|
|
Home
| Databases
| WorldLII
| Search
| Feedback
Supreme Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]
POLEM ENTERPRISE LTD
v
ATTORNEY GENERAL
And OTHERS
Supreme Court
Kirriwom, Cannings and Manuhu JJ
30 October 2007, 2 May 2008
Constitutional law - Rule of law - Elements - Presumption against retrospective operation of law - Law officers - Authority - Solicitor General executing deed of settlement of litigation - Subsequent Supreme Court judgment holding Solicitor General not authorised to settle cases except on instructions of Attorney General - State refusing to pay agreed sum to party - Party commencing enforcement proceedings - Trial judge ruling that Supreme Court decision had retrospective effect and refusing to enforce settlement - Whether Supreme Court decision having retrospective effect - Whether party entitled to enforcement of settlement - Attorney-General Act, s 13.
The appellant, P and the state were involved in litigation arising out of the suspension of P's liquor licence. The Solicitor General, acting for the state, settled the case with P for an agreed sum. The state subsequently refused to pay the agreed amount to P in light of the decision of State v Gelu ('Manorburn') [2003] PGSC 15, in which the Supreme Court held that the Solicitor General had no power to settle cases except on the instructions of the Attorney General. Manorburn was decided after the deed of settlement was entered into by P and the state. P commenced enforcement proceedings, arguing that at the material time the Solicitor General had the power to execute the deed. The trial judge followed Manorburn, applied it retrospectively and held that the deed was unenforceable. He held that s 13 of the Attorney-General Act, which provided that, in representing the state before the courts `the Solicitor General accept instructions only from the Attorney General', was in mandatory terms, so that non-compliance with it rendered an action null and void. P appealed to the Supreme Court, arguing, inter alia, that the trial judge had erred in giving Manorburn retrospective effect.
HELD: Appeal allowed.
Although the decision in Manorburn authoritatively settled the respective roles and functions of the Solicitor General and the Attorney General, when the Solicitor General executed the deed of settlement in the instant matter the law was that he could do so unilaterally, without the Attorney General's instructions or approval. That was the effect of the judicial interpretation of s 13 of the Attorney-General Act current at the time. There was therefore nothing unlawful at that point about the Solicitor General's actions. Those actions could not be rendered unlawful by a subsequent judicial decision or even by a subsequent legislative enactment, unless the judicial decision or the legislative amendment stated expressly that it was to have retrospective effect. The judicial decision in Manorburn applied only to the facts of that case and it applied prospectively. Under the law, post-Manorburn, the Solicitor General had to have instructions from the Attorney General before settling a case, although the court in that case had not specified how such instructions were to be given or evidenced. Therefore the trial judge had not misinterpreted s 13. Any settlement of a case by the Solicitor General after the date of the Manorburn decision, without the Attorney General's instructions, would be unlawful. In Manorburn the Supreme Court did not expressly apply its interpretation of the law retrospectively and it would be surprising if the Supreme Court in any case said that it was applying a decision to overrule previous judicial decisions retrospectively. The essence of the rule of law required a presumption against retrospectivity in the application of law. If the parties to a civil case settled out of court and there was no fraud involved or none of the other grounds on which contracts could be set aside applied, the settlement, being a valid contract, should be enforced, even if it had been based on judicial decisions which had since been overruled. There was no unfairness in that approach in the instant circumstances. The Solicitor General was, at the time, acting lawfully and his actions were not rendered unlawful by the subsequent decision in Manorburn. The trial judge erred by giving Manorburn retrospective effect. The contract between P and the state would therefore be enforced. Although the general rule was that costs followed the event, the award of costs was discretionary and in the circumstances of the instant appeal an order for costs in favour of the appellant was not warranted; the parties would therefore bear their own costs (see paras [27]-[28], [38]-[54], [62]-[63], below). Dicta of Murray CJ in A v Governor of Arbour Hill Prison [2006] IESC 45, Aigilo v State (No 1) (2001) N2103, [2001] PGNC 102, Mali v State [2002] PGSC 4 and Brennan v Bolt Burdon (a firm) [2004] EWCA Civ 1017, [2005] QB 303 applied. State v Gelu (′Manorburn') [2003] PGSC 15 considered.
Per curiam. (i) Although the Supreme Court is not bound by its previous decisions, it should overrule them only with great caution, in a clear case, following full argument and preferably when the court is composed of a greater number of judges than in the earlier case and perhaps when the Chief Justice is presiding. In the absence of these conditions, the court had not considered departing from Manorburn, which it was not convinced was clearly wrong (see paras [24]-[25], below). State v Gelu (′Manorburn') [2003] PGSC 15 considered.
(ii) Appellants must argue their cases in accordance with their notices of appeal. If they take an undisciplined approach then they run the risk, even if they win the appeal, of not getting the costs award that they would otherwise expect (see para [63], below).
[Editors' note: Section 13 of the Attorney-General Act is set out at para [13], below.]
Cases referred to in judgment
A v Governor of Arbour Hill Prison [2006] IESC 45, Ir SC
Aigilo v State (No 1) (2001) N2103, [2001] PGNC 102, PNG NC
Amin, Re [1991] PNGLR 1, PNG SC
Brennan v Bolt Burdon (a firm) [2004] EWCA Civ 1017, [2005] QB 303, [2004]3 WLR 1321, UK CA
Crilly v T & J Farrington [2001] IESC 60; [2001] 3 IR 251, Ir SC
Derbyshire v Tongia [1984] PNGLR 148, PNG SC
Fly River Provincial Govt v Pioneer Health Services Ltd [2003] PGSC 4, PNG SC
Gawi v State [2006] PGSC 20, PNG SC
Kumba v MVIT [2001] PGNC 53, PNG NC
Mali v State [2002] PGSC 4, PNG SC
MVIT v Reading [1988-89] PNGLR 608, PNG SC
Public Prosecutor v Aia [1978] PNGLR 224, PNG SC
State v Gelu ('Manorburn') [2003] PGSC 15, PNG SC
State v Keboki Business Group Inc [1985] PNGLR 369, PNG SC
Supreme Court Reference (No 2 of 1990: Reference by the Public Prosecutor, Re [1992] PNGLR 336, PNG SC
Zanepa v Kaivovo [1999] PGSC 30, PNG SC
Legislation referred to in judgment
Attorney-General Act, ss 11, 13(2)
Supreme Court Act, ss 14(1)(c), 16
Other sources referred to in judgment
Blackstone Commentaries on the Laws of England
Posner The Problems of Jurisprudence (1993)
Appeal
The appellant, Polem Enterprise Ltd, appealed against the decision of Gabi J in the National Court refusing to enforce a deed of settlement
entered into by the Solicitor General on behalf of the state. The respondents, the Attorney General, the Acting Solicitor General,
the Independent State of Papua New Guinea and the East Sepik Provincial Government, contested the appeal. The facts are set out in
the judgment of the court.
V L Narokobi for the appellant.
D M Steven for the first, second and third respondents.
J K Gawi for the fourth respondent.
2 May 2008. The following judgment of the court was delivered.
KIRRIWOM, CANNINGS and MANUHU JJ.
[1] This is an appeal against the refusal of the National Court (Gabi J) to enforce a deed of settlement entered into by the Solicitor General.
[2] The purpose of the deed was to settle out of court a case commenced by the appellant, Polem Enterprise Ltd, against the East Sepik Provincial Government. Polem was claiming damages of K6.1m for unlawful suspension of its liquor licence. The Solicitor General, acting on behalf of the state (including the provincial government) settled the case for K3.5m. Polem then withdrew the case.
[3] The state made progressive payments totalling about K457,000 to Polem before refusing to pay any more in light of the Supreme Court decision in State v Gelu ('Manorburn') [2003] PGSC 15, which was handed down after the deed was entered into. The Supreme Court held that the Solicitor General has no power to settle cases except on the instructions of the Attorney General.
[4] Polem commenced fresh proceedings (by OS No 26 of 2004) to enforce the deed, arguing that at the time he executed it the Solicitor General, Zachary Gelu, had the power to do so because of two previous cases that said the Solicitor General could independently settle cases brought against the state; and in any event, the then Attorney General, Francis Damem, had approved the settlement.
[5] The trial judge followed Manorburn, applied it retrospectively and found that Mr Damem never approved the settlement and held that the deed was unenforceable. His Honour also ordered Polem to repay the K457, 000 to the state.
THE SOLICITOR GENERAL
[6] The Solicitor General is the principal advocate for the state in all matters coming before the courts and is appointed under the Attorney-General Act. The Solicitor General should not be confused with other key public law officers having similar names, such as:
ISSUES
[7] This appeal raises, again, the important practical question of the relationship between the offices of the Solicitor General and the Attorney General. Who has the authority to settle cases on behalf of the state? Is the decision in Manorburn still good law?
[8] There is also the fascinating issue of whether the Supreme Court decision in Manorburn had retrospective effect. Can a judgment of a court render an act unlawful which, when it was done, was lawful by virtue of previous judicial decisions which said the opposite?
CASES, EVENTS AND DATES
[9] The previous judicial decisions that lend support to Polem's argument are Aigilo v State (No 1) (2001) N2103 and Mali v State [2002] PGSC 4. Aigilo was a National Court decision of Kandakasi J. Mali was a Supreme Court decision of Hinchliffe, Sakora and Batari JJ. In both cases it was held that the Solicitor General—not the Attorney General—has power to settle cases on behalf of the state and that the Solicitor General can act independently of the Attorney General.
[10] Aigilo was decided on 3 August 2001 and Mali on 3 April 2002. Both cases pre-dated the deed of settlement that is the bone of contention in the present case, executed on 15 August 2002.
[11] It was around this time that the question of out-of-court settlements became a burning public issue. Too many settlements of cases that seemed defendable gave rise to suspicion of corruption and payment of backhanders to public officials. On 22 August 2002 the National Executive Council made all out-of-court settlements subject to its approval. On 25 July 2003 it decided that all proposed settlements must first be reviewed and cleared by the Attorney General.
[12] In the meantime the state had made three instalments under the deed of settlement with Polem, totalling about K457, 000, the last one on 7 February 2003.
[13] On 15 August 2003, when the Supreme Court (Amet CJ, Kapi DCJ and Los J) handed down the decision in Manorburn, Aigilo and Mali were held to have been wrongly decided. The court noted that the Solicitor General is appointed by and therefore answerable to the Attorney General under s 11 of the Attorney-General Act. The court focussed on s 13 (function of Solicitor General) of the Act, which states:
′(1) The primary function of the Solicitor General is to appear as an advocate for the State in matters coming before the courts in Papua New Guinea.
(2) In the exercise of his function under Subsection (1), the Solicitor General shall accept instructions only from the Attorney General.'
[14] The court observed:
'This provision indicates the nature and the scope of the functions of the Solicitor General. Its main function is to "appear as an advocate for the State in matters before the courts". This is a specific and limited function. In exercising this function, the Solicitor General shall accept instructions from the Attorney General (s 13(2)). In practice, where the State is a party in any litigation before the courts, the Solicitor General may act as an advocate if instructed to do so by the Attorney General in accordance with Section 13(2) of Attorney-General Act. Where the Solicitor General is instructed, he must act in accordance with the instructions of the Attorney General, such as to settle or not to settle a matter.'
[15] Manorburn stands for the proposition that the Attorney General-not the Solicitor General-has the authority to settle cases out of court. If the Solicitor General wishes to enter into a deed of settlement, this can only be done on the instructions, ie approval, of the Attorney General. The Solicitor General cannot act independently. The interpretation of the Act in Manorburn was thus the opposite of that arrived at in Aigilo and Mali.
[16] Nothing has changed since Manorburn was decided. It has been followed by the courts and the Act has not been amended.
[17] It was in that context that the state, in 2003, refused to pay any more money under the deed of settlement with Polem. In 2004 Polem commenced the proceedings OS No 26 of 2004. The trial was held over nine days from April to May 2005 and judgment was delivered on 2 February 2006.
THE NATIONAL COURT DECISION
[18] The trial judge held that the reasons for the state's refusal to pay Polem were sound. The Supreme Court judgment in Manorburn confirmed that the Solicitor General does not have and never had the power to settle cases without the Attorney General's instructions. The previous cases Aigifo and Mali—that suggested the Solicitor General could act independently of the Attorney General were overruled by Manorburn and were wrongly decided.
[19] On the issue of retrospectivity, his Honour stated:
'Section 13(2) of the Attorney-General Act is in mandatory terms and non-compliance will render an action null and void. I am satisfied that Mr Gelu relied on the Aigilo case to settle the claim. The decision in Manorburn case was made in 2003, well after the settlement. Does Manorburn's case apply retrospectively? In my opinion, the answer is clearly: YES. The law then and now is that the Solicitor General "shall" seek instructions from the Attorney General. I am, therefore, of the view that the deed of settlement dated 15th August 2002 is null and void ab initio [from the beginning].'
[20] There was a lot of evidence at the trial about whether Mr Damem had given instructions to Mr Gelu to settle the claim. Mr Gelu testified that Mr Damem authorised him to settle for K3.1m. Mr Damem said that was a lie. The court also heard evidence from the Acting Solicitor General at the time of the trial, John Kumura (which favoured Mr Damem's version of events), and from a Polem representative, John Jimberi (which supported Mr Gelu's version). The trial judge concluded that Mr Damem's evidence was more persuasive and found, as a fact, that Mr Gelu acted without instructions or authority.
[21] Polem argued that the doctrine of promissory estoppel prevented the state from denying the existence of the deed, ie the state could not go back on its promise to pay. Polem argued that it acted in good faith on Mr Gelu's representation that he had authority to settle the case and that it withdrew the case against the provincial government on the basis of the deed. The trial judge was unmoved by those arguments. Promissory estoppel cannot protect something that was null and void and unenforceable from the very beginning, his Honour ruled. There was a clear statutory prohibition of the sort of arrangement entered into by Mr Gelu, so the deed could not be given effect. In support of that conclusion his Honour cited the Supreme Court decisions in The State v Keboki Business Group Inc [1985] PNGLR 369 and Fly River Provincial Govt v Pioneer Health Services Ltd [2003] PGSC 4 and the National Court decision of Davani J in Kumba v MVIT [2001] PGNC 53.
THE GROUNDS OF APPEAL
[22] Polem's notice of appeal contained 24 appeal points but most were combined and some were abandoned at the hearing of the appeal, resulting in us being required to determine five major grounds of appeal.
Attorney-General Act, s 13
[23] First, it was argued that the trial judge misinterpreted s 13 of the Attorney-General Act as it does not say that the Solicitor General has to always seek instructions from the Attorney General, only that he `shall accept instructions only from the Attorney General'. Furthermore his Honour failed to distinguish the facts of Manorburn from those in the present case.
Manorburn was a case of conflicting instructions as the Solicitor General settled the case even though the Attorney General had briefed it out to a private law firm, whereas in the present case there had been no brief-out.
[24] We are not impressed with these arguments as they require us to revisit the correctness of Manorburn and in the circumstances of this case we are not prepared to do that. Though the Supreme Court is not bound by its previous decisions it should only overrule them with great caution, in a clear case, following full argument and preferably when the court is comprised of a greater number of judges than in the earlier case and perhaps when the Chief Justice is presiding (Public Prosecutor v Aia [1978] PNGLR 224, MVIT v Reading [1988-89] PNGLR 608, Derbyshire v Tongia [1984] PNGLR 148, SCR No 2 of 1992 [1992] PNGLR 336, Re Amin [1991] PNGLR 1, Zanepa v Kaivovo [1999] PGSC 30 and Gawi v State [2006] PGSC 20).
[25] We are not convinced that Manorburn was a clearly wrong decision. We did not get the benefit of full argument on its correctness. The court is comprised of the same number of judges as in Manorburn and the Chief justice is not presiding. So we have not considered departing from it.
[26] Manorburn authoritatively settled the respective roles and functions of the Solicitor General and the Attorney General. It is good law. It is clear that the Solicitor General has no power to settle cases against the state except on the instructions of the Attorney General.
[27] The distinction that Mr Narokobi seeks to draw between the facts in Manorburn and those in the present case is illusory. Under the law, post-Manorburn, the Solicitor General must have instructions from the Attorney General before settling a case. The instructions might be express, implied, tacit or inferred. They might be in writing or given orally. The court in Manorburn did not go into the detail of how instructions must be conveyed or evidenced and we are not going there either. The Solicitor General must act on instructions and they can only come from the Attorney General (or the Attorney General's lawful delegate).
[28] The trial judge did not misinterpret s 13 of the Attorney-General Act in the sense contended for by the appellant, so we dismiss this part of the appeal.
Retrospective application of Manorburn
[29] This is the main ground of appeal and we address it in detail below.
Polem argued that the trial judge erred by applying Manorburn retrospectively.
Promissory estoppel
[30] The third and fourth grounds of appeal are about the trial judge's treatment of the promissory estoppel issue. Mr Narokobi submitted that his Honour incorrectly formed the view that s 13(2) of the Attorney-General Act clearly prohibited the Solicitor General settling the case without the Attorney General's instructions; when what he should have decided was that it was a matter of interpretation, there was no clear prohibition and all the other conditions for operation of the doctrine of promissory estoppel were satisfied.
[31] Furthermore the Solicitor General had ostensible authority to settle the case and when the Attorney General found out about the settlement he did nothing to stop the part-payments of K457,000 being made, so he acquiesced in the settlement.
[32] We will address these grounds of appeal later in the judgment.
Instructions
[331 The last ground of appeal was that the trial judge erred in finding, as a fact, that the Solicitor General had no instructions from the Attorney General to settle the case. There was overwhelming evidence that consultation did take place, Mr Narokobi submitted.
[34] We dismiss this ground of appeal for two reasons.
[35] First, the question of whether Mr Damem gave instructions to Mr Gelu is a question of fact and leave should have been obtained under s 14(1)(c) of the Supreme Court Act to argue it. Leave was neither sought nor obtained so the issue is not properly before the court.
[36] Secondly, we have considered the evidence that was before the National Court and can detect no error in the trial judge's finding, either in the way his Honour reached the conclusion or in the conclusion itself.
KEY ISSUES
[37] The key issues boil down to these:
Did the trial judge err by applying Manorburn retrospectively?
[38] The respondents' counsel, Mr Steven and Mr Gawi, submitted that his Honour made no error in applying Manorburn to the facts of this case. The Supreme Court in Manorburn held that the Solicitor General had no power to settle cases without the Attorney General's approval and stated clearly that the Aigilo and Mali cases, which held that the Solicitor General did have such a power, were wrongly decided. Manorburn was the most recent decision. It was a Supreme Court decision and the trial judge was obliged to follow it. The law which makes it clear that the Solicitor General has no power of his own volition to settle cases (s 13 of the Attorney-General Act) has never changed. It is the same law and it should not be applied differently according to the date of its breach.
[39] We consider those submissions to be flawed as they overlook the very nature of written laws, such as Acts of the parliament, which exist not in a vacuum but are subject from time to time to judicial interpretation. To state what the law on a subject is you need to locate the written law on it, in this case the Attorney-General Act, then you need to see whether there has been any judicial interpretation of it. Only when those two sources of law are put together do you get an accurate picture of the law at a particular point in time.
[40] When the Solicitor General executed the deed of settlement on 15 August 2002, the law was that he could do so unilaterally without the Attorney General's instructions or approval. That was the state of the law due to the combined effect of the Attorney-General Act and the interpretation of it in the Aigilo and Mali cases. There was nothing unlawful then about what the Solicitor General did. What he did was lawful.
[41] The Solicitor General's actions cannot be rendered unlawful by a subsequent judicial decision or even by a subsequent legislative enactment unless the judicial decision or the legislative amendment expressly states that it is to have retrospective effect.
[42] Here the subsequent judicial decision, in Manorburn, applied only to the facts of that case, and, of course, it applied prospectively. Any settlement of a case by the Solicitor General after the date of the Manorburn decision, without the Attorney General's instructions, would be unlawful. The Supreme Court in any case said that it was applying its decision to overrule previous judicial decisions retrospectively. We cannot conceive of a situation in which it would be just to do that.
[43] Individuals and corporations conduct their affairs, business and daily lives according to the law as it exists from time to time. That is the essence of the rule of law. It is why there is a presumption against retrospectivity in the application of all sorts of laws. Applying laws retrospectively is akin to changing the rules of a game of football after the game has finished and then applying the new rules to see who won. That is why it is done sparingly, only in exceptional cases.
[44] In this case, the Supreme Court decision in Manorburn changed the law on the relationship between the Solicitor General and the Attorney General and, in particular, on the power of the Solicitor General to settle cases n behalf of the state. Though it might sound funny to say that a law, such as the Attorney-General Act, can change even though it has not been amended by the Parliament, that is, in essence, what happens when a judicial decision is made that overrules previous judicial decisions interpreting that law.
[45] As far as we know this is the first time the National Court or the Supreme Court has grappled with the issue of whether a judicial interpretation of a written law that overrules previous judicial decisions on a subject operates retrospectively. We are confident that in resolving that issue in the opposite way to that of the learned trial judge we are taking a similar approach to that in other jurisdictions. We are not of course bound to take the same approach as overseas courts but our research provides some comfort in the view that what we are saying is nothing out of the ordinary.
[46] We have found particularly illuminating the judgment of Chief Justice Murray of the Supreme Court of Ireland in the recent case of A v Governor of Arbour Hill Prison [2006] IESC 45. A person was convicted of a criminal offence in 2004 under a law that was declared by the Supreme Court in a separate case in 2006 to be unconstitutional. The question arose whether the 2006 court decision had retrospective effect. Should the 2004 conviction stand? Should the prisoner have to serve out his sentence? The answers given were: No, the 2006 decision did not operate retrospectively; Yes, the conviction stood; and Yes, the prisoner had to serve out his sentence.
[47] As to the role of the courts in interpreting and therefore changing the law, Murray CJ stated:
′A primary judicial function is to interpret the law that is to say the Constitution, legislation and the common law. As I observed in Crilly –v-. T J Farrington [2001] IESC 60; [2001] 3 IR 251 at p 286: '... [F]irst, there is the law; then there is interpretation. Then interpretation is the law. This simplified reference to the judicial process emphasises that when courts apply a statute the interpretation which they give it has ultimate authority.' One of the consequences of this judicial process is obvious. The meaning or import of law is interpreted and defined incrementally.'
[48] It sometimes happens—as in the present case—that a judicial decision, like Manorburn, will change completely a law as it has been interpreted and applied by previous judicial decisions, like Aigilo and Mali. That does not mean that the previous decisions cease to exist or cease to have effect or that they were never the law. As Murray CJ explained:
'It is also important to bear in mind ... that the courts cannot and do not choose the legal issues, of interpretation or otherwise, which they have to decide. They can only decide such issues when they are raised in the context of judicial proceedings brought before them. Thus, the conventional manner in which the law has been applied in a particular area for many decades may be greatly altered even turned on its head as a result of a particular issue being raised in a particular case at a particular point in time leading to an extension of the law by reference to general principles, the overriding of precedent or the specific interpretation of a provision of a statute which gives it a meaning different from that which had been commonly held ... The common law has never conceived as consistent with any ordered administration of justice that previously decided and finally determined cases could necessarily be set aside or reopened in the light of a new precedent notwithstanding the historical view of the common law, expressed by Blackstone in his Commentaries, that Judges 'discover' the law as it truly is and that overruled precedents were misrepresentations of the law and were never law..'. As Judge Richard Posner, writing ex-judicially, observed, "Pure retroactivity is rare".' (See The Problems of Jurisprudence (1993).)
[49] His Honour noted that judicial decisions, by their nature, apply retrospectively, in a limited way, but it is jurisprudentially incorrect to give them an absolute retrospectivity:
'Judicial decisions which set a precedent in law do have retrospective effect. First of all the case which decides the point applies it retrospectively in the case being decided because obviously the wrong being remedied occurred before the case was brought. A decision in principle applies retrospectively to all persons who, prior to the decision, suffered the same or similar wrong, whether as a result of the application of an invalid statute or otherwise, provided of course they are entitled to bring proceedings seeking the remedy in accordance with the ordinary rules of law such as a statute of limitations. It will also apply to cases pending before the courts. That is to say that a judicial decision may be relied upon in matters or cases not yet finally determined. But the retrospective effect of a judicial decision is excluded from cases already finally determined. This is the common law position.'
[50] Giving judicial decisions an absolute retrospective effect would create uncertainty and injustice. As the learned Chief Justice explained:
`No one has ever suggested that every time there is a judicial adjudication clarifying or interpreting the law in a particular manner which could have had some bearing on previous and finally decided cases, civil or criminal, that such cases be reopened or the decisions set aside. It has not been suggested because no legal system comprehends such an absolute or complete retroactive effect of judicial decisions. To do so would render a legal system uncertain, incoherent and dysfunctional. Such consequences would cause widespread injustices.'
[51] Another overseas decision we have found helpful in resolving the case before us is that of the English Court of Appeal in Brennan v Bolt Burdon (a firm) [2004] EWCA Civ 1017, [2005] QB 303. A civil case was settled out of court and after the date of settlement a court decision came down that overturned a previous court decision on which the settlement had been based. One of the parties to the settlement, Ms Brennan, applied to have it set side on the ground that it was based on a mistake of law, ie on a court decision that was subsequently found to be wrong.
[52] Her application was unsuccessful. The Court of Appeal held that the parties were not mistaken as to the law as it existed at the time of the settlement, so the settlement could not be set aside. The settlement of a case is a contract, even if the settlement is subject to a consent order. The deed of settlement represents an agreement between parties. It should not be set aside simply because of a subsequent judicial decision on an issue that was covered by the settlement.
[53] We agree with the approach taken in Brennan v Bolt Burdon. If the parties to a civil case settle it out of court and there is no fraud involved or none of the other grounds on which contracts can be set aside apply, the settlement, being a valid contract, should be enforced, even if it has been based on judicial decisions which have since been overruled.
[54] We see no unfairness in that approach, at least not in the circumstances of the present case. There is no evidence of fraud, so we presume that Polem entered into the deed of settlement with the Solicitor General in good faith. The Solicitor General was, at the time, acting lawfully and his actions were not rendered unlawful by the subsequent decision in Manorburn. The contract between Polem and the state should be enforced. We consider that the learned trial judge erred by giving Manorburn retrospective effect and we uphold the second ground of appeal.
Did the trial judge err by not applying the doctrine of promissory estoppel?
[55] The main reason for the trial judge's rejection of Polem's promissory estoppel argument was his Honour's finding, based on the retrospective application of Manorburn, that the settlement was an illegal contract. It was null and void and unenforceable from the beginning. We have found that finding to be incorrect and it follows that his Honour's conclusion as to promissory estoppel is also, with respect, incorrect.
[56] It is not necessary for us to say much more about this part of the appeal. If we had agreed with the trial judge that Manorburn applied retrospectively, it would have been necessary to address in detail the argument that promissory estoppel applied.
[57] There might be merit in Mr Narokobi's submissions that promissory estoppel can save an illegal contract if one of the parties—in this case, the Solicitor General—though acting unlawfully was acting within the scope of his ostensible authority and there was—as here, with the payment of K457,000—part-performance of the contract. However, we are going to uphold the appeal on the retrospectivity issue and it is not necessary to determine grounds 3 and 4 of the appeal.
CONCLUSION
[58] We have dismissed two grounds of appeal: ground no 1, that the trial judge misinterpreted s 13 of the Attorney-General Act and the Manorburn decision and ground no 5, that the trial judge erred in finding as a fact that the Solicitor General had no instructions from the Attorney General.
[59] We have found it unnecessary to determine two grounds: Nos 3 and 4, which deal with promissory estoppel.
[60] We have upheld the primary ground: No 2, that the trial judge erred in retrospectively applying Manorburn.
[61] It follows that the appeal will be allowed and the trial judge's decision to refuse to enforce the deed of settlement will be set aside. We have the option under s 16 of the Supreme Court Act of remitting the case to the National Court for further hearing. However, in the circumstances, it not being shown that there is any reason apart from application of the Manorburn principle that led the trial judge to refuse to enforce the deed of settlement, we do not think there is anything to be gained from a further hearing. We reiterate that in the National Court there was no finding of fraud. This was a case settled out of court in good faith, in accordance with the law as it then was. The settlement, being a contract, should be enforced and we will make an order to that effect.
COSTS
[62] The general rule is that costs follow the event, ie the successful party has its costs paid for by the losing party. The question of costs is, however, a discretionary matter and in the circumstances of this case we do not think an order for costs in favour of the appellant is warranted. First, two of the five grounds of appeal were dismissed. The other, major, consideration is that the appellant filed a notice of appeal that contained 24 appeal points but then, confusingly argued five grounds of appeal at the hearing. We do not think that this unduly prejudiced the respondents but it certainly inconvenienced them as they prepared written submissions that responded to the original 24 grounds of appeal. It also inconvenienced the court.
[63] Appellants must learn to argue their cases in accordance with their notice of appeal. If, as in this case, they take an undisciplined approach, they run the risk, even if they win the case, of not getting the costs award that they would otherwise expect to receive. We will order that the parties bear their own costs.
ORDER
[64] The Supreme Court will order that:
(1) the appeal is upheld;
(2) the order of the National Court of 2 February 2006 in OS No 26 of 2004 is quashed;
(3) the deed of settlement dated 15 August 2002 is declared valid and enforceable and shall be enforced and all moneys still due and payable under it shall be paid forthwith;
(4) the parties shall bear their own costs,
Solicitors:
Narokobi Lawyers for the appellant.
Stevens Lawyers for the first, second and third respondents.
John K Gawi Lawyers for the fourth respondent.
PacLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.paclii.org/pg/cases/PGSC/2008/53.html
