PacLII Home | Databases | WorldLII | Search | Feedback

National Court of Papua New Guinea

You are here:  PacLII >> Databases >> National Court of Papua New Guinea >> 2011 >> [2011] PGNC 236

Database Search | Name Search | Recent Decisions | Noteup | LawCite | Download | Help

Plumtrade Ltd v Papua New Guinea University of Technology [2011] PGNC 236; N4798 (19 April 2011)

N4798


PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]


WS NO. 363 OF 2009


BETWEEN:


PLUMTRADE LIMITED
Plaintiff


AND:


THE PAPUA NEW GUINEA UNIVERSITY OF TECHNOLOGY
Defendant


Lae: Sawong J.
2010: 8 December
2011: 19 April


PRACTICE & PROCEDURES – Application to strike out action – Claims by and Against the State Act s.5 – Statutory interpretation – meaning of the expression "the State" in Claims by and Against the State Act – Whether University of Technology included in the term "the State".


Held:


1. The Supreme Court in SCR No. 1 of 1998; Reservation Pursuant to s.15 of the Supreme Court Act (2001) SC 672 applied six criteria to determine that a provincial government was included in the term "the State" as used in the Claims by and Against the State Act.


2. The Papua New Guinea University of Technology does not meet the criterias in 1, 2, 3 and 6 and therefore whilst it is a "government body" it is not included in the term "the State" as used in the Claims by and Against the State Act. Application refused.


Cases Cited:
Minato v Kumo & The State (1998) N 1768
Tohian & The State v Tau Liu (1998) SC 566
Tobbo Yakale v Allan Sako, Misty Baloiloi & the University of Technology, SCR 1 of 1998, Reservation Pursuant to. S.15, Supreme Court Act, (2001) SC 672
Hewali v Police Force & The State (2002) N2233
Naomi Vicky John v The National Housing Corporation (2005) N2770,
Albert Areng v The National Housing Corporation & Another (2005) N2895
Dastal Limited v Dr. Puka Temu, Minister for Lands & Physical Planning & Others (11th March 2011), Batari, Kariko and Sawong JJ, SCA No. 107 of 2008
Konze Kara v The Public Curator & The Stae (2009) N 4048
Anawe Megaraka Ona v The National Housing Corporation (2009) N3623.
William Trnka v The State (2000) N 1957
Chef Secret Limited v Nationa Capital District & Others (2011) N4217
Sengus Investment Limited v The National Broadcasting Corpioration, Unreported and unnumbered judgment), Sawong J.


Counsel:
A Manase, for the Application/Defendant
D. Poka, for the Plaintiff/Respondent


19 April, 2011


1. SAWONG J: By a Writ of Summons (WS 363 of 2009) the Plaintiff is suing the defendant for an alleged debt of K110, 763.89 being for goods supplied and delivered to the defendant at the request of the defendant over a period between October 2007 and October 2008.


2. The defendant has filed a defense denying the alleged debt. The defendant has now by a Notice moved the Court to dismiss the entire proceedings on the basis that the Plaintiff did not give notice under Section 5 of the Claims By and Against the State Act (the Act).


3. Both counsel have filed written submissions and also made oral submissions. I have read and considered carefully those submissions and the affidavit materials referred to.


4. There is no dispute between the parties that the Plaintiff did not give a notice pursuant to section 5 of the Act. The issue is whether the plaintiff is required to give notice to the defendant pursuant to section 5 of the Act in this case. The issue thus raised, raise a secondary issue as to whether the defendant falls within the expression "The State".


5. In order to determine this issue, one needs to consider the relevant provisions of the Act, Section 5 of the Act reads:


"S. 5 – Notice of Claims Against the State.


(1) No action to enforce any claim against the State lies against the State unless notice in writing of intention to make a claim is given in accordance with this section by the claimant to:


(a) The Departmental Head of the Department responsible for justice matters; or


(b) The Solicitor General."


(2) A notice under this Section shall be given –


(a) Within a period of six months after the occurrence out of which the claim arose; or


(b) Where the claim is for breach of a contract, within a period of six months after the claimant became aware of the alleged breach; or


(c) Within such further period as;


(i) The principle legal advisor; or


(ii) The Court, before whom the action is instituted, on sufficient cause being shown, allows."


6. It is clear that these two (2) subsections provide that:


7. There is growing volume of case law that highlights the importance of compliance with section 5 of the Act. Principles emerging from these cases include:


8. The term State is not defined in the Act. The Interpretation Act defines the expression "The State" to mean "The Independent State of Papua New Guinea".


9. In SCR 1 of 1998, Reservation Pursuant to Section 15 of the Supreme Court Act (2001), SC 672, the Supreme Court unanimously held that the term "State" includes a Provincial Government. The Supreme Court said:


"The Constitution, does not define "The State" but it defines the name "Papua New Guinea" to mean "The Independent State of Papua New Guinea". The Constitution also defines "governmental body" to mean:


(a) a National Government; or


(b) a Provincial Government; or


(c) an arm; department, agency or instrumentality of the National Government or a provincial body;


(d) a body set up by statute or administrative act for government or official purposes".


The Claims By and Against the State Act (1996) does not define "the State". The Interpretation Act defines "the State" as "The Independent State of Papua New Guinea".


A provincial government is thus at least a "governmental body". It is a part of ""State'''? Is it a part of the Governmental body making up "The Independent State of Papua New Guinea"? We believe it is and therefore its assets and finances must be protected from execution in the same way as the assets and finances of the National Government. The State therefore must also include a "provincial government"..."


10. The Court concluded and said:


"We are of the opinion that a provincial government is "governmental body" making up the Independent State of Papua New Guinea for the purposes of the Claims By and Against the State Act. The power of the people is vested in "all governmental bodies" which administers and exercises them on behalf of the people. These governmental bodies includes "The National Government", "a Provincial Government", or arm, department, agency or instrumentality of the National Government or a Provincial Government or "a body set up by statute or administrative act for government or official purposes". This power is exercised by these "governmental bodies" on behalf of the same people. The finances administered by a Provincial Government, is for and on behalf of the same people. The National Government administers "the National Government funds and assets".


11. The Supreme Court also stated that this general protection did not apply to assets and finances of developmental enterprises of a provincial government that have independent corporate status and operate commercially. They are subject to the ordinary laws as corporate citizens. However, any profits this developmental enterprise contributes to the Provincial budgets become the assets belonging to the people and they are also protected from execution processes. In like manner, tax revenue generated under delegated legislative authority becomes State finances and is protected.


12. In SCR 1 of 1998 (supra), the Supreme Court sets out six (6) criterias as to whether a provincial government is included in "the State". These criterias are whether:


  1. The subject entity is established by the Constitution
  2. The subject entity is part of the three tier structure of government enshrined in the Constitution.
  3. like the other tiers of government, the subject entity is constituted by elected representatives.
  4. The National Government exercises some control over provincial governments in political, administrative and financial matters.
  5. The subject entity falls within the definition of "government body" contained in the Constitution.
  6. Judgment debts are recoverable from monies allocated in their budgetary process.

13. In Naomi Vicky John v The National Housing Corporation (2005) N 2770, Lay J, analyzed the criteria in SCR NO. 1 of 1998. He found that the points (d) and (e) apply to the National Housing Corporation but not points (a), b), (c) and (f). In the upshot, His Honour held that the National Housing Corporation was not included in the term "The State" and thus no statutory notice under the Act was required to be given.


14. Similarly, Lay J. applied the same principles in Wanema Trading Limited v Civil Aviation Authority of Papua New Guinea (2006) N 3058 and held that the Civil Aviation Authority was not included as "the State: for the purposes of Section 5 of the Act as whilst point (d) and (e) applied to the Civil Aviation Authority, points (a), (b), (c) and (f) did not.


15. Likewise in Konji Kara vs. The Public Curator & the State (2009) N4048, Hartshorn J, applied the same principles and found that points (a), (b) and (c) did not apply to the Public Curator whilst there was evidence establishing points (d), (e) and (f). Given the non application of the first three criteria, His Honour held that the Public Curator was not "the State" and therefore no statutory notice under the Act was required to be given.


16. In Albert Areng v The National Housing Corporation & Another (2005) N2895, the Court considered a similar issue on whether "the State" would apply to the National Housing Corporation. I held that the term "the State" did not apply to the National Housing Corporation and therefore it was not protected by the provisions of the Act.


17. I concluded that there was no requirement to give notice under Section 5 of the Act before filing a suit against the National Housing Corporation. In the course of my judgment I said this at pp 13 and 14:


"I would add the protection given by Section 5 of the Act (CBASSA) does not apply to statutory corporations such as the Applicant who have independent corporate status. These are subject to the ordinary laws as corporate citizens. As a Corporation it is a separate or distinct legal entity..."


18. More recently, in Sengus Investment Limited v The National Broadcasting Corporation, (Unreported & Unnumbered judgment) Waigani dated 24th September 2010, (WS 442 of 2007), I discussed these aspects further. The brief facts of the case was that, initially the plaintiff filed proceedings against the defendant for breach of Contract for the sale of a piece of property. The plaintiff successfully obtained judgment against the defendant. It then successfully obtained a certificate of taxation for costs. Subsequently, the National Court ordered judgment in favour of the Plaintiff for the sum of K31, 190.70 together with costs of K500.00, a total of K31, 690.70. All of this money was for costs. The Court ordered that the sum be paid within 7 days from the date of the Order. Despite repeated request or demands, the Defendant was protected by Section 31 of the Act. In the course of my judgment, I said at p, 7:


In my opinion it would be legitimate in determining whether the protection applies or not, to consider, inter alia, the corporate structure and purpose of the organizations as set out in its enabling legislation. If for instance, the corporate organization is set up to make profit, pay dividends, pay corporate tax and etc then Section 13 of the Act would not apply.


Conversely where the issue involves a National Government "developmental enterprise, which do not have an independent corporate status or operate commercially, then the protection offered by Section 13 of the Act would apply to its assets and finance.


It appears to me that there are two (2) schools of thought in relation to this aspect. One school of thought is that the protection offered by Section 13 does not apply to some of the State owned instrumentalities, etc which are set up like corporations but do not operate as commercial entities. Their fundings for instance, would come from National Government budgetary process. They have no independent commercial income and they do not pay corporate income tax etc and do not operate for profit. Of course on the other hand there would be National Government entities, instrumentalities or government bodies who would operate commercially and for profit. Such an instrumentality or governmental body, in my view, would not have the benefit of the protection accorded by Section 13 of the Act."


19. In that case I refused the orders sought and found that the defendant's funds and assets are protected by Section 13 of the Act. In the present case, I am dealing with the issue of s.5 of the Act.


Applicant's Submissions


20. Both counsel have filed written submissions and made oral submissions. Mr. Manase for the Applicants submits that the defendant is a State owned University set up or established under the Papua New Guinea University of Technology Act (University Act). He submitted that the University is a government body and is also a statutory authority or public body for the purposes of Public Finance Management Act. The essence of his submissions is that if one looks at the corporate structure of the University, it is clear that it is not set up as a corporate body and does not operate commercially.


21. He submits that this is made plain by Section 34 of or the University Act that the Public Funds Management Act 1995 applies to it and in respect of the raising and management of the University's finances. He further submitted that section 35 of the University Act makes it abundantly clear that its principle source of financing or funding because that provision provides that the State shall each year pay to the University a sum of money determine by the National Executive Council. It also provides that the amount payable to the University under section 35 is to be paid out of the Consolidated Revenue Fund.


22. Mr. Manase submitted that, although it is evident that the defendant is an entity of its own, that is a statutory authority and a government body, it is still funded and managed by the State. It is an educational institution of the State and is an instrument or an agent or a part of the State. Hence he submits, any claims against the University for tortuous act or breach of a contract should be subjected to the Claims Act, including the requirement to give notice under section 5 of the Act.


23. He submitted that the University is a public institution and solely and wholly funded by the State and it is part of the "State". Accordingly, he submitted that the University is not a commercial entity of the State such as Rural Development Bank, the Central Bank, the National Gaming Control Board, Telikom PNG Ltd and Post PNG Ltd. It was therefore submitted that as the University is not a commercial entity of the State but a governmental body or an instrumentality of the State or statutory authority such that it is part of the "State" and therefore the requirement of section 5 notice should apply to it to protect its assets and finances. He also referred me to Tobbo Yakale v Allan Sako Misty Baloiloi and the University of Technology. I shall discuss this case later on in my judgment.


Respondent's Submissions


24. Mr. Poka for the plaintiff concedes that the Plaintiff has not given a section 5 notice to the defendant. He submits that it was not necessary to give such a notice. Mr. Poka's submission is two fold. First he submits that the defendant is not included in the term "State" and that the defendant is a legal entity or corporate body that can sue and be sued.


25. In regard to the first leg of the submissions, he submitted that whether an entity is included in the term "State" under the Act, it must satisfy the criteria set out in order to determine SCR No. 1 of 1998 (Supra). He submitted that in that case the Supreme Court set out six criterias as to whether an entity is included in "the State". These criterias are whether the subject entity:


a) Is established by the Constitution.


b) Is part of three tier structure of government enshrined in the Constitution.


c) Is constituted by elected representative like the other tiers of government.


d) Has some control exercised over it by the National Government in political administrative and financial matters.


e) Falls within the definition of the governmental body contain in the Constitution contained in the Constitution and have has its judgment debts recoverable from monies allocated in the budgetary process.


26. He submitted that if an entity in question does not satisfy one or all of these six criterias, then it is not included in the term "State". He relied on the decisions in Naomi Vicky John v The National Housing Corporation (2005) BN2770, Konze Kara v The Public Curator & The State (2009) N4048.


27. He submitted that in those cases, the learned trial Judges applied the six criterias and found that in the first case, Naomi Vicky John vThe National Housing Corporation, the National Housing Corporation was not included in the "State" and thus there was no requirement to give a statutory notice under the Act. Like wise in Konze Kara, Hartshorn J, applied the same principles and found that the Public Curator did not or was not "the State" and therefore there was no requirement to give notice to it.


28. He submitted that the court should apply the same principles to this case. He submits that the defendant does not meet criterias (a), (b) and (c), in that it is not established by the Constitution, is not part of the three tier structure of government enshrined in the Constitution and is not constituted by elective representatives. It follows according to Mr. Poka that the defendant is not part of "the State" for the purpose of a statutory notice under the Act.


29. Mr. Poka's second submission is that as the defendant is a body corporate it can sue and be sued. Here it is submitted that the existence of the defendant derives from an Act of Parliament namely the University Act. He submits that Section 3 (2) of the University Act provides that the University is a body corporate by the name of The Papua New Guinea University of Technology and has perpetual succession. It has a common seal and is capable by that name of suing and being sued. It has ability of taking, purchasing and holding property. It also has ability of granting, selling, alienating, assigning and demising property; and doing all other matters and things incidentals and pertaining to a body corporate. He submits that there is no question that the defendant is a governmental institution or body set up by a statute for public purposes and it falls under the definition "governmental body" as defined in Schedule 1.2 of the Constitution. The defendant of course gets its funds from the government. Sections 34 & 35.


30. He submits however that given that the defendant is a body corporate which can sue and be sued and do all other matters and things incidental and pertaining to a body corporate, it has corporate status which is a separate distinct entity and is subject to the ordinary laws as corporate citizens. Thus he submits that it is not part of the "State" and therefore there is no requirement to give s.5 notice. Here he relies on my decision in Albert Areng v The National Housing Corporation & Another (2005) N. 2895, Anawe Megaraka Ona v The National Housing Corporation (2009) N 3623.


Decision


31. I have read and considered carefully the evidences that have been relied on by the parties. Equally important I have read and considered carefully the submissions by respective counsel since the matter was heard.


32. Counsel for the University has referred me to Tobbo Yakale v Allan Sako and Others (supra) an unnumbered judgment of my brother Justice Yagi dated 22nd of February 2010. In brief, in that case the Plaintiff claimed the damages for alleged unpaid Termination benefits. The Plaintiff claimed that he was employed by the University as an ambulance driver for about 10 years until his employment was terminated on 11th December 2007. In his statement of claim he alleged that the University had failed to pay him his entitlements such as repatriation expenses, wages and other employment entitlements. He also sought declarations in respect of his entitlements and order restraining the Defendant from evicting him from accommodation supplied to him by the University until his entitlements was paid. On termination, the Plaintiff sought the assistance from the Department of Labour and Employment, the General Workers Union and his present lawyers to pursue his claims. On 7th of August, 2008 the Plaintiff's lawyer wrote to the Department of Justice and Attorney General giving notice of the Plaintiff's intention to sue the third Defendant for monies in lieu of his entitlements. Subsequently, his lawyers filed proceedings in the National Court.


33. The defendant then moved a motion to dismiss the claim on the basis that the plaintiff had failed to give notice of the claim within the time prescribed by section 5 of the Act. They contended that as the cause of action arose on the 11th December, 2007 and therefore the six months limit under section 5 of the Act expired on the 11th of June, 2008.


34. The Plaintiff however contended that notice was properly given on the basis that the plaintiff's cause of action arose at the time when the Plaintiff decided to utilize the legal process and that was on the 15th of May 2009, when the Plaintiff engaged lawyers to litigate his claim.


35. After hearing arguments the learned trial Judge said that the Plaintiff's claim was for unpaid entitlements under a contract of employment. The action was based on contract. Thus, as the Plaintiff's employment was terminated on the 11th of December 2007, that was the date when his cause of action arose.


36. His Honour therefore stated that time within which for the Plaintiff to give the required notice of his claim under section 5 of the Act expired on the 11th of June 2008. Thus the letter dated 7th of August, 2008 purporting to give notice was invalid.


37. It is clear from reading the decision of His Honour that the issues raised before me was not raised fully before His Honour and His Honour therefore did not make any findings on this issues raised before me. His Honour, for instance did not discuss whether the provisions of s. 5 of the Act applied to the University or not, although it is clear that he so found. His Honour did not say any where in his decision how and why he decided that the University was part of the "State" and therefore s.5 notice was required to be given. Unfortunately I have the misfortune of disagreeing with my brother on that.


38. I do so for a number of reasons. Firstly, I accept and apply the six criterias set out in SCR No. 1 of 1998. I find that criterias (a), (b) and (c) do not apply to the University. However, criterias (d), (e) and (f) would apply to it.


39. Thus I am of the view that the defendant is not established by the Constitution. It is not part of a three tier structure of government established in the Constitution and it is not constituted by elected representatives. However it is equally clear that the National Government has some control or exercise over it in that the defendant's finances come from the National Government Budget. It falls within the definition of a "government body".


40. Secondly, the corporate structure of the University makes it clear that it is a body corporate. It has power to sue and be sued in his corporate name and style. It has the ability and the power to take, purchase and hold property in his name. It has the authority and the capacity to buy, sell and assign properties. There is also a general power given to it to do all other matters and things, incidental and pertaining to a body corporate.


41. Whilst there is no doubt that the defendant is a governmental institution or body set up by statute for public purpose and falls under the definition of "governmental body" as defined in Schedule 1.2 of the Constitution and gets its funds from the Government, nevertheless, its statute specifically provides that it is a body corporate which can sue and be sued and do all other matters and things, incidental and are pertaining to a body corporate. I therefore hold the view that it has a corporate status which is a separate and distinct legal entity and is subject to the ordinary laws as a corporate citizen.


42. In the final analysis, I am of the view that the University is not included in the term "State" and thus, no statutory notice under the Act is required to be given to the State prior to filing any proceedings against the University.


43. For those reasons, I am of the view that the provisions of the Act do not apply to the defendant. It follows that the motion by the defendants must be dismissed. I therefore make the following orders:


(1) The motion by the defendant is dismissed.


(2) The defendant shall pay the costs of the plaintiff, such costs to be taxed if not agreed.
____________________________________________________________
Huon Lawyers: Lawyers for the Plaintiff
Manase & Co. Lawyers: Lawyers for the Defendant


PacLII: Copyright Policy | Disclaimers | Privacy Policy | Feedback
URL: http://www.paclii.org/pg/cases/PGNC/2011/236.html