Yer, Secretary for Department of Finance v Yama [2009] PGSC 13; SC990 (3 July 2009)

SC990

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA NO 53 OF 2008

BETWEEN

GABRIEL YER, SECRETARY FOR DEPARTMENT OF FINANCE
First Appellant

AND

LEONARD LAUMA, ACTING CHIEF OF STAFF, PRIME MINISTER’S DEPARTMENT
Second Appellant

AND

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Third Appellant

AND

MAURICE SHEEHAN, CHIEF COMMISSIONER, COMMISSION OF INQUIRY INTO FINANCE DEPARTMENT
Fourth Appellant

AND

PETER YAMA
Respondent

Waigani: Cannings, Gabi & Makail JJ,
2009: 29th June & 03rd July

PRACTICE & PROCEDURE - Application for stay - Application for want of prosecution - Competency of appeal - Delay of 10 months - Whether reasonable explanation given for delay - Whether arguable grounds of appeal - Supreme Court Rules - Order 7, rules 14 & 53 - National Court Rules - Order 4, rules 2 & 3.

Cases Cited:

PNG Forest Authority -v- Securimax Security Limited (2003) SC717
The State -v- Kubor Earthmoving (PNG) Limited [1985] PNGLR 448
Patterson Lowa -v- Wapula Akipe & Ors [1991] PNGLR 265
Dan Kakaraya -v- Sir Michael Somare & Ors (2004) SC762
Nambawan Trophy Limited -v- Dynasty Holdings Limited (2005) SC811
Gary McHardy -v- Prosec Security Services Limited (2000) SC646
John Momis & Ors -v- Attorney General, NEC & The State [2000] PNGLR 109
Hilary Singat -v- Commissioner of Police & The State (2008) SC910

Counsel:

Mr L Makap, for 1st Appellant
Mr N Kubak, for 2nd & 3rd Appellants
Mr S Kassman, for 4th Appellant
Mr B Lomai, for Respondent

03rd July, 2009

RULING
ON APPLICATIONS TO DISMISS APPEAL AND FOR STAY

1. BY THE COURT: There are three applications before the Court for our determination. Two of them are by the Respondent and one by the First Appellant, supported by the Second, Third and Fourth Appellants. They are as follows:

1. Respondent’s Notice of Application for dismissal of appeal for want of prosecution and lack of or no proper instructions from Attorney-General to file appeal filed on 12th March 2009;

2. First Appellant’s Notice of Application for Stay filed on 08th July 2008; and

3. Respondent’s Notice of Application to discharge interim Stay filed on 12th March 2009.

BRIEF FACTS

2. These three applications arose from a decision of the National Court of 03rd July 2008 which ordered inter-alia that the First Appellant release a sum of K7,750,000.00 to the Respondent forthwith. That decision is the subject of the substantive appeal but earlier on in the National Court, the Respondent commenced proceeding by way of an Originating Summons No 371 of 2008 seeking inter-alia an order for payment of K15,500,000.00 to him by the Appellants pursuant to a Deed of Release executed between the Acting Solicitor-General on behalf of the Third Appellant and the Respondent on 28th November 2002 as damages for the unlawful deprivation of use of a State lease described as Section 68, Allotment 38, Madang, granted to the Respondent.

Pursuant to the Deed of Release, the Acting Solicitor-General gave his clearance or approval to the First Appellant to pay K15,500,000.00 to the Respondent and sometimes in the month of June 2008, whilst the First Appellant was away on an official trip overseas, he learnt that a sum of K7,750,000.00 was to be released and paid by the Department of Finance to the Respondent as part payment. He intervened by directing a stop payment. This prompted the Respondent to commence the proceeding in the National Court on 02nd July 2008 to enforce the Deed of Release and payment of K15,500,000.00. This led to the National Court ordering the First Appellant to release K7,750,000.00 to the Respondent upon an interlocutory application by the Respondent on 03rd July 2008.

GROUNDS OF APPEAL

3. It is necessary for us to set out in full the grounds of appeal as they will become relevant to the application for stay in the event that we refuse the Respondent’s application to dismiss the appeal for want of prosecution or lack of or no proper instructions for the Attorney-General to institute the appeal on behalf of the First, Second and Third Appellants in the first place.

4. The Appellants base their appeal on 5 grounds in their Notice of Appeal. We set them out in full below:

"3A Improper Mode of Commencement of Proceedings.

The National Court erred in law in granting the orders sought by way of Notice of Motion in the following respects:-

(i) The substantive proceeding by way of Originating Summons sought to enforce, by orders sought in paragraph 10, a Deed of Settlement for the sum of K15.5 million in favour of the Respondent.

(ii) These orders were preceded by a number of declaratory orders sought by the Respondent in the National Court which were substantially disputed and were largely at issue.

(iii) The Respondent therefore should have commenced the proceedings by way of Writ of Summons with a Statement of Claim endorsed on it pursuant to Order 4 Division 3 of the National Court Rules.

(iv) In addition or in the further alternative, the orders granted pursuant to a Notice of Motion filed and moved in the National Court on 03rd July 2008 were in the nature of mandamus. Such orders can be sought strictly by the exclusive judicial review procedure set out in Order 16 of the National Court Rules. The National Court therefore erred in law in making an order in the nature of mandamus by way of an interlocutory interim application on notice under an ordinary Originating Summons proceedings under Order 4 Division 4 of the National Court Rules.

3B Court Documents short served and substantive orders made without the Appellants being heard.

(i) The National Court erred in law in dispensing with the requirements of service and sufficient notice, and proceeded to make orders that were substantive in nature (without determining the enforceability of the Deed of Settlement), the subject of the orders sought by way of Notice of Motion, and without according the Appellants a practical opportunity to be heard at all.

3C Injunctive Reliefs.

(i) The National Court erred in law in granting an order in the nature of permanent injunction restraining the Appellants by way of an interlocutory Application on notice:-

(a) without hearing out the Appellants at all;

(b) without an undertaking as to damages being given and filed by the Respondent; and

(c) without satisfying the requirements for the grant of interlocutory injunctions established by case law in this jurisdiction.

3D Orders in Breach of Claims By and Against the State Act

(1) The National Court erred in law in the orders made on the 03rd July, 2008 which were in the nature of execution against the revenue of the State, in breach of Section 13 of the Claims By and Against the State Act;

(2) The National Court erred in law, in making those orders in the 03rd July 2008, which were in he nature of mandamus, contrary to Section 14(5) of the Claims By and Against the State Act.

3E Substantive reliefs on the Originating Summons were sought and granted in the Interlocutory application.

The Court erred in law in granting substantive reliefs in the interlocutory application."

EVIDENCE

5. The parties have filed and rely on the following Affidavits for and against each application:

1. Affidavit of Peter Yama sworn on 10th July 2008 and filed on 11th July 2008;

2. Affidavit of Zachary Gelu sworn and filed on 11th July 2008;

3. Affidavit of Ben Lomai sworn on 15th August 2008 and filed on 18th August 2008;

4. Affidavit of Peter Yama sworn and filed on 22nd March 2008;

5. Affidavit of Ben Lomai sworn and filed on 12th March 2009;

6. Affidavit of Peter Yama sworn and filed on 27th March 2009;

7. Affidavit of Gabriel Yer sworn and filed on 08th July 2008;

8. Affidavit of Leonard Louma sworn and filed on 26th August 2008;

9. Affidavit of Gabriel Yer sworn and filed on 26th August 2008;

10. Affidavit of Luther Makap sworn and filed on 28th August 2008;

11. Affidavit of Manly Ua sworn on 27th October 2009 and filed on 28th October 2008;

12. Affidavit of Luther Makap sworn and filed on 26th June 2009;

13. Affidavit of Norbert Kubak sworn and filed on 26th August 2008;

14. Affidavit of Jerry Hulamari sworn and filed on 26th August 2008;

15. Affidavit of Norbert Kubak sworn and filed on 29th October 2008; and

16. Affidavit of Maurice Sheehan sworn and filed on 11th July 2008.

RESPONDENT’S APPLICATION TO DISMISS APPEAL - LACK OF OR NO PROPER INSTRUCTIONS FROM ATTONERY GENERAL

6. We deal first with the application to dismiss the appeal for lack of or no proper instructions from the Attorney-General to institute this appeal because if we uphold the application, it would bring an end to the entire appeal and there would be no need to determine the other applications.

7. Mr. Lomai urges us to dismiss the entire appeal because there is a lack of or no proper instructions given by the Attorney General to Makap Lawyers to institute the appeal on behalf of the First, Second and Third Appellants at the time of filing of the appeal on 08th July 2008. He points to a letter signed by the Acting Attorney-General Mr. Paul Tienstan dated 08th July 2008 (Annexure "B" to the Affidavit of Luther Makap sworn and filed on 12th May 2009) and submits that when Honourable Paul Tienstan issued the brief to Makap Lawyers to institute the appeal on behalf of the First, Second and Third Appellants pursuant to section 7(i) of the Attorney-General Act 1989, he did not have the authority to do so.

8. Mr. Lomai refers us to sections 1 and 25 of the Lawyers Act 1986 and submits that the Attorney-General must be a registered lawyer within the meaning of the Lawyers Act 1986 to have the authority to perform the duties of the Attorney-General including the issuance of briefs to private lawyers under section 7(i) of the Attorney Generals Act 1989. By that he says the Attorney-General must be a holder of a current lawyer’s practicing certificate issued by the Papua New Guinea Law Society in order to hold himself out as a lawyer.

9. In this respect, he says that there is evidence in the Affidavit of Ben Lomai sworn and filed on 12th March 2009 that Mr. Tienstan was not a holder of a current lawyer’s practising certificate under the Lawyers Act 1986 at the time he was Acting Attorney-General, hence did not have the authority to issue a brief to Makap Lawyers to represent the Appellants and file the appeal against the decision of the National Court of 03rd July 2008.

10. Mr. Makap leading the submissions for the Appellants urges us to dismiss this application on the basis that the very ground relied upon by the Respondent to ask the Court to dismiss the entire appeal is in fact an objection to competency of the appeal. Under Order 7 rule 14 of the Supreme Court Rules, an application for competency must be filed within 14 days from the date of service of a Notice of Appeal on the Respondent. He submits, it is very clear that the Respondent is well and truly outside the 14 days, hence is precluded from raising this ground in the present application to dismiss to appeal.

11. In the alternative, he submits that, the Acting Attorney-General Mr. Tienstan did have the requisite authority to brief Makap Lawyers to institute this appeal on behalf of the First, Second and Third Appellants. This is because whilst the incumbent Attorney-General, Dr Allan Marat was out of the country on official duties, the Prime Minster appointed Mr. Tienstan to act as Attorney-General and as the Acting Attorney-General, he had the authority to brief Makap Lawyers to represent and institute this appeal on behalf of the First, Second and Third Appellants pursuant section 7(i) of the Attorney-Generals Act 1989. He relies on section 153 of the Constitution to support this proposition which states:

"153. Validity of executive acts.

(1) Subsections (2), (3) and (4) are subject to any Constitutional Law or Act of the Parliament.

(2) The question, whether the procedures prescribed for the National Executive Council have been or are being complied with, is non-justiciable.

(3) The question, whether any, and if so what report has been given to the National Executive Council by the Advisory Committee on the Power of Mercy, is non-justiciable.

(4) No act of a Minister is open to challenge on the ground that he was not empowered to perform the act, if some other Minister, or any Minister, was so empowered.

(5) This section does not limit the jurisdiction or powers of the Ombudsman Commission, or of an authority or tribunal established under Division III.2 (leadership code)." (Underlining is ours).

12. He submits that as the Prime Minister had appointed Mr.Tienstan to act as Attorney-General during Dr Marat’s absence, by section 153(4) of the Constitution the Acting Attorney-General’s decision to brief Makap Lawyer to represent the First, Second and Third Appellants and institute this appeal is not open to challenge as Mr. Tienstan was merely exercising the authority of the incumbent Attorney-General who was unable to exercise that authority under section 7(i) of the Attorney-General Act 1989.

13. Thirdly, even if the Acting Attorney-General did not have the authority to brief out to Makap Lawyers to represent the First, Second and Third Appellants and institute this appeal, the defect was rectified by the incumbent Attorney-General Dr Allan Marat upon his return from overseas trip when he ratified the Acting Attorney-General Mr. Tienstan’s brief out to Makap Lawyers in his letter to Makap Lawyers dated 22nd August 2008. Mr. Makap submits that the incumbent Attorney-General’s letter of 22nd August 2008 has retrospective effect and is sufficient to validate the Acting Attorney-General’s earlier brief, hence, the appeal is properly instituted and before the Court.

14. In our opinion, the Court must look at the nature of the application, the grounds of the application and the possible outcome of the application to determine whether an application raised after the 14 days is an objection to competency or not. In other words, if the nature, grounds, and the possible outcome do not determine the substantive appeal, the application would be one of competency. See PNG Forest Authority -v- Securimax Security Limited (2003) SC717.

15. Applying these considerations here, we are of the opinion that the Respondent’s application based on lack of or no proper authority from the Attorney-General to institute this appeal is in fact a challenge to the competency of the appeal. As correctly pointed out by Mr. Makap, Order 7 rule 14 of the Supreme Court Rules provides that an objection to competency of an appeal shall be filed within 14 days from the date of service of the Notice of Appeal on the Respondent. There is no power to extend the period of 14 days and there is no right to raise objections outside the time allowed. That is the principle in The State -v- Kubor Earthmoving (PNG) Limited [1985] PNGLR 448 which was subsequently approved by the Supreme Court in Patterson Lowa -v- Wapula Akipe & Ors [1991] PNGLR 265.

16. In our view, the Respondent’s submission on this ground clearly goes to challenge the authority or standing of the lawyers for the First Appellant to institute this appeal on behalf of the First, Second and Third Appellants. If the application is upheld, the end result would be that the entire appeal would be dismissed. As the Respondent did not file an application objecting to the competency of the appeal within 14 days after service of the Notice of Appeal, he is therefore, out of time to challenge the competency of the appeal. We dismiss the application for that reason.

17. But even if we were to consider the merits of the application, we would still reach the same conclusion. We reject Mr. Makap’s submission that since the Prime Minister had appointed Mr. Tienstan to act as Attorney-General during Dr Marat’s absence, by section 153(4) of the Constitution the Acting Attorney-General’s decision to brief Makap Lawyers to represent the Appellants and institute this appeal is not open to challenge as Mr. Tienstan was merely exercising the authority of the incumbent Attorney-General who was unable to exercise that authority under section 7(i) of the Attorney-General Act 1989.

18. In our view, section 153(4) of the Constitution is inapplicable in the present case because to accept the submission of the Appellants would mean that any executive acts or decisions of Ministers of State would not be open to judicial scrutiny. Further, the present case is about a challenge to the authority of the Acting Attorney-General to brief lawyers under section 7(i) of the Attorney-General Act 1989 and not about whether the Acting Attorney-General was properly appointed by the Prime Minister as Acting Attorney-General in order to perform the role of the Attorney-General during the incumbent’s absence.

19. On the other hand, we consider that section 5(a) of the Attorney-General Act 1989 is applicable in this case and should have been applied at the relevant time when the incumbent Attorney-General was out of the country on official duties. Section 5(a) states:

"5. Departmental Head as Attorney-General.

Where the Minister responsible for the National Justice Administration -

(a) is a person to whom Section 4 applies, but is out of the country or is out of speedy and effective communication or is otherwise unable to fulfil the duties of the Office of Attorney-General; or

(b) is not a lawyer fully admitted to practise under the Lawyers Act 1986,

the Departmental Head of the Department responsible for National Justice Administration is the Attorney-General and principal legal adviser to the National Executive." (Underlining is ours).

20. In our view, it is clear that where the Attorney-General is out of the country or is out of speedy and effective communication or is unable to fulfill his duties as the Attorney- General, the Secretary for the Department of Justice becomes the Attorney-General and Principal Legal Adviser to the National Executive Council by operation of law. In order words, if the Attorney-General is out of the country like in this case, the Secretary for the Department of Justice is given the duties, functions and responsibilities including the duty to "instruct lawyers within or outside the country to appear for the State in any matter" under section 7(i) of the Attorney-General Act 1989, It follows, since Dr Marat was out of the country at the relevant time, the Secretary for Justice should have been the person authorized to issue the brief to Makap Lawyers to represent the First, Second and Third Appellants and institute the appeal. Not the Acting Attorney-General.

21. We gather, that may have been the reason for the Deputy Secretary of the Department of Justice (Policy & Legal) to write to the Acting Prime Minster in his letter dated 11th July 2008 marked as Annexure "BLP 17" in the Affidavit of Ben Lomai sworn on 15th August 2008 and filed on 18th August 2008 attempting to point out the defect in the brief to Makap Lawyers by the Acting Attorney-General, Mr. Tienstan.

22. Having said that, we will not hold that against the Appellants as that is not the issue before us and we have not heard full arguments on that point from the parties although the point was raised by the Court during the hearing of the applications. We also make this observation simply to point out the powers, functions, duties and responsibilities of the Minister for Justice and Attorney-General and in the case where he is absent from office, who shall act in his place and perform which powers, functions, duties and responsibilities under the Attorney-General Act 1989.

23. But we do accept that the defect in the brief to Makap Lawyers to represent the Appellants was rectified by the incumbent Attorney-General Dr Marat upon his return from overseas. This can be seen from his letter to Makap Lawyers dated 22nd August 2008 in Annexure "B" to the Affidavit of Luther Makap sworn and filed on 24th June 2009 where he advised Makap Lawyers to represent the First Appellant, hence ratifying the earlier instructions by the Acting Attorney-General Mr.Tienstan’s to Makap Lawyers in the letter of 08th July 2008. Further, Dr Marat also briefed Kubak & Co Lawyers to act for the Second and Third Defendants in his letter dated 22nd August 2008 marked as Annexure "A11" to the Affidavit of Luther Makap sworn and filed on 24th June 2009. In our view, the incumbent Attorney-General’s letter of 22nd August 2008 to Makap Lawyers has retrospective effect and is sufficient to validate the Acting Attorney-General’s earlier brief. It has laid to rest the uncertainty over Makap Lawyers’ appointment as lawyers for the First Appellant.

24. We conclude therefore that the appeal is properly instituted and before the Court. For this reason, we dismiss the application.

RESPONDENT’S APPLICATION TO DISMISS APPEAL - WANT OF PROSECUTION

25. Proceeding on to the next ground of the Respondent’s application to dismiss the appeal for want of prosecution, the Respondent bases his application to dismiss under Order 7, rule 53 of the Supreme Court Rules. Order 7, rule 53 states:

"53. Where an appellant has not done any act required to be done by or under these rules or otherwise has not prosecuted his appeal with due diligence, the court may -

(a) order that the appeal be dismissed for want of prosecution; or

(b) fix a time peremptorily for the doing of the act and at the same time order

that upon non compliance, the appeal shall stand dismissed for want of prosecution, or subsequently, and in the event of non compliance, order that it be so dismissed; or

(c) make any other order that may seem just".

26. In the present case, Mr. Lomai points out that since the appeal was filed on 09th July 2009, the Appellants did not diligently prosecute it. He says the failure by the Appellants to diligently prosecute it can be seen from the following:

* it took 10 months for the Appellants to certify and file the Appeal Books;

* even though the Respondent filed an application to dismiss the appeal for want of prosecution on 09th May 2009, the Appellants failed to settled the index to the Appeal Book and have the Appeal Books certify;

* it was the Respondent who pushed the Appellants to prepare the Appeal Books and eventually had them certified on 09th May 2009; and

* the filing of the Respondent’s application to dismiss the appeal prompted the Appellants to prepare and bring the Appeal Books for certification by the Respondent.

27. On the other hand, Mr. Makap leading the others submits that first, the Appellants did diligently prosecute the appeal. He points out that soon after the filing of the appeal, he filed a draft index to the appeal on 30th July 2009 and was given 02nd August 2008 as the date for the appointment of the settlement of the index to the Appeal Book. When that day came, he did not attend as he did not receive the appropriate instructions from the Attorney-General, Dr Marat if his law firm was to continue representing the Appellants in the appeal until 22nd August 2008.

28. But as soon as he received the instructions from the Attorney-General, Dr Marat to pursue the appeal on behalf of the First Appellant, he attended the settlement of the draft Index to the Appeal Book on 30th August 2008 and thereafter the preparing of the documents and certification of the Appeal Books.

29. Secondly, the preparation of the appeal for substantive hearing was interrupted by the five (5) different interlocutory applications by either the Appellants or the Respondent. As a result, the Appellants’ focus on the substantive appeal was distracted or diverted to those interlocutory applications. For this too, Mr. Makap asks that the Court should not penalize the Appellants for the delay. In any case, the Appeal Books have now been certified by the parties, and this signifies the parties’ willingness or readiness to proceed with the substantive appeal.

30. The first point we wish to emphasize here is that, we agree with the submissions of Mr. Lomai that the Appellants must diligently prosecute the substantive appeal. For it is a duty imposed on the Appellants by the Supreme Court Rules under Order 7, rule 53. In our view, it is therefore incumbent on the Appellants to comply with this requirement and a failure to comply with this requirement may result in the appeal being dismissed for want of prosecution.

31. Secondly, the Court has the ultimate discretion to dismiss an appeal for want of prosecution and such an exercise of discretion must be exercised judicially, that is on proper principles of law. Under Order 7, rule 53 of the Supreme Court Rules, it is clear that first the Court may dismiss an appeal if is established that the Appellant "has not done any act required to be done by or under these rules", or "otherwise has not prosecuted his appeal with due diligence". The onus is on the Appellant to provide a reasonable explanation for the delay in prosecuting the appeal with due diligence. See Dan Kakaraya -v- Sir Michael Somare & Ors (2004) SC762.

32. From the submissions of parties, we gather that the main ground of the application falls under the second leg of Order 7, rule 53. That is, the Appellants did not prosecute the appeal with due diligence. We consider that there has been a delay by the Appellants in prosecuting the appeal. From the date of filing of the appeal of 08th July 2008 to the date of filing of the application to dismiss for want of prosecution on 12th March 2009 is a period of 8 months. In our view, that is a long delay. But can it be said that the Appellants have not prosecuted the appeal with due diligence?

33. We are of the view that the Appellants are not guilty of not prosecuting the appeal with due diligence. They have explained to our satisfaction that the appeal was not prosecuted for some time because they were distracted from preparing for the substantive appeal by at least five different interlocutory applications that came before the Supreme Court at various times prior to this application.

34. For example, there was the application to disqualify a judge by the Respondent filed on 30th October 2008 which had to be argued and time and resources were committed to that application. Another example was the Respondent’s first application to dismiss the appeal for want of prosecution filed on 11th July 2008 which had to be defended. Then there were the Fourth Appellant’s application to join in the appeal filed also on 11th July 2008 and the Respondent’s application to dismiss the appeal for lack of authority filed also on 11th July 2008 which had to be addressed by the First, Second and Third Appellants. See paragraph 5 of the Affidavit of Luther Makap sworn and filed on 26th June 2009.

35. Surely these applications were many and have impacted on the Appellants’ preparation of the substantive appeal. Further to that, because the Respondent had challenged the authority of Makap Lawyers to institute the appeal on behalf of the First, Second and Third Appellants, Makap Lawyers were caught up trying to seek clarification from the Attorney-General Dr Marat on this issue. Thus, we are satisfied that Makap Lawyers had done everything within their power and control to get clarification from the First Appellant and Attorney-General but had been unsuccessful.

36. Their efforts are evident in their letters to the First Appellant dated 17th July 2008 and also the Attorney-General dated 21st July 2008 marked as Annexures "A5" and "A6" to the Affidavit of Luther Makap sworn and filed on 26th June 2009 respectively. Given the uncertainty as to Makap Lawyers authority to represent the First, Second and Third Appellants, they failed to attend the appointment to settle the draft index to the Appeal Book on 22nd July 2008, which resulted in the settlement to be deferred to another date.

37. In any case, "the Court must consider the whole of the circumstances in which the dismissal on the grounds of want of prosecution is brought was file, in particular events that have taken place since the application was filed. Where an appellant has not done what the Rules require in the time required, but has made good its omissions before the application to dismiss is heard, the application may not be successful." See Nambawan Trophy Limited -v- Dynasty Holdings Limited (2005) SC811.

38. In the present case, the Appellants have submitted the Appeal Books to the Respondent’s lawyers and they have certified them. The Appeal Books have been filed on 05th May 2009. Hence, in our view, this signifies that the parties are ready for the substantive appeal. The Appellants have made good their omission before the application for want of prosecution is heard and they must be allowed to argue the substantive appeal.

39. In the end, we are not satisfied that the Respondent has made out a case that the appeal should be dismissed for want of prosecution hence, dismiss the application accordingly.

FIRST APPELLANT’S APPLICATION FOR STAY PENDING DETERMINATION OF SUBSTANTIVE APPEAL

40. We have heard arguments for and against the application for stay. The First Appellant brings the application for stay under section 19 of the Supreme Court Act which states, "Unless otherwise ordered by the Supreme Court or a Judge, an appeal, or an application for leave to appeal, to the Supreme Court does not operate as a stay of proceedings."

41. The Supreme Court case of Gary McHardy -v- Prosec Security Services Limited (2000) SC 646 which all counsel referred to in their respective submissions first makes it clear that there are no hard and fast rules for the Court to take into account when considering an application for stay and secondly, it lists ten considerations by which the Court may take into account when considering an application for stay. We set them out by respectfully quoting the relevant part of the judgment in Gary McHardy’s case (supra) below:

"To conclude that the test for a successful application for stay should be whether there are "special" or "exceptional circumstances" or that there is a "good reason" or that it is an "appropriate case" is restrictive. We think what is important to articulate are the factors and circumstances that may be relevant or appropriate in differing cases from time to time.

We distil from these precedent cases the kinds of factors and circumstances that the Court will consider, amongst others, in the exercise of the discretion whether or not to grant a stay order. We start with the principal premise that the judgment creditor is entitled to the benefits of the judgment. The other factors include the following:

Whether leave to appeal is required and whether it has been obtained;

Whether there has been any delay in making the application.

Possible hardship, inconvenience or prejudice to either party.

The nature of the judgment sought to be stayed.

The financial ability of the applicant.

Preliminary assessment about whether the Applicant has an arguable case on the proposed appeal.

Whether on the face of the record of the judgment there may be indicated apparent error of law or procedure.

The overall interest of justice.

Balance of convenience.

Whether damages would be sufficient remedy."

42. In a given case, not all of the above considerations are applicable and in our view, in the present case, not all of the above considerations are applicable.

Whether there are arguable grounds of appeal

43. In our view, not all of the considerations listed in the Gary McHardy’s case (supra) are applicable in this case. But one that is applicable and most important is whether there are arguable grounds of appeal. We are satisfied that there are arguable grounds of appeal.

44. First, Ground 3A(i)-(iii) and Ground 3E of the Notice of Appeal raises an arguable point in relation to the propriety of the mode of proceeding in the National Court. There is no doubt in our minds that it is arguable either way whether the Respondent should have commenced proceeding by way of pleadings in a Writ of Summons under Order 4 rule 2 of the National Court Rules or by Originating Summons under Order 4 rule 3 of the National Court Rules on the basis that much of the facts giving rise to the cause of action are not substantially in dispute.

45. In the Supreme Court judgment of John Momis & Ors -v- Attorney General, NEC & The State [2000] PNGLR 109, Kapi DCJ, held that in a case where a Plaintiff has commenced proceedings by Originating Summons under Order 4, rule 3 of the National Court Rules, it is an abuse of process of the Court for the Plaintiff to seek substantive reliefs by way of an interlocutory application in a Notice of Motion. The matter must proceed to trial for proper determination of the issues. That principle in John Momis’ case (supra) is now promulgated into the Motions Amendments Rules in rule 5(2)(f) and makes it mandatory that a "party shall not and the judge shall not make any order in terms of the substantive relief sought in the originating process."

46. In the present case, the First Appellant’s submission which is supported by the other Appellants is that the Respondent in the National Court sought substantive reliefs by way of a Notice of Motion and was granted these orders. The main order which the National Court granted was for the payment of K7,750,000.00 to the Respondent. On the other hand, the Respondent argues that the National Court granted the orders sought in the Notice of Motion because there were no substantial facts in dispute. It was clear that the Acting Solicitor-General had cleared or approved the payment of K15,500,000.00 of which K7,750,000.00 was a part payment. See Affidavit of Zacharry Gelu sworn and filed on 11th July 2008.

47. In our view, the arguments raised by the parties raise arguable procedural matters concerning the proceedings upon which the decision of the National Court of 03rd July 2008 is based and also the legality of the Acting Solicitor General’s approval or authorization of payment of K15,500,000.00 to the Respondent. They are neither trivial nor frivolous and vexatious.

48. Further, the Appellants raise in Ground 3A(iv) and Ground 3D the issue of whether the orders sought by the Respondent in the National Court were in fact orders in the nature of mandamus and would only be granted by way of an application for judicial review under Order 16 of the National Court Rules. This is also arguable. This would require a proper consideration of provisions of the Claims By and Against the State Act 1996, in particular sections 13 and 14 along with Order 4, rule 3 of the National Court Rules to see whether it was proper for the National Court to grant an order to compel the First, Second and Third Appellants to pay the money to the Respondent in an Originating Summons commenced under Order 4, rule 2 of the National Court Rules as oppose to an application for judicial review under Order 16 of the National Court Rules.

49. We are not determining who is correct on all these points we have discussed above but simply point out that both sides raise arguable points which have to be determined at the substantive hearing.

50. Secondly, in relation to Ground 3B(i) and Ground 3C of the Notice of Appeal, we are of the opinion that these grounds too raise arguable points of procedural fairness and breach of natural justice because they suggest that the First, Second and Third Appellants did not have the opportunity to properly put their case before the National Court for consideration before a decision was made. In saying this, we do note the submission of Mr. Lomai that there was representation for the First, Second and Third Appellants on 03rd July 2008 by Mr. Lais Kandi from the Solicitor-General’s office and he did not oppose the orders sought by the Respondent. But we also note from the transcript of the proceedings which Mr. Lomai has referred us to that it is not clear if Mr. Kandi did have express instructions from the Attorney-General to allow the hearing to go unopposed.

51. We are also of the view that whether Mr. Kandi had ostensible or implied authority to bind the First, Second and Third Appellants or needed to have expressed instructions from the Attorney-General raises another arguable point. See Hilary Singat -v- Commissioner of Police & The State (2008) SC 910.

Whether there is apparent error of law and procedure

52. The next consideration that is applicable in this case is whether on the face of record of the judgment, there maybe indicated an apparent error of law and procedure. In our view, we are satisfied that it is apparent from the above grounds, especially Grounds 3A and 3B, that there may be errors of law and procedure and we need not repeat them here.

Overall interests of justice

53. The other consideration is the overall interest of justice. Where does it lie? There is no dispute that Respondent’s claim in the National Court is for K15,500,000.00. In our view, this is a substantial amount of money claimed against the Third Appellant. It is also public funds. That means, the First, Second and Third Appellants have an obligation to ensure that the people of Papua New Guinea are not unfairly deprived of the money, especially when the amount is substantial. If there is a question raised as to the propriety of the claim of such a substantial amount of money, then, it is in the interest of justice that the question be resolved properly.

54. It is apparent to us that one of the reasons for the Fourth Appellant to join in the appeal is because, according to the Chief Commissioner of the Fourth Appellant in paragraphs 6 and 12 of his Affidavit sworn and filed on 11th July 2008, the Fourth Appellant is "duty bound to ascertain whether, in entering into the Deed of Settlement, there has been full compliance with the checks and balances for the claims against the State as prescribed by" the various legislations and that the Fourth Appellant would form its own view as to the propriety or validity of the Respondent’s claim under its Terms of Reference.

55. On the other hand, there is the interest of the Respondent which we must also take into account and we do so here. There is evidence before us by the Respondent in paragraph 2 and Annexure "PY1" of his Affidavit sworn on 21st August 2008 and filed on 22nd August 2008 that he has written out four cheques to various churches in Madang and other debtors and these cheques have been dishonoured because of the stop order issued by the First, Second and Third Appellants. We are also aware that the Respondent has been deprived to access the money to meet his financial obligations as well as for his own use and we must balance all of them with the interest of the Appellants. In the circumstances, we are of the opinion that the interests of justice require that, that there be a stay of the National Court proceedings.

Balance of convenience

56. This leads us to also hold the view that the balance of convenience favours the Appellants at this point in time because if the Court does not intervene now and that the orders of the National Court were to be enforced against the Appellants, they will be obliged to release or pay K7,750,000.00 to the Respondent. In the event that the appeal, if successful, the funds would have been dissipated. Thus, in our view, to maintain the status quo, it is appropriate that a stay be granted.

Possible hardship, inconvenience and prejudice

57. The other consideration that is applicable in this case is the possible hardship, inconvenience or prejudice to either party. As we have said above in respect to the balance of convenience, we are of the view that whilst there is evidence from the Respondent that he has been inconvenienced and prejudiced by the actions of the First, Second and Third Appellants to stop payment of the K7,750,000.00 to him, the Third Appellant too stands to lose here given the fact that the amount of money involved is quite substantial. Thus, we must find in favour of the Appellants on this ground.

Damages as sufficient remedy

58. As to the question of whether damages would be sufficient remedy for the Appellants, we are of the view that it is not. We emphasize that here is a claim for K15,500,000.00. That is a substantial amount of money. The Appellants have disputed the Respondent’s claim to it. Surely if the money is released or paid to the Respondent now and if the Appellants succeed in the appeal, the question is will the Respondent return it? That is the big question which remains to be answered.

59. But for now, we are not persuaded by the Respondent that damages would be an adequate remedy for the Appellants rather than an order for stay as we have not heard any submission from Mr. Lomai on this point. In any case, we believe that given the substantial amount of money involved in the litigation between the parties, it is reasonable to say that the chances for the Appellants to recover it in the event of a successful appeal is minimal. Therefore, the chances of a successful action for damages against the Respondent would be extremely remote.

60. Finally, as to the financial ability to meet the claim of the Respondent or the order for payment of K15,500,000.00, we are satisfied that the Third Appellant has the ability to do so because of the fact that it is the State and there can be no doubt as to its financial ability once the question of propriety of the Respondent’s claim is resolved.

CONCLUSION

61. We are not satisfied that the Respondent has made out a case for the appeal to be dismissed for want of prosecution or in the alternative for lack of or no proper instructions from the Attorney-General to institute the appeal. On the other hand, we are satisfied that the Appellants have made out a case for a stay of the National Court proceedings and decision of 03rd July 2008. Accordingly, we dismiss the Respondent’s Notice of Application filed on 12th March 2008 and grant the First Appellant’s application for stay pursuant to the Notice of Application filed on 08th July 2008.

ORDERS

62. The formal orders of the Court are:

1. The Respondent’s application to dismiss the appeal for want of prosecution is dismissed.

2. The Respondent’s application to dismiss the appeal for lack of or no proper instructions from the Attorney General to file appeal is dismissed.

3. The interim order for stay granted on 09th July 2008 and extended until today is further extended, to stay the National Court decision of 03rd July 2008 and proceeding, OS No 371 of 2008 until the determination of the substantive appeal.

4. Costs of the applications shall be in the cause of the appeal.

5. Time for entry of these Orders shall be abridged to the date of settlement by the Registrar which shall take place forthwith.

_____________________________________________

Makap Lawyers: Lawyers for the 1st Appellant
Kubak & Co Lawyers: Lawyers for the 2nd & 3rd Appellants
Kassman Lawyers: Lawyers for the 4th Appellant
Lomai & Lomai Attorneys: Lawyers for the Respondent