Keka v Yafaet [2018] PGSC 18; SC1673 (30 May 2018)

SC1673

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA 93 OF 2017

BETWEEN:
MICHAEL KEKA
Appellant

AND
PIUS YAFAET
First Respondent

NATIONAL HOUSING CORPORATION
Second Respondent

YANJOL APIN as the Acting Registrar of Titles, Department of Lands & Physical Planning
Third Respondent

ANZ BANK LIMITED
Fourth Respondent

Waigani: Collier J, Neill & Liosi JJ
2018: 2^nd & 30^th May

PRACTICE AND PROCEDURE – National Housing Corporation – whether s 5 notice under Claims by and against the State Act considered but not decided – need for appellant to identify error of primary Court

PRACTICE AND PROCEDURE – inherent jurisdiction of National Court – discretion and power of National Court to control proceedings – ability of National Court to dismiss claims on its own motion

Facts

Appellant claimed fraud when title to property was transferred from Second Respondent and title registered to First Respondent – Fourth Respondent claimed innocent third party and indefeasible title pursuant to section 33(1)(a) Land Registration Act – primary judge considered whether section 5 notice under Claims by and against the State Act required and dismissed proceeding.

Held

1. The appeal is dismissed.
2. Each party bear its own costs of and incidental to appeal
   

Cases Cited:

Albert Areng v Babia & NHC (2005) N2895
Chefs Secret Limited v National Capital District Commission [2011] N4217

Karl Paul v Aruai Kispe and 2 Ors (2001) N2085
Kilebo Sigo Mamae & Ors v NHC, OS 844/2015
Mineral Resources Development Authority v Matthew Sisimolu [2010] SC 1090
Mt Hagen Urban LLG v NHC, WS 1194/2002
Naomi Vicky Jones v NHC (2005) N2770
National Capital District Commission v Jim Reima (2009) SC993
Paul Pawaiya & Ors v NHC, OS 429/2006
Paul & Mary Bal v Kenny Taiya (2003) N2481

Paul Tohian v Tau Liu (1998) SC 566
Philip Num v NHC, OS 115/2003

PNG University of Technology v Plumtrade (2012) SC1209

PNG Power v Augerea (2013) SC1245

Public Curator of PNG v Kara (2014) SC 1420

Reservation Pursuant to Section 15 of the Supreme Court Act [2001] SC672

Counsel

Mr J Kumura, for the Appellant
Mrs Noki, for the Fourth Respondent
No appearance for other Respondents

REASONS FOR JUDGMENT

30^th May, 2018

1. BY THE COURT: INTRODUCTION: On 24 May 2017, the appellant’s entire proceeding was dismissed by the National Court for want of service of notice (s 5 Notice) pursuant to s 5(1) of the Claims by and against the State Act 1996 (Claims Act). At the time that judgment was given, there were two applications before the Court, being:

• the fourth respondent’s notice of motion dated 9 February 2017 seeking a dismissal of the proceeding pursuant to Order 12 Rule 40(1) of the National Court Rules and for judgment on its cross-claim pursuant to Order 12 Rules 1 and 30 of the National Court Rules, and
• the appellant’s notice of motion dated 15 March 2017 seeking leave to file an amended statement of claim pursuant to Order 8 Rule 50(1) of the National Court Rules.

2. Neither motion related to the absence of a s 5 Notice, but the issue was raised by the primary Judge on her own motion during the hearing, and the appellant’s proceeding dismissed on that basis.

3. The primary Judge also entered judgment for the fourth respondent in its cross-claim against the appellant, which her Honour considered continued despite the appellant’s proceeding being dismissed for lack of notice. The primary Judge held that the fourth respondent was entitled to judgment against the appellant, even though the entire claim was dismissed for lack of notice, as the cross claim was separate from the appellant’s proceeding and the appellant admitted default in filing a defence to the cross claim.

4. The appellant is appealing against the whole of the judgment given by the National Court.

BACKGROUND

The appellant’s claim in the National Court

5. The appellant issued a writ of summons against the respondents on 18 November 2016. At that time the appellant was occupying and living in a property described as State Lease Section 359 Allotment 07 Hohola NCD (the Property). He had been doing so for 38 years. The Property was owned by the National Housing Corporation (the NHC), the second respondent, and was identified under the Low Cost Give Away Scheme. The Property was listed in the National Gazette No G23 of 5 February 2002 as item 1503. Mr Giwayim Guom was listed as the “Tenant” and “Approved Transferee”.

6. The National Housing Corporation Act 1990 (the NHC Act) in s 3(a) provides for the second respondent to declare a person to be eligible for assistance under Part IV of the NHC Act by reasons of their “limited means”. Section 38(d) (which is under Part IV of the NHC Act) provides that where a tenancy agreement has been in force for two years, the NHC may offer the property to the tenant or his “next of kin”. Section 65 of the NHC Act makes void a purported sale of a NHC property without the consent of the NHC.

7. The appellant states that he is the son of the Tenant, Mr Guom. Mr Guom died and the appellant, who claimed that he was his father’s next of kin, had assumed that the Property formed part of the deceased estate and passed to him.

8. The first respondent was the appellant’s brother-in-law and was also living in the Property. In 2010, Ms Julie Guom, the appellant’s sister and the first respondent’s wife, died. In approximately November 2011 the first respondent claimed that he had title to the Property and sought to evict the appellant and the appellant’s family from the Property by commencing proceedings under the Summary Ejectment Act in the Port Moresby District Court. That proceeding is still pending.

9. When the appellant made enquiries with the second respondent, the appellant discovered that the first respondent had transferred the Property into the first respondent’s name. The first respondent cannot now be located.

10. The appellant alleged in his statement of claim that the first respondent had obtained the property by fraud and that the second respondent had failed to discharge its statutory duties pursuant to the NHC Act by failing to make necessary enquiries and follow relevant and proper procedures.

11. Between 2012 and 2015, the fourth respondent sent numerous “Notices to Vacate” to the appellant. After making enquiries, the appellant found that the first respondent had transferred the Property to Ms Jacinta Kasse, who in turn mortgaged the Property to the fourth respondent, ANZ Bank. Ms Kasse had defaulted on the loan repayments and the fourth respondent sought to take possession of the Property. The appellant alleged that the first and fourth respondents engaged the police to attend the Property and to harass and threatened to evict the appellant.

12. The fourth respondent exercised its power of sale under the mortgage and sold the property. That sale was the trigger for proceedings to evict the appellant from the property. The fourth respondent pleads that it had no knowledge of the fraud pleaded by the appellant in the way that the first respondent acquired title to the property.

13. At the trial the appellant’s counsel urged the National Court to accept the appellant’s explanation for the Tenant and the appellant not formalising title promptly. In particular, the appellant explained that he was too young to understand the process of the offer made in 2002 but after the Tenant’s death he called repeatedly on the NHC and was “fobbed off” by NHC personnel.

14. It appears that the first respondent was more successful than the appellant in obtaining title to the Property from the NHC.

15. As a result of these events, the appellant claimed that he suffered loss of the Property, loss of enjoyment of the Property, constant fear and uncertainty over the possibility of eviction, and loss of peace and serenity on the Property. The appellant sought, inter alia, orders that he had a legal interest in the Property and for general damages for his claimed loss.

The fourth respondent’s cross-claim

16. The fourth respondent subsequently filed a cross claim against the appellant on 19 January 2017, claiming that as mortgagee it was entitled to vacant possession of the Property pursuant to the mortgage and to ss 68, 69 and 74(1) of the Land Registration Act. The fourth respondent sought orders that the appellant give vacant possession of the Property to the fourth respondent within 14 days. In the event that the appellant did not give vacant possession, the fourth respondent sought an order that members of the Royal Papua New Guinea Constabulary be at liberty to enter the Property and evict the appellant, and give vacant possession of the Property to the fourth respondent.

The hearing on 24 May 2017

17. The fourth respondent issued a notice of motion on 2 February 2017 and sought to have the appellant’s claim dismissed pursuant to Order 12 Rule 40(1) of the National Court Rules , on the basis that the claim:

• failed to disclose a reasonable cause of action;
• was frivolous or vexatious; and
• was an abuse of Court process.

18. The fourth respondent further sought an order under Order 12 Rules 1 and 38 that judgment for the fourth respondent be entered in its cross-claim.

19. The appellant issued a further notice of motion, filed 15 March 2017, seeking leave to amend his statement of claim pursuant to Order 1 Rule 7 of the National Court Rules.

DECISION OF THE PRIMARY JUDGE

20. Both applications were listed on 24 May 2017. However, the National Court dismissed the appellant’s notice of motion on the basis that it had failed to comply with the notice requirements in s 5(1) of the NHC Act. Section 5 provides:

5. NOTICE OF CLAIMS AGAINST THE STATE.
(1) No action to enforce any claim against the State lies against the State unless notice in writing of intention to make a claim is given in accordance with this section by the claimant to–

(a) the Departmental Head of the Department responsible for justice matters; or
(b) the Solicitor-General.

(2) A notice under this section shall be given–

(a) within a period of six months after the occurrence out of which the claim arose; or
(b) where the claim is for breach of a contract, within a period of six months after the claimant became aware of the alleged breach; or
(c) within such further period as–

(i) the Principal Legal Adviser; or
(ii) the court before which the action is instituted,

on sufficient cause being shown, allows.

(3) A notice under Subsection (1) shall be given by–

(a) personal service on an officer referred to in Subsection (1); or
(b) leaving the document at the office of the officer with the person apparently occupying the position of personal secretary to that officer between the hours of 7.45 a.m. and 12 noon, or 1.00 p.m. and 4.06 p.m., or such other hours as may from time to time be declared by or under the Public Services (Management) Act 1995 to be the normal public service hours of duty, on any day which is not a Saturday, Sunday or a public holiday declared by or under the Public Holidays Act 1953.

21. Relevantly the following exchange took place at the trial between her Honour and Counsel for the appellant:

HER HONOUR: It is a housing corporation? Section 5 notice is required on housing corporation as well Mr Kumura. So what do you propose to do if you have not given section 5 notice?
MR KUMURA: I note that, your Honour.
HER HONOUR: What do you propose to do Mr Kumura, section 5 notice is mandatory? Failure would hold the entire proceedings dismissed prior to give that section 5.
MR KUMURA: Yes your Honour.
HER HONOUR: Irrespective of all the arguments.
MR KUMURA: Yes your Honour. But it would be my submission that section 5 is required where there is a claim in contract or tort or a breach of a constitutional right.
HER HONOUR: Breach of?
MR KUMURA: Constitutional right.
HER HONOUR: You are alleging fraud, that is negligence...
MR KUMURA: Yes. This is a claim against the housing corporation for fraud, non compliance of statutory requirement.
HER HONOUR: Well, if there is one it is up to them to come argue before this court and it is negligence, tort, contract. You are saying your client entered into a contract for sale, there is a gazettal for that purchase, where is that contract?
MR KUMURA: We are saying it is a requirement under the – a statutory requirement is not compliant with the housing corporation and our respectful submission would be there will not be a requirement for a section 5 notice.
HER HONOUR: Any claim against an agent of the State and arm of the State, section 5 notice is mandatory. Tau Liu, Mr Kumura. I am pretty sure you were involved in that case as well.
MR KUMURA: With respect your Honour I have also come across a case where it has been held that if somebody is suing the State basically for the State – to compel the State to perform a statutory function that it did not do...
HER HONOUR: That is OS, originating summons JR
MR KUMURA: That will not require a section 5 notice.
HER HONOUR: Well this is not a judicial review matter, Mr Kumura.
MR KUMURA: I know your Honour but...
HER HONOUR: It is a claim against the State.
MR KUMURA: No, your Honour but in the – with respect ...
HER HONOUR: Well, then you do the right thing then by your client. If you reckon it is a judicial review matter and does not require section 5 notice, go to the appropriate court and file the appropriate proceedings.
MR KUMURA: Well, we are basically saying in this proceeding housing corporation failed to comply with certain requirements – statutory requirements and...
HER HONOUR: And section 5 notice is required Mr Kumura, Yes?
(transcript pages 33-34)

22. Subsequently her Honour continued:

HER HONOUR: Just being fair to having – to give your client an opportunity to be heard. And you have to take into consideration the requirements of section 5 notice as it is, Mr Kumura. That is mandatory.
MR KUMURA: Yes your Honour.
HER HONOUR: And this court in the exercise of discretion can dismiss the entire proceeding as it is presented before this court which you yourself had disclosed that section 5 notice was not given. And as it is, since the matter is before this court, the entire proceedings are now dismissed for lack of section 5 notice, will not proceed any further having heard counsel and giving counsel an opportunity to consider whether to withdraw or discontinue, the opportunity was not taken.
MR KUMURA: I am sorry, your Honour. I was not aware that you were...
HER HONOUR: It has been raised several times during this morning, Mr Kumura?
MR KUMURA: Yes. Well, we submit section 5 is crucial...
HER HONOUR: It is. You address the court on that as well, Mr Kumura. The issue was raised. You argued this matter was not a section 5 notice matter. The court then gave okay, if it is not a section 5 notice then it’s a judicial review, go to the appropriate court. You chose to remain in this court. The entire proceedings are dismissed for lack of section 5 notice in spite of all the arguments that this court has heard with regard to the proceeding as it is presented by both counsel. Tau Liu is mandatory requirement. Section 5 notice is mandatory.
(transcript pages 41-42)

THE GROUNDS OF APPEAL

23. The appellant relies on seven grounds of appeal set out in his notice of appeal. They are as follows:

(1) The primary Judge erred in fact and law in raising and dealing with the issue of notice pursuant to s 5 of the Act when that was not an issue in the fourth respondent’s notice of motion before that Court.
(2) The primary Judge erred in fact and in law in not allowing parties, especially the appellant, to properly and fully address the Court on the issue of notice pursuant to s 5 of the Act when there are different judgments in the National Court and the Supreme Court on whether or not the National Housing Corporation falls within the meaning of “State” as set out in the Act such that notice is a condition precedent before a proceeding can be issued against the National Housing Corporation.
(3) The primary Judge erred in fact and in law in dismissing the proceeding for lack of notice pursuant to s 5 of the Act when there are differing judgments in the National Court and the Supreme Court on that issue and the primary Judge did not indicate on what case authority or authorities she relied on to rule that notice was required in that case.
(4) The primary Judge erred in fact and in law in dismissing the entire proceeding for lack of notice pursuant to s 5 of the Act when the National Housing Corporation does not fall within the meaning of the word “State” as set out in the Act and therefore there was no requirement for notice pursuant to s 5 of the Act.
(5) The primary Judge erred in fact and in law in holding that notice pursuant to s 5 of the Act was required when suing the National Housing Corporation when s 6(1)(a) of the National Housing Corporation Act 1990 provides that the National Housing Corporation is a corporate entity and further provides in s 6(1)(e) that the National Housing Corporation can be sued directly in its corporate name and style.
(6) The primary Judge erred in fact and in law in holding that notice pursuant to s 5 of the Act was required when only the National Housing Corporation was named in that proceeding and not the Independent State of Papua New Guinea.
(7) The primary Judge erred in fact and in law in awarding judgment against the appellant on the fourth respondent’s cross claim when the dismissal of the proceeding was on the basis of lack of notice pursuant to s 5 of the Act and not on the basis of the fourth respondent’s notice of motion for dismissal of the appellant’s claim.

CONSIDERATION

Grounds of appeal 1, 2 and 3: should the primary Judge have dismissed the appellant’s proceeding on 24 May 2017?

24. The appellant’s notice of appeal raises three issues relating to the manner in which the primary Judge dismissed the proceeding. These issues form grounds 1 to 3 of the notice of appeal. In summary, these issues are:

• Lack of notice was not put in issue by either of the two notices of motion which the Court was required to consider at the hearing on 24 May 2017.
• The parties were not given the opportunity to properly and adequately address the Court on the issues of whether the NHC was part of the State and whether notice was required under s 5 of the Claims Act.
• The primary Judge did not direct the parties to the authorities on which her Honour’s decision to dismiss the proceeding for lack of notice was based and this was problematic in circumstances where there is conflicting in the National and Supreme Courts on this issue.

25. The fourth respondent’s submissions as to these issues can be summarised as follows:

• the National Court had wide jurisdiction to dismiss the proceedings on its own initiative as the proceeding was incompetent due to the lack of a s 5 Notice, and it was proper for the National Court to do so;
• the appellant was given an opportunity to respond to the s 5 Notice issue raised by the Court, and his lawyer made submissions on the issue.
• the decision of the primary Judge to dismiss the proceeding was consistent with the approach to s 5 Notice established in numerous authorities, and the primary Judge relied specifically on the case of Paul Tohian v Tau Liu (1998) SC 566.

26. In Karl Paul v Aruai Kispe and 2 Ors (2001) N2085 Injia J (as his Honour then was) observed:

The Court has wide powers to control the conduct of proceedings before it, subject to jurisdictional limitations fixed by Statute. It is in the inherent jurisdiction of the court to take firm control of the proceedings to ensure that the business of the Court is conducted in an orderly and fair and timely manner and to ensure that justice is done in the particular case. To this end, it is within the inherent jurisdiction of the Court to scrutinize the form and contends of documents before it...
There is a wide discretion vested in the Court by the NCR to screen and weed out claims which do not disclose a reasonable cause of action, are frivolous and vexatious or an abuse of process of the Court, (O12 r 40), or the documents filed in Court are scandalous irrelevant or otherwise oppressive (O2 r 29), or the ground of irregularity. That discretion is normally exercised upon application by an interested party. Nevertheless, it goes without saying that the Court may exercise that discretion on its own initiative. It is open to the Court to raise and determine questions concerning the regularity (O1 r 9) or competency of proceedings at any stage of the proceedings with or without application by an interested party...

27. The discretion of the Court to strike out proceedings on its own motion specifically in circumstances where s 5 of the Claims Act has not been complied with, rendering proceedings incompetent, was recognised by the National Court in Paul & Mary Bal v Kenny Taiya (2003) N2481. Furthermore in Chefs Secret Limited v National Capital District Commission [2011] N4217 at [6]-[7] Sawong J said:

If the Claims Act is not complied with, the Court has the discretion to strike out proceedings on its own motion. It does not have to wait for a party to apply to the Court. The Court should not take a back seat in such matters. It must be vigilant in its delivery of justice by ensuring that parties comply with stipulated, mandated procedures.
(citations omitted)

28. We find that the National Court had jurisdiction, on its own motion as part of its inherent jurisdiction to control and manage the proceedings before it, to dismiss the appellant’s claim as incompetent for want of compliance with s 5 (1) of the Claims Act.

29. As to the appellant’s argument that the parties were not given the opportunity to adequately and properly address the issue of notice, it is evident from the transcript of the National Court hearing we set out earlier in this judgment that Counsel for the appellant made submissions as to the requirement of the s 5 Notice. The appellant submitted before the primary Judge that notice was not required in cases where a person was suing the State in order to perform a statutory function that it did not perform. The appellant submitted further that this was the case in the proceedings before her Honour, since the basis on which there was a claim for fraud against the second respondent was its failure to comply with statutory requirements. As the transcript reveals, the primary Judge responded that the proceeding before the National Court was not an application for judicial review and therefore it involved a claim against the State.

30. We also note that, contrary to the appellant’s submissions, during the course of the hearing the primary Judge did refer to relevant authority, namely the decision of the Supreme Court in Paul Tohian v Tau Liu. Relevantly we note the following passages from this case:

The appellants filed a motion in the National Court to strike out the writ of summons for failure to comply with s 5 of the Act. The argument was advanced that the notice required is a condition precedent to the cause of action and the writ filed before the notice was given is a nullity...
The provision under consideration is very similar to s. 54 of the Motor Vehicles (Third Party Insurance) Act (Cap 295) (hereinafter referred to as the MVITA). The Supreme Court has considered that provision and concluded that service of notice of intention to make a claim under the MVITA is a mandatory condition precedent to the validity of any writ of summons filed against the Trust (see Rundle v MVIT [1988] PNGLR 20). The trial judge acknowledged this case in his decision but chose not to apply the same reasoning on the basis:

“However the right to proceed against the State for any wrong is a right at Common Law and protected in the Constitution and covered in the Wrongs Act. The right to sue the State is not a special privilege granted by statute, it is a right that has always existed. The purpose of the Claim By and Against The State is to regulate and facilitate and present some conditions to a right that has always existed. Therefore the writ that has issued in July must be a valid writ. The purpose of the time provision in section 5 of the Act is to require claimants to take action within a certain time to enable the State to properly research the basis of such a claim before the facts that gave rise to the claim get forgotten or fade in people’s memory. Bearing in mind that the State is in a different position than the usual defendant in that the State is responsible for the actions of so many people over the whole nation. In this case before me now the writ was filed and served well within a period of 6 months of the occurrence of the incident out of which the claim has arisen. In the circumstances therefore I am satisfied that the writ itself can be seen as notice and therefore there was no requirement to give any further notice.”

In our view the trial judge was correct in holding that the provision under consideration is similar to s. 54 of MVITA. However, he fell into error when he did not follow the reasoning in Rundle v MVIT (supra). The purpose of the requirement to give notice remains the same whether or not the notice is required to be given within the 6 months or within such further period as may be granted by the Principal Legal Adviser or the Court. It is clear to us that the notice of intention to make a claim is a condition precedent to issuing a writ of summons in all circumstances.

31. Neither party has submitted to us that the decision of this Court in Paul Tohian v Tau Liu should be reconsidered.

32. In the circumstances, we reject grounds 1 to 3.

Grounds 4-6: was the appellant required to give s 5 Notice to the second respondent?

33. Grounds 4 to 6 of the notice of appeal deal with the substantive issue of whether the NHC is an arm or agency of the State for the purposes of determining whether the appellant was required to give notice under s 5 of the Claims Act.

34. At present, there is no definitive Supreme Court authority on this issue. The authorities in the National Court diverge, with multiple decisions coming to both conclusions: see Mt Hagen Urban LLG v NHC, WS 1194/2002, Kilebo Sigo Mamae & Ors v NHC, OS 844/2015, Paul Pawaiya & Ors v NHC, OS 429/2006, Philip Num v NHC, OS 115/2003; contra. Naomi Vicky Jones v NHC (2005) N2770, Albert Areng v Babia & NHC (2005) N2895.

35. In relation to whether the appellant was required to give s 5 Notice, the appellant submitted:

• The NHC is not “the State” for the purposes of s 5(1) of the Claims Act since it does not meet the six criteria from Reservation Pursuant to Section 15 of the Supreme Court Act (2001) SC672, and the additional two criteria from PNG University of Technology v Plumtrade (2012) SC1209 (Unitech) and PNG Power v Augerea (2013) SC1245 (PNG Power).
• Simply because an entity is a governmental body and established by statute does not mean that it is the State for the purposes of the Claims Act.
• A s 5 Notice was not required in this case because s 6 of the NHC Act sets out the process by which the NHC can sue and be sued in its corporate name. This does not refer to s 5 Notice.
• A s 5 Notice was not required because the State was not named in the proceeding.

36. By way of summary, the fourth respondent submitted in relation to these grounds that:

• The NHC is the State for the purposes of s 5(1) of the Claims Act as all of the relevant criteria were present.
• That the NHC can be sued in its corporate name does not mean that s 5 Notice is not also required, especially since provincial governments also have this characteristic and have been held to be the State such that they must be given s 5 Notice.
• The status of the NHC should be considered analogous to the relevant entities in PNG Power and Public Curator of PNG v Kara (2014) SC1420 (Public Curator).
• The decision to dismiss the proceeding was consistent with the principle established in the authorities, in particular Paul Tohian v Tau Liu (1998) SC 566, that notice under s 5 of the Claims Act is a condition precedent to any claim against the State.

37. As we noted earlier in this judgment, s 5 (1) of the Claims Act provides that no action to enforce any claim against the State lies against the State unless notice of intention to make a claim is given in accordance with the section.

38. In PNG Power Ltd v Augerea, the Supreme Court set out criteria that were used to determine that PNG Power was a governmental body, which were:

• It is an entity established pursuant to a statute.
• Its employees are deemed employees in the public service and to whom the Public Services (Management) Act 1995 applies.
• Its Board and its Chief Executive Officer are appointed by government.
• It is obliged to give effect to the policies of the government and not to pursue its own corporate will.
• It is not established to make profits for the government but for the benefit to the people.

39. In National Capital District Commission v Jim Reima (2009) SC993; Mineral Resources Development Authority v Matthew Sisimolu [2010] SC 1090 (Sisimolu), the Court also observed:

... the factors to be taken into account when determining whether an entity is a statutory organization or a State entity, is to revert to the governing legislation which would demonstrate the functions of that organization, whether it is accountable to the State and whether it is a public body.

40. In PNG Power Ltd, the Supreme Court noted that there were conflicting authorities at [64], but specifically considered to the question of whether the NHC was part of the State, finding:

Given the conflicting National Court decisions on point, it is necessary to briefly comment on some of the decisions. We start with the decision in Noami Vicky John v. National Housing Corporation (supra). There, His Honour, Lay J., (as he then) held that the National Housing Corporation (NHC) is a governmental body but is not part of the State because it did not meet all of the factors or elements identified by the Supreme Court decision in Reservation Pursuant to Section 15 of the Supreme Court Act, which we outline in paragraph 54 above. His Honour did have regard to the corporate and commercial nature of the NHC and its set up and operations. However, His Honour did not give any consideration to the fact that the NHC was charged with the duty and responsibility of providing public housing. It is notorious fact that the NHC charges only nominal rentals from its tenants which does not compare at all to the kinds of rents charged in the open market place. The NHC depends heavily on the National Government for most of its funding, which also appoints the board members and service to the NHC is deemed service to the State by s.19 of the National Housing Corporation Act 1990, in the case of the managing director and s. 20 (5) and (6) of the Act. These, in our view, qualified the NHC to be an entity which is part of the State.

41. The fourth respondent rightly identified that there are two different lists of criteria that have been applied in different circumstances – the criteria from PNG Power have been applied to statutory corporations, while the six criteria test to which the appellant referred has been applied to provincial governments. That there are different sets of criteria is endorsed in the case of Sisimolu where it was recognised that some criteria will not be able to be properly tested against the characteristics of every statutory authority.

42. The additional criteria referred to by the appellant – which the appellant identified as the Unitech criterion and the PNG Power public purpose criterion – are probably not properly classified as additional individual criteria. The principle from Unitech, that regard must be had to the establishing statute, is a general principle that ought to guide the application of the applicable set of criteria to a particular entity. The criterion referred to in PNG Power is captured in the fifth criterion from that decision.

43. Contrary to the appellant’s submission on the point, the fact that the NHC can sue and be sued in its corporate name is, at best, neutral. As the fourth respondent submitted, this is also a characteristic of provincial governments pursuant to s 6(b) of the Organic Law on Provincial and Local-level Governments, and provincial governments have unequivocally been held by this Court to be the State for s 5 Notice purposes. Further, whether or not the State of Papua New Guinea is named in the litigation is irrelevant in the context of ascertaining whether an entity like the NHC is “the State”.

44. The authorities, in particular Unitech and Sisimolu, demonstrate that an analysis of the statute establishing the relevant body is critical to the determination of whether it is part of the State. The second respondent was established by the NHC Act, the provisions of which are therefore relevant to the application of the PNG Power criteria.

45. Regarding the first four criteria set out in PNG Power, it is appropriate to venture the following brief comments as to why they are likely satisfied in the case of the NHC:

• Criterion 1: The NHC is a statutory body established by the NHC Act.
• Criterion 2: The employees of the NHC are members of the Public Service and are subject to that legislation. This is provided in ss 17 and 19 of the NHC in regard to the Managing Director of the NHC and ss 20, 22 and 23 for other staff, who are variously subject to the Regulatory Statutory Authorities (Appointment to Certain Offices) Act, the Public Services (Management)Act, the Salaries and Conditions Monitoring Committee Act and the Public Finances (Management) Act.
• Criteria 3: Sections 7 to 13 of the NHC Act give the State (through the relevant Minister) wide and almost unfettered discretion in appointment of management.
• Criterion 4: Section 27 of the NHC Act provides that the NHC shall give effect to any direction given by the NEC or the Minister.

46. As to criterion 5, there has been suggestion that the NHC, in reality, engages extensively in what can be described as commercial activity. It was noted during the oral hearing that the NHC now includes a subsidiary, the National Housing Estate Ltd, which deals with the business aspect of operations. This may be further indicative that the NHC does not satisfy criterion 5, and be a basis on which to exclude it from being an arm of the State. However, in the circumstances of this case it is not possible to decide whether criterion 5 is met, nor whether the position is analogous to that in PNG Power and Public Curator. There was no evidence before the National Court, nor is there any material before this Court, in respect of the commercial activities engaged in by the NHC or the National Housing Estate Ltd. The appellant also did not argue the point in a manner that would allow the Court to make relevant findings in this regard.

47. This case is not an appropriate vehicle for making a definitive statement on the question whether the NHC is an arm of the State in Papua New Guinea. In the absence of proper evidence and argument, it is not appropriate to make definitive statements that will have a broad and significant impact on litigation in this area.

48. Further, we also note that the obiter comments about the NHC in PNG Power are not determinative of the issue of whether the NHC is the State for present purposes.

49. Notwithstanding our reservations in making any broad and definitive finding on the question of whether the NHC is an arm of the State, we consider that the appellant must also fail on grounds 4, 5 and 6 as the appellant has not been able to substantiate them in the appeal. The appellant has simply failed to identify error on the part of the primary Judge. The primary Judge appeared to consider that it was a clear case that the NHC was the State for the purposes of s 5 of the Claims Act, which is understandable given the comments of this Court in PNG Power and the sections of the NHC Act identified above.

50. We note that the question whether the NHC is the State, such that as s5 Notice is required in respect of claims against it, remains an issue open to be litigated in a properly argued case where issues regarding the corporate and commercial nature of its activities can be examined by reference to evidence.

Was the primary Judge correct to dismiss the entire proceeding against all parties?

51. In written submissions and during the course of the hearing, the appellant submitted that, in the event that s 5 Notice was required to be given to the second respondent, it would have been appropriate for the proceeding against the second respondent to be dismissed while the proceeding in respect of the other respondents was permitted to continue. This was because only the second respondent could conceivably be the State and there was no requirement for a s 5 Notice in respect of the other respondents.

52. This was not raised by the appellant in the notice of appeal. However, in any event, the fourth respondent met this argument by noting that in these circumstances it would be futile for the appellant’s proceedings to continue as against the first, third, fourth and fifth respondents where the proceeding against the second respondent had been dismissed. A central aspect of the appellant’s proceeding related to the alleged failure of the second respondent to comply with its statutory duties. Where the claim against the second respondent is not sustained, the remaining claims against the other respondents, and the possibility of granting relief in the terms sought to be granted to the appellant, also fall away.

Ground 7: was the fourth respondent entitled to judgment on the cross-claim?

53. Ground 7 of the notice of appeal is that the primary Judge erred in awarding judgment against the appellant on the fourth respondent’s cross-claim when the dismissal of the proceeding was on the basis of the lack of a s 5 Notice and not on the basis of the fourth respondent’s notice of motion for dismissal of the cross-claim.

54. The primary Judge raised the question of whether it was possible for the fourth respondent’s cross-claim to continue in circumstances where her Honour was making orders dismissing the entirety of the appellant’s proceeding. However, her Honour noted that the cross-claim continued because, pursuant to Order 8 Rule 37 of the National Court Rules:

The claim to be set up under cross claim must be one that the court could have entertained as a separate action by the defendant.

55. The fourth respondent’s cross-claim was therefore unaffected by the dismissal – it was capable by definition of being entertained as a separate action pursuant to Order 8 Rule 37,

56. Judgment for the fourth respondent was entered against the appellant on the basis of the appellant’s default in filing a defence in accordance with Order 8 Rule 45 of the National Court Rules, which provides:

DEFAULT OF DEFENDANT TO CROSS-CLAIM
Where a defendant to a cross-claim does not give notion of an intention to defend the cross-claim or file a defence as required by these Rules, or does not file a defence in accordance with an order to do so, a judgment (including a judgment by default or by consent) or decision (including a decision by consent) on any claim, question or issue in the proceeding on the writ of summons or on any other cross-claim in the proceeding shall, unless the Court otherwise orders, be binding as between the cross-claimant and the defendant to the cross-claim so far as the judgment or decision is relevant to any Claim, question or issue in the proceedings on the cross-claim.

57. This also was not the basis on which the fourth respondent had sought that judgment be entered against the appellant in the fourth respondent’s notice of motion. Rather, the fourth respondent sought judgment on the basis of Order 12 Rules 1 and 30 of the National Court Rules. But the issue of default was raised by counsel for the fourth respondent and by the primary Judge at the hearing in the National Court on 24 May 2017.

58. The result of that default is that the fourth respondent is entitled to relief sought in its cross-claim.

CONCLUSION

59. The appellant has not substantiated his grounds of appeal and the appeal should be dismissed.

60. The only respondent to enter an appearance in respect of the appeal was the fourth respondent. In circumstances where there remains a live issue concerning the status of the NHC, and no submissions of substance were made in respect of costs, we consider it appropriate that each party bears its own costs of and incidental to this appeal.
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Kumura Lawyers: Lawyers for the Appellant
Bradshaw Lawyers: Lawyer for the Fourth Respondent
No appearance for other Respondents