Ona v National Housing Corporation [2009] PGNC 49; N3623 (6 May 2009)

N3623

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 128 of 2006

BETWEEN

ANAVE MEGARAKA ONA
Plaintiff

AND

NATIONAL HOUSING CORPORATION
Defendant

Waigani: Sevua, J
2006: 4 October
2009: 6 May

PRACTICE AND PROCEDURE – Claim for damages for negligence against the National Housing Corporation – Notice of intention to make a claim against the State - Claims By And Against The State Act - Lack of Section 5 notice - Application to dismiss proceedings – Whether requirement to give notice applies to the National Housing Corporation – Whether the term "State" means or includes National Housing Corporation - Whether s.5 notice should have been given to the defendant – Section 5 notice requirement not applicable to National Housing Corporation – Application dismissed with costs.

Held.

1. The term "State" does not mean or include the National Housing Corporation.
2. The requirement for Section 5 notice under the Claims By and Against the State Act does not apply to the defendant, National Housing Corporation.
3. The defendant’s application to dismiss the proceedings is dismissed with costs.

Cases referred to in judgment.
Phillip Num v. National Housing Corporation (2006) unreported & unnumbered (OS115 of 2003) 25 August 2006
Albert Areng v, Greg Bavia and National Housing Corporation (2005), N2895, 22 June 2005
Paul Rawaiya & ors v. National Housing Corporation and The State (2006) unreported & unnumbered, (OS429 of 2006) 14 August 2006
Maipson v. National Housing Corporation (2006), 25 August 2006, (OS115 of 2003)
Naomi Vicky John v. National Housing Corporation (2005) N2770, 31 January 2005
Kilebo Sigo Mamae & Ors v. National Housing Corporation (2006) unreported & unnumbered, (OS844 of 2005) 27 January 2006
Reservation Pursuant to Section 15 of the Supreme Court Act (2001), SC672, 8 November 2001

Legislation
Claims By and Against the State Act 1996; s. 5
National Housing Corporation Act, ss 6, 28, 29, 68
Interpretation Act, s.3

Counsel
S. Kende, for Plaintiff/Respondent
F. Yapao, for Defendants/Applicant

6 May, 2009

1. SEVUA, J: By way of a notice of motion filed on 19 September 1996, the defendant had applied for an order to dismiss the whole of the proceedings for want of Section 5 notice under the Claims By and Against The State Act. That application was moved on 4 October 2006.

2. The plaintiff filed his writ on 21 December 2006. Prior to that, he did not give notice pursuant to Section 5 of the Claims By and Against the State Act to the defendant, National Housing Corporation. That is not in issue as the plaintiff has conceded that. However, the plaintiff/respondent has argued that the requirement to give notice under Section 5 in this case did not apply to the defendant, because the defendant is a statutory corporation therefore the requirement to give notice does not apply to statutory corporations such as the National Housing Corporation.

3. As I alluded to, there is no dispute that the plaintiff did not give the required notice to the defendant prior to instituting his claim. He has not disputed the defendant’s evidence on that issue. Therefore the question raised in this application is purely one of law.

4. The applicant’s counsel, Mr. Yapao placed reliance on several National Court decisions, namely; Phillip Num v. National Housing Corporation; Kelebo Gaman v. National Housing Corporation, and Maipson v. National Housing Corporation. He submitted that the National Housing Corporation is a State agency therefore the requirement to give Section 5 notice applies. That is the essence of the applicants’ arguments. Unfortunately, I have been unable to peruse a copy of the judgment in Maipson’s case.

5. On the contrary, Mr. Kende, counsel for the plaintiff contended that the defendant is a statutory corporation therefore the requirement to give notice of intention to make a claim against the State does not apply as the s.5 notice requirement does not apply to statutory corporations. He relied on Albert Areng v. Greg Babia & National Housing Corporation (2005), N2895, 22nd June 2005, a decision of former Judge, Sawong, J.

6. The confusion on the law on this issue is due to the differing opinions of different Judges of the National Court. For instance, in Paul Rawaiya & Ors v. National Housing Corporation & The State, (2006), unnumbered and unreported, (OS429 of 2006) 14 August 2006; where the Section 5 notice was an issue before the Court, Gabi, J’s opinion expressed at the bottom of page 2 is as follows:

"I agree with the submission by the counsel for the defendants that the first defendant is an agent of the State under s.29 of the National Housing Corporation Act. As such, it is part of the State (sic) for purposes of the Claims By And Against The State Act."

7. Again in Phillip Num v. National Housing Corporation (2006), (OS115 of 2003), 25 August 2006, David, J held that the defendant, National Housing Corporation falls within the meaning of the term "State" for the purpose of the Claims By And Against The State Act.

8. In Naomi Vicky John v. National Housing Corporation (2005), N2770, 31 January 2005, Lay, J had deduced from the Supreme Court Reservation, six tests which he thought the Supreme Court took into account when it determined that the term "State" include Provincial Governments. His Honour concluded that because the defendants had satisfied only two of those six tests, the defendant National Housing Corporation did not come within the term "State".

9. In a similar case, Kilebo Sigo Mamae & Ors v. Max Pingia & National Housing Corporation (2006), unnumbered and unreported, (OS844 of 2005), 27 January 2006, Davani, J dealt with the same issue. Whilst she did not expressly say that the term, "State" includes National Housing Corporation, she did discuss the lack of Section 5 notice to the second defendant. Although she made no explicit statement of the law, she followed other cases therefore it can be inferred that she agreed with the other Judges in the cases she alluded to. Those cases are cited in the last page of her judgment.

10. However, former Judge, Sawong, J (as he then was) expressed a different view altogether in Albert Areng v. Gregory Babia & National Housing Corporation (2005), N.2895, 22 June 2005. The Court held, inter alia, in that case that the provision of Section 5 of the Claims By and Against the State Act does not apply to statutory corporations such as the National Housing Corporation.

11. I find myself in agreement with that decision because I am of the view that it was based on the determination of the Supreme Court in Reservation Pursuant to Section 15 of the Supreme Court Act; unreported, (SCR 1 of 1998) SC 672, 8 November 2001, a five men bench comprising Amet, CJ (as he then was), Los, Sheehan, Salika and Sakora, JJ., which was a very senior bench of the Supreme Court.

12. Although the issue in that Reference was whether the term, "the State" also include a Provincial Government, the determination by the Supreme Court in so far as it relates to statutory corporations has already been determined, in my view.

13. It must be reiterated that the Supreme Court in that case was of the opinion that a provincial government is a governmental body and therefore, like a Local Level Government, it is a part of the State therefore its assets and finances must be protected from execution pursuant to Section 13 (1) of Claims By and Against the State Act in the same way as the assets and finances of the National Government are protected.

14. It will be noted that in that case the Supreme Court referred to the meaning of the term "State" as defined in the Interpretation Act to mean "The Independent State of Papua New Guinea". Is the National Housing Corporation the Independent State of Papua New Guinea? In my opinion, it is not. If the legislature had intended that the definition of the term "the State" in the Interpretation Act should include the National Housing Corporation and all other statutory corporations, that would have been expressly stated in that definition for the avoidance of doubt.

15. For that reason, it is my view that single Judges of the National Court cannot determine the issue of Section 5 notice under the Claims by And Against the State Act in any other way than in accordance with the determination of the Supreme Court in SCR 1 of 1998, (supra). The Supreme Court decision is binding on the National Court pursuant to Schedule 2.9 Constitution.

16. Following the Supreme Court determination that the term "State" includes Provincial and Local-Level Governments for the purposes of the Claims By and Against the State Act, the Court said at page 10:

"It is to be remembered that this protection does not apply to assets and finances of developmental enterprises of provincial governments that have independent corporate statuses and operate commercially. They are subject to the ordinary laws on corporate enterprises."

17. It is noted that the Supreme Court did not expressly define what "developmental enterprises" of Provincial Governments are. However in Albert Areng (supra), Sawong, J (as he then was) formed the opinion that Section 5 of the Act doest not apply to "statutory corporations" such as the National Housing Corporation who possess independent corporate statuses and operate commercially and are subject to the ordinary laws as corporate citizens.

18. The Court was also of the view that such a corporation is a distinct legal entity, thus a Section 5 notice need not be served on the State prior to issuing of proceedings against a statutory corporation. That was one reason the Court dismissed the defendants’ application in that case.

19. I agree with some of the views expressed by some Judges in the National Court cases referred to in respect of the status of the defendant as an agent of the State (s.29), and a public purpose (s. 68). However, with respect I do not agree that because it is an agent of the State and it is for a public purpose, it is the State.

20. Section 5 of the National Housing Corporation Act 1990 establishes the defendant, which by Section 6, is a corporation having perpetual succession; a seal; may acquire, hold and dispose of property, and can sue and be sued in its corporate name. In my view, the fact of incorporation takes it out as a Department of the State. Gone are the days when the defendant used to be known as the Department of Housing which was then part of the State.

21. The word "corporation" simply means a ‘body corporate’ or in the Oxford Dictionary of Law, New Edition, "an entity that has legal personality, that is, it is capable of enjoying and being subject to legal rights and duties." Section 6 (2) empowers the Court, Judges and persons acting judicially to recognise the seal of the corporation.

22. Furthermore, the word "incorporation" means that the entity has taken on a corporate personality or has become a legal person distinct from its members, for example, a company. As a corporation, it possesses the legal capacity given to it in s. 6 of the Act. If I were to accept that the defendant is the State, or the State includes the defendant, why is that proceedings taken against the National Housing Corporation, and there are numerous, have not been taken against the Independent State of Papua New Guinea? Or why is it that in those numerous proceedings, the State is not named as a nominal defendant because the National Housing Corporation is the State?

23. Section 28 spells out the functions of the corporation, some of which are to do with improving housing conditions; provision of adequate and suitable accommodation to lease to people eligible; sale of houses to people eligible; erect dwelling on its own land; maintenance of dwellings and housing projects, etc etc. There is nothing in that section which states that the functions of the defendant are the functions of the Independent State of Papua New Guinea.

24. Section 29 (1) basically provides that the defendant (corporation) may act as an agent of the State or an institution of the State in matters relating to development of accommodation for its employees and may also perform or do similar other acts in respect of housing on behalf of the State or its employees. Again there is nothing in that provision which explicitly states that the corporation is the State.

25. Therefore it is my view that the National Housing Corporation Act 1990 does not provide that the Corporation is the State or that the term "State" means and includes the National Housing Corporation.

26. I think there has been some misconception in regards to the Supreme Court decision in the Supreme Court Reference SC 672 (supra). In that case the Court was specifically referring to the Provincial Government and not statutory corporations such as the defendant. It would be a travesty of justice if I were to hold that the term "State" means and includes the National Housing Corporation and other statutory corporations because the Supreme Court did not determine that issue in the Reference (supra).

27. If I were to hold that the term ‘State’ or "The State" means and includes, the National Housing Corporation then such bodies as Telikom PNG, Post PNG, PNG Ports Corporation, Kokonas Industry Corporation, and many other Statutory authorities would also mean they are the State. I do not read Sections 6, 28 and 29 of the National Housing Corporation Act that way as other National Court Judges have done. As I have found, these provisions make no specific reference to the term "State" as meaning or including the National Housing Corporation.

28. In my view, where a Government body is taken away from the public law arena and corporatized, it means that that corporation has put on a corporate veil and is to be treated as a corporate citizen. Whilst it may be correct that the defendant has some political control through the relevant Minister and some control in relation to money, etc. I do not consider that it is the State.

29. In the case of the National Housing Corporation, I consider that by virtue of s.6 of the National Housing Corporation Act, the defendant has independent corporate status and operates commercially as it is a corporation which can sue and be sued in its corporate name. If I were to hold that the National Housing Corporation is the State, why does s.6 empowers it to sue and be sued in its corporate name instead of in the name of the State?

30. There are many instances where the defendant and other corporate authorities like Telikom PNG, have instituted proceedings against the State itself. If the State means and includes the National Housing Corporation, why is it that the State has been sued by the defendant in some cases? Can the State sue itself? If not, how can the Court rule that the State means and includes the National Housing Corporation when the defendant, therefore the State, is suing itself?

31. I have considered the opinion of Gabi, J, David, J and Davani, J in the cases against the defendant which they determined and concluded that the State means and includes the National Housing Corporation. However with respect, I beg to differ from their opinion.

32. Instead, I agree with the views expressed by Sawong, J (as he then was) in Albert Areng (supra) where the Court expressed a view that "where a statutory corporation is to be sued, a claimant need not give a s.5 notice to the State." That opinion was premised on the fact that the Supreme Court in SC 672 determined that "s.13 (1) of the Claims By and Against the State Act did not apply to assets or finances of development enterprises of Provincial Governments that have independent corporate statuses and operate commercially."

33. At page 14 of Areng’ (supra), the trial Judge said:

"I would add that the protection given by s.5 of that Act do not apply to statutory corporations such as the applicant who have independent corporate statuses and who operate commercially. These are subject to the ordinary laws as corporate citizens. As a corporation, it is a separate or distinct legal entity. And as such a claimant need not serve a notice on the State in accordance with s.5 of the Claims By And Against The State Act before filing or issuing proceedings against a statutory corporation."

34. In that case the Court was discussing an application for an order to dismiss the proceedings instituted by the plaintiff for lack of s.5 notice. The Court eventually dismissed the defendants’ application.

35. In Naomi Vicky John (supra), the National Court dismissed a similar application by the defendant, but on different grounds. However, it is interesting to note the trial Judge’s view expressed at page 7 in the following manner:

In respect of a number of government institutions the position is now much clearer than it would have been a few years ago because of the trend to corporatisation of State enterprises and superannuation funds. Applying the "commercial purposes" exception, mentioned by the Supreme Court (in italics above), to National Government entities, these corporatised entities would now more clearly not be "the State" (my emphasis).

36. By way of an analogy, these cases can be summarised as follows:

• Reservation Pursuant to Section 15 of the Supreme Court Act, the Supreme Court held that the term, "the State" also includes a Provincial Government.
  
• Albert Areng v. Greg Babia and National Housing Corporation, the provisions of s.5 of the Claims By and Against the State Act do not apply to statutory corporations such as National Housing Corporation.
  
• Kilebo Sigo Samae & Anor v. Max Lindapao & National Housing Corporation, the National Housing Corporation is a public purpose institution and public purpose institutions are arms of the State. Section 5 notice should have been given to the defendant.
  
• Paul Rawaiya & Ors v. National Housing Corporation & The State, the first defendant (National Housing Corporation) is an agent of the State pursuant to s.29 National Housing Corporation Act therefore it is part of the State for purposes of the Claims By and Against the State Act.
  
• Philip Num v. National Housing Corporation, the defendant falls within the meaning of the term, "State" for the purposes of the Claims (sic) Act.
  
• Naomi Vicky John v. National Housing Corporation, the National Housing Corporation is a governmental body within the meaning defined in the Constitution, but it is not included in the term "the State".
  

37. I reiterate that the National Housing Corporation, although an agent or instrumentality of the State, is not, "the State" as it is not included in the definition of "the State" which means the Independent State of Papua New Guinea in s.3 (1) Interpretation Act.

38. Accordingly, I conclude that as the term "State" or "the State" does not mean or include National Housing Corporation or statutory corporations, the defendant is not the State therefore the requirements of Section 5 notice under the Claims By and Against the State Act do not apply.

39. For these reasons, the defendant’s application is dismissed with costs.

40. The formal orders of the Court are –

1. The defendant’s application is dismissed.
   
2. The defendant shall pay the plaintiff’s costs of the application, to be taxed if not agreed.
   
3. The order is abridged.
   

Lomai and Lomai Attorneys: Lawyer for the Plaintiff
Paul Paraka Lawyers: Lawyer for Defendant