Joseph v Rami [2023] PGNC 409; N10566 (10 November 2023)

N10566

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 575 OF 2017

BETWEEN:
VICTOR JOSEPH
Plaintiff

AND:
RUI RAMI
First Defendant

AND:
NATIONAL HOUSING CORPORATION
Second Defendant

Waigani: Bre, AJ
2023: 25^th October, 10^th November

CIVIL PRACTICE AND PROCEDURE - Claims By and Against the State – Whether Section 5 CBASA – No evidence of notice – National Housing Corporation – 'State' within Section 5 CBASA – Application by non-State party.

Cases Cited
Keka v Yafaet [2018] PGSC 18; SC1673
Kero Lerro Trading v Philip Stagg (2006) N3950
Kopyoto Investment Ltd (trading as Lodge 10) v National Housing Corporation [2022] PGSC 138; SC2339 (14 October 2022)
Public Curator of Papua New Guinea v Kara [2014] PGSC 58; SC1420

Legislation
Claims By and Against the State Act 1996, s5.
National Housing Corporation Act 1999, ss6,7,27-30

Counsel
No Appearance for the Plaintiff
Mr J Ole, for the First Defendant
Mr. A Luke, for the Second Defendant

RULING

10^th November 2023

1. BRE, AJ: INTRODUCTION: Rui Rami, the First Defendant has applied to have the proceedings dismissed in its entirety for non-compliance with Section 5 Notice pursuant to the Claims By and Against the State Act 1996 (hereinafter referred to as 'CBASA').

2. Rui Rami relies on his Notice of Motion filed on 13 September 2023 and his Affidavit sworn on and filed on 13 September 2023.

3. The Second Defendant National Housing Corporation (‘NHC’), supports the First Defendant's application. The First Defendant served his Notice of Motion and Affidavit in Support and a letter advising of the matter being returnable on 25 October 2023 to the Plaintiff's lawyer on 24 October 2023. I proceeded to hear the application after being satisfied of service.

BACKGROUND

4. The Plaintiff, Victor Joseph, filed this proceedings on 09 June 2017 seeking declaratory orders that the transfer of title by NHC to Rui Rami be declared null and void on grounds of fraud. The Plaintiff is alleging statutory breach and fraud by the NHC and is seeking relief to void the transfer. The property in dispute is described as Section 359 Allotment 64, Hohola, NCD, State Lease Volume 69 Folio 112.

5. The First Defendant's defence is that he purchased the property from NHC and now has registered indefeasible title over the property and should by right be given vacant possession of the property.

6. If fraud is proven it is a ground to cancel a registered title. There are substantial issues for the Court to decide at a trial proper.

7. The Court had on 30 June 2023 refused a similar application by NHC.

SUBMISSIONS

8. Counsel for the First Defendant, Mr Ole explained the history of the proceedings and submitted that the primary issue rests on whether Section 5 Notice was served on the State. Mr Ole referred to Ganai AJ’s orders of 30 June 2023.

9. Her Honour refused the dismissal application and issued specific Directions for the confirmation from the Solicitor General of the receipt of Section 5 Notice.

10. Both Mr Ole and Mr Luke submitted that the State Solicitor has now provided a letter attached as Annexure B1 of the Affidavit of Rui Rami confirming that the State was not served.

11. I inquired if the Second Defendant, National Housing Commission, was considered 'the State’ for the purpose of section 5 CBASA. Mr Luke responded that it was a gray area and referred me to the Supreme Court case of Kopyoto Investment Ltd (trading as Lodge 10) v National Housing Corporation [2022] PGSC 138; SC2339 (14 October 2022).

ISSUE

12. The Issue for determination includes whether:

1. The NHC comes within the ambit of Section 5 CBASA as 'the State' and
   
2. The First Defendant has standing to bring a dismissal action for want of Section 5 CBASA notice.
   

LAW

13. Section 5 CBASA reads:

"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 Principal Legal Adviser; or
(ii) the court before which the action is instituted,

on sufficient cause being shown, allows.

(3) A notice under Subsection (1) shall be given by–

(a) personal service on an officer referred to in Subsection (1); or
(b) leaving the document at the office of the officer with the person apparently occupying the position of personal secretary to that officer between the hours of 7.45 a.m. and 12 noon, or 1.00 p.m. and 4.06 p.m., or such other hours as may from time to time be declared by or under the Public Services (Management) Act 1995 to be the normal public service hours of duty, on any day which is not a Saturday, Sunday or a public holiday declared by or under the Public Holidays Act 1953."
ANALYSIS

14. It is trite law that Section 5 CBASA notice is a condition precedent to any action against the State. In Paul Tohian v. Tau Liu (1998) SC566, the Supreme Court stated at page 2 of its judgment:

The purpose of the requirement to give notice remains the same whether or not the notice is required to be given within 6 months or within such period as may be granted by the Principle Legal Advisor or the Court. It is clear to us that the Notice of Intention to make a Claim is a condition recedent to issuing a Writ of Summons in all circumstances.”

15. The term ‘State’ is not defined in the CBASA but it is trite law that it relates to the Independent State of Papua New Guinea. See Section 1 of the Constitution.

16. The NHC is a public authority created by statute governed by a Board whose members are appointed by the National Executive Council. See section 7 National Housing Corporation Act 1990 (‘NHC’).

17. The NHC Act Section 6, creates the NHC as a statutory body with legal personality and perpetual succession governed by a Board with financial and employment powers. The NHC is not a traditional public service department nor a State owned enterprise with purely private corporate commercial functions.
Sections 27 to 30 NHC Act sets out its functions as to impose housing conditions, purchase and sell property etc..

18. The Supreme Court in Keka v Yafaet addressed the issue of whether NHC is an arm of the State for purposes of Section 5 CBASA but fell short of making a final decision because there was no evidence before the Court on about the NHC's commercial activities and held that the issue remained open. See Keka v Yafaet at [45] to [50].

19. The Supreme Court applied six tests set out on PNG Power Ltd v Augerea (2013) SC1245 and fell short of confirming the commercial or other activities of the NHC in the absence of evidence. The Court held at 45-50].

“This case is not an appropriate vehicle for making a definitive statement on the question whether the NHC is an arm of the State in Papua New Guinea. In the absence of proper evidence and argument, it is not appropriate to make definitive statements that will have a broad and significant impact on litigation in this area.

Further, we also note that the obiter comments about the NHC in PNG Power are not determinative of the issue of whether the NHC is the State for present purposes.

Notwithstanding our reservations in making any broad and definitive finding on the question of whether the NHC is an arm of the State, we consider that the appellant must also fail on grounds 4, 5 and 6 as the appellant has not been able to substantiate them in the appeal. The appellant has simply failed to identify error on the part of the primary Judge. The primary Judge appeared to consider that it was a clear case that the NHC was the State for the purposes of s 5 of the Claims Act, which is understandable given the comments of this Court in PNG Power and the sections of the NHC Act identified above.

We note that the question whether the NHC is the State, such that as s5 Notice is required in respect of claims against it, remains an issue open to be litigated in a properly argued case where issues regarding the corporate and commercial nature of its activities can be examined by reference to evidence”.

20. These tests were applied to the Office of the Public Curator by the Supreme Court in Public Curator of Papua New Guinea v Kara [2014] PGSC 58; SC1420 (15 December 2014) to decide that the Public Curator came within Section 5 CBASA as a state entity. There is discussion in Public Curator v Kara about differing views of the National Court concerning the application of Section 5 to NHC.

21. The Supreme Court did not address the issue in Kopyoto Investment Ltd (trading as Lodge 10) v National Housing Corporation [2022] PGSC 138; SC2339 (14 October 2022). Rather the Court proceeded in a manner similar to the trial judge in Keka v Yafaet [49].

22. Both Keka v Yafaet and Kopyoto Investment v NHC composed of three-member Supreme Court bench with Kopyoto Investment v NHC decided some three years after Keka v Yafaet though with no reference was made to Keka v Yafaet as I think the issue was not before the Court. My view is that the issue of whether NHC comes within the ambit of Section 5 CBSA remains an open issue and may require a full Supreme Court to deliberate on the matter.

23. I have not considered the tests here because the issue was not properly argued before me.

24. In my view, the lack of Section 5 notice confirms that no action lies against the State on vicarious liability grounds. However, it does not absolve the NHC from this litigation.

2)Whether the First Defendant has standing to bring a dismissal action for want of Section 5CBASA notice .

25. The Section 5 issue was raised earlier by the Second Defendant and refused. The earlier application was filed and argued by the NHC on 13 September 2023. I find it unusual for a non-State entity like the First Defendant to bring a Section 5 CBASA application for competency. If the proceedings are discontinued against NHC the proceedings against the First Defendant still remains. A finding on Section 5 CBASA only affects the State or its agencies and statutory bodies like the NHC not the First Defendant. I find this application is misconceived.

26. Further, the discretion to dismiss proceedings in its entirety must be weighed carefully to ensure the Plaintiff is not driven from the judgement seat in a summary way. See Kero Lerro Trading v Philip Stagg (2006) N3950.

27. The First Defendant did not make submissions on the second relief it sought under Order 12 rule 40(1)(c) NCR. Regardless this relief is not available in proceedings that allege fraud. See NCR Order 12 rule 37.

28. The substantive claim challenges the NHC's actions or omissions in selling and facilitating transfer of title to the First Defendant. The NHC is a key party to the proceedings and can be sued independently of the State due to its Corporate legal personality and perpetual succession status arising from its enabling Act, the National Housing Corporation Act.

29. For the foregoing reasons, I refuse the First Defendant's application.

ORDER

30. The formal Orders of the Court are:

1. This First Defendant's Notice of Motion filed on 13 September 2023 is refused.
   
2. Costs follow the event.
   
3. Time is abridged for the entry of these Orders to the time of Settlement by the Registrar which shall take place, forthwith.
   

Orders Accordingly.
_______________________________________________________________
Furigi Lawyers: Lawyers for the Plaintiff
Ole Lawyers : Lawyers for the First Defendant
NHC in-house employed lawyer: Lawyers for the Second Defendant