National Development Bank v Noka Builders Ltd [2024] PGSC 157; SC2703 (30 May 2024)

SC2703

PAPUA NEW GUINEA
[SUPREME COURT OF JUSTICE]

SCA NO. 120 OF 2022 [IECMS]

BETWEEN
NATIONAL DEVELOPMENT BANK
Appellant

AND
NOKA BUILDERS LIMITED
Respondent

WAIGANI: MOGISH J, MURRAY J, GEITA J
30 MAY 2023; 30 MAY 2024

SUPREME COURT – Appeal – appeal against decision partly refusing an application to dismiss proceeding for being time-barred - notice of appeal does not state whether the whole or part of the judgment is being appealed from.

PRACTICE AND PROCEDURE – objection to competency of appeal raised in submissions– Order 7 rule 9 (b) of the Supreme Court Rules 2012 – compliance with Supreme Court Rules mandatory – rules not complied with – No objection to competency filed – Inherent power of the Court to determine whether an appeal is properly before it - objection upheld – appeal dismissed

Cases cited
Waghi Savings and Loan Society Ltd v Bank of South Pacific Ltd (1980)
SC185
Lowa v Akip [1991] PNGLR 265
Bruce Tsang v Credit Corporation (PNG) Ltd [1993] PNGLR 112
Bakani v Daipo (2001) SC659
Kukari v Polye (2008) SC907
Pacific Equities & Investments Ltd v Teup Goledu (2009) SC962
Amet v Yama (2010) SC1064
National Capital Ltd v Port Moresby Stock Exchange (2010) SC1053
Idumous Investments Ltd & Anor v National Fisheries Authority (2013)
SC1273
National Capital Limited v Bakani (2014) SC1392
Nipo Investment Ltd v Nambawan Super Ltd & 2 Ors (2017)

Counsel
Mr. C. Joseph, for the appellant
Mr. D. Levy, for the respondent

1. BY THE COURT: This is the decision of this Court in relation to the appeal commenced by Notice of Appeal filed on 12^th September 2022 by the appellant, National Development Bank Ltd (NDB).

2. NDB appeals against the decision of the National Court at Waigani given on 21^st July 2022 in the proceedings – WS No. 131 of 2018 between Noka Builders Ltd (plaintiff, then), now respondent (Noka) and National Development Bank Ltd (defendant, then), whereby the primary Judge partly refused an application by NDB to dismiss the proceeding instituted by Noka for being time-barred and further granted the application by Noka seeking leave to file an Amended Statement of Claim.

Background

(Pre-National Court Proceedings)

3. NDB engaged Noka through two (2) different contracts on 11^th January 2011 to construct two (2) buildings in Lae, Morobe Province. One at Section 41 Lot 19, Oleander Avenue, Eriku (Oleander Ave project) and the other at Section 32, Lot 84, Palm Street, Eriku (Palm St project). Pursuant to its engagement on 11^th January 2011, Noka commenced work. On 14^th November 2011, by way of a letter to Noka, NDB terminated both contracts of 11^th January 2011, claiming non-completion and poor workmanship of work.

National Court Proceedings

4. In its Statement of Claim, endorsed to the writ of summons filed on 12 September 2022, Noka alleged that NDB breached the two (2) contracts by early termination without cause and sought damages for loss suffered as a result of the breach.

5. Noka also claimed that before the termination of the contracts, which it claims was premature, it had rendered services as agreed. At the time of termination, the Oleander Ave project was about 70% completed whilst the Palm St project was about 75 – 80% completed. Three (3) invoices totalling to K314,348.49 for progress claims for the services it rendered were submitted for payment before the termination on 14^th November 2011. Since the submission of the invoices NDB has not settle and they remain outstanding.

6. It is Noka’s further claim that, at the time of termination of the contract, it still had 26 weeks of defects liability period available pursuant to Clause 16 of both Agreements. However, it was not allowed to utilise that period to rectify any defects and bring the projects to completion.

7. In its prayer for relief, Noka sought the following damages:

(1) Special damages in the specific sum of K314,348.49 being for the outstanding invoices;

(2) Special damages in the sum of K1,018,446.95 being the balance of the Contract value outstanding of the Oleander Avenue Property as at the date of termination of the Contract;

(3) Special damages in the sum of K745,251.97 being the balance of the Contract value outstanding in respect of Palm Street Property outstanding from the date of termination of the Contract;

(4) General damages to be assessed for breach of the Building Contracts;

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

8. NDB defended the claim by Noka and made a counter claim. In its defence, NDB denied the claims by Noka for breach of contract, stating:

(1) all amounts due and owing to Noka by way of progress payments have been fully settled,
(2) the contracts were terminated by mutual consent of both parties due to non-completion of the work allegedly completed by Noka and
(3) the cause of action is time-barred.

9. In its cross-claim, NDB pleaded inter alia, that, at all material times, Noka was aware and agreed to complete the Palm St project within 26 weeks from the date of it taking possession of the site and 24 weeks for the Oleander Ave project from the date of it taking possession of the site.

10. Noka took possession of both sites on 8^th November 2010 and around March/February 2011, Noka requested for extension of 6 weeks for the Palm St project and 7 weeks for the Oleander Ave project.

11. Despite its agreement to complete both projects within the agreed time frame, Noka failed to do so, even after extensions were given by it. The final one was allowed in June 2011 marking 31^st July 2011 as the new and final completion date, which Noka again failed to reach. That prompted it to terminate the two (2) contracts which it did on 14^th November 2011.

12. Thereafter, it engaged another company to complete the two (2) projects which it did in May 2012.

13. As a result of Noka’s failure to complete the two (2) projects within the agreed period, NDB claimed Noka breached the contracts of 11^th January 2011 and sought damages for the alleged breach and or damages in negligence in delivering quality finishes within the agreed time.

14. In its prayer for relief, NDB claimed:

(a) General damages.
(b) Loss of business income in the sum of K1,141,800.
(c) Costs and expenses of K1,9044.233.
(d) Interest pursuant to statute.

15. On 2^nd March 2022, NDB filed a motion to dismiss the proceedings for being statute-barred.

16. On 2^nd May 2022, Noka filed a motion for leave to file an Amended Statement of Claim.

17. On 11^th May 2022, the primary Judge heard both applications and on 12^th July 2022, the primary Judge ruled on the two (2) applications as follows:

(1) The plaintiff’s notice of motion filed 2022 seeking leave to file an amended statement of claim is upheld.
(2) The defendant’s notice of motion filed 2^nd March 2022 seeking to dismiss the proceeding for being time- barred is upheld in part.
(3) Leave is granted to the plaintiff to file and serve an amended statement of claim within seven (7) days of this order.
(4) Leave is granted to the defendant to file and serve an amended defence within seven (7) days from the date of service of the amended statement of claim.
(5) In so far as it is sought in these proceedings at paragraphs 19(b) and 21 and paragraphs 3 and 4 of the prayer for relief in the draft amended statement of claim seeking damages in the sum of K1,018,446.95 and K745,251.97 for the balance of the contacts, they are struck out as the action in these proceedings to that extent is time-barred and dismissed.
(6) ...
(7) ...
(8) ...

18. From the Court orders, in particular, Orders 2 & 5, and further from our reading of the of the primary Judge’s reasons for his decision which are at [10] – [22], of the judgement, it is clear to us that, this appeal is really against part of the finding relating to the claim by Noka for unpaid invoices totalling to K314,348.49. The primary Judge found that claim to be not time-barred and allowed it to go to trial through the proposed amended statement of claim which was also allowed.

Grounds of Appeal

19. There are seven (7) grounds of appeal which we have summarised into three (3) main grounds, alleged the primary Judge erred in deciding that:

(1) the claim for unpaid invoices totalling to K314,348.49 arose on

9^th August 2017. It is therefore not statute-barred under Section 16 of the Frauds and Limitations Act 1988.

(Ground (a) of the Notice of Appeal).

(2) it is not disputed that NDB terminated the two (2) contracts on 14^th November 2011, however it did not pay for the work Noka did prior to the termination of the contracts. Noka was therefore entitled to submit invoices for the work it did pursuant to Clause 18 of the ContractS. (Grounds (b) – (d) of the Notice of Appeal).

(3) Noka had made a case to allow the Statement of Claim to be amended to include a cause of action in quantum meruit as an alternative to the primary cause.

(Grounds (e) - (g) of the Notice of Appeal).

Issues

20. From the summarised grounds of appeal, three (3) main issue arise for this Court to determine in the following order:

(1) Is Noka’s claim for outstanding invoices time-barred?
(2) If not, is Noka entitled to bring its claim under the contracts of 11 January 2011?
(3) Did the primary Judge commit an error in his exercise of discretion in granting leave to amend?

21. In the course of hearing submissions, Mr. Levy of counsel for Noka raised a preliminary objection to the competency of this appeal.

22. We consider it necessary to determine this preliminary issue first before proceeding to consider the issues we have posed in [20] because for this Court to consider those issues, the appeal before us must be competent. If it is not competent, the appeal will be dismissed and that would be the end of the matter.

Objection to competency

23. It is Noka’s submission through its counsel that, the Notice of Appeal is incompetent in that, it has failed to state whether it is against the whole or part only and what part of the judgment is appealed from. That is critical. It offends Order 7 rule 9 (b) of the Supreme Court Rules which is in mandatory term. For that, the appeal must be dismissed. Mr. Levy referred us to the Supreme Court judgment in the case of Idumous Investments Ltd & Anor vs. National Fisheries Authority (2013) SC1273 in support of his submission.

24. In response, Mr. Joseph of counsel for NDB contends, the objection by Noka itself, is incompetent and must be dismissed in that, no objection has been filed. The respondent cannot raise any objections to the competency of an appeal without first filing an objection. This Court must therefore dismiss the objection.

Consideration

25. Mr. Joseph’s contention is rejected outright as it is without merit. It is now settled that, the Supreme Court retains the power to determine whether an appeal is properly before it at any stage of the proceeding, even in cases where, as here, no objection to competency is filed. In Amet vs. Yamo (2010) SC1064 Salika DCJ (as he then was) and Batari J at [27] stated:

“27. The issue of competence is to do with legal and jurisdictional aspects of the court process. More often than not, this concerns the validity of the very proceedings before the court. Hence, it can be raised and determined at any stage of the proceedings. In, Chief Collector of Taxes vs. Bougainville Copper Limited and Bougainville Copper Limited vs. Chief Collector of Taxes (2007) SC 853 the Supreme Court, adopting the principle in Patterson Lowa & Ors vs. Wapula Akipe & Ors [1992] PNGLR 399 made that clear when it held:

“It is settled law that, the Courts have an inherent jurisdiction to watch over their processes and procedures to ensure that they are not abused. This is an issue that is always open to the court at any stage of the proceedings. As such, it does not matter whether a party appearing before the Court is raising it, because it goes into the competence of the very proceedings brought before the Court.””
(emphasis added)

26. The Courts in Waghi Savings and Loan Society Ltd v Bank of South Pacific Ltd (1980) SC185, Lowa v Akip [1991] PNGLR 265, Bruce Tsang v Credit Corporation (PNG) Ltd [1993] PNGLR 112, and Amet v Yama (2010) SC1064) have also stated that, the question of the Supreme Court’s jurisdiction remains open and can be determined by the court at any time. This is so, even in instances where no challenge to jurisdiction is raised by a party or where the question of jurisdiction is raised incompetently, eg: where a notice of objection is filed outside the time permitted by the Supreme Court Rules.

27. All courts, and in particular the Supreme Court which is at the pinnacle of the hierarchy of the National Judicial System, must be vigilant in ensuring that it has jurisdiction to deal with the matter before it and that the jurisdiction of the court has been properly invoked (Pacific Equities & Investments Ltd v Teup Goledu (2009) SC962, National Capital Ltd v Port Moresby stock Exchange (2010) SC1053).

28. And in Nipo Investment Ltd v Nambawan Super Ltd & 2 Ors (2017) the Supreme in upholding an objection to competency of an appeal that failed to comply with mandatory provision of Order 10 Rule 3 (b) (i) & (ii) of the Supreme Court Rules 2012, at [8] & [9] stated:

“8. As the Supreme Court has observed on multiple occasions, an appeal may be incompetent if it does not comply with the requirements of the Supreme Court Act and or the SCR: Haiveta v Wingti (1994) PNGLR 189, Neville v National Executive Council of Papua New Guinea [2015] SC1431 at [22], Papua New Guinea Law Society v Cooper [2016]

SC1553 at [5].” and

“9. In this case the material before the Court, both in the affidavit of

Mr. Shepherd and the application book itself, shows that Order 10 Rule 3 (b) (i) and (ii) has not been complied with. The appellant refers to fairness in its submissions. While the strict application of these rules can lead to what may appear to be harsh result, the need for parties to comply with Rules of Court is not an exercise in pedantic technicality. The Rules ensure that the difficult and often complex process of litigation occurs in an ordered manner, meeting the expectations of the Court and all parties. This Court has been consistent in finding that breach of Order 10 Rule 3 (b) (i) and (ii) is fatal to an appeal. Bakani (2014) SC1392 remain good law, and no reason has been advanced to us to persuade us that we should not follow these authorities.”

29. In this case, Mr. Joseph, in his submissions stated, the appeal is really against part of the National Court’s decision that allowed part of the claim to go through. Mr. Levy contended, despite what was submitted, the notice of appeal does not reflect that which is required in Order 7 Rule 9 (b) of the Supreme Court Rules. In other words, Mr. Levy contends that, Order 7 Rule 9 (b) of the Supreme Court Rules was not complied with, and so the appeal is incompetent and must be dismissed.

30. Order 7 Rule 9 (b) of the Supreme Court Rules is in the following terms:
The notice of appeal shall state whether the whole or part only and what part of the judgment is appealed from. (emphasis added)

31. The said rule is in mandatory terms. The Notice of Appeal by NDB at [1] reads:

“1. THE Appellant appeals against the decision of the National Court (constituted by the Honourable Justice Makail) given on the 12^th day of July 2022 at Waigani in proceedings WS No. 131 of 2018 refusing the Appellant’s application to dismiss the entire proceedings as being time-barred and granting the Respondent leave to file an amended statement of claim together with consequential orders.”

32. In Nipo Investments Ltd, (supra) the Supreme Court, following the judgments in Bakani v Daipo (2001) SC659, Kukari v Polye (2008) SC907 and National Capital Limited v Bakani (2014) SC1392, held, an appeal may be incompetent if it fails to comply with mandatory requirements of the Supreme Court Act or Rules.

33. Applying the principles discussed to this case, the Notice of Appeal by NDB is incompetent in that it has failed to comply with Order 7 Rule 9 (b) of the Supreme Court Rules. It follows therefore that the appeal must be and is now dismissed.

Conclusion

33. As we have dismissed the appeal by NDB for being incompetent, that is the end of the matter.

Orders

1. The objection to competency by Noka is upheld.
2. The appeal by NDB is dismissed for being incompetent.
3. NDB shall pay Noka’s cost of and incidental to the appeal on a party-party basis or to be taxed if not agreed.
   

Lawyers for the appellant: Ashurst PNG Lawyers
Lawyers for the respondent: Livingstone Lawyers