Polem Enterprise Ltd v Attorney-General of Papua New Guinea [2010] PGSC 20; SC1073 (15 September 2010)

SC1073

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA NO 9 0F 2006

POLEM ENTERPRISE LTD
Appellant

V

ATTORNEY-GENERAL OF PAPUA NEW GUINEA
MR FRANCIS DAMEM
First Respondent

ACTING SOLICITOR-GENERAL OF PAPUA NEW GUINEA
MR JOHN KUMURA
Second Respondent

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Third Respondent

EAST SEPIK PROVINCIAL GOVERNMENT
Fourth Respondent

Waigani: Kirriwom J, Cannings J, Manuhu J
2010: 3, 15 September

JUDGMENTS AND ORDERS – interest – whether a court which does not include an award of interest in a judgment can award interest after entry of judgment – whether a successful party has a right to an award of interest – Judicial Proceedings (Interest on Debts and Damages) Act – Constitution, Section 155(4).

An appellant that succeeded in an appeal to the Supreme Court in obtaining an order for enforcement of a deed of settlement returned to the Supreme Court after the entry of judgment with an application for interest on the judgment sum, arguing that the Supreme Court had not awarded interest even though the appellant had asked for it. Interest at a rate of eight per cent per annum was sought on the judgment sum calculated from the date on which the cause of action arose to the date of judgment. The application was based on two provisions of the Judicial Proceedings (Interest on Debts and Damages) Act Sections 3(1) and 1(1), together with Section 155(4) of the Constitution.

Held:

(1) The application, to the extent it was based on Section 3(1) of the Judicial Proceedings (Interest on Debts and Damages) Act, was misconceived as that law, though it gives a party the right to be paid interest, only relates to the period after the date of judgment, not before it.

(2) The application, to the extent it was based on Section 1(1) of the Judicial Proceedings (Interest on Debts and Damages) Act, was refused as that law does not confer any right on a successful party to an award of interest, rather it confers a discretion on the court giving judgment to include an amount of interest in the sum for which judgment is given; and, in this case, the Supreme Court had already exercised that discretion by not including any interest in its order on the appeal.

(3) The application, to the extent that it was based on Section 155(4) of the Constitution, was refused as it was not necessary, in the circumstances of this case, to award interest.

(4) The application was accordingly dismissed and costs awarded to the respondents.

Cases cited

The following cases are cited in the judgment:

Alotau Enterprises Pty Ltd v Zurich Pacific Insurance Pty Ltd
Cheong Supermarket Pty Ltd v Pery Muro [1987] PNGLR 24
Lawrence Sausau v PNG Harbours Board (2007) N3255
PNG Aviation Services Pty Ltd v Geob Karri (2009) SC1002
Polem Enterprise Ltd v Attorney-General (2008) SC911
Trawen v Kama (2010) SC1063

APPLICATION

This was an application for an award of interest on a judgment already delivered.

Counsel

C Narokobi, for the appellant
D M Steven, for the 1st, 2nd and 3rd respondents

15 September, 2010

1. BY THE COURT: This is a ruling on an application for an award of interest. It is made by the appellant, Polem Enterprise Ltd, which succeeded, on 2 May 2008, in an appeal to the Supreme Court, by obtaining an order for enforcement of a deed of settlement against the State (Polem Enterprise Ltd v Attorney-General (2008) SC911). The appellant has returned to the Supreme Court (constituted by the same Judges who heard and determined the appeal) with an application, filed on 18 June 2008, for an award of interest on the judgment sum.

2. The appellant says that the judgment sum was K3,042,176.70 and that it is entitled to interest at the rate of eight per cent per annum of that sum calculated over a period commencing on the date on which the cause of action accrued (which it says is 7 February 2003) and ending on the date of judgment (2 May 2008), a period of five years and 85 days. The appellant thus claims K1,273,547.00 as interest.

3. The appellant argues that the Supreme Court did not award interest even though it was sought and that our judgment of 2 May 2008 should be varied by including an order for payment of that amount of interest. The appellant argues that it acted quickly to bring this matter to the Court's attention soon after the date of judgment. Its counsel, Mr Narokobi, says that the appellant has attempted to negotiate an out-of-court settlement with the respondents, to no avail, and has brought the matter back to court only as a last resort.

The application is opposed by the respondents.

GROUNDS OF THE APPLICATION

4. The application appears to be based on two provisions of the Judicial Proceedings (Interest on Debts and Damages) Act – Section 3(1) and Section 1(1) – together with Section 155(4) of the Constitution. We say 'appears' as we found it difficult at the hearing of the application to elicit from Mr Narokobi a clear enunciation of the jurisdictional basis of the application. In oral submissions Mr Narokobi relied on Section 3(1) of the Judicial Proceedings (Interest on Debts and Damages) Act and Section 155(4) of the Constitution, whereas in the formal application filed on 18 June 2008, Section 155(4) is relied on but only Sections 1 and 2 of the Act are referred to – there is no mention of Section 3.

5. We therefore treat the application as being based on three grounds:

• Section 3(1) of the Act;
  
• Section 1(1) of the Act;
  
• Section 155(4) of the Constitution.
  

LAW

6. The Judicial Proceedings (Interest on Debts and Damages) Act has only three sections, so we set it out in its entirety:

Judicial Proceedings (Interest on Debts and Damages) Act.

Being an Act to make provision for interest on certain judgements.

1. Interest on certain debts and damages.

(1) Subject to Section 2, in proceedings in a court for the recovery of a debt or damages the court may order that there be included in the sum for which judgement is given interest, at such rate as it thinks proper, on the whole or part of the debt or damages for the whole or part of the period between the date on which the cause of action arose and the date of the judgement.

(2) Where the proceedings referred to in Subsection (1) are taken against the State, the rate of any interest under that subsection shall not exceed 8% yearly.

2. Interest on interest, etc.

Nothing in Section 1—

(a) authorizes the awarding of interest on interest; or

(b) applies in relation to a debt on which interest is payable as of right, whether under an agreement or otherwise; or

(c) affects the damages recoverable for the dishonour of a bill of exchange.

3. Interest on debt under judgement or order.

(1) Subject to Subsections (2) and (3), where judgement is given or an order is made for the payment of money, interest shall, unless the court otherwise orders, be payable at the prescribed rate from the date when the judgement or order takes effect on such of the money as is from time to time unpaid.

(2) Where, in proceedings on a common law claim, the court directs the entry of judgement for damages and the damages are paid within 30 days after the date of the direction, interest on the judgement debt shall not be payable under Subsection (1) unless the court otherwise orders.

(3) Where, in proceedings for damages on a common law claim, the court makes an order for the payment of costs and the costs are paid within 30 days after the ascertainment of the amount of the costs by taxation or otherwise, interest on the costs shall not be payable under Subsection (1) unless the court otherwise orders.

(4) Notwithstanding anything in this section, where the judgement given or the order made is given or made against the State—

(a) the rate of interest payable under Subsection (1) shall not exceed 8% yearly; and

(b) any payment under Subsections (2) and (3) shall be deemed to have been made on the date of the drawing of the cheque for payment; and

(c) where the sum awarded is increased on appeal—interest shall only be payable on the increase in accordance with this Section from the date when the appellate judgement or order takes effect.

7. The Constitution, Section 155(4), states:

Both the Supreme Court and the National Court have an inherent power to make, in such circumstances as seem to them proper, orders in the nature of prerogative writs and such other orders as are necessary to do justice in the circumstances of a particular case.

JUDICIAL PROCEEDINGS (INTEREST ON DEBTS AND DAMAGES) ACT, SECTION 3(1)

8. Mr Narokobi's principal submission was that the appellant was entitled to an award of interest on the judgment sum by virtue of Section 3(1).

9. Section 3(1) entitles a successful party to interest if two preconditions are met. First the judgment must be given or an order made "for the payment of money". Secondly, the court must not order that interest under this provision not be payable. However, the period over which interest is calculated is "from the date when the judgment or order takes effect". It only concerns post-judgment interest: interest calculated over the period from the date of judgment to when the money is paid.

10. In the present case the appellant is applying for pre-judgment interest: interest in respect of the period from the date that the cause of action arose to the date of judgment. The application, to the extent it is based on Section 3(1), is misconceived. We reiterate that Section 3(1), though it gives a party a right to be paid interest, only relates to the period after the date of judgment, not before it.

JUDICIAL PROCEEDINGS (INTEREST ON DEBTS AND DAMAGES) ACT, SECTION 1(1)

11. Section 1(1) is the provision under which the appellant might have been awarded interest in respect of the period before the date of judgment. However, a successful party has no right to an award of pre-judgment interest. It is a matter of discretion for the court giving judgment. In fact, as Bredmeyer J pointed out in Cheong Supermarket Pty Ltd v Pery Muro [1987] PNGLR 24, the discretion is four-fold:

(1) whether to grant interest at all;

(2) to fix the rate;

(3) to grant interest on the whole or part of the debt or damages for which judgment has been given; and

(4) to fix the period for which interest will run.

12. It is a common misconception that pre-judgment interest under Section 1(1) is calculated at a rate of 8% per annum. It must be emphasised that the rate of interest is, along with the other three variables identified by Bredmeyer J, a matter of discretion for the court. It can be less than 8%. It can be 8%. It can, generally, be more than 8%, except where interest is awarded against the State, in which case it cannot exceed 8% (PNG Aviation Services Pty Ltd v Geob Karri (2009) SC1002, Alotau Enterprises Pty Ltd v Zurich Pacific Insurance Pty Ltd).

13. As for the present case, our order of 2 May 2008 was in these terms:

(1) the appeal is upheld;

(2) the order of the National Court of 2 February 2006 in OS No 26 of 2004 is quashed;

(3) the deed of settlement dated 15 August 2002 is declared valid and enforceable and shall be enforced and all moneys still due and payable under it shall be paid forthwith;

(4) the parties shall bear their own costs.

14. There was no order for interest, which means that we exercised our discretion under Section 1(1) to award no interest. Nothing in Mr Narokobi's submission persuades us that there was a wrong exercise of discretion or that it was an oversight on the part of the court. This was not a case in which it was appropriate to award interest as the proceedings before the Supreme Court were not "for the recovery of a debt or damages" (that being a condition precedent to the exercise of discretion under Section 1(1)). Furthermore, the deed of settlement that our order declared valid and enforceable incorporated a component of interest.

15. The present application, to the extent it is based on Section 1(1) of the Judicial Proceedings (Interest on Debts and Damages) Act, is refused.

CONSTITUTION, SECTION 155(4)

16. Mr Narokobi submitted that we should invoke the inherent power of the Supreme Court under Section 155(4) of the Constitution to order payment of pre-judgment interest, his argument being that the circumstances of the case make it proper to do so and that an order for interest is necessary to do justice in the circumstances of this particular case. He relies on the decision of Injia DCJ, as he then was, in Lawrence Sausau v PNG Harbours Board (2007) N3255. In that case the plaintiff's application for judicial review of the decision of the Harbours Board to terminate his employment was upheld and he was awarded K16,554.97 in unpaid termination entitlements. Six weeks after the date of judgment he applied for interest on that amount. His Honour granted the application and awarded interest of K3,495.12, relying on Section 155(4) to vary the judgment. His Honour reasoned as follows:

In a case where the plaintiff in hindsight or through genuine inadvertence does not claim or pursue interest before or at the time judgment is given and claims or pursues interest soon after judgment is given, the Court, in the exercise of its discretion should not unreasonably refuse interest, even if it means varying the judgment to provide for interest. In my view it is within the inherent discretionary jurisdiction of the court to revisit the final judgment, vary it and award interest as provided by law. This discretionary jurisdiction does not come within the common law 'slip rule' principle but under s 155(4) of the Constitution.

17. We do not consider that Sausau's case advances the appellant's application in any significant way. We accept that the application that is now before us was filed within a reasonable period after the date of judgment. However, whereas in Sausau the court felt that there was no good reason to refuse the application for interest, here, we consider the circumstances are not appropriate for an award of interest. It should be noted that in Sausau the court emphasised that the award of pre-judgment interest was a matter of discretion; and in fact the court allowed interest to run over a period of only two years (commencing on the date of filing the proceedings, not from the date on which the cause of action arose).

18. To the extent that the present application is based on Section 155(4) of the Constitution, it is refused as the circumstances do not seem to us proper to award any pre-judgment interest. Furthermore it is not necessary to award any interest, to do justice in the circumstances of this particular case.

THE SLIP RULE

19. The slip rule is the name given to the common law principle that gives a court the inherent power to correct mistakes or slips in a judgment that are not attributable to the conduct of a party or its lawyer (Trawen v Kama (2010) SC1063). We can conceive of a situation in which, for example, a court gives a judgment for recovery of a debt or damages but inadvertently neglects to exercise its discretion as to interest. A party might then properly make a slip rule application, asking the court to correct its slip, by considering the issue of interest and exercising its discretion to award interest. The court might then vary the judgment and include an order for payment of interest.

20. We make these comments in passing, for the sake of completeness. Mr Narokobi in his opening submission stated that the appellant was not making a slip rule application. We wish to make it clear that if it had been framed as such an application it would not have succeeded as there was no error or mistake or slip in our judgment of 2 May 2008.

CONCLUSION

21. No good reason has been advanced to award the appellant any interest. The question of whether a successful party is to be paid any pre-judgment interest is a matter of discretion. We have exercised our discretion by deciding to award no interest. That is the end of the matter. Costs will follow the event.

ORDER

1. The application to vary the judgment and order of the Supreme Court of 2 May 2008, by including an award of interest, is refused.

2. Costs of this application shall be paid by the appellant to the first, second and third respondents, on a party-party basis, to be taxed if not agreed.

Judgment accordingly.

_____________________
Narokobi Lawyers: Lawyers for the Appellant
Stevens Lawyers: Lawyers for the First, Second and Third Respondents