National Capital District Commission v Internal Revenue Commission [2022] PGNC 314; N9844 (30 August 2022)

N9844

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS (COMM) NO. 11 OF 2021 (NO. 6)

BETWEEN:
NATIONAL CAPITAL DISTRICT COMMISSION
Plaintiff

V

INTERNAL REVENUE COMMISSION
First Defendant

AND:
SAM KOIM in his capacity as the COMMISSIONER GENERAL OF INTERNAL REVENUE COMMISSION and in his capacity as Trustee of National Capital District Inland GST
Second Defendant

AND:
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Third Defendant

AND:
CENTRAL PROVINCIAL GOVERNMENT
Fourth Defendant

AND:
MOTU KOITA ASSEMBLY
Fifth Defendant

AND:
GULF PROVINCIAL GOVERNMENT
Sixth Defendant

AND:
EDITH LAUFA in her capacity as Trustee of National Capital District Inland GST Trust Account
Seventh Defendant

Waigani: Anis J
2022: 17^th & 30^th August

NOTICE OF MOTION – Application to set aside notices issued under discovery and interrogatories – cited sources include Order 10A Rule 16, Order 10A Rule 17, Order 10A Rule 19, Order 10A Rule 21 and Order 12 Rule 1 of the National Court Rules, section 155(4) of the Constitution and the inherent jurisdiction of the Court - whether notices issued amount to abuse of process – consideration – whether the Court should exercise its inherent jurisdiction to control proceedings before it

Cases Cited:

NCDC v IRC and Ors (2021) N8809
Muriso Pokia v. Mendwan Yallon (2014) SC1336
State v Alphonse Wohuinangu (1991) N966
Thomas Wapi v Sergeant Koga Ialy and Or (2014) SC1370

Counsel:

D Wood with counsel assisting L Evore and R Tevlone, for the Plaintiff
S Sinen, for the First and Second Defendants
T Mileng, for the Third Defendant
G Wayne, for the Fourth Defendant
N Vada, for the Fifth Defendant
J Kiluwe, for the Sixth Defendant
M Mukwesipu, for the Seventh Defendant

RULING

30^th August, 2022

1. ANIS J: The parties, with leave of the Court on 3 August 2022, vacated the hearing which was scheduled at 9:30am on 17 August 2022. I issued directions following that, which included these:

4. All Notices of Discoveries and Interrogatories including Notices to Produce and Notices to Admit Facts issued by the parties to date are set aside.
   
5. Parties are at liberty to file fresh Notices for Discoveries and Interrogatories after the date of this Court Order.
   
6. The matter shall return for Directions pursuant to Order 10A Rule 17 of the National Court Rules at 9:30am on Wednesday 17 August 2022.
   

2. The matter returned on 17 August 2022. By then, the 4^th defendant had filed and served the plaintiff and the 5^th defendant, with the following documents:

(i) Notice to Answer Interrogatories issued to the plaintiff and the 5^th defendant (filed on 9 August 2022 – Doc. No. 171);

(ii) Notice for Discovery issued to the plaintiff (filed on 9 August 2022 – Doc. No. 172);

(iii) Notice to Admit Facts issued to the plaintiff (filed on 9 August 2022 – Doc. No. 173);

(iv) Notice to Admit Facts issued to the 5^th defendant (filed on 9 August 2022 – Doc. No. 174);

(v) Notice to Produce issued to the plaintiff (filed on 11 August 2022 – Doc. No. 175).

3. The plaintiff responded with a notice of motion (filed on 15 August 2022) (NoM). Term 4 of NoM is the primary relief. It seeks to set aside the above 4 of the 5 issued notices (the 4/5 notices) that were issued against it. The sources invoked under term 4 are, Order 10A Rule 16, Order 10A Rule 17, Order 10A Rule 19, Order 10A Rule 21 and Order 12 Rule 1 of the National Court Rules (NCR), section 155(4) of the Constitution and the inherent jurisdiction of the Court.

4. I heard the NoM on 17 August 2022. The 5^th and 7^th defendants supported the motion. The 1^st, 2^nd, 4^th and 6^th defendants opposed it. The 3^rd defendant took a neutral stand. I note that the 1^st, 2^nd and 6^th defendants all adopted the submissions of the 4^th defendant in response.

BACKGROUND

5. I summarised the brief background of the matter at paras 3, 4 and 5 in my earlier decision, NCDC v. IRC and Ors (2021) N8809, as follows:

3. The plaintiff seeks various declaratory relief in its originating summons. The relief sought essentially relate to or concern the application or interpretation of provisions under 2 legislations, namely, the National Capital District Commission Act 2001 (NCDC Act) and the Inter-Governmental Relations (Functions and Funding) Act 2009 (IGR Act). The provisions include sections 37 to 45 of the IGR Act, and section 33(2) of the NCDC Act.

4. What triggered the plaintiff to filing this proceeding and seeking interim restraining orders is this. On 22 April of 2021, the 2^nd defendant made a formal announcement in the media. He informed the public and relevant stake holders, and I will paraphrase, that he has made a decision whereby instead of a current practice where GST funds for the 4^th, 5^th and 6^th defendants (the 3 named defendants) are paid by 1^st Defendant (the Commission) to them through the plaintiff, that the Commission will commence paying these GST portions or percentages of funds directly to the 3 named defendants. The 2^nd defendant gave effect to his decision by effecting payments of the GST funds that were required for the month of April 2021 directly to the 3 named defendants.

5. The plaintiff, having knowledge of that, filed this proceeding.

PRELIMINARY ISSUES

6. The 4^th defendant has raised preliminary issues. Firstly, it argues that the NoM is an attempt by the plaintiff to derail the process for discovery and interrogatories which are permitted under the NCR. It also submits that this Court had granted leave to the parties generally to file these notices, and it refers to term 5 of the Court’s Order of 3 August 2022.

7. I note the submissions of the parties on these. In my view, the 4^th defendant’s arguments, with respect, are baseless, and I dismiss them. The National Court Commercial Rules 2005 (Commercial Rules) is applicable herein. The matter was adjourned from 3 August 2022 to the 17 August 2022, and the hearing on that day, as per term 6 of the Court direction, was directions hearing under Order 10A Rule 17 of the Commercial Rules. There is no doubt about this. Before I briefly consider Order 10A Rules 17 and 19, there is a further error of fact that requires clarity. Term 4 of the Court’s Order of 3 August 2022 did not grant leave to the parties to file notices for discoveries or interrogatories. It rather informs the parties of their rights to attend to them if they wish. That said, one must note that the matter is registered as a commercial matter thus is subject to the Commercial Rules, which include 10A Rules 17, 18 and 19. I need not restated these rules here which are quite lengthy except to refer to them in the Commercial Rules.

8. The 4^th defendant’s 5 notices were filed under the general NCR for discoveries and interrogatories. Even though I may accept them as filed and served on this basis, the matter returned on 17 August 2022, under Order 10A Rule 17 of the Commercial Rules. Whilst sitting on that day for that purpose, I was then asked to also hear and make determination on the NoM. So obviously, I have the powers to consider and make a ruling under Order 10A Rules 17 to 22 of the Commercial Rules. These rules fall under the sub-heading APPLICATIONS AND DIRECTIONS AFTER LISTING. Order 10A Rule 18 in particular states, The Commercial List judge may make such orders or give such directions as are appropriate to ensure the just, efficient and expeditious disposal of cases on the list. And Rule 21 states:

Orders or directions relating to the provision of particulars, the filing of lists of documents and the administration of interrogatories will be made only upon demonstrated need being established in respect to particular matters.

9. Moving on, the second preliminary challenge raised by the 4^th defendant is this. It submits that the NoM was filed for an improper purpose or to conceal the truth. I note the submissions of the parties on this. I reject the 4^th defendant’s submission. I find no valid basis for this argument given the powers and requirements that are stipulated under Order 10A Rules 17 to 22 of the Commercial Rules. Order 21 is express and its requirements are consistent with what the plaintiff and the 5^th and 7^th defendants are asserting in relation to the NoM.

10. The 3^rd preliminary objection or challenge to the NoM is this. The 4^th defendant submits that the NoM is defective. It submits that each of the 4 notices should have been pleaded separately with their relevant jurisdiction and the grounds for objection. I note the submissions of the parties in this regard. I also reject this preliminary objection. I find it to be baseless. The NoM is sufficiently pleaded. See case: Muriso Pokia v. Mendwan Yallon (2014) SC1336. I observe and find that the relief in question, that is, relief 4 and 5, each plead their jurisdictional basis, and they also indicate why the plaintiff is relying on them. Further, the plaintiff’s reasons are also premised on the requirements under Order 10A Rule 17 and 21 of the Commercial Rules which were disputed between the parties throughout the hearing of the NoM.

11. I will address the 4^th and 5^th preliminary objections of the 4^th defendant together. The 4^th defendant argues that the NoM filed is inconsistent with the intent and spirit of the NCR. It also submits that the NoM is an abuse of process because it seeks to set a bad precedent. I note the submissions from the parties on these issues. With respect, I reject both arguments of the 4^th defendant. The NoM was filed primarily in view of the requirements under Order 10A Rules 17 to 22 which I have addressed above in my decision herein.

INHERENT JURISDICTION

12. I note that the plaintiff has also, in its substantive submission, asked the Court to exercise its inherent jurisdiction in controlling proceedings before it, including from abuse, to set aside the 5 notices that have been issued by the 4^th defendant. It made submissions in that regard.

13. I have also heard submissions in response from the 4^th defendant.

14. I note that I may on my own volition, exercise my inherent power to control proceedings before me from abuse or otherwise. The inherent jurisdiction is explained in the case law, and I would firstly refer to Brown J’s decision in State v Alphonse Wohuinangu (1991) N966. His Honour stated, and I quote, Courts in Australia have inherent jurisdiction to control and supervise their own proceedings. I can see no good reason for departing from that principle which is implied by the unlimited jurisdiction given to the National Court by s 166 of the Constitution.

15. The decision has been adopted and applied in both the National and the Supreme Courts. In Thomas Wapi v Sergeant Koga Ialy and Or (2014) SC 1370, the Supreme Court stated:

7. It is accepted that the National Court has inherent jurisdiction and pursuant to s.155 (4) Constitution, is able to control its own processes. In this regard and by way of example, we refer to Agiru v. Electoral Commission (2002) SC687 in which the Supreme Court said:

"Those principles in essence are that, the court's inherent power is its authority to do all things that are necessary for the proper administration of justice. Such inherent power consists of all powers reasonably required to enable the court to perform efficiently its judicial functions and to protect its dignity and integrity. Essential to these inherent powers is the court's duty to protect itself by ensuring that vexatious litigants do not abuse the court's process by instituting frivolous or vexatious suits. It behoves litigants therefore to carefully choose their causes of action before they commence proceedings in this Court purporting to enforce their rights. The court should summarily dismiss proceedings it considers frivolous, vexatious or is an abuse of process. (see, generally, Ronney Wabia v BP Exploration Operating Co. Ltd & Ors, Unreported National Court Judgment N1697 dated 28 March 1998)"

8. We also make reference to the decision of Injia J (as he then was) of Karl Paul v. Aruai Kispe and Ors (2001) https://pngsd.judcom.nsw.gov.au/pgnc/judgments/2001/2001_PGNC_132.htmlN2085 in which His Honour said:

"This Court has wide powers to control the conduct of proceedings before it, subject of course, to jurisdictional limitations fixed by Statute. It is in the inherent jurisdiction of the Court to take firm control of the proceedings to ensure that the business of the Court is conducted in an orderly and fair and timely manner and to ensure that justice is done in the particular case. To this end, it is within the inherent jurisdiction of the Court toscrutinize the form and contents of documents before it. State v. Alphonse Woinangu N966 (1991).

There is a wide discretion vested in the Court by the NCR to screen and weed out claims which do not disclose a reasonable cause of action, are frivolous and vexatious or an abuse of process of the Court, (O12 r40) or the documents filed in Court are scandalous, irrelevant or otherwise oppressive (O2 r29), or on the ground of irregularity. That discretion is normally exercised upon application by an interested party. Nevertheless, it goes without saying that the Court may exercise that discretion on its own initiative. It is open to the Court to raise and determine questions concerning the regularity (O1 r1-9) or competency of proceedings at any stage of the proceedings with or without application by an interested party: see Siaman Riri & Anor v. Simon Nusen & Ors N1375 (1995). It is for this reason that I raised the issue of competency on my initiative."

9. That said, this power of the Court should be exercised cautiously and in the clearest of cases.

16. “Should I exercise my inherent jurisdiction to address the matter generally including the NoM that is filed by the plaintiff, and determine whether the actions of the 4^th defendant amount to an abuse of process or whether the 4 or 5 notices that have been issued by the 4^th defendant are proper and require attention before the matter may be set down for hearing?”

CONSIDERATION

17. To answer the question, I take into account, for this purpose the following relevant facts and circumstances of this case:

(a) The proceeding is commenced as an originating summons and not by a writ of summons and statement of claim;

(b) Proceedings that are commenced under originating summons, unlike pleadings, require quick disposal as the main issues would normally concern questions of law with no serious contentions on the material facts that are relied on;

(c) The present proceeding was filed and registered as a Commercial Matter thus is subject to the Commercial Rules;

(d) The originating summons was first filed on 4 May 2021;

(e) As of the date of the last Directions Hearing on 17 August 2022, a period of 1 year 3 months has lapsed;

(f) There have been more than 10 interlocutor applications filed by the parties where some have been withdrawn, others contested or consented to, and some are still pending or held in abeyance;

(g) There have been numerous extempore as well as unreported decisions made by this Court, that is, from these various interlocutory applications; as far as unreported judgments are concerned, this decision will be regarded as the 6^th;

(h) a good number of these interlocutory applications had been filed by the defendants which included applications to summarily dismiss the matter which have been unsuccessful;

(i) the plaintiff’s interlocutory applications mainly consisted of countering the applications or actions taken by the defendants;

(j) the matter was set down for hearing on 17 August 2022;

(k) the trial date was vacated on 3 August 2022 primarily because the 4^th defendant had served notices for discoveries and interrogatories on the plaintiff;

(l) the notices for discoveries and interrogatories filed before 3 August 2022 were set aside on 3 August 2022;

(m) the 4^th defendant then filed the 5 notices after 3 August 2022, that is, on 9 & 11 August 2022;

(n) the plaintiff responded with the present NoM;

(o) the 4^th defendant has a pending notice of motion filed on 28 July 2022 (document number 156) which, amongst others, seeks discoveries and interrogatories.

18. The 4^th defendant’s various requests contained in the 5 notices may be summarised as follows. The 4^th defendant is requesting the plaintiff and the 5^th defendant, to confirm whether the Deputy Chairman of the plaintiff and one board member Francis Koaba, were present on a special board meeting No. SFC 01/2021 or had received notice of the said meeting. It was from the said meeting that the plaintiff’s lawyers Ashurst Lawyers were said to have been engaged to represent the plaintiff. So, the 4^th defendant, it seems, is seeking to confirm if the plaintiff had duly engaged its lawyers to act for it in the matter. The 4^th defendant also requested the plaintiff to produce a copy of the plaintiff’s 2022 Budget document based on a reference that was made in one of the plaintiff’s evidence, that is, the sworn affidavit of Augustine Ravi which was filed on 27 July 2022.

19. I have considered the submissions of the parties on whether the documents and information sought in the 4 or 5 notices are relevant or necessary, that is, for the purpose of the substantive proceeding. Let me remind myself of the substantive claim. The main relief sought are declaratory and injunctive relief, as pleaded in the Amended Originating Summons filed on 18 July 2022. They consist of similar type relief against the defendants. For this purpose, I restate the first 3 herein:

1. A declaration that the National Capital District is and was lawfully entitled to receive and be paid and distribute to it the amount equal to 60% of the net GST collected in the National Capital District Province as referred to in section 40(1) of the Inter-Governmental Relations (Functions and Funding) Act 2009 (as amended), without any deduction of any amount by the Internal Revenue Commission to the Central Provincial Government purportedly pursuant to section 33(1), 33(2)(a) and 33(3) of the National Capital District Commission Act 2001 (as amended by section 7 of the National Capital District Commission (Amendment) Act 2021) or otherwise.
   
2. A declaration that the Internal Revenue Commission is and was not lawfully entitled to pay or distribute any of the National Capital District’s share of the National Capital District Inland GST Trust Account equal to 60% of the net GST collected in the Province in the amount as referred to in section 40(1) of the Inter-Governmental Relations (Functions and Funding) Act 2009 (as amended) to the Central Provincial Government purportedly pursuant to section 33(1), 33(2)(a) and 33(3) of the National Capital District Commission Act 2001 (as amended by section 7 of the National Capital District Commission (Amendment) Act 2021) or otherwise.
3. The first, Second and Third Defendants, by themselves, their servants and agents be permanently restrained from paying or distributing, or seeking to pay or distribute, any monies to the Central Provincial Government purportedly pursuant to Sections to section 33(1), 33(2)(a) and 33(3) of the National Capital District Commission Act 2001 (as amended by section 7 of the National Capital District Commission (Amendment) Act 2021) or otherwise out of the amount equal to 60% of the net GST collected in the Province as referred to in section 40 of the Inter-Governmental Relations (Functions and Funding) Act 2009 (as amended).
   

20. I observe that the plaintiff seeks interpretations of provisions in both the IGRFF Act and the NCDC Act of 2001. I observe that to be the case as expressly stated in the relief that is pleaded in the OS and in the legal arguments.

21. When I compare these to the 5 notices that were issued by the 4^th defendant to the plaintiff and the 5^th defendant, I do not find them to be of any relevance to the main issues that are in contentions between the parties. Answering these questions or queries raised in these notices will not in any way assist the Court determine the main issues that are to be argued which are express as indicated in the relief that are being sought.

22. The plaintiff’s lawyers have instructions to act for it in the matter. The 4^th defendant however is dissatisfied or ‘unimpressed’ about this it seems, and it is seeking confirmation through these various notices that it has issued. So, essentially, the 4^th defendant is questioning an internal or administrative affair of the plaintiff, that is, it wants to know whether the plaintiff has duly appointed its lawyers to act for it in this matter. The immediate question that comes to my mind this. What business or right does the 4^th defendant have in the first place to make such query into the internal affairs of the plaintiff? I find that the 4^th defendant has no standing whatsoever to inquire into the administrative or internal affairs of the plaintiff, that is, on how it conducts its affairs including appointment of lawyers or firms to act for it whether it be in legal matters or otherwise. But even if I may be proven wrong in this regard, the next issue is whether such information is at all relevant to the central issues. Again, I would still find against the 4^th defendant in this regard.

FINDINGS

23. Taking into account all of the above, I find the actions of the 4^th defendant and others that supported the 4^th defendant, to amount to abuse of the court process. These actions appear to suggest that the 4^th defendant may be deliberately frustrating the hearing process of the matter. When one looks at the issues, they appear meritorious. They also appear to have very significant public concern and interest. The end result involves millions of kina of public or tax payers’ monies. All the parties concern may be described in general as ‘public bodies’ or institutions and parties that hold positions in their public capacities. Public interest therefore requires that the matter should be determined expeditiously or without delay.

24. This case, given its present circumstances, and in my view, calls for or warrants me to exercise my inherent jurisdiction. I will not allow the Court process to be tarnished by any ill or baseless actions or conduct of one or more defendants, to frustrate the process from reaching a finality in litigation.

25. I will order the 5 notices to be set-aside. I will also order the matter to return for status conference for allocation of a hearing date.

ALTERNATIVE

26. I must say here that had I gone ahead to hear the NoM, I would have also reached the same outcome for the stated reasons.

SUMMARY

27. I will therefore set-aside the 5 notices, in the exercise of my inherent jurisdiction. I find these notices plus the conduct of the 4^th defendant and those that support the 4^th defendant, to amount to abuse of Court process; that they are aimed as delaying the matter without any genuine or proper basis.

28. This matter must be dealt with on its merit without further delay and wastage of the Court’s time. I will set it to return at 9:30am this Thursday 1 September 2022.

COST

29. An award of cost herein is discretionary.

30. I will order cost to follow the event. Given my considerations and findings herein, I will order cost of the application to be on a solicitor/client basis, which may be taxed if not agreed.

ORDERS OF THE COURT

31. I make the following orders:

1. The Notice to Answer Interrogatories issued to the plaintiff and the 5^th defendant (filed on 9 August 2022 – Doc. No. 171), Notice for Discovery issued to the plaintiff (filed on 9 August 2022 – Doc. No. 172), Notice to Admit Facts issued to the plaintiff (filed on 9 August 2022 – Doc. No. 173), Notice to Admit Facts issued to the 5^th defendant (filed on 9 August 2022 – Doc. No. 174), and the Notice to Produce issued to the plaintiff (filed on 11 August 2022 – Doc. No. 175) are set-side.
   
2. This matter is set down for Status Conference without further delay at 9:30am on Thursday 1 September 2022 for allocation of a trial date.
   
3. The 4^th defendant shall pay the plaintiff’s cost of this application on a solicitor/client basis which may be taxed if not agreed.
   
4. Time for entry of these orders is abridged to the date and time of settlement by the Registrar which shall take place forthwith.
   

The Court orders accordingly.

________________________________________________________________
Ashurst: Lawyers for the Plaintiff
In-house counsel: Lawyer for the First and Second Defendants
Solicitor-General: Lawyer for the Third Defendant
Kessadale: Lawyers for the Fourth Defendant
In-house counsel: Lawyer or the Fifth Defendant
Jema: Lawyers for the Sixth Defendant
Mukwesipu Lawyers for the Seventh Defendant