Maps Tuna Ltd v Manus Provincial Government [2005] PGSC 20; SC793 (29 July 2005)

SC793

PAPUA NEW GUINEA

[IN THE SUPREME COURT OF JUSTICE]

SCA. NO. 77 OF 2005

BETWEEN:

MAPS TUNA LIMITED

-Appellant-

AND:

MANUS PROVINCIAL GOVERNMENT

-Respondent-

LAE: KIRRIWOM, J.
2005: 23, 25 & 29 July

PRACTICE AND PROCEDURE – Judgment - Enforcement of – Application for Stay of - Pending Appeal to the Supreme Court – Common Law Lien over vessel – Security for Monies owed – Arguable case – Balance of Convenience favouring Appellant – Injunction against Respondent Removing Vessel from Possession of Appellant.

PRACTICE AND PROCEDURE – Section 5 notice – Claims By And Against The State Act 1996 – Applicability to suit against a Provincial Government - Case Stated – Application for separation of issue to be tried as – Order 10 Division 4 – Separate Decisions of Questions – Rules 20 – 24, National Court Rules – Proceeding dismissed in entirety based on admission by Counsel on non-compliance of notice requirement – Appeal to the Supreme Court.

Brief Facts:

Midway through the pleadings in this matter commenced by originating summons and at the stage where interrogatories were issued and answered, an issue arose as to whether there was a legal requirement for the Plaintiff to give section 5 notice under the Claims Act where a Provincial Government was sued. Plaintiff maintained throughout that there was no legal requirement for that and admitted it did not give such notice. Defendant filed a motion seeking court direction under O.10 r.21 for the question of notice to be isolated and determined separately as case stated as to whether section 5 notice requirement applied to a Provincial Government and if so, whether the non-compliance by the Plaintiff amounted to the entire proceeding a nullity.

When the motion was presented before Davani, J Her Honour considered it unnecessary to entertain the motion as was pursued before her and relying on the Plaintiff’s admission of non compliance with section 5 notice, dismissed the proceeding in its entirety, ordered the vessel FV Manus 1 to be returned to the Defendant and awarded solicitor-clients costs against the Plaintiff. Plaintiff appealed.

Pending hearing of the appeal, Plaintiff, now Appellant sought return of the vessel FV Manus that was removed from its wharf by the servants or agents of the Respondent and an order for stay of enforcement of the judgment of Davani, J dated 18 July 2005.

Held: granting the application,

1. That the enforcement of judgment of Davani J in OS 425 of 2003 ordered 18th July 2005 and entered 19th July 2005 be stayed until the appeal has been heard and the court orders otherwise;
   
2. That the Respondent is restrained from removing the vessel FV Manus 1 from the possession of the Appellant until the appeal has been heard or until further orders of the Supreme Court.
   
3. Costs in the appeal.
   

Cases cited:
SCR No.1 of 1998 Reservation Pursuant to s.15 of the Supreme Court Act [2001] SC672
Koi Antonius v. Fantson Yaninen [2004] N2774
Caspar Kondi v. Provincial Administrator, Department of Western Highlands Province [2004] N2755
Treid Pacific (PNG) Limited v. Eastern Highlands Provincial Government WS No. 1052/2000 Unreported Judgment of 24th June 2004

Counsel:
A. Pryke for the Applicant/Appellant
P. Kuman for the Respondent

INTERLOCUTORY JUDGMENT

29th July 2005

KIRRIWOM, J.: This matter came before me as an ex parte Supreme Court motion very late on Friday 23rd July 2005 seeking the following interlocutory orders:

1. The order of the National Court in OS 425 of 2003 ordered 18/07/ 2005 and entered on 19/07/ 2005 be stayed pursuant to section 19 & 8(1)(e) of the Supreme Court Act
   
2. The Respondent return the vessel MV Manus 1 to the Appellant’s wharf forthwith.
   

3. Costs be in the cause.

4. Such other or further orders as the court deems just.

There was no Supreme Court appeal on foot at the time as none had yet been filed. The Applicant however expressed its desire to file its appeal as soon as the registry was opened but the urgency of the matter required an order of the court to secure the return of a vessel that was removed from its possession by virtue of the court order of 18/07/05.

The Applicant was aggrieved by the Order of the National Court made on 18th July 2005 which dismissed its action against the Respondent seeking certain declaratory orders and for recovery of a substantial amount of money as debts. It appears that no appeal was lodged against or an application was made to have the order stayed or set aside immediately after the order was made until the Respondent moved to enforce the judgment of the Court by taking physical possession of the boat F.V. Manus 1 on the day the application was pursued before me. The Applicant was seeking essentially two reliefs, firstly, a stay of the enforcement of the order by Justice Davani on 18th July 2005 and secondly for the return of the vessel F.V Manus 1 which had already been removed from the Appellant’s wharf by servants or agents of the Respondent after the orders were made.

I advised Mr. Pryke who was appearing for the Applicant that I could not sit as a Supreme Court Judge to deal with his application without there being a Supreme Court appeal on foot and that the Supreme Court registry is only located in Waigani and not in any other centres. That is the standing policy unless it is otherwise determined either administratively or by an Act of Parliament. I also pointed out the possibility that the National Court could well be functus officio having already determined the matter.

However given the urgency of the matter and for the sake of preserving the status quo while the parties took their dispute to the higher court, I proceeded to exercise my inherent powers under section 155 (4) of the Constitution, sitting as a National Court Judge and heard the application. In the back of my mind I was confident that I still had jurisdiction to deal with the matter as it had not been heard substantively and decided which would then render the National Court functus officio thereby preventing further adjudication of the matter by the same court except on appeal. However, in an effort to do justice in the circumstances of the case, based on the court’s residual powers after judgment to have same set aside prior to enforcement where appropriate (and I have since discovered that under O.13 rr.11 and 21 NCR the applicant was entitled to make its application and seek similar relief) and also by virtue of the Court’s inherent powers under the section 155(4) of the Constitution I gave the following interim orders:

1. That MV Manus 1 be forthwith returned to the Maps Tuna Wharf pending further orders of the court.
   
2. That the application for stay of execution of the Order of the National Court made on 18/07/05 and entered on 19/07/05 be adjourned and be argued fully before me on the return date of this motion on Tuesday 26th July 2005.
   
3. That MV Manus 1 is hereby ordered not to leave Lae Port until further order of this court.
   
4. The Applicant Maps Tuna shall serve all documents filed in this application on the Defendant/Respondent, Manus Provincial Government.
   

5. That the Applicant shall file an undertaking as to damages.

6. That the parties shall appear before the Court at 9:30am Tuesday 26th July 2005 for any variation or further Orders of this Court.
   

7. Costs are in the cause.

These Orders were made, although the documents filed do not reflect that, under no misconception on my part as to my jurisdiction or authority to grant those orders as I pointed out to Mr. Kuman for the Respondent. The document heading showing as emanating in the Supreme Court was counsel’s misconception which I accept some responsibility for not correcting once I satisfied myself of my jurisdictional limitation as a Supreme Court Judge. The only way I could hear the application was to proceed with it as a National Court Judge. My confidence was also fortified by the fact that the July Circuit in Lae had not yet ended and I still had discretion to recall the matter and entertain application for a stay of execution of an order made in the National Court during the currency of the circuit or sitting for the month of July. I now note that the course I took was appropriate in the circumstances, and indeed ought to have been the avenue pursued by the Applicant while it considered taking the matter by way of appeal to the Supreme Court. Be that as it may, that is all now water under the bridge because the Applicant had since lodged its appeal on 25th July 2005.

Today, on the return date, for the interim orders I made on 23/07/05, I sit in a dual capacity to deal with the Applicant/Appellant’s Motion that is returnable before me on this date in my capacity as a National Court Judge and at the same time dealing with the same matter as a single Judge of the Supreme Court since the status of the proceeding changed on 25th July 2005 with the lodgment of appeal to the Supreme Court.

It is noteworthy that the procedural niceties of the proceedings had not clouded the real issues in the matter between the parties and I thank counsel for their assistance in this regard.

Mr. Kuman had quite correctly summed up the Court’s role today which is really two-fold:

1. today was the return date for the interim orders made on 23rd July 2005 when the Court hears the respondent and determine whether all or some of these orders lapse or are continued;
   
2. to hear submissions on whether the Judgment of the Court on 18th July 2005 be stayed until the appeal has been determined.
   

As to the first matter, I am satisfied that the interim orders have been complied with fully except to determine now whether all or some of the Orders either lapse now or be continued. The only relevant interim orders are Orders 1 and 3 which are subjects of further submissions by the parties. The Court has not been advised if the vessel FV Manus 1 had already returned to the Appellant’s wharf.

The issue before me now is whether the respondent be allowed to enjoy the benefit of the judgment ordered in its favour on 18th July 2005 notwithstanding the appeal against that judgment.

The appellant has challenged the judgment on the issue of Section 5 notice under Claims By And Against the State Act 1996 (CBAASA) on the premise that Section 5 requirement under the Act did not apply to Provincial Governments. This is one of the Appellant’s grounds of appeal. The rest of the Appellant’s grounds of appeal against Davani, J’s orders are:

1. The learned trial judge erred in law in making orders that were not sought in the Notice of Motion, that is dismissal of the proceedings in their entirety and return of the vessel to Manus Provincial Government.
   
2. The learned trial judge erred in law in failing to consider that Maps Tuna Limited had a common law lien on the vessel for a debt owed to it by the Manus Provincial Government in respect of monies expended on the vessel for repairs and improvements before ordering the return of the vessel.
   
3. The learned judge erred in law in finding that it was not necessary to try the issue as a stated case.
   
4. The learned trial judge erred in law in assuming or determining that section 5 of the Claim By And Against the State Act requires a person suing a Provincial Government to give written notice prior instituting proceedings.
   
5. The learned trial judge erred in law in ordering that Maps Tuna Limited pay Manus Provincial Government’s costs taxed on a solicitor-client basis without first entertaining argument on the issue of costs.
   
6. The learned trial judge erred in law in ordering that Maps Tuna Limited pay Manus Provincial Government costs taxed on a solicitor/client basis when such an order was not sought by the Notice of Motion.
   

The Appellant argued that the trial judge had gone out of her way to dismiss the Plaintiff’s action when there was no such application before her. All that the Defendant/Respondent was seeking was a separate ruling or opinion if you like, from the court, on whether Section 5 CBAASA also applied where a Plaintiff was suing a Provincial Government by way of a stated case. This procedure for requesting the court to separate an issue and deal with it as a stated case is provided under O.10 r.21 NCR. In fact r.21 cannot be read in isolation, it must be read together with the rest of Division 4 – Separate Decisions of Questions. There are only four Rules under this Division and they are quite explicit in their terms:

"Division 4.—Separate Decision of Questions.

20. Interpretation of Division 4. (31/1)

In this Division "question" includes any question or issue in any proceedings, whether of fact or law or partly of fact and partly of law, and whether raised by pleadings, agreement of parties or otherwise.

21. Order for decision. (31/2)

The Court may make orders for—

(a) the decision of any question separately from any other question, whether before, at or after any trial or further trial in the proceedings; and

(b) the statement of a case and the question for decision.

22. Agreed result. (31/4)

(1) Any parties to proceedings in which a case is stated under Rule 21 may, with the leave of the Court, agree that, on any question being decided in the sense specified in the agreement, a specified direction for entry of judgment or a specified order shall be made.

(2) On that question being so decided, the Court may make the agreed direction or order.

(3) Where an agreement is made pursuant to Sub-rule (1) before a case is stated, the terms of the agreement shall be set out in the stated case.

23. Record, etc. of decision. (31/5)

Where any question is decided under this Division the Court shall, subject to Rule 24, either—

(a) cause the decision to be recorded; or

(b) direct the entry of such declaratory judgment, or make such declaratory order, as the nature of the case requires.

24. Disposal of proceedings. (31/6)

Where the decision of a question under this Division—

(a) substantially disposes of the proceedings or of the whole or any part of any claim for relief in the proceedings; or

(b) renders unnecessary any trial or further trial in the proceedings or on the whole or any part of any claim for relief in the proceedings,

the Court may, as the nature of the case requires—

(c) dismiss the proceedings or the whole or any part of any claim for relief in the proceedings; or

(d) direct the entry of any judgment; or

(e) make any other order."

Based on these Rules the Respondent filed a motion dated 22nd June 2005 which specifically was seeking the following relief:

1. An order that pursuant to O.10 r. 21 of National Court Rules the following questions be tried as a stated case:
   
   • (a) Whether section 5 notice under the Claims By And Against the State Act 1998 must be given prior to suing a Provincial Government?
     
   • (b) If so, whether the failure by the Plaintiff to give such a notice makes these proceedings a nullity?
     
2. Costs
   
3. Any other orders."
   

The trial judge not only found that this case was not an appropriate one for separation as case stated, but treated it simply as one that did not comply with the requirement of the law which was admitted by the Plaintiff and there was no need to go further and dismissed the action when the parties were already mid-way into the pleadings.

The respondent on the other had argued that there was nothing unusual or improper about the Court dismissing an action mid-way through the pleadings. Mr. Kuman argued that it was already settled law in this jurisdiction that ‘State’ for purposes of Section 5 of CBAASA included Provincial Government and referred to the Supreme Court case of SCR No.1 of 1998 Reservation Pursuant to s.15 of the Supreme Court Act [2001] SC672 and two subsequent decisions of the National Court in Koi Antonius v Fantson Yaninen [2004] N2774 and Caspar Kondi v Provincial Administrator Department of WHP [2004] N2755.

He argued that the law was quite clear at the time and the Plaintiff admitted non-compliance with Section 5 of the CBAASA which culminated in the order made by the trial judge. He therefore submits that there was nothing wrong with the judgment, the appeal is baseless and without merits and the Respondent be allowed to enjoy the benefits of its judgment.

The principal reason for the appellant’s contention to keep the FV Manus 1 vessel in its care and control is that the respondent owes the appellant huge sum of money amounting to over K670,000 for repairs and maintenance on the vessel which has not been paid. It is therefore exercising its common lien on detaining the ship and to use it to catch more fish for export to Japan where tuna price is quite attractive at this time. It is argued that by fishing the boat, catching and selling fish to Japan the Appellant can be able defray the Respondent’s debts that it has not been able to repay, thereby resulting in the Court proceedings. It is therefore entitled to the possession of FV Manus 1 until the debts are paid. According to the evidence there have been admissions of liability and discussions have been held to settle with some offers made.

Mr Kuman argued that the common lien that the Appellant claims to have on the ship on account of unpaid debts is one that can be either possessory or non-possessory lien. He says that the Appellant can still exercise its power of common law lien on the property without actual physical possession of the vessel and allow the vessel to return to the owners which is the Respondent. It is contended that the respondent needs the vessel to catch fish and earn income for the Manus Provincial Government. This is the Respondent’s source of income which is being denied by a wealthy company like the Appellant. But I am not going to determine the issue before me based on the common law doctrine of possessory or non-possessory lien. The issue really is one of preserving the status quo and for now the balance of convenience lies with the vessel remaining with the Appellant who was immediately in possession of it until the court order of 18/07/05. Halsbury’s Laws of England Fourth Edition defines what "legal lien" means where it states: "In its primary or legal sense ‘lien’ means a right at common law in one man to retain that which is rightfully and continuously in his possession belonging to another until the present and accrued claims of the person in possession are satisfied. In this primary sense it is given by law and not by contract."

Mr Kuman raised the issue of possessory and non-possessory lien on the vessel on the basis that damages was adequate remedy for the Plaintiff’s claim and not necessarily having physical possession of the Defendant’s vessel. But the other side of that argument is that how sound can be that undertaking if the Defendant has already demonstrated its inability to pay the Plaintiff what it owes to date and supported by law that even if judgment is obtained, the Plaintiff cannot legally enforce the judgment against the Defendant in the light of the Supreme Court decision in SCR. 1 of 1998 (supra) already referred to?

It is not my function to determine the right or wrong of the decision of the trial judge. That is the matter for the full Supreme Court to hear and determine. All I have to do sitting now as a single judge of the Supreme Court is to rule on whether the judgment of the National Court dated 18th July 2005 be stayed pending the hearing of this appeal before the Supreme Court.

Brief examination of the history of this case is that Manus Provincial Government owns these two fishing vessels called FV Manus 1 and FV Manus 2. Prior to the Appellant in this case became involved with these vessels, the Respondent had a contract with a Japanese company which contract was terminated and the Respondent repossessed the vessels. The vessels were then moored inside the Fairfax Harbour in Port Moresby. The Respondents then advertised for new partners and the Appellant was one of the bidders. Its bid was accepted by the Manus Provincial Government followed by preliminary discussions involving relevant persons representing both parties. Before the parties had actually executed a formal Vessel Management and Marketing Agreement, the Manus Provincial Executive, through the Governor Hon. Dr,. Jacob Jumogot MP, entered into an interim arraignment under which the Appellant could take immediate possession of the vessels. Based on that interim arrangement the Appellant sailed the two vessels from Port Moresby to Lae but at considerable cost in respect of one of the vessels. Pursuant to that interim arrangement the Appellant managed the vessels as well as fishing them pending the formal agreement being executed. To date since December of 2002 when the parties first entered into discussions on this venture, no formal written agreement is in place. It seems that the whole relationship between the parties has remained very fluid and quite a volatile and turbulent one from the start of the Appellant’s taking possession of the vessels over complaints of non-payment of monthly commissions to the Respondent and relentless efforts by the Respondent to terminate the interim arrangement. This had then led to the Appellant’s commencing proceedings in the National Court seeking certain declarations on the relationship between the parties and the Respondent’s indebtedness to the Appellant for the expenses incurred by it in managing, shipping and repairing both vessels since they took possession of them.

But at the time the Appellant commenced this action against the Respondent, it did not give notice under Section 5 of CBAASA. The Appellant’s position then was that Section 5 did not apply to Provincial Governments which were separate creatures under the Constitution with perpetual right of succession; they can sue and be sued by virtue of their separate entity from the State. Even the State can sue Provincial Governments.

It would seem that the Respondent initially went along with that reasoning but departed from it mid-way through the pleadings in this case following recent decisions of the National Court which effectively determined that Section 5 equally applied to the Provincial Government. I don’t want to delve into the reasoning in those two judgments but based on these decisions the Respondent by Notice of Motion dated 22nd June 2005 moved the Court for declaration under O.10 r.21 of National Court Rules whether the requirement under Section 5 CBAASA to give notice applied to a Provincial Government prior to issuing any action against it and if so whether failure to do so rendered the proceedings on foot a nullity as a stated case for the Court’s consideration as an issue separate from the substantive proceeding.

But prior to this Motion being filed and argued before the court, there were already serious discussions between the parties on the futility of the discontinuance or dismissal of this action, which could be immediately activated with a fresh action being filed, there were serious concerns about the delay and protraction of the matter and its impact on the entire proceedings which was not beneficial to both parties. That point was amply demonstrated in court.

With respect it seems little if any regard was paid to the fact that the dismissal of the proceeding on this technicality did not bring an end to the parties’ dispute. All it did was further prolonged the dispute and imposed upon the parties unnecessary costs that they would rather do without or which could have been avoided by issuing directions to the Appellant to remedy the anomaly. The admission by the Appellant for not giving notice under section 5 of CBAASA was not an unconsidered oversight, it was a deliberate choice based on perfectly valid and arguable points of law and common sense. Admission per se did not mean that the failure amounted to a ground for dismissal of the action which the trial judge it seems, with respect, was quick to conclude without even properly examining the substance of the Appellant’s argument. She failed to examine the real purport of Division 4 rr 20-24 of the National Court Rules pertaining to Case Stated by directing her mind to whether the issue was one that was proper to be treated in the way the court was asked in the Respondent’s motion. The trial judge with respect prematurely terminated the proceedings amidst pending contentious issues that remained to be resolved when they were searching for a procedure to determine a point of law. In my view Her Honour, again with respect, took the case away from the course it was pursued according to the terms of the motion and found it to be inappropriate for purpose of O. 10 r.21 NCR to be treated as a separate issue for the court’s determination, the very same issue that will now be determined by the Supreme Court.

Given the history and background of the case or dispute between the parties, it was quite plain that this case definitely was not going to end easily in the way it was ordered. There was a claim and cross-claim. The claim was based on both oral and written agreement and conduct of the parties. Both parties had consciously and knowingly courted each other to enter into a binding legal relationship and regardless of what had or had not materialized from their desires to create this relationship, there are huge financial debts claimed against each other. The Appellant is claiming recovery of expenses on the vessels under the interim arrangement and the Respondent is claiming unpaid benefits accruing from that relationship. Probably the Respondent might have been content to walk away from this proceeding with its vessel FV Manus 1 and forge a new relationship with another partner and forget the debts owed to it by Maps Tuna Limited but surely Appellant could not just walk away from a debt in excess of K670,000 after dismissal of its claim and look for new vessels elsewhere. As against each other, there were and are debts to settle and with foresight, with respect, I think the matter should have been allowed to progress to a guided solution, if need be; otherwise, some directions for the parties to go on with the case while allowing the Plaintiff the opportunity for the anomaly to be rectified. That is what really should have happened. And I share the sentiments of Hinchliffe, J in the case of Treid Pacific (PNG) Limited v Eastern Highlands Provincial Government WS No.1052 of 2000 Unreported Judgment of 24th June 2004 which was cited by my Brother David, AJ (as he then was) in Koi Antonius –v- Fantson Yaninen and ESPG [2004] N2774 but His Honour chose to differ in his opinion, relying on the Supreme Court decision in SCR 1 of 1998, Reservation Pursuant to Section 15 of the Supreme Court Act [2001] SC672. His Honour cited the passage from that judgment by Hinchliffe, J which I find useful and applicable in this case which states:

"I am of the view that when the plaintiff issued this writ on 15th August 2000 there was nothing to say that a Provincial Government fell into the meaning of "the State" as in Section 5 of the said Act and it therefore follows that the plaintiff was not bound to serve a notice of intention to defend to make a claim on the State prior to issuing of this Writ. The plaintiff did not fall into error when it issued proceedings against the defendant without giving the said prior notice of intention. I am also decided that it is now not necessary for the plaintiff to serve the said notice of intention as the matter has moved on since then and the defendant is well notified and informed of the plaintiff’s claim. On this point I finally say that it is also not necessary for the plaintiff to serve the said notice of intention because at the time of issuing this Writ there was, as I have found, no requirement on the plaintiff to serve such a notice on the State".

His Honour here was faced with the same issue as in this case and the view that he expressed was precisely the point that was made in avoiding procrastination and exacerbation of the parties desire to end their dispute rather than being dictated to by technicality. And almost similar observation was made by Cannings, J in Caspar Kondi v Provincial Administrator, Department of Western Highlands Province [2004] N2755 when he remarked:

"This is a case that has not been handled well by the Western Highlands Provincial Government. The plaintiff took reasonable steps to recover a debt. It is incumbent on a provincial government or any governmental body in a similar position to either correspond meaningfully with a person in the position of the plaintiff and negotiate the matter or to file a defence to any Court proceedings that are commenced. The Western Highlands Provincial Government has done neither. Instead it has chosen to attempt to have the proceedings dismissed on a technicality. It has not acted reasonably, in my view."

It is worth mentioning here that Western Highlands Provincial Government had a provincial legislation called Claims By And Against the Western Highlands Provincial Government Act similar in content to the Claims By And Against the State Act 1996 whereas it seems similar provincial legislation does not exist in the case of Manus Provincial Government, at least none of the parties said there was. It begs the question therefore in this case as to what practical utility was it going to serve when the parties fully appreciating the strength and weaknesses of each other’s case to endeavour to terminate the proceeding on technicality that was not going to obviate fresh proceeding being instituted bearing in mind that the Plaintiff (now Appellant) was still within time to do just that? Otherwise I cannot help thinking that all this exercise was for the benefit of the lawyers more than the clients because the finality that the parties wanted and still want is forever going to elude them at the behest of their legal representatives while legal costs have escalated that the clients are now left with to settle compounded by the additional expense of lost time, more anxiety and more costs as the case continues.

All in all I am satisfied that there is an arguable case in this appeal and I grant the application by the Applicant/Appellant and order that the enforcement of the judgment of the National Court made 18th July 2005 in OS No. 425 of 2003 is hereby stayed until the Supreme Court has heard this appeal and orders otherwise. I further order that interim orders granted for the return of MV Manus 1 to the Appellant’s wharf and the further order for non-removal of the vessel from the Appellant’s possession are now consolidated with an order for injunction against the Respondent from removing the vessel FV Manus 1 whilst it is in the Appellant’s possession until the appeal has been heard by the Supreme Court or until further orders of the Supreme Court.

Costs in the Appeal.

Lawyer for the Applicant / Appellant: Pryke & Bray Lawyers
Lawyer for the Respondent: Posman Kua Aisi Lawyers