Yer, Secretary, Department of Finance v Yama [2009] PGSC 28; SC996 (30 October 2009)

SC996

PAPUA NEW GUINEA
IN THE SUPREME COURT OF JUSTICE

SCA NO 53 OF 2008

GABRIEL YER, SECRETARY, DEPARTMENT OF FINANCE
First Appellant

LEONARD LOUMA, ACTING CHIEF OF STAFF, DEPARTMENT OF PRIME MINISTER
Second Appellant

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Third Appellant

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

V

PETER YAMA
Respondent

Waigani: Sakora J, Mogish J, Cannings J
2009: 4 September, 30 October

PRACTICE AND PROCEDURE – mode of commencement of proceedings – whether proceedings regarding enforcement of deed of release must be commenced by writ of summons or originating summons – whether motion seeking order in nature of mandamus must be brought under Order 16 of the National Court Rules.

PRACTICE AND PROCEDURE – requirements for service of notice of motion on parties against whom interlocutory orders are sought.

INJUNCTIONS – duty of National Court to set out considerations taken into account in deciding whether to grant injunction.

CLAIMS BY AND AGAINST THE STATE ACT – procedures for enforcement of judgments against the State.

PRACTICE AND PROCEDURE – circumstances in which a claim for substantive relief in interlocutory proceedings is an abuse of process.

The respondent commenced proceedings in the National Court by originating summons seeking an order that the Secretary for Finance comply with a deed of settlement between him and the State and pay him K15.5 million. The day after he filed the originating summons he sought and obtained by notice of motion from the National Court an order that the Secretary release and clear a cheque for K7.75 million that had earlier been given to him in part-payment of the claim and that all defendants were restrained from interfering and/or dealing with the release and clearance of the cheque for K7.75 million. The Secretary and other parties including the State appealed against that order on five grounds: (1) the proceedings were improperly commenced by originating summons; (2) the defendants were given insufficient notice of the motion; (3) the primary Judge failed to apply the principles about granting injunctions before making the order; (4) the provisions of the Claims By and Against the State Act regarding enforcement of judgments against the State were breached; and (5) the rules about not granting substantive relief by notice of motion were breached.

Held:

(1) The proceedings were not improperly commenced by originating summons.

(2) The Secretary, being a party against whom specific orders were sought, was entitled to three days notice of the motion; and the failure to give such notice could not be cured by a State lawyer saying that he appeared for the Secretary when clearly no proper opportunity had been given to him to consider the matter and give proper instructions. The primary Judge erred by not ensuring that the Secretary was given sufficient notice.

(3) The order of the National Court was in the nature of a permanent injunction and the primary Judge erred by not stating and applying the principles that must be considered when deciding whether to make such an order.

(4) No provisions of the Claims By and Against the State Act were breached and there was no error of law by the primary Judge in that regard.

(5) The relief sought by the notice of motion was substantive relief and it was contrary to the National Court Rules for it to be sought in that manner; and the primary Judge erred by failing to dismiss the motion for that reason.

(6) Three of the five grounds of appeal were upheld. The appeal was allowed, the order of the National Court quashed and the matter remitted to the National Court.

Cases cited

The following cases are cited in the judgment:

Avia Aihi v The State (No 1) [1981] PNGLR 81
Chief Collector of Taxes v Bougainville Copper Ltd (2007) SC853
Drew v Towers Investments [1973] PNGLR 450
Frederick Martins Punangi v Sinai Brown, Minister for Public Service (2004) N2661
Gene v Hamidian-Rad [1999] PNGLR 444
Gobe Hongu Limited v National Executive Council (1999) N1920
Hilary Singat v Commissioner of Police (2008) SC910
John Momis v Attorney-General [2000] PNGLR 109
Malewo v Faulkner & Ok Tedi Mining Co Ltd (2009) SC960
Manum and Mano v Dage (2003) N2435
Mauga Logging Company Ltd v South Pacific Oil Palm Pty Ltd [1977] PNGLR 80
Mision Asiki v Manasupe Zurenuoc (2005) SC797
NCDC v Yama Security Services Ltd (2005) SC835
NCDC v Yama Security Services Pty Ltd (2003) SC707
Pansat Communications Pty Ltd v Vele and The State (1999) SC604
Paul Paraka v Eastern Highlands Provincial Government (2005) SC809
Polem Enterprise Ltd v Attorney-General (2008) SC911
Public Prosecutor v Nahau Rooney (No 2) [1979] PNGLR 448
SCR No 2 of 1981; Re Section 19(1)(f) Criminal Code [1982] PNGLR 150
Sealark Shipping Pty Ltd v The Secretary for Treasury (1998) N1732
Simon Mali v The State (2002) SC690
Supreme Court Reference No 3 of 1984; Ex Parte Rowan Sidney Callick and Joe Koroma [1985] PNGLR 67
Telikom PNG Ltd v ICCC & Digicel (PNG) Ltd (2008) SC906
The State v Manorburn Earthmoving Ltd (2003) SC716
Uma More v UPNG [1985] PNGLR 41
Vailala Purari Investment Ltd v Papua New Guinea Forest Authority (2004) N2594
Wagambie v Lokinap [1991] PNGLR 145
Yer & Others v Yama (2009) SC990

APPEAL

This was an appeal against an order of the National Court that the Secretary for Finance release and clear a cheque intended as part-payment of public money due under a deed of settlement between a private citizen and the State.

Counsel

L N Makap, for the first appellant
N B Kubak, for the second & third appellants
S Kassman, for the fourth appellant
P B Lomai, for the respondent

30 October, 2009

1. BY THE COURT: This is an appeal against an order of the National Court (Paliau AJ) that required the Secretary for Finance, Mr Gabriel Yer, to release and clear a cheque for K7.75 million in public money that had been drawn and given to the respondent, Mr Peter Yama. The Secretary had put a stop order on the cheque and Mr Yama sought the court order to get the Secretary to release and clear it.

2. The Secretary and three other parties are appealing against the order on five grounds. Before we deal with them it is necessary to explain how the cheque for K7.75 million came to be drawn in Mr Yama’s name and the circumstances in which the order was made.

THE DEED OF SETTLEMENT AND THE CHEQUE FOR K7.75 MILLION

3. The cheque was processed by the Department of Finance and given to Mr Yama in June 2008. It was part-payment of money he says was due to him under a deed of settlement between him and the State signed in November 2002. The deed related to an out-of-court settlement of National Court proceedings WS No 1315 of 2002 Mr Yama commenced against the State over land in Madang town. Mr Yama was granted a State Lease over the land in 1988 but claimed that traditional landowners prevented him developing the land and that the State was responsible for what happened. He sought damages of K38.69 million and settled the matter for K15.5 million. The then Solicitor-General, Mr Zachary Gelu, signed the deed on behalf of the State.

4. Nothing was paid, however, and in May 2008 Mr Yama’s lawyers wrote to the Secretary requesting payment of the K15.5 million immediately. Then the Acting Solicitor-General, Mr Neville Devete, wrote to the Secretary, also in May 2008, recommending payment.

5. The cheque for K7.75 million (half the amount of the deed of settlement) was drawn on 24 June 2008, apparently on the directions of the Acting Secretary for Finance, Mrs Doriga Henry, and given to Mr Yama. On the same day, however, the Acting Secretary put a stop order on the cheque. Then the stop order was rescinded on 26 June. Mr Yama deposited the cheque into his personal account at the ANZ Bank on 27 June but the Secretary, Mr Yer, who was overseas at the time, intervened on the same day by reinstating the stop order.

NATIONAL COURT PROCEEDINGS

6. Five days later, on 2 July 2008, Mr Yama commenced proceedings in the National Court, as plaintiff, by originating summons, OS No 371 of 2008, seeking an order that the Secretary comply with the November 2002 deed of settlement and pay him K15.5 million. On the same day he filed a notice of motion seeking an order by way of mandamus to compel the Secretary to release and clear the cheque for K7.75 million within 24 hours.

7. The originating summons and notice of motion were served on the Secretary’s office (but not on him personally) and also on the Office of Solicitor-General on the afternoon of 2 July 2008. The Secretary is the first defendant in those proceedings, the Prime Minister’s Chief of Staff, Mr Leonard Louma, second defendant, and the State, third defendant. Those parties have become the first, second and third appellants in the appeal and been joined by Chief Commissioner Maurice Sheehan of the Commission of Inquiry into the Department of Finance as fourth appellant.

8. An amended notice of motion (amended by asking that the cheque be released and cleared "forthwith" rather than "within 24 hours") came before Paliau AJ at 10.25 am the next day, 3 July 2008. Mr P B Lomai of Lomai & Lomai Attorneys appeared for Mr Yama. Mr L Kandi of the Office of Solicitor-General entered an appearance on behalf of the Secretary for Finance and the State. There was no appearance by Mr Louma (as neither he nor his office was served with the originating summons or notice of motion).

9. Mr Lomai made a brief submission in support of the motion and relied on a supporting affidavit by Mr Yama that annexed a bundle of documents including the deed of settlement and a clearance letter of 29 May 2008 from the Acting Solicitor-General to the Secretary for Finance.

10. Mr Kandi did not oppose the motion. He explained that the Office of Solicitor-General had identified the matter as one that needed to be settled in light of the decision of the Supreme Court in Polem Enterprise Ltd v Attorney-General (2008) SC911 (which held that deeds of settlement entered into by the Solicitor-General before 15 August 2003 could be enforced even where the Solicitor-General acted without the Attorney-General’s instructions). It had passed the Solicitor-General’s due diligence tests and been cleared for payment. Mr Kandi added, however, that he had no instructions as to why the stop order had been placed on the cheque for K7.75 million. He suggested that the Court could either summon the Secretary to explain the stop order or make the order in the nature of mandamus that the plaintiff was seeking. He left it to the discretion of the Court to decide what to do.

11. His Honour gave an immediate ruling on the motion, stating:

Thank you counsel. I have considered the submissions by both counsel and I am of the view that as far as the lawyers for the State are concerned the matter has been cleared and they are the lawyers that should be listened to by any departments for that matter. There is no problem in relation to that since the cheques have been issued anyway. And for reasons unbeknown to the parties the cheques have been held again and not decided to be cleared and so on that basis I grant the orders as sought in the amended notice of motion ...

12. The order was entered later that day, 3 July 2008, stating:

1. The requirement for service of documents on the second defendant is dispensed with for the purposes of this application.

2. The first defendant is to release and clear the cheque No 880355 drawn in the name of the plaintiff in the sum of K7.75 million held with the Bank of Papua New Guinea forthwith.

3. All the defendants are permanently restrained from interfering and/or dealing with the release and clearance of the cheque No 880355 forthwith.

13. The Supreme Court granted an interim stay of that order on 9 July 2008 and on 3 July 2009 extended the interim stay until determination of the appeal (Yer & Others v Yama (2009) SC990).

GROUNDS OF APPEAL

14. The appellants rely on five grounds of appeal to argue that the order of 3 July 2008 should be quashed and the whole of the National Court proceedings OS No 371 of 2008 dismissed:

1. the proceedings were improperly commenced by originating summons and the order for part-payment should have been preceded by an application for leave to seek judicial review under Order 16 of the National Court Rules;

2. the Secretary was given insufficient notice of the motion;

3. the primary Judge failed to apply the principles about granting injunctions before making the order;

4. the provisions of the Claims By and Against the State Act regarding enforcement of judgments against the State were breached; and

5. the rules about not granting substantive relief by notice of motion were breached.

GROUND 1: IMPROPER MODE OF COMMENCEMENT

15. The appellants argue that the National Court proceedings commenced by Mr Yama on 2 July 2008 used an improper originating process. An Order 4 originating summons was used when what should have been used was an Order 4 writ of summons or an Order 16 originating summons. They argue that the primary Judge erred by making the order of 3 July 2008 despite the improper mode of commencement of the proceedings.

Writ of summons

16. The argument that a writ of summons should have been used is based on the proposition that when parties to court proceedings reach an out of court settlement, the settlement gives rise to a new agreement between them and constitutes a fresh cause of action superseding the cause of action sued on in the proceedings that have been settled (Vailala Purari Investment Ltd v Papua New Guinea Forest Authority (2004) N2594). Fresh proceedings must be commenced and the best way of presenting the issues is for the existence of the deed and the alleged breach of the deed to be pleaded in a statement of claim endorsed on a writ of summons. The appellants argue that that is what the Supreme Court held in NCDC v Yama Security Services Pty Ltd (2003) SC707 and that is the process that Mr Yama was obliged to use in this case.

17. The appellants are correct in saying that the Court in that case indicated that a writ of summons was the preferred mode of commencement. But the Court fell short of saying that it was mandatory. It was not held that failure to use a writ of summons will mean that the proceedings are defective or should be dismissed. It was acknowledged that a claim made for breach of a deed of settlement or some other form of compromise of earlier court proceedings is not one of the types of proceedings that under Order 4, Rule 2 of the National Court Rules must be commenced by writ of summons. As Mr Lomai pointed out the plaintiff may under Order 4, Rule 3 choose whether to commence the proceedings by writ of summons or originating summons. The Supreme Court recently pointed out in Malewo v Faulkner & Ok Tedi Mining Co Ltd (2009) SC960 that plaintiffs have a fairly wide discretion when choosing how to commence proceedings.

18. In this case Mr Yama chose an originating summons. There was nothing wrong with that. Therefore no error was committed by the learned primary Judge in not refusing the motion for that reason.

Order 16 originating summons

19. The appellants’ alternative argument is that Mr Yama should have filed an originating summons under Order 16 as he was seeking orders in the nature of mandamus against the Secretary for Finance. The appellants refer to the orders sought in the originating summons, which include an order that the Secretary comply with the deed of settlement, and in the notice of motion heard on 3 July 2008, which include "an order by way of mandamus" to compel the Secretary to release the cheque for K7.75 million. The appellants argue that Mr Yama was wanting the National Court to judicially review the actions of the Secretary and seeking orders against him in the nature of the prerogative writ of mandamus. They refer to Order 16, Rule 1(1) of the National Court Rules, which states:

An application for an order in the nature of mandamus, prohibition, certiorari or quo warranto shall be made by way of an application for judicial review in accordance with this Order.

20. They argue that to comply with this rule an originating summons should have been filed that was confined to seeking leave for judicial review; and only after leave was granted would it have been proper for Mr Yama to seek orders in the nature of mandamus against the Secretary. They rely on Gene v Hamidian-Rad [1999] PNGLR 444 where the Supreme Court held that when the plaintiff, Dr Hamidian-Rad, went to the National Court seeking to nullify the decision of the Commissioner General of Internal Revenue to issue a direction to Air Niugini under the Income Tax Act not to carry him on any flight leaving PNG, he was applying for an order in the nature of certiorari (an order quashing the decision). He should have approached the National Court under Order 16 by filing an originating summons seeking leave to apply for judicial review. He did not do that. He avoided the leave requirements by filing an originating summons under Order 4. The Commissioner General had objected to the procedure in the National Court but the objection was rejected by the primary Judge and an order was made nullifying the Commissioner General’s decision and allowing Dr Hamidian-Rad to leave the country. On appeal, the Supreme Court held that the primary Judge erred by rejecting the objection.

21. In the present case no objection was taken in the National Court to Mr Yama’s failure to approach the Court under Order 16, so that makes this case immediately distinguishable from Hamidian-Rad.

22. There is also another important difference: the orders sought by Mr Yama were not actually orders in the nature of mandamus. Though the notice of motion used the word "mandamus" – by seeking "an order by way of mandamus" – it is necessary, when determining what mode of commencement is necessary, to look at the substance as well as the wording of the orders being sought.

23. If in substance the plaintiff is not seeking one of the prerogative writs such as mandamus it will not be necessary to use an Order 16 originating summons. If all that the plaintiff is seeking is a declaration or an injunction than even where the defendant is a governmental body or public authority an Order 16 originating summons will not be necessary and the plaintiff will not have to obtain leave for judicial review. An Order 4 originating summons will be sufficient (Telikom PNG Ltd v ICCC & Digicel (PNG) Ltd (2008) SC906). Similarly, if in substance the plaintiff is seeking orders to enforce private law rights under a contract rather than rights or obligations arising under public law, an Order 16 originating summons will not be necessary and the plaintiff will not have to obtain leave for judicial review (Frederick Martins Punangi v Sinai Brown, Minister for Public Service (2004) N2661; Mision Asiki v Manasupe Zurenuoc (2005) SC797).

24. Here, Mr Yama was seeking to enforce rights arising under a deed of settlement, which is tantamount to a contract. These were private law rights. He was not seeking an order to compel the Secretary for Finance to comply with a duty arising under public law (such as a provision of an Act of the Parliament) – that being the essence of the writ of mandamus. So even though the words "an order by way of mandamus" were used in the notice of motion, an order by way of mandamus was not in substance being sought.

25. It was not necessary for an Order 16 originating summons to be used or for leave for judicial review to be sought or obtained. Therefore no error was committed by the learned primary Judge in not refusing the motion for that reason.

Conclusion re ground 1

26. His Honour did not err in any of the respects contended for by the appellants. Ground 1 is dismissed.

GROUND 2: INSUFFICIENT NOTICE OF THE PROCEEDINGS

Appellants’ argument

27. The appellants argue that the three parties who were named as defendants in the National Court (the Secretary, Mr Louma and the State) were given insufficient notice of the hearing of the motion on 3 July 2008. The Secretary’s office and the State were served on the afternoon of 2 July 2008 and Mr Louma was not served at all. This was argued to be in breach of:

- the National Court Rules, Order 4, Rule 42, which requires that unless the Court otherwise orders, a notice of motion must be served at least three days before the hearing of the motion; and

- the National Court Rules, Order 4, Rule 49-5 [Rule 5 of the Motions (Amendment) Rules 2005], which lays down special rules about urgent ex parte applications; and

- the Constitution, Section 59, which provides that the minimum requirement of natural justice is the duty to act fairly and in principle to be seen to act fairly.

Respondent’s argument

28. Mr Lomai, for Mr Yama, counters those arguments by pointing to the presence in court on the morning of 3 July 2008 of Mr Kandi of the Office of Solicitor-General who informed the Court that he appeared for the first defendant (the Secretary for Finance) and the third defendant (the State). Mr Kandi did not contend that his clients had been short-served so those parties cannot now claim that they were short-served or denied natural justice. As for the second defendant, Mr Louma, no orders were sought against him, so it was unnecessary for him to be served, Mr Lomai submitted.

The State

29. We will deal first with the issue of the third defendant, the State, not being given sufficient notice. We agree with Mr Lomai’s submission that Mr Kandi, being a lawyer in the Office of Solicitor-General, properly represented the State and was in a position to waive compliance with the requirements of service on the State, which is what, tacitly, he did by not taking any issue with service and not opposing the motion.

30. No error of law was made by the learned primary Judge in that regard.

Mr Louma

31. Because he was named as second defendant we consider that Mr Louma should have been served with a copy of the notice of motion. It is not correct to say that no orders were sought against him.

32. One of the orders sought was that all defendants be permanently restrained from interfering and/or dealing with the cheque for K7.75 million. It was suggested during the hearing of this appeal that one of the reasons the Secretary placed a stop order on the cheque was that Mr Louma conveyed to his office a direction to that effect by the Prime Minister. We are not making any findings on the propriety or legality of such a direction but its existence is sufficient to show that Mr Louma had an official interest in the proceedings. His capacity to take steps in relation to the cheque would be affected by the order being sought.

33. Mr Louma was not represented in Court on 3 July 2008 and no good reasons were advanced for dispensing with the requirements of service regarding him. An error of law was made by the learned primary Judge in that regard.

The Secretary for Finance

34. As for the first defendant, the Secretary for Finance, special considerations arise. He is the Departmental Head of the Department with responsibility for financial management, the Department of Finance. He has under Section 4(1) of the Public Finances (Management) Act 1995 control and direction of all matters relating to the management of the financial affairs of the State, subject to specific directions given to him by the Minister for Finance. He is a very important public official in the National Government. He is a leader subject to the Leadership Code under Section 26(1)(f) of the Constitution. He has an onerous array of powers, functions, duties and responsibilities to perform regarding the Public Accounts of Papua New Guinea, including the release of public money to discharge the responsibilities of the State under deeds of settlement it has entered into. In performing those powers, functions, duties and responsibilities, he is not subject to the direction or control of the Solicitor-General.

35. In this case the Secretary for Finance was named as a separate party and specific orders were sought against him in the notice of motion that was heard on 3 July 2008. He had a right to at least three days notice of the hearing of the motion so that he could give considered instructions to his lawyer on whether to oppose the motion. He was denied those rights by the hasty manner in which the originating summons and notice of motion were served on his office on the afternoon of 2 July and the motion was heard on the morning of 3 July 2008.

36. Though Mr Kandi said he appeared for the Secretary, thus leading to a rebuttable presumption that that was indeed the case (Hilary Singat v Commissioner of Police (2008) SC910) we consider that his Honour should have inquired into this further. His Honour should have ensured that, in fact, Mr Kandi did have instructions from the Secretary. The transcript of the proceedings reveals that, after explaining that the Office of Solicitor-General had cleared the payment to Mr Yama under the deed of settlement, Mr Kandi told his Honour:

And also at the Finance Department this is a matter that has been paid but for some reason a stop has been put and which stop had initially been withdrawn to be only superseded by a later – I have spoken to the Secretary as to the bases and reasons and he said he would do a statement for us so that we can reduce that into an affidavit form but he was not able to do that prior to me coming into court.

37. 0Mr Kandi therefore gave ample indication to the Court that in fact he did not have instructions from the Secretary for Finance. If his Honour had addressed his mind to the issue the only conclusion that could reasonably have been drawn was that the Secretary had been given insufficient notice of the hearing of the motion and it was inappropriate to waive the requirements of service.

38. The discretion of a Judge hearing a motion to dispense with the requirements of service must be exercised carefully and judiciously, taking into account all relevant considerations including whether the lawyer saying that he appears for a public official actually has instructions to do so. This is especially the case where the disbursement of a large amount of public money – K7.75 million in this case – is involved. The presiding Judge must exercise considerable caution and ensure that public officials with a role in the control of management of the Public Accounts are afforded a reasonable opportunity to be heard, especially if they are named as a party to the proceedings and the Court is being asked to make an order against them or if it appears on the evidence before the Court that it is likely that the public official will oppose a claim for disbursement of public money.

39. Here, it was obvious that the Secretary for Finance had concerns about the proposed payment of K7.75 million. He explained them in an affidavit filed in the Supreme Court on 8 August 2008:

- he had only recently become aware of the deed of settlement for K15.5 million in favour of Mr Yama;

- he instructed his officers not to effect any payments until he sought further clarification from the Attorney-General and the Solicitor-General;

- despite his instructions, the part-payment of K7.75 million was facilitated on 23-24 June 2008 by the Acting Secretary for Finance while he was in Singapore on official duty travel;

- there was no endorsement of the payment by the National Executive Council contrary to NEC Decision No 21 of 2006 that all deeds of settlement in excess of K1 million must be approved by the NEC; and

- there was no approval of the payment by the Minister for Finance under Section 61 of the Public Finances (Management) Act 1995, which is a necessary requirement in light of the decision of the Supreme Court in NCDC v Yama Security Services Limited (2005) SC835.

40. It is not necessary for us to decide whether the above matters amounted to good reasons for opposing the order for payment of K7.75 million or whether they were sufficient grounds on which the National Court could have refused to make the order. It is sufficient to say that they appear to be valid concerns. They are the sorts of matters that the Secretary for Finance is expected, indeed duty-bound, to bring to the Court’s attention when it is deciding whether to make an order requiring him to meet a claim for a substantial amount of public money. The Secretary was deprived of his right and the capacity to meet his obligation to bring these matters to the Court’s attention by the decision of the learned primary Judge to dispense with the requirements of service.

Conclusion re ground 2

41. The learned primary Judge erred in law by dispensing with the requirements of service regarding Mr Louma and the Secretary for Finance, contrary to the National Court Rules. They were denied their rights to be heard. Ground 2 is upheld.

GROUND 3: FAILURE TO APPLY PRINCIPLES ABOUT GRANTING INJUNCTIONS

42. This ground of appeal focuses on the third order of 3 July 2008, which permanently restrained all defendants from interfering and/or dealing with the release and clearance of the cheque for K7.75 million. The appellants argue that this was an injunction and that the primary Judge erred in law in three respects by granting it:

- his Honour did not set out the legal basis for the injunction;

- it was not a remedy sought in the originating summons; and

- no undertaking as to damages was given.

No legal basis

43. Mr Lomai submitted that contrary to what the appellants argued, there was a clear legal basis for the injunction in Section 155(4) of the Constitution, which says that the National Court has an inherent power to make in circumstances that seem to it proper such orders as are necessary to do justice in the circumstances of the case. He referred to one of the early post-Independence cases on injunctions, Mauga Logging Company Ltd v South Pacific Oil Palm [1977] PNGLR 80, which confirmed that Section 155(4) gives the National Court a broader power to grant injunctions than that available under the common law. He submitted that in this case the National Court had in its absolute discretion satisfied itself that it was necessary to make the orders sought by Mr Yama to do justice in the circumstances of the case. There were no other legal impediments to its exercise of discretion. The discretion had been exercised lawfully and there was nothing allowing the Supreme Court to disturb the National Court’s orders, Mr Lomai submitted.

44. With respect, this is a simplistic and flawed interpretation of Section 155(4). It disregards a long line of authority which says that Section 155(4) does not confer an absolute discretion on the National Court to make whatever orders it thinks necessary to do justice. Section 155(4) does not confer primary rights. It does not allow the National Court to disregard existing legal principles that must be applied when deciding whether to make an order, including an injunction (Avia Aihi v The State (No 1) [1981] PNGLR 81, SCR No 2 of 1981; Re Section 19(1)(f) Criminal Code [1982] PNGLR 150, Uma More v UPNG [1985] PNGLR 41).

45. There are settled principles that must be taken into account by the National Court when it is considering whether to grant an injunction. If the Court grants the injunction the Court’s records must – unless the injunction is granted by consent – demonstrate either through a written judgment or by reasons expressed orally by the presiding Judge that the Court has addressed its mind to these principles and is satisfied that their application makes it appropriate to grant the injunction that has been sought (Paul Paraka v Eastern Highlands Provincial Government (2005) SC809).

46. In this case, though the State lawyer put up little resistance to the order, it was not a consent order that was sought or obtained (Drew v Towers Investments [1973] PNGLR 450; Simon Mali v The State (2002) SC690). What was sought was not an interim order but a permanent injunction preventing all defendants from interfering and/or dealing with the release and clearance of the cheque for K7.75 million. The need for the presiding Judge to address his mind to and be satisfied of the relevant considerations and to convey through his reasons for decision that he was so satisfied was therefore acute.

47. None of those things happened, however. Neither Mr Lomai nor Mr Kandi addressed the Court on those issues and his Honour did not mention them either. The permanent injunction was therefore granted without a clear legal basis.

Injunction not sought in the originating summons

48. The appellants argue that his Honour also erred by granting the permanent injunction when it was not sought in the originating summons.

49. We uphold this argument. Though the claim for the permanent injunction was in the notice of motion it was not in the originating summons. The general rule is that a party cannot, without the leave of the Court, seek an injunction through a motion if the injunction has not been included in the relief sought in the originating process (Paul Paraka v Eastern Highlands Provincial Government (2005) SC809; Gobe Hongu Limited v National Executive Council (1999) N1920). Neither Mr Lomai nor Mr Kandi addressed the Court on this issue and his Honour did not mention it either. The permanent injunction was therefore granted in error in that regard.

No undertaking as to damages

50. The appellants argue that his Honour also erred by granting the permanent injunction when the party applying for it had not given an undertaking as to damages.

51. We also uphold this argument. As a general rule it is a prerequisite to the granting of an interim injunction that the party applying for it has given an undertaking that it will compensate other parties for damage they suffer if it subsequently transpires that the injunction was granted irregularly (Chief Collector of Taxes v Bougainville Copper Ltd (2007) SC853). Though Mr Yama was seeking a permanent injunction, the peculiar circumstances of this case – highlighted by seeking a permanent injunction through a notice of motion – required that an undertaking as to damages be given. Though Mr Kandi took no issue with the absence of an undertaking we consider that, with respect, the learned primary Judge should have detected this flaw in the motion. By proceeding to grant the injunction without addressing this issue, his Honour erred in law.

Conclusion re ground 3

52. The permanent injunction that restrained all defendants from interfering and/or dealing with the release and clearance of the cheque for K7.75 million was made without any clear legal basis. It was not an order sought in the originating summons. No undertaking as to damages was given. The injunction was erroneously granted. Ground 3 is upheld.

GROUND 4: BREACH OF CLAIMS BY AND AGAINST THE STATE ACT

53. The appellants argue that his Honour erred when ordering the Secretary for Finance to release and clear the cheque for K7.75 million forthwith as this was contrary to Sections 13(1) and 14(5) of the Claims By and Against the State Act.

54. Section 13(1) (no execution against the State) states:

In any suit, execution or attachment, or process in the nature of execution or attachment, may not be issued against the property or revenue of the State.

55. Section 14(5) (satisfaction of judgment against the State) states:

No action—

(a) for or in the nature of mandamus; or

(b) for contempt of court, or otherwise

lies against the Solicitor-General or the Departmental Head responsible for finance matters in respect of the satisfaction of a judgment under this Act, other than for failure to observe the requirements of Subsection (2), (3) or (4), as the case may be, or unless other exceptional circumstances can be shown to the satisfaction of the court.

56. The argument regarding Section 13(1) is that the originating summons under which motion was brought is a "suit" – a proceeding aimed at determining the State’s liability under the deed of settlement – and that the order for the Secretary to release and clear the cheque for K7.75 million forthwith was a court process "in the nature of execution" against the property of the State. Such an order therefore contravenes Section 13(1).

57. As for Section 14(5) the argument is that the order for the Secretary to release and clear the cheque for K7.75 million forthwith is an order against the Secretary "in the nature of mandamus ... in respect of the satisfaction of a judgment under this Act"; and such an order contravenes Section 14(5)(b).

58. We consider that both arguments are misconceived. Both Sections 13 and 14 are dealing with the procedure to be followed after a judgment has been entered against the State. They prescribe and place limits on the method of enforcement of judgments against the State (Pansat Communications Pty Ltd v Vele and The State (1999) SC604; Wagambie v Lokinap [1991] PNGLR 145; Sealark Shipping Pty Ltd v The Secretary for Treasury (1998) N1732; Manum and Mano v Dage (2003) N2435). Here, neither the originating summons nor the notice of motion was aimed at enforcing a judgment. They were processes aimed at enforcing a deed of settlement.

Conclusion as to ground 4

59. The order of the learned primary Judge involved no breach of the Claims By and Against the State Act. We dismiss ground 4.

GROUND 5: BREACH OF RULES ABOUT GRANTING SUBSTANTIVE RELIEF BY NOTICE OF MOTION

60. The appellants argue that his Honour erred by granting substantive relief in interlocutory proceedings. The principal order sought in the originating summons was an order that the Secretary for Finance complies with the deed of settlement and pay Mr Yama K15.5 million. The principal order sought in the notice of motion and the principal order made on 3 July 2008 was that the Secretary release and clear the cheque for K7.75 million forthwith. This was argued to be in breach of:

- the National Court Rules, Order 4, Rule 49-5(2)(f) [Rule 5(2)(f) of the Motions (Amendment) Rules 2005], which provides that when hearing an urgent ex parte application "the Judge shall not make any order in terms of the substantive relief sought in the originating summons"; and

- the National Court Rules, Order 4, Rule 49-9 [Rule 9 of the Motions (Amendment) Rules 2005], which states that except as otherwise expressly provided by the Rules "motions shall be for relief on interlocutory matters only and not for the substantive relief claimed in the originating process".

61. These Rules are a codification of what has become a rule of practice and procedure in PNG as a result of the National Court decision of Kapi DCJ (as he then was), in John Momis v Attorney-General [2000] PNGLR 109 and the Supreme Court decision in NCDC v Yama Security Services Pty Ltd (2003) SC707.

62. Mr Lomai pointed out that the order for the Secretary for Finance to release and clear the cheque for K7.75 million forthwith only related to half the amount sought in the originating summons and that there were nine other declarations and orders sought in the originating summons that were not sought in the notice of motion or granted by the Court on 3 July 2008.

63. That may be so but we consider that obtaining an order for half of the amount claimed is a substantive order – a very substantive order – the significance of which is not diminished by referring to the number of other incidental remedies that were not granted. The Court must look at the substance of what the plaintiff was seeking: he was seeking an order for payment of K15.5 million and he obtained an order for half of that amount. He obtained substantive relief by notice of motion. We uphold the appellants’ arguments that this contravened the National Court Rules and was an abuse of process.

Conclusion re ground 5

64. The learned primary Judge erred in law by granting substantive relief to the plaintiff in interlocutory proceedings. Ground 5 is upheld.

WHAT ORDERS SHOULD THE SUPREME COURT MAKE?

65. We have upheld three of the five grounds of appeal. We are satisfied that several significant errors of law were made in the course of making the order of 3 July 2008. It follows that the appeal will be allowed and the order quashed.

66. In the notice of appeal the appellants also seek an order that the whole of the National Court proceedings OS No 371 of 2008 be dismissed. We see no justification for making such an order. Our attention has been focussed on the proceedings in the National Court and the order made on 3 July 2008, not on the efficacy of the OS proceedings and not on the question of enforcement of the deed of settlement. We will remit the OS proceedings to the National Court and the parties will be at liberty to take whatever steps are considered appropriate by way of prosecuting, defending or perhaps settling those proceedings.

67. As to costs, as not all grounds of appeal have been upheld and part of the relief sought by the appellants has been refused we consider that they should not be awarded the whole of the costs of the appeal. An award for only half of their costs is appropriate.

COMMENTS

68. Before pronouncing the formal orders of the Court there are some matters on which we wish to comment that were not raised in the hearing of the appeal but may be of assistance to the parties in the resolution of this matter.

69. We note that in various affidavits comments have been made on the effect of the Supreme Court decision in Polem Enterprise Ltd v Attorney-General (2008) SC911. That case concerned the question of whether a deed of settlement entered into on behalf of the State by the Solicitor-General without getting prior instructions from the Attorney-General could be enforced. The Supreme Court said that yes, it could, if the deed was executed prior to 15 August 2003, the date of the Supreme Court decision in The State v Manorburn Earthmoving Ltd (2003) SC716. Manorburn stands for the proposition that by virtue of Section 13 of the Attorney-General Act, the Attorney-General – not the Solicitor-General – has 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. In Manorburn the Supreme Court overturned its previous decision in Simon Mali v The State (2002) SC690.

70. In Polem the Court held that the decision in Manorburn did not have retrospective effect. Hence the deed of settlement in that case, signed by the Solicitor-General on 15 August 2002, could be enforced even though he had no instructions from the Attorney-General. However, it appears to us that the Supreme Court did not say in Polem that because a deed of settlement was executed by the Solicitor-General prior to 15 August 2003 it must be enforced. The question of enforceability will still be subject to considerations such as fraud, mistake or perhaps illegality arising from a failure to comply with Section 61 of the Public (Finances) Management Act.

71. Another question which appears worthy of consideration is whether the final advice to the Secretary for Finance on whether to pay money under a deed of settlement should come from the Attorney-General or the Solicitor-General. It appears to us that that question has not been decided by the Polem Enterprise case.

72. We trust that the matters that have come to light in determination of this appeal demonstrate how important it is for the Executive and Judicial arms of Government to make decisions about the disbursement of large sums of public money in accordance with law on a case-by-case basis in a careful, considered and unrushed manner.

73. Finally, we express our concern that in the period of less than two months since this appeal was heard there have been a number of statements published in the media that concern the subject matter of the appeal. Some of those statements have been reported to be made by persons who are parties to these proceedings. We feel it necessary to warn everyone concerned of the need not to make unnecessary public comments on issues that are before the courts. If such comments are made in a careless or ill-considered way the person making the statement and the media organisation which publishes the statement run a real risk of being in contempt of court. In Public Prosecutor v Nahau Rooney (No 2) [1979] PNGLR 448 the Supreme Court held that conduct will amount to contempt sub judice where it presents a real risk of interference with the due administration of justice; or where it is intended to prejudice the fair hearing of a matter before the court. It was confirmed in Supreme Court Reference No 3 of 1984; Ex Parte Rowan Sidney Callick and Joe Koroma [1985] PNGLR 67 that publication in the media of comments on a matter before the court will be a contempt of the court if it prejudges an issue or is likely to cause public prejudgment of the issue.

74. Lawyers have a duty to advise their clients on these matters. The place for litigating disputes is in the courtroom, not in the pages of the newspapers.

ORDER

(1) The appeal is allowed.

(2) The order of the National Court of 3 July 2008 is quashed.

(3) OS No 371 of 2008 is remitted to the National Court.

(4) The respondent shall pay half of the costs of the appeal to the appellants on a party-party basis, to be taxed, if not agreed.

Judgment accordingly.

_____________________

Makap Lawyers: Lawyers for the First Appellant
Norbert Kubak & Co Lawyers: Lawyers for the Second & Third Appellants
Counsel Assisting, COI: Lawyer for the Fourth Appellant
Lomai & Lomai Attorneys: Lawyers for the Respondent