N2774

PAPUA NEW GUINEA

IN THE NATIONAL COURT OF JUSTICE

WS NO. 943 OF 2003

BETWEEN:

KOI ANTONIUS
Plaintiff

AND:

FANTSON YANINEN
ADMINISTRATOR OF EAST SEPIK PROVINCE AND
CHAIRMAN OF LIQUOR LICENSING BOARD
First Defendant

AND:

EAST SEPIK PROVINCIAL GOVERNMENT
Second Defendant

WEWAK: DAVID, AJ
2004: 24th, 26th November

PRACTICE AND PROCEDURE – application for default judgment for failure to give discovery – cross-application to dismiss writ of summons – no notice under Section 5 of the Claims by and Against the State Act 1996 – notice is condition precedent to proceedings against the State – Supreme Court enunciation that "State" includes provincial governments and its arms and agencies delivered after cause of action arose – conduct of the defendants to defend proceedings does not amount to waiver of their right to raise objection for lack of notice - enunciation has retrospective effect– entire proceedings dismissed – costs a discretionary matter – conduct of defendants considered – parties bear own costs. 

Cases cited:
The State v. Bisket Uranguae Pokia (1980) PNGLR 97
The Ship "Federal Huron" v. Ok Tedi Mining Ltd (1986) PNGLR 5
Reservation pursuant to Section 15 Supreme Courts Act, SCR 1 of 1998 (2001) SC672
Pato v. Enga Provincial Government (1995) PNGLR 469
Pupune v. Makarai (1997) PNGLR 622
Paul Tohian, Minister for Police and the State v. Tau Liu (1998) SC566
Milne Bay Provincial Government v. Roy Evara and the State (1981) PNGLR 63.
Karl Paul v. Aruai Kispe & PNG Forest Authority (2001) N2085
Paul & Mary Bal v. State (2003) N2481
Treid Pacific (PNG) Limited v. Eastern Highlands Provincial Government, WS No. 1052 of 2000, Unreported, 24th June 2004
Sarakuma Investment Limited trading as Wabusa Mini Tavern v. East Sepik Provincial Government & Ors (2004) N2621

Counsel:
J Apo for the Plaintiff
J Alman for the Defendants

RULING

INTRODUCTION

The Plaintiff filed an application by way of Notice of Motion filed on 10th November 2004 seeking orders pursuant to Order 9 Rule 15 of the National Court Rules ("the NCR") that the Defendants’ defence and notice of intention to defend be struck out and that default judgment be entered against the Second Defendant and further that the matter be set down for trial for damages to be assessed plus costs against the Second Defendant. The Defendants filed a cross-application by way of their Notice of Motion filed on 18th November 2004 seeking orders that the Writ of Summons be dismissed on the basis that the Plaintiff did not give notice under Section 5 of the Claims by and Against the State Act 1996 ("the Claims Act") or in the alternative the matter be set down for trial.

BACKGROUND

On 7th July 2003, the Plaintiff issued a Writ of Summons against the Defendants. The Plaintiff’s claim against the First Defendant is in the latter’s capacity as the Provincial Administrator of the East Sepik Province who is also the Chairman of the East Sepik Liquor Licensing Board ("the Board"). 

The Plaintiff alleges that from 1992 to 1998, he was carrying on a business known as Sachondai Tavern in Wewak. On or about 18th September 1998, the Plaintiff applied to the Board for the renewal of his liquor trading licence for that business and paid the appropriate fee. His application was refused on 16th November 1998 on the basis that the tavern was too close to the road and that road users had experienced alcohol related incidents near the tavern in the past. The application fee was refunded on 18th August 1999. The Plaintiff further alleges that the refusal to re-issue a liquor licence had no basis and was in breach of the East Sepik Provincial Liquor Licensing Act 1980 ("the Liquor Licensing Act"). Because the liquor licence was not re-issued, the Plaintiff claims that he was not able to operate his business and has thereby suffered substantial financial loss and damage. The Plaintiff alleges that the Defendants are vicariously liable for the actions of the Board and claims against them the sum of K500,000.00, damages, interest and costs.

The Plaintiff served the Writ of Summons upon the First Defendant by delivering a copy of the same to the First Defendant’s Secretary at the First Defendant’s Office on 10th July 2003. The Plaintiff served the Writ of Summons upon the Second Defendant by delivering a copy of the same to John Alman, Provincial Legal Officer for the East Sepik Provincial Government on 10th July 2003.

On 11th July 2003, John Alman filed a Notice of Intention to Defend and a Notice of Appearance on behalf of the Defendants

The Defendants filed their Defence on 1st August 2003 stating in essence that the refusal to re-issue the licence was subject to the Plaintiff relocating the tavern and the loss he alleges to have suffered was his own making and they deny any liability at all. The Defendants also state that the Plaintiff commenced relocating the tavern to another location in January 2002 and after two (2) inspections, the Board finally re-issued a licence to the Plaintiff on 22nd November 2002 to commence trading from 1st October 2002 and expiring on 30th October 2003.

On 12th August 2004, the Plaintiff filed a Notice of Discovery requiring the Second Defendant to give discovery of documents with verification within fifteen (15) days of service. That notice was served upon the Second Defendant on 18th August 2004 and the Second Defendant has failed to give discovery as requested. 

There is no dispute that the Plaintiff did not serve a notice under Section 5 of the Claims Act.

ISSUES

I consider the pertinent issues to be:-

1.	Whether the conduct of the Defendants is such that they have waived their right to raise the objection of lack of notice under Section 5 of the Claims Act at this stage of the proceedings?;

2.	Whether the decision of the Supreme Court enunciating that the term "State" in the Claims Act includes provincial governments and its arms and agencies has a retrospective operation which would require claimants to give notice under Section 5 of the Claims Act where a cause of action arose prior to the date of the decision?;

3.	Whether default judgment be entered against the Second Defendant having defaulted to give discovery?.	

LAW

I will firstly deal with Issues 1 and 2 together and then the last issue which will be determined by my ruling on the first two (2) issues.

The term "State" in the Claims Act applies and extends to Provincial Governments and its arms and agencies: Reservation pursuant to S.15 Supreme Court Act, SCR No.1 of 1998 (2001) SC672. This decision was delivered by the Supreme Court on 8th November 2001. By this decision, the view expressed by His Honour Injia, J (as he then was) in Pupune v. Makarai (1997) PNGLR 622 that the term "State" included Provincial Governments and Local Level Governments was approved. His Hounour Kapi, DCJ, as he then was, had previously expressed the opposite view in Pato 
v. Enga Provincial Government (1995) PNGLR 469 that the term "State" only included the National Government, or an arm, department, agency or an instrumentality of the National Government which did not include Provincial Governments. 

All claims by and against the State are governed by the Claims Act. Section 5 of the Claims Act provides as follows:-

"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 contract, within a period of six months after the claimant became aware of the alleged breach; or

(c)	within such 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 7:45am and 12 noon, or 

(c)	1.00pm and 4.06pm, 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, or any day which is not a Saturday, Sunday or a public holiday declared by or under the Public Holidays Act (Chapter 321)."

For a claim against the State to stand, notice under Section 5 of the Claims Act which must be in writing and containing sufficient details of an intended claim must be served on the officers specified in Subsections (1)(a) and (b) of that section in accordance with the mandatory method of service under Subsection 3 of that section and within six (6) months after the cause of action arose or within such extended period allowed by the Principal Legal Adviser or this Court: see Hewali v. Police Force and The State (2002) N.2233 and Bokin v. The Independent State of Papua New Guinea (2001) N.2111. In 
Paul Tohian, Minister for Police and the State v. Tau Liu (1998) SC566, the Supreme Court held that:-

"The purpose of the requirement to give notice remains the same whether or not the notice is required to be given within 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".

FIRST ISSUE:	CONDUCT OF DEFENDANTS TO DEFEND PROCEEDINGS

Mr Apo has submitted that by the conduct of the Defendants to defend the proceedings since the Writ of Summons was served upon them on 10th July 2003 and not raising the objection of lack of notice under Section 5 of the Claims Act until now, they have waived their right. On the other hand, Mr Alman contends that the Plaintiff’s action is baseless for lack of such notice and refers me to the case of Sarakuma Investment Limited trading as Wabusa Mini Tavern v. East Sepik Provincial Government & Ors (2004) N2621 where His Honour Cannings, J dismissed the entire proceedings as the plaintiff there, as in this case, did not give notice under Section 5 of the Claims Act. In that case, the plaintiff also applied to the Board for the renewal of his liquor trading licence but was refused. The plaintiff claimed that the Board wrongly refused to re-issue the licence which was in breach of the Liquor Licensing Act. The defendants there did not file a defence but when the plaintiff filed an application for default judgment to be entered, they, as in this case, then filed their application to dismiss the proceedings for lack of notice.

Mr Apo has referred me to the case of Treid Pacific (PNG) Limited v. Eastern Highlands Provincial Government, WS No.1052 of 2000, Unreported, 24th June 2004 to support his arguments in relation to the second issue but I find it equally worthy of it being considered here as well to the extent that it also relates to the conduct of the defendant there. The Plaintiff in that case did not serve a notice pursuant to Section 5 of the Claims Act before issuing its Writ of Summons against the Eastern Highlands Provincial Government on 15th August 2000 which was served on 10th October 2000. A defence was filed on 26th June 2003. Two (2) Notices of Motion came before His Honour, Hinchliffe, J, one from each party. The Defendant sought, inter alia, an order that the Writ of Summons be struck out for non-compliance with the provisions of the Claims Act. The Plaintiff on the other hand sought, inter alia, an order that it be granted leave to give notice under Section 5 of the Claims Act within fourteen (14) days of the grant of such order. It appears from the Brief Reasons for Decision that the parties had attempted to settle the matter out of court which is reflected by the very late filing of the defence as well as the said motions which were moved on 31st May 2004. His Honour said:-

"I am of the view that when the plaintiff issued this writ on 15th August 2000 there was nothing to say that a Provincial Government fell into the meaning of "the State" as in Section 5 of the said Act and it therefore follows that the plaintiff was not bound to serve a notice of intention to defend to make a claim on the State prior to issuing of this Writ. The plaintiff did not fall into error when it issued proceedings against the defendant without giving the said prior notice of intention. I am also decided that it is now not necessary for the plaintiff to serve the said notice of intention as the matter has moved on since then and the defendant is well notified and informed of the plaintiff’s claim. On this point I finally say that it is also not necessary for the plaintiff to serve the said notice of intention because at the time of issuing this Writ there was, as I have found, no requirement on the plaintiff to serve such a notice on the State". (my emphasis)

In my view, it would have been incumbent upon the Defendants to have pleaded their objection in their Defence as a matter of practice under Order 8 Rule 14 of the NCR and make an application to dismiss the proceedings thereafter, but having not done so does not amount to a waiver of their right to raise the objection even at this stage of the proceedings. The Claims Act stipulates that it is a claimant who must comply with the mandatory statutory requirement and the failure of the Defendants to raise their objection does not remove that burden from the Plaintiff in this case. It is my respectful view that procedures laid down by legislation must be complied with by claimants and the Court must ensure that there is such compliance even if it means that the Court exercise its wide discretionary power of its own volition to determine proceedings for non-compliance as being irregular and incompetent: see Karl Paul v. Aruai Kispe and Ors (2001) N2085. This Court even has the power to stop a case at any stage of the proceedings even where the parties have resolved not to raise the issue of lack of notice or not to defend the proceedings: Paul & Mary Bal v. State & Ors (2003) N2481.

SECOND ISSUE:	RETROSPECTIVE OPERATION OF SUPREME COURT 
DECISION

Prior to the Supreme Court decision in Reservation pursuant to S.15 Supreme Court Act, SCR No.1 of 1998 (supra), a Provincial Government and its arms and agencies could be sued without the need to comply with Section 5 of the Claims Act. The Second Defendant has legal capacity to sue and be sued. Section 6(b) of the Organic Law on Provincial Governments and Local Level Governments provides:-

6.	Legal Capacity

A Provincial Government or a Local-Level Government –

(a)	………………………………………………………………….
(b)	may sue and be sued,

and a provincial law or a local-level law may make provision for and in respect of the manner and form in which each respective government may do so.

The Writ of Summons in Treid Pacific (PNG) Limited v. Eastern Highlands Provincial Government (supra) was issued on 15th August 2000 when there was nothing to say that the term "State" in the Claims Act applied and extended to a Provincial Government whereas the Writ of Summons in this case was issued on 7th July 2003 about twenty (20) months after the decision in Reservation pursuant to S.15 Supreme Court Act, SCR No.1 of 1998 (supra). Mr Apo submits that that decision does not have a retrospective effect on causes of action arising prior to 8th November 2001 but a prospective one. Mr Alman contends that I should follow Paul Tohian, Minister for Police and the State v. Tau Liu (supra) instead and dismiss the proceedings. I disagree with Mr Apo as I am of the view that the enunciation in Reservation pursuant to S.15 Supreme Court Act, SCR No.1 of 1998 (supra) operates retrospectively: The Ship "Federal Huron" v. Ok Tedi Mining Ltd [1986] PNGLR 5 and The State v. Bisket Uranguae Pokia [1980] PNGLR 97. The effect of such retrospectivity is that it applies to pending claims and actions. By way of comparison, a statutory enactment would not normally have a retrospective effect and that if it were, it would be expressed in specific terms to achieve that result: see Milne Bay Provincial Government v. Roy Evara and the State [1981] PNGLR 63.

Thus, the requirement to give notice under Section 5 of the Claims Act applies even where a cause of action arose against a Provincial Government and its arms and agencies prior to 8th November 2001 pending proceedings to be instituted after that date. In The Ship "Federal Huron" v. Ok Tedi Mining Ltd (supra) the Supreme Court in deciding that there was an admiralty jurisdiction for the whole of Papua New Guinea within the parameters established in the Colonial Courts of Admiralty Act 1890 said at pages 36 and 37 as follows:-

"As Mr O’Regan says however in one respect, every court decision has a retrospective effect. ………………………………………………………

We frankly find it incomprehensible and quite against accepted legal theory that a party should come before a court which although given power to develop a law in that party’s case, turns him away without a remedy. We have been driven inexorably to the conclusion that despite the Court finding a gap in existence at some anterior point in time, it must fill such gap retrospectively.

If that is so, then at least in the circumstances of this case where a gap relates to half the country and the development is made on the basis of what existed in the other half at the time of Independence, another logical step must follow. Not only is the developed law retrospective, but it is retrospective to 16 September 1975. Thus the whole law of Papua New Guinea in the particular area is consistent and coherent from its inception. This may be of no assistance to persons who, for one reason or another, did not bring their Admiralty actions prior to the development that we would enunciate in this Court, for they will still be governed by the various limitation periods."

The Plaintiff’s cause of action arose prior to 8th November 2001. He was required to give notice to the State in accordance with Section 5 of the Claims Act prior to issuing his Writ of Summons and his failure to do that means that he is in breach and the consequence of that is that no claim exists. These proceedings are incompetent and must be dismissed in its entirety.

THIRD ISSUE:	APPLICATION FOR DEFAULT JUDGMENT

It follows therefore that it is not necessary to deal with the last issue as I have already decided the fate of these proceedings.

COSTS

As to costs, it being a discretionary matter and taking into account the conduct of the Defendants in defending these proceedings and not making their application until now when the Plaintiff has filed an application for default judgment for the failure of the Second Defendant to give discovery and more than twelve (12) months having transpired after the filing and service upon them of the Writ of Summons, I consider that the parties should bear their own costs under the circumstances.

ORDER

Accordingly, I make the following orders:

1.	The proceedings are dismissed in its entirety.
2.	The plaintiff’s application for default is refused.
3.	Parties to bear their own costs.
________________________________________________________________________

Lawyers for the Plaintiff	:	Bayam Lawyers
Lawyers for the Defendants	:	John Alman – East Sepik Provincial Administration
Legal Officer