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Kunda v Southern Highlands Provincial Government [2009] PGNC 163; N3775 (26 June 2009)

N3775

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO 27 OF 2006

BETWEEN

JOHN KUNDA
Plaintiff

AND

SOUTHERN HIGHLANDS PROVINCIAL GOVERNMENT
First Defendant

AND

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Second Defendant

Mount Hagen: Makail J,
2009: 12th & 26th June

PRACTICE & PROCEDURE - Application to dismiss proceeding for want of notice of claim - Civil proceeding against a Provincial Government and the State - Two separate defendants and legal entities - Whether application to dismiss applies to the State - Application upheld for Provincial Government only - Proceeding dismissed against Provincial Government only - Organic Law on Provincial Governments and Local Level Governments - Sections 6, 7 & 10 - Constitution - Sections 1, 187A & 247 - Claims By and Against the Southern Highlands Provincial Government Act 2000 - Section 4 - Claims By and Against the State Act 1996 - Section 5.

Facts:

A former mayor of Mendi Urban Town Authority and Assembly member and Chairman of Community Services commenced proceeding against two Defendants, one a Provincial Government and the other, the State claiming unpaid salaries, allowances and other entitlements whilst serving in those various capacities. The First Defendant moved a motion to dismiss the proceeding against it on the ground that the notice requirements of the laws regulating claims by and against it had not been complied with. The Second Defendant supported the motion and sought to have the proceeding also dismissed against it on the same ground.

The First Defendant argued that no notice of claim was given to the Provincial Administrator or his personal secretary in compliance with section 4 of the Claims By and Against the Southern Highlands Provincial Government Act 2000. The Second Defendant argued that the substance of the Plaintiffs claim is against the First Defendant and if the proceeding is dismissed against the First Defendant, there will be no claim against the Second Defendant, therefore, the proceeding be dismissed against it too.

Held:

1. The First Defendant and the Second Defendant are two different and separate legal entities because they are established or created by two different legislations, the former under sections 6 and 10 of the Organic Law on Provincial Governments and Local Level Governments and the latter, sections 1 and 247 of the Constitution.

2. Two separate notices of claim are required to be given; one to the First Defendant under section 4 of the Claims By and Against the Southern Highlands Provincial Government Act 2000 and the other, to the Second Defendant under section 5 of the Claims By and Against the State Act 1996.

3. As no notice of claim was given to the Provincial Administrator or his personal secretary, section 4 of the Claims By and Against the Southern Highlands Provincial Government Act 2000 was breached and the proceeding against the First Defendant was dismissed.

4. The Second Defendant cannot rely on the application of the First Defendant to dismiss the proceeding for want of notice of claim under section 4 of the Claims By and Against the Southern Highlands Provincial Government Act 2000.

5. As the Second Defendant had not filed and moved an application to dismiss the proceeding against it for want of notice of claim under section 5 of the Claims By and Against the State Act 1996 or for not disclosing a cause of action against it, the proceeding was not dismissed against it.

Cases cited:

Papua New Guinea Cases

Wellcos Engineering Limited -v- Southern Highlands Provincial Government & the State: WS No 959 of 2006 (Unnumbered & Unreported Judgment of 21st May 2008)
John Wasis & Ors -v- Southern Highlands Provincial Government & the State: WS No 472 of 2006 (Unnumbered & Unreported Judgment of 14th November 2008)
SCR No 1 of 1998: Reservation Pursuant to s 15 of the Supreme Court Act (2001) SC672
Koi Antonius -v- Fanston Yaninen & East Sepik Provincial Government (2004) N2774
Sarakuma Investment Limited -v- Peter Merkendi & East Sepik Provincial Government (2004) N2629

Counsel:

No appearance for Plaintiff
Mr T. Dalid, for First Defendant/Applicant
Ms A. Doa, for Second Defendant

26th June, 2009

RULING

1. MAKAIL J: The Plaintiff is a former mayor of Mendi Urban Town Authority and also former Assembly member and Chairman of Community Services from 1995 to May 2003. He alleged that while he was serving in those various capacities, the First Defendant failed to pay him some of his salaries, allowances and other service entitlements. Even after he finished work in May 2003, the First Defendant still failed to pay him. He commenced this proceeding against the First Defendant and the Second Defendant on 23rd January 2006 to claim unpaid salaries, allowances and entitlements totaling K257,944.22.

2. The First Defendant claims that the Plaintiff did not give a notice of claim to the Administrator of the First Defendant prior to commencing this proceeding. It says that such a notice is a precondition to claim against the First Defendant under section 4 of the Claims By and Against the Southern Highlands Provincial Government Act 2000, (referred herein to as "CB&ASHPG Act"). As a result it brings this application by its Notice of Motion filed on 10th October 2008 seeking an order to dismiss the entire proceeding for want of notice of claim under section 4 of the CB&ASHPG Act. The Second Defendant supports the application of the First Defendant.

3. Section 4 of the CB&ASHPG Act states:

"4 NOTICE OF CLAIM AGAINST THE SOUTHERN HIGHLANDS PROVINCIAL GOVERNMENT.

(1) No action to enforce any claim against the Southern Highlands Provincial Government lies against the Southern Highlands Provincial Government unless notice in writing of intention to make a claim is given in accordance with this section by the claimant to the Administrator of Southern Highlands Province.

(2) A notice under this section shall be given:-

(a) within a period of six (6) 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(6) months after the claimant became aware of the alleged breach; or

(c) within such further period as -

(i) the Administrator upon advice; or

(ii) the court before which the action is to be 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 9:00 am and 12:00 noon on a Friday which is not a public Holiday declared under the Public Holiday Act (Chapter 321)".

3. In support of the application, the First Defendant relies upon the Affidavit of William Powi sworn on 2nd October 2008 and filed on 24th October 2008. Mr Powi deposes inter alia in paragraph 4 that neither he nor his personal secretary received a notice of claim from the Plaintiff and so he believes that the Plaintiff did not give a notice of claim to the First Defendant prior to commencing this proceeding.

4. The First Defendant also relies on the Affidavit of Barclay Tenja sworn on 17th March 2009 and filed on 10th June 2009 where he deposes in paragraphs 3, 4, 5 & 6 that first, he worked for the First Defendant for more than 15 years and one of his duty is to maintain proper records of litigation matters including section 4 notices for the First Defendant and secondly, upon being instructed by the Provincial Administrator Mr Powi to conduct a search of the records to find out if the Plaintiff had given notice of claim to the First Defendant in relation to his unpaid entitlements, he did so.

5. He did so by conducting a thorough search of all the manual and electronic records of documents received by the First Defendant and found no written notice of claim in relation to the Plaintiffs claim directed to the Provincial Administrator. As a result, he believes that the Plaintiff did not give a notice of claim to the First Defendant prior to commencing this proceeding.

6. Although the Plaintiff was served the Notice of Motion and supporting Affidavits and also verbally advised of the hearing date of the application by Mr Barclay Tenja at his Wakwak village, just outside Mendi town on 10th June 2009, he did not attend the hearing. As a result, the Court did not receive any submissions from him in respect of the application. See Affidavit of Barclay Tenja sworn and filed on 11th June 2009.

7. That being the case, there is un-controvertible evidence by the First Defendant that neither the Provincial Administrator nor his personal secretary were served with a notice of claim in respect of the claim by the Plaintiff prior to the commencement of this proceeding. I conclude therefore that, the Plaintiff did not give notice of his claim to the First Defendant before commencing this proceeding against the Defendants. It follows that the Plaintiff has breached the mandatory requirements of section 4 of the CB&ASHPG Act and I must uphold the application of the First Defendant and dismiss the proceeding against the First Defendant accordingly.

8. In reaching this decision, I have been guided by the decision of Hartshorn J, in Wellcos Engineering Limited -v- Southern Highlands Provincial Government & the State: WS No 959 of 2006 (Unnumbered & Unreported Judgment of 21st May 2008). I consider that the issue in that case was whether or not it is necessary to give two notices of claim if a claimant intents to sue a Provincial Government and the State. His Honour held that it was necessary to give two separate notices; one to the Provincial Government and the other to the State because they are sued separately in the proceeding.

9. This is how His Honour explained the difference:

"In the Supreme Court case of Tohian & The State -v- Tau Liu (1998) SC 566, it was held that notice of an intention to make a claim against the State is a condition precedent to the issuing of a Writ of Summons. Notice under s.5 must be given first before the Writ is issued. The requirements to give notice to the appropriate person and the method if serving the notice are mandatory". Bokin -v- Independent State of Papua New Guinea (2001) N2111. The notice must be given "within a period of six (6) months after the occurrence of which the claim arose" or if the claim is or a breach of contract, "within a period of six (6) months after the claimant become aware of the alleged breach.

The reasoning in these cases applies equally to Provincial Legislations. Consequently, notice of intention to make a claim under the Claims By and Against the State Act. The Southern Highlands Provincial Government is named as a separate party in these proceedings. Section 5 of the Southern Highlands Provincial Government Act applies in such a case.

I reject the argument that a notice was given pursuant to s.5 of the Claims By & Against the State Act to the Solicitor General, notice of intention to make a claim need not be given under the Southern Highlands Provincial Government Act when it is named as a separate party in these proceedings. Section 5 of the Southern Highlands Provincial Government Act applies in such a case". (Underlining is mine)

10. Cannings J, followed that decision in John Wasis & Ors -v- Southern Highlands Provincial Government & the State: WS No 472 of 2006 (Unnumbered & Unreported Judgment of 14th November 2008) when he was faced with the same issue.

11. The decision in the above two cases mean that if a claimant does not give notice of claim to the Provincial Government which has an equivalent provision of section 5 of the Claims By and Against the State 1996, (referred to herein as "CB&AS Act") in its provincial legislation before commencing proceeding against it, on appropriate application by the Provincial Government, the proceeding may be dismissed. In other words, a Plaintiff cannot rely on the notice of claim given to the State (Attorney General or Solicitor General) under section 5 of the CB&AS Act, to say that it has given the required notice of claim to the Provincial Government. That is the effect of the decisions in the above two cases.

12. But in this case, it is slightly different. It is a case where the Second Defendant has not filed an application to dismiss the proceeding for want of notice of claim under section 5 of the CB&AS Act, but merely supports the First Defendant’s application to dismiss the entire proceeding for want of notice of claim under section 4 of the CB&ASHPG Act. It should also be mentioned here that, the Second Defendant has not filed an application to dismiss the proceeding for not disclosing a reasonable cause of action against it under Order 12, rule 40 of the National Court Rules.

13. That being the case, the issue therefore is; should the proceeding be dismissed against the Second Defendant for want of notice under section 4 of the CB&ASHPG Act? Counsel for the Second Defendant urges me to dismiss the proceeding against the Second Defendant because the Second Defendant has been sued as a nominal Defendant in this proceeding. She says that the substance of the claim in this proceeding is against the First Defendant. In other words, the claim for unpaid salaries, allowances and other entitlements by the Plaintiff is against the First Defendant. It is not against the Second Defendant. Therefore, if the proceeding is dismissed against the First Defendant for want of notice under section 4 of the CB&ASHPG Act, there will be no claim for the Court to determine against the Second Defendants.

14. I consider that it is necessary to set out the relevant parts of the pleadings in the Statement of Claim to appreciate the submissions of the counsel for the Second Defendant. I set them out below:

"1. The plaintiff is a former Mayor of Mendi Urban who by virtue of that position served in the Southern Highlands Provincial Government as Assembly Member and Chairman of Community Services for a period of eight (8) years and can sued (sic) under his own name.

2. The First Defendant as the entity responsible for entitlements of all Assemble (sic) can be liable as such.

3. The Second Defendant as Sovereign Authority over all Provincial Governments, Government Departments and Agencies can be held liable as such.

4. In early 1995, the plaintiff who was a councilor in Mendi Urban Authority was elected Interim Lord Mayor of Mendi Urban and following his election was appointed Assembly Member and Chairman of Community Services in the Southern Highlands Provincial Government the positions he held till the General Elections in 1997, a total of three (3) years.

5. The Plaintiff retained his council seat in the 1997 Geberal Elections and was re-elected as Mayor of Medni Urban shortly afterwards. Following his election as Mayor of Mendi Urban, was appointed Assembly Member and Chairman of Community Services in the Southern Highlands Provincial Government for the second time. He held those positions from 1997 to May 2003, a total of five (5) years.

6. The Plaintiff was Mayor, Assembly Member and Chairman of Community Services from 1995 to May 2003, a period of around eight (8) years.

7. While plaintiff was an Assembly Members and Chairman of Community Services in the Southern Highlands Provincial Government from 1995 to 2003, he was not paid some of his salaries, allowances and entitlements. He was not paid his final entitlements after he left office in May, 2003 and he has not been paid to date."

15. By looking at the above pleadings as they stand, it appears that they do not disclose a reasonable cause of action against the Second Defendant. The Second Defendant is tied in this proceeding by virtue of paragraph 3 of the Statement of Claim in the sense that it is the superior authority of all government agencies in the country including provincial governments and it would seem, ultimately liable for their acts and omissions, although the Plaintiff does not expressly plead "vicarious liability" against the Second Defendant. Be that as it may, there appears to be no nexus between the Plaintiff and the Second Defendant. However, I am not deciding whether there is a reasonable cause of action against the Second Defendant in this application brought by the First Defendant and it would be wrong for me to decide that issue now as is, has suggested by counsel for the Second Defendant.

16. The issue as I said above is whether the Second Defendant can rely on the lack of notice under section 4 of the CB&ASHPG Act in the First Defendant’s application to ask for the dismissal of the proceeding against it. When this issue is considered in that perspective, it is my respectful opinion that the Second Defendant cannot rely on the First Defendant’s application to dismiss the proceeding for want of notice of claim under section 4 of the CB&ASHPG Act because first, the CB&ASHPG Act and the CB&AS Act are two different legislations. One is a provincial legislation and the other, an Act of Parliament. And whilst it is true that section 4 of the CB&ASHPG Act is identical to section 5 of the CB&AS Act, I am of the view that they apply to two separate legal entities. The former governs litigation matters for the First Defendant and the latter, the Second Defendant (the State).

17. The constitutional foundation of the First Defendant is found in section 187A of Part IVA of the Constitution which provides for a system of Provincial Governments for Papua New Guinea as follows; "[T]here shall be a system of Provincial Governments and Local-level Governments for Papua New Guinea in accordance with this Part". But in my view, the First Defendant is a creature of the Organic Law, namely the Organic Law on Provincial Governments and Local Level Governments (herein referred to as "OLPG&LLG") and can sue and be sued under its name and style and these attributes can be found in sections 6 and 10 of the OLPG&LLG. First, section 10 states:

"10. Provincial Government and Provincial Legislature.

(1) A Provincial Government is hereby established for each province."

18. Secondly, section 6 provides for the legal capacity of Provincial Governments in the following terms:

"Division 4.-Legal Status of Provincial Governments and Local-level Governments.

Subdivision A.-Legal Capacity of Provincial Governments and Local-level Governments.

6. Legal capacity.

A Provincial Government or a Local-level Government-

(a) may acquire, hold and dispose of property of any kind; and

(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." (Underlining is mine).

19. The First Defendant is one of the Provincial Governments of which I am aware of that has enacted its own provincial legislation, (CB&ASHPG Act) to complement and give effect to sections 6 and 7 of the OLPG&LLG in so far as litigation matters for and against the First Defendant is concerned. The other is the Western Highlands Provincial Government through its Claims By and Against the Western Highlands Provincial Government Act 2001. It is also worth noting section 7 of the OLPG&LLG here and I quote:

"7. Service of process.

Any notice, summons, writ or other process required to be served on a Provincial Government or a Local-level Government may be served on an officer designated by the Provincial Government or the Local-level Government for that purpose."

20. Given section 7 of the OLPG&LLG, the First Defendant has made it mandatory that a notice of claim must be given to the Provincial Administrator personally or in his absence, to his personal secretary by the passing of the provincial legislation, the CB&ASHPG Act, in particular section 4. On the other hand, the Second Defendant is a creature of the Constitution because it is established under section 1 and by section 247, has legal capacity to sue and be sued. Section 247 states:

"247. Legal capacity of the Independent State of Papua New Guinea.

(1) Papua New Guinea has power to acquire, hold and dispose of property of any kind, and to make contracts, in accordance with an Act of the Parliament.

(2) Papua New Guinea may sue and be sued, in accordance with an Act of the Parliament."

21. That means that it is an entity that is separate and independent from the First Defendant. Section 247 makes provision for the Second Defendant to sue and be sued in accordance with an Act of Parliament and that Act of Parliament is the CB&AS Act. Section 5 of CB&AS Act states:

"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."

22. The upshot of all these discussions is that, the First Defendant and the Second Defendant are two different and separate legal entities because they are established or created by two different legislations (OLPG&LLG and the Constitution) and governed by two different legislations in so far as litigation matters for and against them are concerned (CB&ASHPG Act and CB&AS Act). Therefore, their rights and obligations cannot be traded for one another.

23. Following on from that and secondly, the Southern Highlands Provincial Government is a separate defendant and the State is also a separate defendant in this proceeding. The interest of the State as Second Defendant in this proceeding must be put forward independently and separately as it is sued separately by the Plaintiff in this proceeding by virtue of section 2(1) of the CB&AS Act which states, "A person making a claim against the State in contract or in tort may bring a suit against the State, in respect of the claim, in any court in which such a suit may be brought as between other persons."

24. For example, if the State seeks to raise objections on the grounds of lack of notice of claim under section 5 of the CB&AS Act or for non disclosure of a reasonable cause of action, these are matters that it should independently and separately raise in an application by a Notice of Motion before the Court.

25. In this regard, I do not think as is has been submitted by counsel for the Second Defendant that, the decision of the Supreme Court in SCR No 1 of 1998: Reservation Pursuant to s 15 of the Supreme Court Act (2001) SC 672 can be used by the Second Defendant to argue that as the "State" in section 13(1) of the CB&AS Act also includes Provincial Governments, hence in the context of this case, since the "State" includes the Southern Highlands Provincial Government, and if the Plaintiff has failed to give notice to the Southern Highlands Provincial Government and if the proceeding is dismissed against the Southern Highlands Provincial Government, automatically the proceeding should also be dismissed against the Second Defendant.

26. For to accept this submission would run counter to the independence and legal authority of each of them and also undermine their independence and authority in a general way and also in a more specific way in so far as claims by and against each of them are concern. Not only that but, would also defeat the whole purpose of having section 4 in the CB&ASHPG Act and section 5 in the CB&ASHPG.

27. And I do not think that the reasons I have given above would be inconsistent or contrary to what David AJ, (as he then was) concluded in Koi Antonius -v- Fanston Yaninen & East Sepik Provincial Government (2004) N2774 where he held that the decision in Supreme Court Reservation No 1 of 1998 (supra) had retrospective effect on the Plaintiffs action against the Defendant on an objection by the Defendants that the Plaintiff had not given prior notice of claim under section 5 of the CB&AS Act.

28. In that case, the cause of action arose prior to 08th November 2001 which was the date of the decision of the Supreme Court in Supreme Court Reservation No 1 of 1998 (supra) and it was argued by counsel for the Plaintiff that the decision of the Supreme Court in Supreme Court Reservation No 1 of 1998 (supra) did not apply as it had no retrospective effect. As such, the Plaintiff was not required to give notice of claim under section 5 of the CB&AS Act to the Defendants through the State (Attorney General or Solicitor General) prior to issuing proceeding against them. However, His Honour rejected that argument and followed the decision in the Supreme Court Reservation No 1 of 1998 (supra) and accepted that the State included Provincial Governments.

29. Proceeding on this premise, since the State included Provincial Governments, like the Second Defendant (East Sepik Provincial Government) in that case, His Honour found that the Supreme Court Reservation No 1 of 1998 judgment (supra) had retrospective effect, hence did apply to the Plaintiff. Accordingly, the Plaintiff was required to give notice of claim through the State (Attorney General or Solicitor General) before issuing the proceeding against the Defendants.

30. Since the Plaintiff had not given prior notice, His Honour upheld the Defendants’ application and dismissed the entire proceeding as being incompetent. From my reading of His Honour’s judgment, I infer that neither the East Sepik Provincial Government had a provincial legislation governing claims by and against it nor an equivalent provision of section 5 of the CB&AS Act. Accordingly, I infer also that, this may have been the reason for counsel for the Defendants to rely on section 5 of the CB&AS Act to seek a dismissal of the proceeding for want of notice of claim.

31. Be that as it may, I consider that, in cases where Provincial Governments do not have provincial legislations governing claims by and against them, whether it can be argued that they may rely on section 5 of the CB&AS Act to dismiss proceeding against them on the authority of the Supreme Court Reservation No 1 of 1998 judgment (supra) is an interesting one that remains to be decided. Further, I do not think David AJ, (as he then was) had decided that issue either in Koi Antonio’s case (supra) and so that issue is still open for debate and decision. Maybe that was the reason for Cannings J, to set the debate in motion on that issue (whether the term "State" under section 13 of the CB&AS Act also extended to other provisions of the Act where the word "State" is used like in section 5), in Sarakuma Investment Limited -v- Peter Merkendi & East Sepik Provincial Government (2004) N2629, where he observed:

"In the present case Mr Yamboli submitted that the Claims Act was breached, as a notice of intention to make a claim was not given. He referred to SCR No 1 of 1998 in support of that proposition. The question reserved for the Supreme Court in that case was specifically about Section 13 of the Claims Act. The Court was not asked whether the term "the State" used in other sections of the Act, also refers to provincial governments and provincial government agencies. I do not consider that much turns on that. The Supreme Court expressed the strong view that the Claims Act was intended to protect the assets and revenue of the State, or in other words the People of Papua New Guinea, whether the bodies or persons with direct control over the assets or revenue were the National Government or provincial governments or local-level government bodies." (my emphasis).

32. But, from my reading of His Honour’s reasons, although he seemed to say that the Supreme Court was asked to decide whether the word "State" used in other sections of the Act also refers to Provincial Governments as in section 13, it would seem His Honour accepted that the word "State" included Provincial Governments and went on to dismiss the entire proceeding based on the Defendants’ application for want of notice of claim under section 5 of the CB&AS Act.

33. Having said that I still think that the issue has not been authoritatively decided by the Court and is debatable even though the Supreme Court did decide in Supreme Court Reservation No 1 of 1998 judgment (supra) that the word "State" included Provincial Governments in so far as execution of assets and proceeds of the State is concern under section 13 of the CB&AS Act. But for now, for the reasons I have given above, it is my respectful opinion that the Second Defendant cannot rely on the application of the First Defendant to ask for a dismissal of the proceeding against it too. It should file a separate application to dismiss the proceeding if it considers that it has a case to make against the Plaintiff for either the Plaintiffs failure to give notice of claim under section 5 of the CB&AS Act or for not disclosing a reasonable cause of action against it under Order 12, rule 40 of the National Court Rules.

34. In the end, I am not satisfied that I should dismiss the entire proceeding against the Second Defendant. I only order that the proceeding against the First Defendant be dismissed with costs to be taxed if not agreed.

Ruling accordingly.

_____________________________________

No appearance for the Plaintiff
Jerry Kiwai Lawyers: Lawyers for First Defendant
Acting Solicitor General: Lawyers for Second Defendant