Agmark Pacific Ltd v Cocoa Board of Papua New Guinea [2012] PGNC 199; N4902 (8 October 2012)

N4902

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO 539 OF 2012

BETWEEN:

AGMARK PACIFIC LIMITED
Plaintiff

AND:

COCOA BOARD OF PAPUA NEW GUINEA
First Defendant

AND:

INDEPENDENT STATE OF PAPUA NEW GUINEA
Second Defendant

Waigani: Kariko, J
2012: 1st & 8th October

PRACTICE AND PROCEDURE – notice of motion – failure to cite reference to jurisdiction – whether motion incompetent – Order 4, Rule 49(8) National Court Rules

PRACTICE AND PROCEDURE – notice of motion – motion must be for interlocutory relief and not substantive relief – Order 4, Rule 49(9) National Court Rules

JUDGMENT DEBT – enforcement - appointment of receiver – whether the Companies Act applies to the Cocoa Board – Part XVII Companies Act 1997 – whether the Cocoa Board a part of the State – whether the Cocoa Board is immune from having a receiver appointed to it - s.13(1), Claims by and Against the State Act 1996

Cases cited:

PNG Ports Corporation Ltd v Starships (PNG) Ltd (2011) N4213
John Momis v Attorney-General [2000] PNGLR 109
NCDC v Yama Security Services Pty Ltd (2003) SC707
Sengus Investment Ltd v National Broadcasting Corporation (2010) N4129
Sealark Shipping Limited and Bismark Maritime Pty Limited v Secretary of Treasury & the State (1998) PNGLR 333

Counsel:

Mr G Poole, for the plaintiff
Mr R Diweni, for the first defendant
Ms M Kias, for the second defendant

8th October, 2012

1. KARIKO, J: The National Court awarded judgement in favour of Agmark Pacific Limited (APL) on 19th March 2010 whereby the Cocoa Board of Papua New Guinea (the Cocoa Board) and the Independent State of Papua New Guinea (the State) were ordered to pay APL K4,885,260.49 with 8% interest within 21 days plus costs (the Judgement Debt) . The Judgement Debt is yet to be settled.
   
2. This proceeding essentially seeks to have a receiver appointed for the purpose of satisfying the Judgement Debt because the State has taken far longer than anticipated by law to settle the matter.
   
3. The matter came before me and APL moved an application for the appointment of a receiver which application was opposed by both the Cocoa Board and the State.
   

Reference to jurisdiction

4. A preliminary objection was raised by the defendants claiming the relevant notice of motion is incompetent for not citing the jurisdictional basis for the orders sought. Reference was made to Practice Direction No. 6 of 2004 whose requirements are now contained in Order 4 Rule 49(8) of the National Court Rules (the NCR) which reads:
   

"All Motions must contain a concise reference to the Court's jurisdiction to grant the orders being sought. Motions not containing such reference will not be accepted for filing. If accepted by the Registry staff without such reference, and it goes before the motions judge, the Court may strike out the motion for being incompetent and for lack of form".

5. The failure to cite the requisite reference does not automatically render a motion incompetent. The court still has discretion whether or not to strike out the motion. This discretionary power however must be exercised judicially and on proper grounds; see PNG Ports Corporation Ltd v Starships (PNG) Ltd (2011) N4213.
   
6. Counsel for APL conceded the failure to cite the relevant jurisdictional provision but argued the failure did not warrant finding the motion incompetent. He indicated he would correct the oversight and indeed after this matter was adjourned for ruling an amended notice of motion was filed by APL. The amended notice of motion now includes the jurisdictional basis relied upon for the motion which are Order 13 Rule 2 of the National Court Rules and section 12 of the Laws Adoption and Adaptation Act although the latter reference is itself wrongly cited as the Laws Adoption and Adoption Act. But as this amended notice of motion was filed after the application was argued, I have not considered it.
   
7. In my opinion the reasons for the requirements of Order 4 Rule 49(8) are:
   
   • (1) to ensure the applicant knows the jurisdictional basis for the orders sought; and
     
   • (2) to make the other party aware of the exact legal basis for the application in order to properly respond to it; and
     
   • (3) for the court to properly appreciate whether it has jurisdiction to grant the orders sought.
     
8. There may be cases where clearly the opposing party is not prejudiced by the failure to comply with the Rule but in a case such as the present where the applicant is seeking four principal orders all to do with the appointment of a receiver, the serious nature of the orders warrant the court's jurisdiction to grant the orders to be cited in the motion.
   
9. It follows in my view that the notice of motion filed by APL on 6th September 2012 is incompetent.
   

Motion seeking substantive relief

10. To my mind, there is another reason why the relief sought in the motion should be refused.
    
11. The notice of motion seeks orders for the appointment of a receiver to hold and manage the assets of the Cocoa Board to satisfy the Judgement Debt. These are essentially the same orders sought in the originating summons.
    
12. Order 4 Rule 49(9) of the NCR states that except as otherwise expressly provided by the Rules: motions shall be for relief on interlocutory matters only and not for the substantive relief claimed in the originating process.
    
13. It is a well-settled rule of practice and procedure that the notice of motion procedure should not be used as a vehicle to obtain substantive relief. This rule was codified as a result of the National Court decision of Kapi DCJ in John Momis v Attorney-General [2000] PNGLR 109 and the Supreme Court decision in NCDC v Yama Security Services Pty Ltd (2003) SC707.
    

Appointment of a receiver

14. APL argued that pursuant to Order 13 Rule 2 of the NCR the Court may appoint a Receiver to the Cocoa Board for reasons that:
    
    • (1) The Cocoa Board as a corporation, albeit established by statute, is subject to the provisions of the Companies Act in relation to receiverships; and
      
    • (2) While the Cocoa Board is a governmental body, it does not enjoy the immunities of the State.
      
15. The defendants in responding in effect submitted for the proceeding to be dismissed.
    

Application of the Companies Act

16. The relevant provisions of the Companies Act 1997 (the Companies Act) concerning receiverships are found in PART XVII – RECEIVERSHIPS. These provisions (sections 254-289) apply to a company that is incorporated under the Companies Act meaning an incorporated and registered company having shares, shareholders and directors; see the definition of "company" under section 254(1) and section 2 of the Companies Act. The Cocoa Board is not such a corporation.
    
17. Part XVII of the Companies Act therefore has no application to the Cocoa Board.
    

Application of section 13(1) Claims Act

18. The defendants submitted that section 13(1) of the Claims By and Against the State Act 1996 (the Claims Act) provides immunity and prohibits a receiver from being appointed to the Cocoa Board. This section reads:
    

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.

19. The relevant questions then are:
    
    • (1) Is the Cocoa Board a part of the State?
    • (2) Is the appointment of a receiver a process in the nature of an execution?
      
20. In Sengus Investment Ltd v National Broadcasting Corporation (2010) N4129, Sawong J held that in determining whether the protection under section 13(1) applies or not to a statutory corporation of the State, the corporate structure and purpose of the organization must be considered and if the corporation is set up to make profit, pay dividends, pay corporate tax etc. then the protection is not available.
    
21. The Cocoa Board is clearly a governmental body. It is a corporation established by section 4 of the Cocoa Act Chapter 338 to control and regulate the cocoa industry of Papua New Guinea. Apart from the relevant Departmental Head, the other members of the Board are appointed pursuant to the Regulatory Statutory Authorities (Appointment to Certain Offices) Act 2004 on terms and conditions set by the responsible Minister. The Minister may terminate the appointments on prescribed grounds. The Public Services (Management) Act 1995 has application to employees of the Cocoa Board and the Public Finances (Management) Act 1995 generally applies to the Board. The Cocoa Board is not a commercial enterprise or a profit-making corporation. It does not declare and pay dividends nor does it pay corporate taxes.
    
22. Following the decision in Sengus Investment Ltd v National Broadcasting Corporation (supra) I find the Cocoa Board is a part of the State for the purpose of section 13(1) of the Claims Act.
    
23. As stated earlier, APL seeks to have a receiver appointed to hold and deal with the property of the Cocoa Board to satisfy the Judgement Debt. There is no dispute that the appointment of a receiver to enforce a judgement for the payment of money is a process in the nature of an execution against property. The protection offered by section 13(1) of the Claims Act therefore applies to the Cocoa Board.
    
24. In the originating summons, APL also seeks a declaration to the effect that the time taken by the State to endorse the Certificate of Judgement initially issued exceeds the period prescribed by section 14(2) of the Claims Act but this section places an obligation on the Solicitor-General and not the State. Any claim alleging failure of the Solicitor-General to act under that provision should be pursued pursuant to section 14(5).
    
25. In the circumstances I conclude there is no reasonable cause of action against the defendants.
    

Costs

26. I do not consider it appropriate to award costs on an indemnity basis as submitted by the defendants.
    

Remarks

27. Before issuing the formal orders, I must agree with Mr Poole that the very slow progress of the State in attending to the settlement of the Judgement Debt is unacceptable. It is now nearly 2 years since the State's Supreme Court appeal was dismissed. The delay in settlement undoubtedly continues to adversely affect APL as a commercial enterprise.
    
28. But I also accept that the second Certificate of Judgement and the Clearance Letter from the Solicitor-General are now with the Department of Finance having been sent there on 19th September 2012. The Secretary for Finance is obliged under section 14(3) of the Claims Act to satisfy the judgement within a reasonable time which was held by this Court to be three months; Sealark Shipping Limited and Bismark Maritime Pty Limited v. Secretary of Treasury & the State (1998) PNGLR 333. If the Secretary fails, APL may consider bringing an action pursuant to section 14(5) of the Claims Act.
    

Orders

29. The orders of this Court then are:
    
    • (1) The plaintiff's notice of motion filed 6th September 2012 is dismissed.
      
    • (2) This entire proceeding is dismissed.
      
    • (3) The defendants' costs of and incidental to this proceeding shall be paid by the plaintiff on a party-party basis, to be taxed if not agreed.
      
    • (4) The time for entry of these orders is abridged to the time of settlement by the Registrar which shall take place forthwith.
      

___________________________________________________

O'Briens Lawyers: Lawyer for the Plaintiff
Stevens Lawyers: Lawyer for the First Defendant
Solicitor-General: Lawyer for the Second Defendant