SC1069

PAPUA NEW GUINEA
IN THE SUPREME COURT OF JUSTICE

SCA 1 of 2008

BETWEEN:

J A CONSTRUCTION
Appellant

AND:

IPISA WANEGA
First Respondent

HONA JAVATI
Second Respondent

EASTERN HIGHLANDS PROVINCIAL GOVERNMENT
Third Respondent

Waigani: Batari J, David J, Ellis J
2010: 30 August, 3 September

JUDGMENT

Failure to give notice of claim against Provincial Government – Claims By and Against the State Act, section 5

Whether decisions of the Supreme Court operate with retrospective effect 

Cases cited:

Papua New Guinea Cases

Antonius v Yaninen (2004) N2774
Federal Huron v OK Tedi Limited [1986] PNGLR 5
Pato v Enga Provincial Government [1995] PNGLR 469; N1340
Polem Enterprise Ltd v Attorney-General [2008] PGSC 9; SC911 (2 May 2008)
Pupune v Makrai and PNGBC [1997] PNGLR 22
Ruta v EHPG [1998] PNGLR 157
SCR1 of 1998 [2001] PGSC 8; SC672 (8 November 2001)
State v Manoburn Earthmoving Ltd (2003) SC716
Tohian v Liu (1998) SC566
Tried Pacific (PNG) Ltd v EHPG (2004) WS 1052 of 200

Overseas Cases

A v Governor of Arbour Hill Prison [2006] IESC 45
Brennan v Bolt Burden [2004] EWCA Civ 1017

Counsel:
C Narokobi, for the Appellant
There was no appearance for the Respondents

1. BY THE COURT: BACKGROUND: This appeal raises the question of whether the Appellant's claim against the 3rd Respondent should fail because no notice was given pursuant to section 5 of the Claims By and Against the State Act (CBASA).

2 The Appellant was alleged to have been contracted by the 3rd Respondent, namely the Eastern Highlands Provincial Government, to undertake construction work on toilet and shower blocks at the Goroka Demonstration High School for K52,000. Despite the fact that the dispute was clearly between Appellant and the 3rd Respondent, the school's Principal and the Chairman of the school's Board of Governors were also sued. Those two Respondents did not participate in this appeal.

3 The Statement of Claim alleged that five part payments were made but only particularised four such payments which totalled K28,880.07. The Appellant claimed that, as a result of a substantial increase in the cost of building materials, a revised quotation which sought to increase the contract sum from K52,000 to K66,000 was submitted. Despite not pleading any agreement to that increased contract sum, the Appellant claimed not the K23, 119.93 difference between what was paid (K28,880.07) and the contract sum (K52,000) but the K37,119.93 difference between what was paid (K28,880.07) and the revised quotation (K66,000.00).

Chronology

4 From the documents contained in the Appeal Book, the following chronology may be constructed:

27 May 98 3rd Respondent accepted Appellant's quotation 
21 Jul 99 Writ of Summons filed
18 Aug 00 Order for default judgment obtained against Respondents
08 Nov 01 Judgment in SCR1 of 1998 made it clear that the term "State" includes Provincial Government
01 Apr 03 Notice of Motion filed by Appellant, seeking an order that the Respondent pay the Appellant damages
22 Apr 03 Appellant's current lawyer filed a Notice of Appearance
25 Apr 03 Respondents ordered to pay K37,119.93 plus interest
03 Jun 03 White Young & Williams filed a Notice of Change of Lawyers for the Respondents
27 Oct 04 O'Briens filed Notice of Change of Lawyers for the 3rd Respondent
31 Jan 05 The 3rd Respondent filed a Motion to have the orders of 22 Aug 2000 and 11 Jun 03 set aside and the action dismissed
18 Apr 05 Amended Notice of Motion filed adding an alternative claim for leave to file a defence out of time
01 Sep 05 Motion of 18 Apr 05 withdrawn
06 Nov 06 Appellant's motion to have matter set down for assessment
14 Dec 06 Matter listed for 14 Feb 07
13 Mar 07 3rd Respondent's Motion to set aside default judgment for failure to comply with section 5 of the CBASA
09 Nov 07 Hearing of 3rd Respondent's Motion
29 Nov 07 Judgment delivered, dismissing the proceedings and ordering the Appellant to pay the 3rd Respondent's costs
07 Jan 08 Notice of Appeal filed

Transcript of hearing

5 From the transcript of the hearing of the 3rd Respondent's motion on 9 November 2007, it is clear that there was no issue between the parties that the Appellant had not complied with section 5 of the CBASA. At that hearing, the question of whether the decision of the Supreme Court, delivered on 8 November 2001, in SCR1 of 1998 [2001] PGSC 8; SC672 had retrospective effect was argued. Reference was made to the decision in Federal Huron v OK Tedi Limited [1986] PNGLR 5. It was suggested that the question of whether there had been compliance with section 5 should not be entertained because of the 1 September 2005 withdrawal of the 18 April 2005 Notice of Motion. 

6 In paragraph 14 of the judgment (on page 10 of the judgment and page 159 of the Appeal Book) it was noted that the Appellant's lawyer "did write to the Solicitor-General seeking an extension of time to give notice but the application was refused because the [Appellant] did not show cause why notice was not given within the prescribed time limit". It was also observed that, following that refusal, no application for an extension of time was made to the Court, under section 5(2)(c)(ii) of the CBASA. In other words, despite being aware of the section 5 issue, and despite being able to suggest that an extension should be granted because the position in relation to claims against a Provincial Government was not made clear until 8 November 2001, the Appellant's lawyers did nothing. No application was made to either the Attorney-General or to the National Court for an extension of time at any time during the 8 year period from 8 November 2001 to 29 November 2009 when the judgment the subject of this appeal was delivered.

Judgment of the National Court

7 The learned trial judge noted that the question of whether section 5 of the CBASA applied to Provincial Governments had been considered in judgments delivered prior to the Writ of Summons being filed on 21 July 1999, such as Pato v Enga Provincial Government [1995] PNGLR 469, Pupune v Makrai and PNGBC [1997] PNGLR 22 and Ruta v EHPG [1998] PNGLR 157, which it was said should have alerted the Appellant's lawyer to the question of whether a section 5 notice should be given.

8 It was correctly noted that, after the Supreme Court's decision in 2001, the Appellant's lawyers could have taken steps to rectify the non-compliance with section 5 of the CBASA. 

9 The learned trial judge quoted from Halsbury's Laws of England, 4th edition, volume 44(1) at paragraph 1283:

An amending enactment is generally presumed to change the relevant law only from the time of the enactment's commencement. In the absence of a clear indication of a contrary intention in an amending enactment, the substantive rights of the party to an action thus fall to be determined by the law as it existed when the action was commenced, and this is so whether the law is changed before the hearing of the case at the first instance or while an appeal is pending. However, an amending enactment may say expressly or by implication that its effect is to be retrospective.

A declaratory enactment, since it does not change the relevant law, operates form the commencement of that law (where it is statute law) or from an indefinite time (where it is the common law or other enacted law).

10 The learned trial judge noted that the Appellant's lawyer had been aware of the section 5 issue since 2004 and that was evident from the application to the Solicitor-General for an extension of time. It was also noted that the requirement to give notice was a condition precedent: Tohian v Liu (1998) SC 566.

Grounds of appeal

11 The decision of the learned trial judge to dismiss the proceedings for failure to comply with section 5 of the CBASA was challenged on a number of grounds. Those grounds may be summarised as follows:

(1)	at the time these proceedings commenced, there was no law which stated that notice pursuant to section 5 was required prior to suing a Provincial Government;

(2)	the decision in the Federal Huron case did not apply to this case;

(3)	the issue of whether a section 5 notice was required was res judicata since that point had been previously been decided in the Appellant's favour in that the 3rd Respondent had conceded that a section 5 notice was not required in this case;

(4)	it was not open to the 3rd Respondent to contest the failure of the Appellant to file a section 5 notice since the Appellant had already obtained a default judgment; and

(5)	The CBASA is unconstitutional, in whole or in part, since it does not comply with section 38 and 39 of the Constitution.

Appellant's submissions

12 The document headed "Extract of Submission" provided little assistance to the Court. That document included a suggestion that the CBASA "came into operation after the proceeding was filed" despite the fact that the CBASA was passed in 1996 and the Writ of Summons was not filed until 21 July 1999. That document concluded by seeking an order for the 3rd Respondent to pay K230,047.81 with interest. The contents of document headed "Appellant's Submission" are considered below, in relation to each of the grounds of appeal upon which the Appellant relied.

Ground 1

13 For this ground of appeal to succeed, it would be necessary to hold that decisions of the Supreme Court do not have retrospective effect. The decision in Polem Enterprise Ltd v Attorney-General [2008] PGSC 9; SC911 (2 May 2008) was referred to on appeal, but not at first instance since the decision in that case was handed down after the learned trial judge delivered judgment in this matter. 

14 The decision on the retrospective operation of judgments in Polem's case was made following a consideration of the decision of the Supreme Court of Ireland in A v Governor of Arbour Hill Prison [2006] IESC 45 and the decision of the English Court of Appeal in Brennan v Bolt Burden [2004] EWCA Civ 1017. The Irish judgment related to a criminal case and did no more than confirm that judgments do not affect the outcome of cases that have been previously finalised. However, that case did confirm, as indicated in the passage quoted at paragraphs 49 and 50 in Polem's case, that judgments do effect cases not finally determined at the date of that judgment. Brennan's case involved the validity of a settlement reached prior to a judgment which overturned a previous court decision on which that settlement was based. Not surprisingly, the pre-judgment settlement was not affected by that judgment since the case had been finalised. Like those two cases, Polem's case raised the question of whether the decision in State v Manoburn Earthmoving Ltd (2003) SC716 applied retrospectively to a deed of settlement. 

15 Hence, the decision in Polem's case relates to situations where proceedings have been finalised prior to a judgment that changes the law. The position is different in relation to cases that have not been commenced or which, like this case, have not been finalised when a judgment is delivered that affects the issues in such a case. That view accords with the passage from Halsbury's, quoted above. When a judgment is delivered that may be seen to change the law, the position thereafter does not depend on whether cases were commenced before or after that judgment but whether cases were finalised before or after that judgment. In other words, the law does not produce differing results depending on whether cases were commenced before or after the judgment in question: the law produces the same result for all cases finalised after the judgment in question. 

16 The decision in Antonius v Yaninen (2004) N2774 accords with that approach as that was a case in which the CBASA was held to apply to a Provincial Government in relation to proceedings commenced on 21 July 1999, prior to the 8 November 2001 decision in SCR1 of 1998 [2001] PGSC 8; SC672, but not finalised prior to the delivery of the judgment of the Supreme Court in that case.

17 Accordingly, the proposition that the decision delivered on 8 November 2001 in SCR1 of 1998 [2001] PGSC 8; SC672 does not have retrospective effect is rejected and this ground of appeal fails. To the extent that the Appellant seeks to have this court take the view that section 5 of the CBASA does not apply to Provincial Governments, that Supreme Court decision stands in the way of acceptance of such submissions.

18 For the reasons indicated above, the decision in Tried Pacific (PNG) Ltd v EHPG (2004) WS 1052 of 2000, that there was no requirement to serve a section 5 notice because there was no such requirement when the writ was filed, cannot be regarded as good law.

19 The reference made on behalf of the Appellant to the provisions of the Organic Law on Provincial Governments and Local-level Governments did not overcome the effect of the judgment of the Supreme Court in SCR1 of 1998 [2001] PGSC 8; SC672, delivered on 8 November 2001, which made it clear that section 5 of the CBASA applies to claims made against a Provincial Government.

Ground 2

20 The decision of the learned trial judge on the question of retrospective operation of judgments did not involve any error. There is no justification for the Court to invoke section 158 of the Constitution since the Appellant's predicament could and should have been addressed by either (1) by giving notice pursuant to section 5, from an abundance of caution, prior to the judgment of the Supreme Court delivered on 9 November 2001 in SCR1 of 1998 (2001) SC672, or (2) by seeking an extension of time by making an application to the court pursuant to section 5(2)(c)(ii) of the CBASA. To suggest that the judgment now challenged on appeal visits unfairness on the Appellant is to overlook that an application was made for an extension of time to give notice under section 5 of the CBASA, that that application was deficient since the notice failed to show cause why notice was not given and, following the rejection of that application, no further steps were taken by or on behalf of the Appellant.

Ground 3

21 The suggestion that the issue of a section 5 notice was res judicata must be rejected since there was no ruling made on that issue and the withdrawal of the Amended Notice of Motion did not have the effect of precluding the 3rd Respondent from subsequently raising that issue.

Ground 4

22 The fourth ground suggested that the 3rd Respondent should not be permitted to challenge the default judgment which the Appellant had previously obtained. There is no merit in this ground since default judgments are not uncommonly subsequently contested and may be set aside. In this case the learned trial judge did no more than follow the decision in Tohian's case which makes a section 5 notice a condition precedent which the Appellant must satisfy.

Ground 5

23 This ground was not argued at first instance and the Appellant should not be permitted to raise this argument for the first time on appeal. Further, if this ground was to be argued then that should have been pursued by a reference and not via this appeal. 

Order 

24 Accordingly, the order of the Court will be as follows:

1	Appeal dismissed with costs.

Order accordingly.

__________________

Narokobi Lawyers: Lawyers for the Appellant
There was no appearance for the Respondents