Kalinoe v Paraka [2010] PGSC 13; SC1024 (30 April 2010)

SC1024

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCM NO 15 0F 2006

JOSHUA KALINOE, CHIEF SECRETARY TO GOVERNMENT
First Appellant

GABRIEL YER, ACTING SECRETARY,
DEPARTMENT OF FINANCE
Second Appellant

SIMON TOSALI, SECRETARY, DEPARTMENT OF TREASURY
Third Appellant

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Fourth Appellant

V

PAUL PARAKA, TRADING AS PAUL PARAKA LAWYERS
Respondent

SCM NO 3 0F 2007

HON BIRE KIMISOPA MP, MINISTER FOR JUSTICE
First Appellant

WINNIE KIAP, SECRETARY, NATIONAL EXECUTIVE COUNCIL
Second Appellant

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Third Appellant

V

PAUL PARAKA, TRADING AS PAUL PARAKA LAWYERS
Respondent

Waigani: Salika DCJ, Lenalia & Cannings JJ
2010: 29, 30 April

SUPREME COURT – jurisdiction – necessity for parties seeking orders from the Supreme Court to properly invoke jurisdiction of the Court

PRACTICE AND PROCEDURE – orders for a stay of proceedings – application for discharge of stay order – need for application to be made without undue delay

PRACTICE AND PROCEDURE – stay of proceedings – Supreme Court Act, Section 19 – whether an applicant for a stay of proceedings needs to give an undertaking as to damages – difference between a stay of proceedings and an injunction.

The respondent to two separate Supreme Court appeals applied for discharge or variation of a stay order granted by single Judges of the Supreme Court in each of those appeals. The effect of the stay order was in each case to put a stay on the National Court orders that were being appealed against, those orders in each case requiring the appellants to pay approximately K6 million to the respondent for legal fees allegedly owed to him by the State. The respondent argued before the Supreme Court (constituted by three Judges) that the stay orders were made in error as in each instance the single Judge of the Supreme Court had failed to insist on the appellants providing an undertaking as to damages; a stay order being the equivalent of an injunction and it being a part of the law of PNG that an undertaking as to damages is an essential prerequisite to the granting of an injunction.

Held:

(1) Any party seeking any order from the Supreme Court must clearly specify in its application or any other originating process the basis on which it seeks to invoke the jurisdiction of the Supreme Court.

(2) An applicant for an order to discharge or vary an existing order of the Supreme Court must make its application within a reasonable time after the order it seeks to have discharged or varied was made; and if there appears to have been an inordinate delay in making the application a very good explanation must be available to warrant the Court entertaining the application.

(3) An injunction and a stay order are conceptually different court orders; and whereas an undertaking as to damages is in most cases an essential prerequisite to the granting of an injunction, it is not so for the granting of a stay order.

(4) In this case, the respondent's application for discharge or variation was vague and confusing and it followed that the Supreme Court's jurisdiction was not properly invoked. The applications were inherently defective and the Court refused leave to remedy the defect. For this reason alone the applications were refused.

(5) Further, the applications were not made until more than two years after each stay order was made and there was no reasonable explanation for the undue delay. For this reason also the applications were refused.

(6) As to the merits of the applications, the respondent failed to persuade the Court that it should disturb the well-settled distinction between an injunction and a stay of proceedings. The Judges who granted the stay orders made no errors by not insisting on an undertaking as to damages.

(7) Both applications were accordingly dismissed, with costs.

Cases cited

The following cases are cited in the judgment:

Gary McHardy v Prosec Security and Communications Ltd, trading as Protect Security [2000] PNGLR 279
Isaac Lupari v Sir Michael Somare MP (2008) SC951
Peter Makeng v Timbers (PNG) Limited (2008) N3317
Vincent Kaupa v Simon Poraituk (2008) SC955

APPLICATIONS

These were two applications to set aside or vary stay orders, in separate appeal proceedings, that had been made by single Judges of the Supreme Court.

Counsel

SCM No 15 of 2006

P Mawa, for the first, second and fourth appellants
G Poole, for the third appellant
R Inua & P Othas, for the respondent

SCM No 3 of 2007

P Mawa, for the first, second and third appellants
R Inua & P Othas, for the respondent

30 April, 2010

1. BY THE COURT: We are hearing two separate applications in two separate Supreme Court proceedings, known as SCM (Supreme Court Motion) No 15 of 2006 and SCM No 3 of 2007. The applications are similar and the Supreme Court proceedings – and also the National Court proceedings – to which they relate are similar. So we are hearing the applications together.

2. In each case the application is by the respondent to a Supreme Court appeal: Paul Paraka, trading as Paul Paraka Lawyers. In each case the appellants are similar in that they are all senior public officials or the State. In SCM No 15 of 2006 the lead appellant is the then Chief Secretary to Government, Mr Joshua Kalinoe. In SCM No 3 of 2007 the lead appellant is the then Minister for Justice, Hon Bire Kimisopa MP.

3. In each case the appellants are appealing against orders of the National Court constituted by Hinchliffe J in late 2006 and early 2007 during a period when there was an ongoing dispute between the respondent and various public officials, including the appellants in both cases, concerning the briefing out of legal work of the State to private law firms. In particular there was disagreement about the amount of money owed by the State to the respondent's firm, Paul Paraka Lawyers, for legal work it had provided to the State.

OS NO 829 OF 2006 AND SCM NO 15 OF 2006

4. In the National Court proceedings OS No 829 of 2006 Hinchliffe J granted leave on 17 November 2006 to the respondent, Mr Paraka, to apply for judicial review of the decision of the Chief Secretary to Government to cease payment of all legal fees to Paul Paraka Lawyers. On the same day, 17 November 2006, his Honour ordered that the State pay K6.499 million (approx) to Paul Paraka Lawyers by 1.30 pm that day; and on 22 November 2006 made a further order in regard to that payment (as it had not been paid by the time set by the Court).

5. The appellants, led by the Chief Secretary to Government, immediately appealed against the orders of 17 and 22 November 2006 and on 22 November 2006 Kapi CJ, sitting as a single Judge of the Supreme Court, ordered a stay of the National Court orders of 17 November 2006. The order of Kapi CJ of 22 November 2006 is one of the two orders that the respondent, Mr Paraka, is applying to have set aside or varied.

OS NO 876 OF 2006 AND SCM NO 3 OF 2007

6. In the National Court proceedings OS No 876 of 2006 Hinchliffe J granted leave on 14 December 2006 to the respondent, Mr Paraka, to apply for judicial review of the decision of the Minister for Justice to establish a departmental inquiry into the briefing out of legal work of the State to private law firms. On 2 March 2007, his Honour ordered that the State pay K6.438 million (approx) to Paul Paraka Lawyers by 3.30 pm that day.

7. The appellants, led by the Minister for Justice, the following day appealed against the order of 2 March 2007 and on 5 March 2007 Injia DCJ, as he then was, sitting as a single Judge of the Supreme Court, ordered a stay of the National Court orders of 2 March 2007. The order of Injia DCJ of 5 March 2007 is the second of the two orders that the respondent, Mr Paraka, is applying to have set aside or varied.

NATURE OF THE APPLICATIONS

8. The two applications that are before us for determination were filed on 11 August 2009 and are in the same terms. They each state:

Application will be made pursuant to Section 5 of the Supreme Court Act to a Judge of the Supreme Court ...

For orders:

1. That the stay order [of 22 November 2006 or 5 March 2007, as the case may be] be set aside.
   
2. Alternatively that the appellants file and serve on the respondent ... an undertaking as to damages.
   
3. That the undertaking as to damages have retrospective effect to [22 November 2006 or 5 March 2007, as the case may be].
   

9. At the hearing of these applications it was pointed out to the respondent's counsel, Mr Inua, that the applications appeared to be confusing as they were cast in terms of an application to a single Judge of the Supreme Court, whereas in fact the application was being made to the 'full' Supreme Court – a three-Judge bench constituted in accordance with Section 161(2) of the Constitution, which provides that except where provided for by or under an Act of the Parliament or the Rules of the Supreme Court, for the purposes of any hearing the Supreme Court shall consist of at least three Judges.

10. It was also pointed out that the reference to Section 5 was rather vague as that section of the Supreme Court Act consists of a number of sub-sections conferring quite different powers on single Judges of the Supreme Court as distinct from the Supreme Court (constituted by three Judges). Mr Inua responded by seeking leave of the Court to amend each application so that it would read as an application under Section 5(3) to the Supreme Court to discharge or vary the order of a single Judge. We did not rule on the application for leave to amend at the hearing – and we will below give our ruling on that issue. Instead, Mr Inua was permitted to complete his submission on the merits of the applications.

11. The argument the respondent puts in support of each application is the same: that the stay orders, made first by Kapi CJ in SCM No 15 of 2006 on 22 November 2006 and later, in SCM No 3 of 2007 by Injia DCJ, were made in error as in each instance their Honours failed to insist on the appellants providing an undertaking as to damages.

12. Mr Inua submitted that a stay order is the equivalent of an injunction and it being a part of the law of PNG that an undertaking as to damages is an essential prerequisite to the granting of an injunction, it follows that it is also an essential prerequisite to the granting of a stay order.

THE APPELLANTS' POSITION

13. On the question of whether the respondent should be granted leave to amend the applications there was a divergence of approach amongst the appellants. Mr Mawa, counsel for the first, second and fourth appellants in SCM No 15 of 2006, and for all appellants in SCM No 3 of 2007, objected to the granting of leave and submitted that both applications of 11 August 2009 were not properly before the Court. Mr Poole, counsel for the third appellant in SCM No 15 of 2006, did not oppose the granting of leave and submitted that the Court should entertain both applications and deal with them on their merits.

14. Mr Poole, however, raised the issue of delay and submitted that both applications should be refused for that reason alone.

15. As to the merits of the applications Mr Mawa and Mr Poole were in unison in submitting that it was wrong in law to equate an injunction with a stay of proceedings and that neither Kapi CJ nor Injia DCJ erred when failing to insist on an undertaking as to damages.

ISSUES

16. The arguments of the parties give rise to three issues:

1. Should leave be granted to amend the applications and are they properly before the Court?
   
2. Should the applications be refused on the ground of undue delay?
   
3. Should the stay orders be set aside or varied because of the failure to provide undertakings as to damages?
   

1 SHOULD LEAVE BE GRANTED TO AMEND THE APPLICATIONS AND ARE THEY PROPERLY BEFORE THE COURT?

17. We do not consider that it is generally appropriate to allow an amendment to an application when leave is sought orally during the course of the hearing of the application. Leave is opposed by the majority of the appellants, and we consider that the position they have taken is quite reasonable. A party filing an application to the Supreme Court must ensure that the application is drafted in terms that make it clear what particular aspect of the Supreme Court's jurisdiction is sought to be invoked. If after the filing of the application it is realised that it could have been more clearly expressed an application should be made before the hearing to amend it. But where leave is sought during the actual hearing of the application, different considerations arise and a party would need to show very special reasons – apart from lack of diligence on the part of the applicant or his lawyers – that would justify the granting of leave. No such reasons are apparent here and we refuse leave.

18. That means that the respondent is left with the applications in their current terms, which are, with respect, vague and confusing. Vague because there is only a general reference to Section 5; and confusing as the application is expressed as being made to "a Judge of the Supreme Court". Our concerns become clear when the full text of Section 5 is considered. It states:

(1) Where an appeal is pending before the Supreme Court—

(a) a direction not involving the decision on the appeal; or

(b) an interim order to prevent prejudice to the claims of the parties; or

(c) an order in any proceedings (other than criminal proceedings) for security for costs; or

(d) an order dismissing an appeal in any proceedings (other than criminal proceedings) for default in furnishing security; or

(e) an order admitting an appellant to bail,

may be made by a Judge.

(2) A direction or order made under Subsection (1) shall be deemed to be a direction or order of the Supreme Court.

(3) A direction or order made under Subsection (1) may be discharged or varied by the Supreme Court.

19. To properly invoke the jurisdiction of the Supreme Court we suggest that the respondent might have filed the applications in terms of Section 5(3): an application to the Supreme Court (not 'a Judge of the Supreme Court') to discharge or vary an order of a Judge made under Section 5(1)(b).

20. Alternatively the application might have been made under Section 19 (stay of proceedings on appeal) of the Supreme Court Act to discharge or vary an order that had been made by a single Judge under that provision, 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.

21. As they stand, however, neither application is properly before the Court. The applications are inherently defective. The Supreme Court's jurisdiction has not been properly invoked. For that reason we will dismiss the applications.

2 SHOULD THE APPLICATIONS BE REFUSED ON THE GROUND OF UNDUE DELAY?

22. We consider that an applicant for an order to discharge or vary an existing order of the Supreme Court must make its application within a reasonable time after the order it seeks to have discharged or varied was made. If there appears to have been an inordinate delay in making the application a very good explanation must be available to warrant the Court entertaining the application.

23. Here, the applications were made on 11 August 2009, while the stay orders were made on 22 November 2006 and 5 March 2007. Well over two years lapsed before the applications to set them aside were filed. We are persuaded by Mr Poole's submission that these are inordinate delays and there was no reasonable explanation for them. For this reason also the applications must be refused.

3 SHOULD THE STAY ORDERS BE SET ASIDE OR VARIED BECAUSE OF THE FAILURE TO PROVIDE UNDERTAKINGS AS TO DAMAGES?

24. We heard full argument on this issue so we will address it, even though it is not necessary to do so given our refusal of the applications for other reasons. Mr Inua acknowledged that in common law jurisdictions it is fairly well settled that there is a conceptual difference between an injunction and a stay order and that there is not normally a requirement for an applicant for a stay order to provide an undertaking as to damages. Mr Inua suggested, however, that we have a discretion to exercise and that we should take the opportunity provided by this case to settle the law on this issue in PNG. With respect, the law is settled. Injia DCJ addressed the issue in Peter Makeng v Timbers (PNG) Limited (2008) N3317 in these terms:

Although a stay of proceedings and an interim injunction perform the same function of preserving the status quo until the full hearing, there are conceptual differences between the two forms of relief. Whilst the injunction protects the interest of the litigant in dispute with another, the stay is not addressed to an 'opposing party' but rather is directed at suspending the operation of a particular decision. While the grant of an interim injunction is usually conditional upon the applicant giving a cross-undertaking in damages, there appears to be no such requirement or practice in relation to a stay of proceedings.

25. The Supreme Court (Kirriwom J, Lay J, Gabi J) cited the above dicta with approval in the recent case of Vincent Kaupa v Simon Poraituk (2008) SC955. So the present cases are not the first time that these issues have been addressed by the Supreme Court.

26. Furthermore, the leading case on how the Supreme Court should deal with applications for interim orders under Section 5(1)(b) of the Supreme Court Act – Gary McHardy v Prosec Security and Communications Ltd, trading as Protect Security [2000] PNGLR 279 – does not indicate that an undertaking as to damages is required. Such applications are similar in many respects to applications for a stay of proceedings under Section 19 of the Supreme Court Act. An applicant does not have to provide an undertaking as to damages to obtain such orders. An applicant does not even have to prove that there are special or exceptional circumstances to warrant the making of interim orders. There are no hard and fast pre-conditions that have to be satisfied. Provided that the court exercises its discretion justly and reasonably and in accordance with the principles of natural justice or procedural fairness, the discretion available to the Judge or the Court when deciding whether to grant the interim orders or a stay of proceedings, is very broad (Isaac Lupari v Sir Michael Somare MP (2008) SC951).

27. We have considered the reasons given by both Kapi CJ and Injia DCJ for making the stay orders of 22 November 2006 and 5 March 2007. Neither of their Honours erred in failing to insist that an undertaking as to damages be provided by the appellants. We consider that the law is settled that an injunction and a stay order are conceptually different orders. While an undertaking as to damages is in most cases an essential prerequisite to the granting of an injunction, it is not so for the granting of a stay order. The respondent has failed to persuade us that we should disturb the well-settled distinction between an injunction and a stay of proceedings. The applications before us are without merit.

CONCLUSION

28. We will refuse both applications for three reasons. First, neither is it properly before the Court. Secondly, they have been too long delayed without satisfactory explanation. Thirdly, on the merits, we reject the argument underpinning the applications that an application for a stay order must be accompanied by an undertaking as to damages.

ORDER

29. Orders will be entered in the following terms:

SCM No 15 of 2006

(1) the respondent's application filed on 11 August 2009 is refused;

(2) the respondent shall pay the appellants' costs of the proceedings on a party-party basis, to be taxed if not agreed.

SCM No 3 of 2007

(1) the respondent's application filed on 11 August 2009 is refused;

(2) the respondent shall pay the appellants' costs of the proceedings on a party-party basis, to be taxed if not agreed.

Judgment accordingly.

______________________________________________________
SCM No 15 of 2006
Mawa Lawyers: Lawyers for the First, Second & Fourth Appellants
O'Brien's Lawyers: Lawyers for the Third Appellant
Paul Paraka Lawyers: Lawyers for the Respondent

SCM No 3 of 2007
Mawa Lawyers: Lawyers for the First, Second & Third Appellants
Paul Paraka Lawyers: Lawyers for the Respondent