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Southern Highlands Provincial Government v Kalu [2016] PGSC 79; SC1568 (1 August 2016)

SC1568

PAPUA NEW GUINEA

[IN THE SUPREME COURT OF JUSTICE]


SCREV No.23 OF 2014


BETWEEN
SOUTHERN HIGHLANDS PROVINCIALGOVERNMENT
Applicant


AND
RONALD KALU
Respondent


Waigani: Injia CJ

2016: 1st August


APPLICATION FOR LEAVE to review summary judgment -Action for breach of employment contract - Deed of Settlement for damages in the sum of K800,000 relied upon to support claim for liquidated sum - Summary judgment entered for liquidated sum - Criteria for grant of leave for review - Application to facts - Whether leave for review should be granted - Application dismissed - Constitution, s155 (2)(b), Supreme Court Orders, O 5 r 1


Cases cited in the judgment:


Lae Bottling Industries Ltd v Lae Rental Homes Ltd (2011) SC1120

Luke Marano v Jack Nouari (2013) SC 1307

NCDC v Peter Yama Security Services Pty Ltd [2003] SC707

State v Toka Enterprises Ltd (2013) SC1266


Counsel:

A Maribu, for the Applicant

L Kari, for the Respondent


1st August, 2016


  1. INJIA CJ: This is an application for leave to apply for judicial review of a summary judgment given by the National Court on 3 June 2011. The application is brought under s 155(2)(b) of the Constitution and O 5 r 1 of the Supreme Court Rules 2012.

Preliminary issues:


  1. The respondent raised several preliminary issues as follows:
  2. The leave application is properly before this court. An application for leave for judicial review is not in Form 5A. Form 5A relates an application for leave for review under Order 5 Division 5 (Election Petition Reviews). An application for leave for review resembles the form of an application for leave to appeal with appropriate modification: see O 5 r 1. The leave application in the present case complies with that form. It correctly seeks leave to review the judgment based on errors allegedly committed by the trial court; it is not based on any slip that may have been committed by that court.
  3. Mr Kembo has the necessary standing to bring this application on behalf of his office and that of SHP of which he is its administrative head. His predecessor, in his official capacity, was a signatory to the deed of settlement. The Provincial administrator was named as a party in WS 1563 of 2002 and WS 184 of 2010, under which the decision the subject of this application was made. For these reasons I dismiss the preliminary points raised by the respondent.

Leave application: principles


  1. The criteria for grant of leave for review is settled in various decisions of this Court: Lae Bottling Industries Ltd v Lae Rental Homes Ltd (2011) SC1120, State v Toka Enterprises Ltd (2013) SC1266, Luke Marano v Jack Nouari (2013) SC 1307. The applicant must have standing to bring the application. If the applicant is a party in the proceedings of the court below from which the judgment under review was given, the question of standing does not arise. The applicant must offer a reasonable explanation as to why an appeal against the judgment was not filed within time. The application for leave for review must not be delayed. If there has been a delay in lodging the application, a reasonable explanation must be given. The application must be prosecuted promptly. If there has been a delay in prosecuting the application, a reasonable explanation must be offered. If the court finds that there has been a delay and no reasonable explanation has been offered for the delay in lodging and prosecuting the application, the court may, nonetheless, grant leave for review if there are exceptional circumstances showing manifestation of substantial injustice that give rise to serious issues of facts or law that warrants a full review of the judgment. It is also necessary for the applicant to demonstrate that it is in the interest of justice to warrant a review of the judgment.

Applicant's arguments


  1. The applicant argues that it was a party in the proceedings in the court below from which the application arises and has standing to bring the application.
  2. The applicant admits no appeal was filed, that there has been undue delay in filing the application for leave to review and there has been delay in prosecuting the leave application. Those have been explained. The application was filed on 11 September 2014, more than three (3) years after the judgment was given, and moved before this court, on 5 July 2016, over 1 year 9 months after filing it. The applicant's explanation is that the respondent did not serve the judgement on the applicant, instead he served the orders and certificate of judgment on the Solicitor General in Port Moresby. When the judgment came to the applicant's attention, the applicant sought proper legal advice on the next course of action which took time and as a result the application for leave could not be filed earlier. The application could not be moved promptly because it took time to locate the respondent to be served the application for leave. When the respondent could not be contacted, an application made and granted by this Court for substituted service on 7 October 2015 and service was effected.
  3. The respondent sued for damages for breach of employment contract entered into between himself and Southern Highlands Credit Guarantee Scheme Limited (SHCGS). The applicant was not a party to that contract.
  4. SHCGS was not registered as an incorporated company with the Investment Promotion Authority and lacked legal capacity to enter into the contract.
  5. The Deed of Settlement relied upon by the respondent and the court to support the summary judgment was illegal for reasons set in the sub-paragraphs (8) and (9) above: NCDC v Peter Yama Security Services Pty Ltd [2003] SC707. Besides, there was no evidence put before the Court that the contract had been performed by the respondent to justify summary judgment for the amount awarded.
  6. Summary judgment was not available under NCR, O 12 r 38 because the claim was not for a liquidated sum for which summary judgment in the liquidated sum is not available.
  7. There were procedural breaches which if considered by the Court, summary judgments would not have been granted. The State was joined by the respondent as a party very late in the proceedings, without leave, at the time the application for summary judgment was moved, and without giving the mandatory s 4 notice under the Claims By and Against the State Act.
  8. The public interest requires the judgment to be reviewed.
  9. In these circumstances, there has occurred a substantial manifestation of injustice and it is in the interest of justice that leave should be granted for a full review of the judgment.

Respondent's arguments


  1. The explanations offered by the applicant for failing to file the appeal, delay in filing the application for leave for review and delay in prosecuting the application for leave, are unreasonable. The applicant has waited 19 years to receive his contractual entitlements and even when a judgment has been given, the applicant refuses to satisfy the judgment.
  2. A Deed of Settlement was executed by the Provincial Governor and the Provincial Administrator in 2006 to settle the respondent's claim, which is binding on the applicant.
  3. The applicant's lawyers have been supplied with a copy of the certificate of incorporation of SHCGS, yet it continues to maintain to this day that SHCGS was not incorporated at the material time.
  4. The applicant was served with the court documents and they failed to attend court resulting in judgment entered against it.
  5. Notice of the claim was given to the Provincial Administrator in accordance with the Claims By and Against the State Act.
  6. This was a liquidated claim in that the deed of settlement for the payment of a specific sum (K800, 000) was pleaded in the statement of claim and the summary judgment for that amount was properly given.
  7. Although SHPG was not a party to the Contract of Employment, the applicant at no time disputed the capacity of the Provincial Governor and the Provincial Administrator to sign the Deed and their standing to represent the SHPG in the two proceedings brought in the National Court. They, at no time, disputed the ownership of SHCGS by SHPG. In WS No. 1563 of 2002, the respondent sued the SHPG and its Provincial Administer for breach of his employment contract. The action was compromised and deed of settlement concluded. When the applicant failed to honour the deed, proceedings in WS 184 of 2010 were instituted to enforce the deed. The applicant therefore was properly joined as a defendant in those two proceedings and judgment entered against it.
  8. The deed is not challenged on the basis of fraud. No fraud occurred in entering into the deed and its binding.
  9. The applicant has waited 19 years for his employment entitlements to be paid by the applicant. In the interest of justice, the application should be dismissed to allow the judgment to be satisfied.
  10. If leave is granted, the applicant should be ordered to pay the judgment sum into court.

Determination


Standing, failure to appeal and delay


  1. There is no question that the applicant has standing to bring the application.
  2. Obviously, no appeal was filed. I find that no reasonable explanation has been offered for the failure to file the appeal. There is evidence to show that the applicant was served with the Writ of Summons and engaged Kiwai Lawyers to attend the proceedings on its behalf. The motion for summary judgment was served on Kiwai lawyers for the defendant but they choose not to attend the court proceedings in Waigani. The judgment was entered ex parte. Although it is not clear from the evidence (see affidavit of applicant sworn on 9th November 2015 and filed herein), as to when the judgment or order and the certificate of judgment were served on Kiwai Lawyers or the Provincial Administrator, the applicant should have obtained that information from the court registry and taken necessary steps to appeal the decision. Instead the applicant failed to do so at its own peril. When the order and certificate of judgment came to its attention, the applicant consumed time seeking advice as to what to do next. When the applicant chose to file the application for leave for review, it took the applicant more than 3 years to reach that decision.
  3. The delay in bringing the application to a hearing is to some extent explained. The matter first came before the listing judge directions on 22 October 2015, close to 13 months after it was filed. Subsequent appearances in Court took place during the interlocutory phase and this soaked up time. It was moved before me on 5 July 2016. The applicant did not do enough to obtain an expedited hearing date for his application after filing it. The onus is always on the applicant to take steps to move the application promptly. That did not happen in this case. On the whole, there has been an undue delay in prosecuting the application and that has not been satisfactorily explained.

Exceptional circumstances, substantial injustice and interest of justice


  1. The employment contract was in respect of the CEO of a public company on senior position on "salary grade 18" and for a five (5) year term commencing 21 July 1997. Two years into the contract, it was terminated in 1999. Going by the conditions of service in monetary terms in the contract, a claim for K800,000 for the remaining balance of his contract, though on its face may seem to be a large amount of money, is not an unreasonable amount. And he need not earn that amount representing the balance of the contract through performance, to be entitled to sue for that amount. In any event, the contract could not be performed because it was terminated in any event.
  2. It is not correct to say that the SHPG was not a party to the employment contract because the contract itself bears the name “Southern Highlands Provincial Government” on the first page of the contract right at the top of the page. The contract was signed by and on behalf of SHPG by “HON. ANDERSON AGIRU, MP, and GOVERNOR OF SOUTHERN HIGHLANDS PROVINCIAL GOVERNMENT”. Therefore the SHPG and the Provincial Administrator were correctly named as defendants in WS No. 1563 of 2002. The Deed of Settlement was duly executed between the SHP Provincial Administrator and the respondent, based on which the applicant and the Provincial Administrator were correctly named as parties in the proceedings in WS 184 of 2010. The judgment was correctly entered against them.
  3. I do note that the pleadings in the statement of claim in the two writs fell short of specifying the nexus in terms of SHPG's ownership of SHCGS. However that does not seem to have been an issue at all in the Court below until now in this review. It appears SHPG phased out the operations of SHCGS in 1999 and all staff of SHCGS were paid out by SHPG except the respondent. The no-party argument appears to be of recent invention to frame up support for the review.
  4. With regard to the summary judgment, the claim in WS 184 of 2010 was a liquidated claim. The deed of settlement for K800, 000 was specifically pleaded. No challenges were made to the deed as having been based on fraud, illegality or any of the other known grounds for invalidating a deed of settlement. The deed was valid and enforceable.
  5. With regard to SHCGS’s capacity to enter into the contract, a certificate of incorporation dated 7 November 1997 is in evidence before this Court, which the respondent says a copy has been furnished to the applicant. The contract precedes the incorporation by 3 months 14 days. In other words the incorporation of SHCGS occurred after the contract was signed, by several months. In law, SHCGS at the time the contract was entered into was an unincorporated body. Upon incorporation, the company no doubt adopted the contract. Parties to the contract performed the contract on that basis. No question arose then as to SHCGS Ltd's capacity to adopt the contract until now. This lack of capacity to contract argument also appears to be of recent invention.
  6. Summary judgement was open to be granted on what is clearly a claim for a liquidated sum. There was evidence to support the claim for this liquidated sum. There could be and was no defence to the claim.
  7. The State was joined as a party for what appears to be for the purpose of facilitating satisfaction of the judgment. If there are irregularities in joining the State as a party for that purpose, those can be isolated and resolved. Those issues should not affect the judgment against the applicant.
  8. For these reasons, I am satisfied that the application for leave is clearly without merit and should not proceed to a full review. It has not been shown by the applicant that there are serious issues raised that substantial injustice was done to the applicant. The contrary has been shown, that it is the respondent who has suffered substantial injustice in having to wait for his entitlements for some 19 years. The interest of justice demands that the judgement should not be disturbed on review in order to allow the judgment to be satisfied.

Conclusion

  1. The purpose of this application for leave for judicial review is not to conduct a detailed examination, assessment and determination of the merits of the proposed grounds of review and the material placed before the court. However, if upon a quick perusal of the proposed grounds of the review and the material placed before the court by both parties, it is shown that the application is clearly without merit because the application does not raise any serious issues to be tried by the full Court, it is within this Court's discretion to stop the review from proceeding any further and the Court should not hesitate to do so. That indeed is the purpose of this leave process. The circumstances of the present case fall into that category. The application fails to qualify under four (4) of the five (5) criteria for grant of leave for review. The application must be dismissed.
  2. With regard to costs, I am not satisfied a case for costs on an indemnity basis has been made out.

Orders

  1. The formal orders of this Court are:

________________________________________________________________
Liria Lawyers: Lawyer for the Applicant
PNG Legal Services: Lawyer for the Respondent


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