Nikint Investment Ltd v Niganu [2020] PGSC 6; SC1919 (21 February 2020)

SC1919

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA NO. 65 OF 2018

BETWEEN:
NIKINT INVESTMENT LIMITED
Appellant

AND:
THOMAS NIGANU
First Respondent

AND:
CATHLEEN AO
Second Respondent

AND:
GERTRUDE MARIKA
Third Respondent

AND:
DOREEN TATU
Fourth Respondent

AND:
MUAMBIE FIROMPA
Fifth Respondent

AND:
WARI KAPI
Sixth Respondent

AND:
LUKE VAI
Seventh Respondent

AND:
STEVEN OI
Eighth Respondent

AND:
JOHN SENDY SIREH
Ninth Respondent
AND:
BENJAMIN SAMSON
Tenth Respondent

AND:
YANOL APIN, REGISTRAR OF TITLES
Eleventh Respondent

AND:
HON. BENNY ALLAN, MINISTER FOR LANDS
& PHYSICAL PLANNING
Twelfth Respondent

AND:
INDEPENDENT STATE OF PAPUA NEW GUINEA
Thirteenth Respondent

Waigani: Yagi, Kariko and Koeget, JJ
2019: 31^st October
2020: 21^st February

PRACTICE AND PROCEDURE –claim against the State – State sued with other defendants –lack of s.5 Notice – whether National Court has discretion whether or not to dismiss entire proceedings

Cases Cited:

CMSS (PNG) Ltd v State (2014) N5717
Huriba Andago v Andy Hamaga (2018) N7332
Jack Apai v David Ling (2014) N7567
JA Construction Limited v Ipisa Wanega (2007) N3243
James Mara v Kakas Muikin (2009) N3971
Mission Asiki v Manasupe Zurenuoc (2005) SC797
Paul Tohian v Tau Liu (1998) SC566
Rundall v Motor Vehicle Insurance Trust [1988] PNGLR 20
State v Downer Construction (PNG) Ltd (2009) SC979
Tukuliya v Director, Papua New Guinea National Museum & Art Gallery (2018) SC1697
Yamanka Multi Services Ltd v National Capital District Commission (2016) N6556

Legislation:

Claims By And Against The State Act 1996
Constitution
Motor Vehicles (Third Party Insurance) Act, Ch. 295

Counsel:

Ms D Doiwa, for the Appellant
Mr S Phannaphen, for the first respondent
Mr A Token, for the Second to Seventh Respondents
No appearances for the Eighth to Thirteenth Respondents

JUDGMENT

21^st February, 2020

1. BY THE COURT: This is an appeal from the decision of the National Court given on 11^th of April, 2018 in proceeding WS (HR) No. 267 of 2016 – Thomas Niganu –v- Cathleen Ao and 12 Others in which the trial Judge ordered the proceeding be dismissed against the State for non-compliance with s.5 of the Claims By And Against The State Act 1996(the Claims Act) but that the suit otherwise continue as against the remaining defendants.
   

National Court proceeding

2. The first respondent Thomas Niganu (Niganu) is the registered proprietor of land described as Allotment 66 Section 484 Hohola. National Capital District.
   
3. In the National Court, he pleads in his Statement of Claim that:
   
   • In 2009 he lodged his application seeking rezoning of vacant State land (part of a road reserve) adjoining his property so that the area of his property could be extended to include the vacant land as residential land, to allow him to build 40 residential units with adequate car parking.
   • The application together with accompanying documents including the survey and building plans were passed to the second respondent Cathleen Ao(Ao), an employee of the Department of Lands & Physical Planning (Lands Department)to submit to the relevant authorities for consideration.
   • Instead, Ao and five co-workers plagiarized his documents and under the auspices of a home-ownership scheme for staff of the Lands Department, lodged their own applications for rezoning and sub-division of the same vacant land.
   • Their applications were subsequently approved, and each of them wasissued a State Lease over one of the newly-created blocks of land described as Allotments 86, 87, 88, 89 and 28 Section 484, Hohola.
     
4. Ao and her co-workers are named as the first six defendants. It is alleged that they colluded and fraudulently obtained the new State Leases.
   
5. Two of the new Allotments were then sold to third parties - one Steven Oi, and the other to the appellant. The two transferees are also named as defendants. Their registered titles are sought to be nullified on the basis that the State Leases were initially obtained by fraud.
   
6. The other defendants are:
   
   • John Sendy Sireh, the surveyor who drew up the relevant survey plan for the rezoning and sub-division of the vacant land. It is alleged that he plagiarized the survey plan prepared by Niganu.
   • Benjamin Samson, the former Registrar of Titles, against whom it is alleged that he colluded with Ao and her co-workers in obtaining the new State Leases.
   • Yanol Apin, the Registrar of Titles (at the time of filing of the Writ), Interestingly, no cause of action is pleaded against this officer. Rather, Niganu requires this officer to explain to the Court whether the issuance of the new State Leases followed proper process.
   • Hon. Benny Allan, who was then the Minister for Lands & Physical Planning. It is alleged that he wrongfully approved the new State Leases that had been issued as a result of fraud.
   • The State, who was sued on the basis of vicarious liability for the wrongful actions of its “servants and or agents”, who Niganu lists as Ao and her co-workers, the Registrar of Titles and his predecessor, and the Minister.
     

The decision appealed

7. On 11^th April 2018, counsel for the State (also representing the Registrar of Titles, his predecessor, and the Minister) moved an application in the National Court seeking dismissal of the proceedings for lack of Notice under s.5 of the Claims Act, and alternatively, under O12 r40 and O8 r27 of the National Court Rules for failing to disclose a reasonable cause of action, for being frivolous or vexatious and for abuse of process.
   
8. After deciding that s.5 Notice was not given, the learned trial Judge acknowledged he was obliged to dismiss the proceedings against the State, but he nonetheless considered he had a discretion as to whether or not to wholly dismiss the proceedings against all the defendants. His Honour reasoned:
   

“ .... it does not seem to me to necessarily follow that the proceedings against the State having been dismissed, the whole proceedings ought to be dismissed. I understand that that is the usual consequence when the court finds that section 5 has not been complied with. ....

As section 5 as counsel have indicated and it has been shown in a number of cases is a law that is designed or the purpose of which is to protect the State or to put the State on notice that there is a likelihood of a claim being made against it so that the State can, because it has so many public officials for whom it is responsible and potentially liable for their conduct and it allows the State the opportunity to investigate the claim and sort out its merits and so that claims against the State are not delayed and prolonged. So if the proceedings against the State are dismissed, that purpose of section 5(1) will be achieved in this case. .....

...............................................................................................................

It is relevant to consider the overall interests of justice and in interpreting the law the courts must give paramount consideration for the interests of justice.

I do not think it would be just to dismiss these proceedings against all other defendants simply because of the failure of the plaintiff to comply with section 5(1). Therefore, the proceedings will be dismissed against the State. The proceedings will remain against the other defendants including those who had been sued apparently in their capacity as public officials.....The State is an individual entity. It is a legal person and it has separate existence from the officers and functions of it. For those reasons as indicated, the proceedings against the State only will be dismissed.”(Our emphasis)

Grounds of appeal

9. Summarized, the appellant’s grounds of appeal allege that:
   
   • (1) The trial judge erred in law in not dismissing the entire proceedings for the first respondent’s failure to give proper s.5 Notice.
   • (2) The trial judge erred in law and in fact, in separating the State from its employees and functionaries,contrary to the principles of vicarious liability and the Wrongs (Miscellaneous Provisions) Act, Ch.297.
   • (3) The trial judge erred in law and in fact, in separating the State from its employees and functionaries, contrary to the pleadings in the Statement of Claim.
   • (4) The trial judge erred in law and in fact, in intervening in the pleadings in the Statement of Claim.
   • (5) The trial judge erred in law and in fact, in finding that the overall interests of justice favoured the first respondent.
     

Ground 1

10. We consider the critical and fundamental question to answer on this appeal is whether or not the Court is obliged to dismiss the entire proceedings in all cases involving a claim against the State where s.5 Notice has not been given. Put another way, where a s.5 Notice has not been given in proceedings involving a claim against the State, does the Court have a discretion whether or not to dismiss the entire proceedings in any circumstance?
    
11. Ms Doiwa for the appellant, supported by Mr Token, argued that based on the leading authority of Paul Tohian v Tau Liu (1998) SC566, the proceedings ought to have been dismissed in its entirety. Mr Pannaphan for the first respondent, submitted that s.5of the Claims Act operates for the benefit of the State only, and therefore the trial Judge did not err.
    
12. Section 5(1) of the Claims Act reads:
    

“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.” (Our emphasis)

13. The Supreme Court has interpreted the phrase "no action" to mean no proceedings in a court; Rundall v Motor Vehicle Insurance Trust [1988] PNGLR 20, approved in Paul Tohian v Tau Liu. In Rundall v Motor Vehicle Insurance Trust, the Court considered the interpretation of s.54(6) of the Motor Vehicles (Third Party Insurance) Act, Ch. 295 which contains similar expressions to s.5(1) of the Claims Act. Section 54(6) provides that “No action to enforce any claim” against the Motor Vehicles Insurance Trust lies against the Trust “unless notice of intention to make a claim is given” to the Trust. The majority held that a notice of intention to make a claim is a condition precedent to the institution or commencement of any action (court proceedings) to enforce the claim.
    
14. In Paul Tohian v Tau Liu, the Supreme Court in referring to s.5 of the Claims Act, observed:
    

“The provision under consideration is very similar to s 54 of the Motor Vehicles (Third Party Insurance) Act (Ch. 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).” (Our emphasis)

15. The Court then concluded:
    

“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.” (Emphasis added)

16. Numerous cases both in the National and Supreme Courts have since applied the principle highlighting that s.5 Notice must be given first before proceedings are filed. The notice requirements only apply to claims based on contract, tort, and enforcement of constitutional rights and freedoms under ss.57 & 58 of the Constitution; section 2 of the Claims Act, but not judicial reviews; Mision Asiki v Manasupe Zurenouc (2005) SC 797.
    
17. Many of those cases have involved defendants other than the State, mostly employees, agents and officials of the State,similar to the instant matter. Invariably, the State has been sued on the basis of vicarious liability. Paul Tohian v Tau Liu was such a case where the Police Commissioner was named as the other defendant. It was not an issue for the Supreme Court then to decide whether or not it had any discretion regarding the validity of the proceedings as against the Police Commissioner, because it determined the whole of the proceedings was incompetent.
    
18. We are not aware of, nor was our attention drawn by counsel, to any case involving multiple defendants, where for want of a s.5 Notice, the Court has only dismissed the claim against the State but not the entire proceedings. We believe the trial Judge was mindful of this when he remarked:
    

“This is not usually regarded as a discretionary matter and I do not see that I have any discretion other than to dismiss the proceedings against the State at least. I do however find that I have a discretion in that it does not seem to me to necessarily follow that the proceedings against the State having been dismissed, the whole proceedings ought to be dismissed. I understand that that is the usual consequence when the court finds that section 5 has not been complied with.”(Our emphasis)

19. We note however the views expressed by his Honour Hartshorn J in Jack Apai v David Ling (2014) N7567, that seemingly favour the appellant’s position. In that case, the State was named a defendant together with the National Forest Authority, its Managing Director, Vanimo Forest Products Limited and its General Manager. The dispute apparently concerned a timber permit issued by the Authority to Vanimo Forest Products Limited. In considering whether or not defendants other than the State are entitled to apply for dismissal of proceedings for want of a s.5 Notice, his Honour observed:
    

“12. As to whether the claims against the second defendant are similarly affected, a defendant to an incompetent proceeding is entitled to question the competency of a proceeding against it on the ground that it is affected by the bringing of an incompetent proceeding in which it is named as a defendant and is obliged to defend: Paul Eddie v. Bill Kirokim (2012) N4932, CMSS (PNG) Ltd v. State (2014) N5717.

13. Further, from a perusal of the claims against the second defendant in the statement of claim, it is apparent that they are intertwined and not readily or easily severable from the claims against the third and fourth defendants. Consequently, the claims against the second defendant are similarly affected by the incompetent proceeding. The whole proceeding should be dismissed as an abuse of process for the reasons given....”
    
20. We first agree with his Honour’s view that a defendant other than the State may make application. We also believe that his Honour’s remarks in [13] apply in all cases in which the State is sued with other defendants, for reasons that:
    
    • a suit against the State is normally founded on vicarious liability, and usually includes servants, agents and officials of the State as defendants whose actions are deemed to render the State liable pursuant to the Wrongs (Miscellaneous Provisions) Act, Ch.297; and
    • in the case of any other defendant, the claims generally arise out of an alleged legal relationship between that defendant and the State, directly or indirectly through the conduct of servants, agents or officials of the State.
      

In those circumstances, the various claims are commonly “intertwined and not easily severable”, and this is particularly so where vicarious liability is pleaded against the State.

21. We would emphasize however that once court proceedings are found incompetent, all the claims or causes of action contained in the originating document cannot stand.The Court has no discretion, contrary to the trial Judge’s view. That is the effect of the principle established by Paul Tohian v Tau Liu. It is the proceedings that is rendered incompetent, and not simply the claim against the State.The dismissal of the claim against the State does not validate proceedings that are void when filed.
    
22. In State v Downer Construction (PNG) Ltd (2009) SC979, the Supreme Court (Gavara-Nanu, Kandakasi and Jay JJ) had the occasion to consider the meaning of the term “action” contained in s.5(1) and held that the term referred to court action or court proceedings, although Kandakasi J viewed the term extended to include other modes of dispute resolution including arbitration.We would endorse the view of the majority in that case, and we also approve the meaning given to the word “claim” expressed by Gavara-Nanu J and that is, it refers to a claim which contemplates legal action or legal proceedings.
    
23. A “claim” must obviously be of the type described in s.2 of the Claims Act. A court action or court proceedings is commenced by the filing of a writ or the appropriate originating process, and that would contain the claim or the cause of action alleged against a defendant. Where there are multiple defendants, there may be different claims contained in the originating process as against each of them. But that does not mean there are different court actions or proceedings – there is but one proceedings, which is brought into existence by the originating process. As has been already underscored, where s.5 Notice requirements are not met, the court action or court proceedings is regarded incompetent.
    
24. The Supreme Court in discussing the import of Paul Tohian v Tau Liu, has observed that:
    
    • the proceedings are “void from the beginning” if s.5 Notice has not been given; Bokin v Dana (2005) SC817, (Sevua, Sawong & Lay, JJ)
    • the entire proceedings is incompetent; Tukuliya v Director, Papua New Guinea National Museum & Art Gallery([2018) SC1697, Gavara-Nanu, Manuhu &Kassman JJ).
      
25. It has also been stated that the default:
    
    • “makes a writ void”; per Davani J, JA Construction Limited v Ipisa Wanega(2007) N3243 at [29]
      • “would invalidate the proceedings and the plaintiffs’ action would have no legal basis”; per Gavara-Nanu J, James Mara v Kakas Muikin (2009) N3971 at [12]
      • renders the proceedings“an abuse of process”; per Hartshorn J, CMSS (PNG) Ltd v State(2014) N5717 at [26]
      • “is fatal and standing on its own, justifies the dismissal of this proceedings”; per Dingake J, Huriba Andago v Andy Hamaga (2018) N7332 at [28]
        
26. It is significant to note that in all the cases cited in the preceding two paragraphs, the State was alleged to be vicariously liable and was sued along with employees, officers and functionaries, but the cases also involved a petroleum company (CMSS (PNG) Ltd v State) and a commercial bank (Huriba Andago v Andy Hamaga). And in those cases, the entire proceedings were dismissed as being incompetent for want of a s.5 Notice.
    
27. The trial Judge reflected that the purpose of s.5 is achieved by the dismissal of the claim against the State where there is no Notice. We respectfully consider his Honour’s statement to be misconceived. The purpose of s.5 is achieved if Notice is given before an action is filed, and not by dismissing a claim for non-compliance with the provision. The purpose is achieved pre-court proceedings, and not subsequent to the filing of proceedings. Dismissal is merely the consequence of the non-compliance.
    
28. The trial Judge did not specifically refer to Paul Tohian v Tau Liu even though the State’s application was founded on this case authority, nor did he suggest that the decision was wrong in law. Instead, his Honour was influenced in his decision by the general principle of “interest of justice”, citing Mision Asiki v Manasupe Zurenouc, because he considered the serious allegations pleaded in the Writ ought to be tried. It is trite that “justice” means “justice according to law”. The relevant and applicable law in the present matter is that stated in Paul Tohian v Tau Liu. With respect, the trial Judge was bound by this decision of the Supreme Court, consistent with Schedule 2.9 of the Constitution.
    
29. We would also add that the first respondent, who opposed this appeal, did not argue that the decision in Paul Tohian v Tau Liu should be reconsidered.
    
30. In the circumstances, we find that the trial Judge erred in law and we would uphold the first ground of appeal.
    

Grounds 2-5

31. Following our finding that the trial Judge wrongly decided he had a discretion whether or not to dismiss the entire proceedings, we do not deem it necessary to determine the other grounds of appeal as they concern the exercise of a purported discretion the trial Judge did not have.
    

Conclusion

32. We uphold the appeal and award costs against the first respondent.
    

Order

33. This Court orders that:
    
    • (1) The appeal is allowed.
      
    • (2) The orders of the National Court dated 11^th April 2018 in proceedings WS (HR) No. 267 of 2016– Thomas Niganu v Cathleen Ao and 12 Others are quashed and set aside.
      
    • (3) The said National Court proceedings WS (HR) No. 267 of 2016 is dismissed in its entirety.
      
    • (4) The first respondent shall pay the costs of the appellant and the other respondents, of this appeal and of the National Court proceedings.

________________________________________________________________
Makap Lawyers: Lawyers for the Appellant
Lhyrn Lawyers: Lawyers for the First Respondent
Pubic Solicitor: Lawyers for the Second to Seventh Respondents
Solicitor-General: Lawyers for the Tenth to Thirteenth Respondents