in proceeding to trial would have been a substantial reason on the side of not continuing the injunction. It will be appropriate to make some orders to ensure the Plaintiff moves swiftly to bring this matter to trial.

Balance of Convenience

33. On the issue of balance of convenience, I have already said that damages would not be an adequate remedy for the Plaintiff. I find damages would be an adequate remedy for the Defendant, if the Plaintiff fails to obtain relief at the trial. In fact, the Defendant’s evidence does not disclose any financial loss which it might suffer as a result of continuation of the injunction until the matter is determined. The Plaintiff’s evidence is that it is not defaulting, which must mean that it is paying the rent due and the Defendant has not asserted to the contrary. In determining the balance of convenience when considering whether or not to grant or continue an injunction, the course which will do least damage is the most desirable: See Films Rover International Ltd. v. Cannon Film Sales Ltd [1987] 1 WLR 670 at 680F. That case concerned an application for a mandatory injunction but the statement is a counsel of common sense which can be adopted in any application for an injunction. And "where other factors appear to be evenly balanced it is a counsel of prudence to take such measures as are calculated to preserve the status quo", per Frost CJ in Mount Hagen Airport Hotel Pty.Ltd. v Gibbs and Anor [1976] PNGLR 216. The status quo here is that the Plaintiff is in the premises concerned as tenant paying rental.

34. In all the circumstances of the case, my view is that preserving the status quo by the continuation of the injunction to trial is the course which will do least damage to the parties irrespective of which party then succeeds.

Conclusions on the Interlocutory Injunction

35. From the above analysis, I am not satisfied that the Defendant has made out that, in granting the initial order the court proceeded on a wrong principle, was misled, did not have produced to it relevant material or the need for the injunction has passed.

36. Excluding the evidence of the actual lease documents, there is still evidence of agreement to enter into leases for ten (10) years sufficient to establish an arguable case for the Plaintiff. The Defendant appears to wish to rely on technical deficiencies, and it may succeed on these at the trial, but at this stage their effect is not so clear as to make it plain and obvious that the Plaintiff's arguable case cannot succeed. The balance of convenience favours the Plaintiff. I therefore refuse to set aside the interim injunction.

The Claims by and Against the State Act

37. In the case of Naomi Vicki John v. National Housing Corp. (1/2005) N2770, I attempted to analyze the reasoning behind the decision of the Supreme Court in SCR No. 1 of 1998; Reservation Pursuant to s15 of the Supreme Court Act SC672 and concluded that in that case their Honours’ conclusion that provincial governments are included in the term "State" in s 13 of the Claims by Against the State Act were as follows:

1. They are established by the Constitution;

2. They are part of the three-tier system 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 of the Provincial Governments in political, administrative, and financial matters;
5. They fall within the definition of "Governmental Body" contained in the Constitution;
6. Judgment debts are recoverable from monies allocated in their budgetary process.

38. In that case I did not follow, to the extent that it was relevant Mt Hagen Urban Local Level Government v. National Housing Corporation (WS 1194 of 2002 unreported decision of 20th April 2004 Mogish J), as His Honor was dealing with s 13 of the Claims by and Against the State Act, when he found that the purposes of that section the National Housing Corp. is the State. Nor did I follow Okam Sakarius v Chris TepN2355 (2003) (Salika J) where the court was dealing with the status of the Cocoa and Copra Extension Agency and found it to be part of the State, for the purposes of s 13 of the Act because it was subject to political direction and relied on the State for its financing.

39. In the case of Albert Areng v Gregory Babia N2895 (a 6/2005) (Sawong J.) His Honour found that a notice pursuant to s 5 was not required in proceedings against the National Housing Corp. because the corporation was not the State. His Honour concluded that the reasoning in SCR 1 of 1998; Reservation Pursuant to s15 of the Supreme Court Act (supra) indicated that a statutory corporation should be treated differently from the State.

40. Counsel for the Defendant referred to Kemp Ada v Lin Wen Beau & Ors (supra). However, an examination of that case shows that what Andrew J. was considering was the meaning of "the State or a servant or agent of the State", and he then found that the National Fisheries Authority was an agent of the State. That is a completely different matter from finding that the Authority was the State itself. I therefore do not find that case helpful. Counsel for the Defendant also referred to SCR No. 9 of 1990; Application by the Principle Legal Adviser Bernard M. Narokobi (supra) in the judgment of Doherty J. where Her Honour, after observing that the Investment Promotion Authority was subject to ministerial direction said "these and other provisions are indicative of its being an instrumentality of the State...". Again, there is a substantial distinction between a statutory authority being the "State" and being an "instrumentality of the State". For this reason I do not find this case helpful.

41. Under the Civil Aviation Act 2000, the Minister has the general oversight of civil aviation policy and legislation (s 8) but does not have management powers or powers to direct the functions of State aviation enterprises. He may seek information (s 9). He may give policy directions, but not so as to achieve a particular result in a particular case (s 19). The Act establishes a department and a Civil Aviation Authority, the latter being the Defendant in these proceedings. The revenue of the Civil Aviation Authority is any moneys appropriated by the Parliament; revenue the Authority generates itself and any other revenue lawfully available to it such as grants, donations or loans (s 35). It is a trading enterprise (s 34). The chief executive officer of the Authority is the Director and neither the Minister nor the Department Head are to attempt to influence him in the exercise of his functions (s 17(5). The Minister’s powers are limited and the Authority, its’ Director and its Board enjoy a significant degree of autonomy authorized by the Act.

42. To my mind none of those provisions, separately or together, compel the conclusion that the Defendant is the State. It is a State instrumentality, it is a governmental body, but it is not part of the three-tier system of government. Its members are not elected by the people. It does not meet most of the criteria applied in the reasoning of the Supreme Court in SCR 1 of 1998; Reservation Pursuant to s15 of the Supreme Court Act.

43. When applying the purposive argument as to what harm was intended to be prevented by the Act, sight cannot be lost of the fact that it is the words of an Act of Parliament which are being interpreted. The court is not legislating. The Claims by and Against the State Act was passed against the background of all the other legislation which Parliament has passed and the Constitution. There were many other words in the draftsman's vocabulary which could have been used if it was intended to extend the protection of s 5 to statutory corporations. It seems to me that most statutory authorities have been created for the very purpose of distinguishing them from the State. Most could have operated as line government departments but Parliament has given them their own corporate identity which distinguishes them from the State. That is certainly the case with the Civil Aviation Authority which has been established by an Act of Parliament passed some years after the Claims by Against the State Act was enacted. If it was desired that notice be given to the Defendant or the Attorney General before proceedings were commenced then the legislature could have inserted into the Civil Aviation Act 2000 a provision such as appears in the Postal Services Act, s23 (2) (which requires 1 month’s notice before action) or defined it as the State for the purposes of the Claims by and Against the State Act, s5.

44. For all of the foregoing reasons I find that the Civil Aviation Authority is not the State for the purposes of s 5 of the Claims by and Against the State Act.

46. I therefore refuse the application to discharge the interim injunction at this time and I also refuse the application to strike out the proceedings.

47. It appears that this matter will proceed to trial. The affidavit evidence filed raises many issues, some of which the parties may conclude before trial are not relevant or not in issue. What is in issue and what is not in issue is not defined by the evidence filed. The parties can only properly prepare for trial if there are pleadings to define the issues. I will therefore order that the matter proceed by pleadings.

ORDERED:

1. The application to dissolve the interim injunction granted on 12 September 2005 and extended until trial on 3 April 2006, is refused;
2. the application to dismiss the action for want of notice pursuant to s 5 of the Claims by and Against the State Act, is refused;
3. the action is to proceed by way of pleading, the Plaintiff to file and serve its Statement of Claim within 30 days, other pleadings to follow in the times stipulated by Order 8; subject to Order 1 rule 15;
4. the Plaintiff is to file and serve all affidavits on which it will rely at the trial within 21 days of close of pleadings;
5. the Defendant is to file and serve all affidavits on which it will rely at the trial within 21 days of service of the Plaintiffs affidavits;
6. the Plaintiff is to file a motion for directions for trial before the Listing Judge within 14 days of receipt of the Defendant's affidavits;
7. the Defendant is to pay the Plaintiff's costs of the application.
   

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Stevens Lawyers: Lawyers for the Applicant Defendant
Powes Parkop Lawyers: Lawyers for the Respondent Defendant