N4068

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 475 OF 2007

BETWEEN:

NATIONAL FISHERIES AUTHORITY
Plaintiff/First Cross Defendant

AND:

NEW BRITAIN RESOURCES
DEVELOPMENT LIMITED
First Defendant/First Cross Claimant

AND:

EAST NEW BRITAIN PROVINCIAL
GOVERNMENT
Second Defendant/Second Cross Claimant

AND:

INDEPENDENT STATE OF PAPUA
NEW GUINEA
Third Defendant/Second Cross Defendant

Waigani: Hartshorn J.
2009: 21st April
26th August

Application to Amend Statement of Claim – Application to Dismiss Plaintiff's claim for relief in proceeding – Order 12 Rule 40(1) National Court Rules 

Facts:

1. New Britain Resources Development Limited (NBRDL) and the East New Britain Provincial Government (both referred to as Cross Claimants) entered into a contract with the State whereby it was agreed that NBRDL would construct a fish processing facility. The State agreed that when 75% of the first stage of the facility was built it would grant 20 fishing vessel licences to NBRDL. Although the necessary construction was completed, the licences were not issued. National Fisheries Authority (NFA) submits that parts of the Agreement are illegal or unenforceable and commenced this proceeding seeking amongst others, declarations to that effect. The Cross Claimants cross claimed against NFA seeking damages for breach of statutory duty and declaratory relief and against the State seeking damages for breach of contract. Judgment has been ordered against the State on the cross claim with damages to be assessed.

2. NFA now applies to amend it's statement of claim and the Cross Claimants apply to have NFA's claim for relief in the proceeding dismissed or struck out.

Held:

1. The doctrine of res judicata applies in this instance. NFA is bound on the determination of liability. NFA is in effect seeking to impugn the determination of liability already made in the proceeding. NFA cannot advance argument or adduce further evidence directed to showing that the issue of liability was wrongly determined. 

2. There is no longer an issue between NFA and the Cross Claimants. The declaratory orders sought would have no practical utility.

3. NFA's claim for relief in the proceeding is dismissed as an abuse of process. 

Cases cited: 

Papua New Guinea Cases:

Herman Gawi v. png Ready Mixed Concrete (1983) unnumbered, unreported, Bredmeyer J 
Ok Tedi Mining Ltd v. Niugini Insurance Corporation & Others (No. 2) [1988-89] PNGLR 425
Tolom Abai v. The State (1995) N1402 
Titi Christian v. Rabbie Namaliu (1996) unreported OS No. 2 of 1995
Telikom PNG Ltd v. ICCC (2007) N3144, (2008) SC906
Yama v. PNGBC Ltd (2008) SC922

Overseas Cases:

Fidelitas Shipping Co. Ltd v. V/O Export-Chleb [1966] 1 Q.B. 630 
The Russian Commercial and Industrial Bank v. British Bank for Foreign Trade Ltd [1921] 2 AC 438 

Counsel:

Mr. A. W. Jerewai, for the Plaintiff/First Cross Defendant 
Mr. I. R. Molloy and Mr. H. Leahy, for the First and Second Defendants/Cross Claimants

26th August 2009

1. HARTSHORN J. New Britain Resources Development Limited, East New Britain Provincial Government (Cross Claimants) and the State entered into an agreement to create an integrated fishing industry in East New Britain Province (Agreement).

2. Under the Agreement, New Britain Resources would construct a fish processing facility. The State agreed that when 75% of the first stage of the facility was built, New Britain Resources would be granted 20 fishing vessel licences. Although the necessary construction was completed, the licences were not issued.

3. The National Fisheries Authority (NFA) submits that parts of the Agreement are illegal or unenforceable and commenced this proceeding seeking amongst others, declarations to that effect.

4. The Cross Claimants cross claimed against NFA seeking damages for breach of statutory duty and declaratory relief and against the State seeking damages for breach of contract. Judgment has been ordered against the State on the cross claim with damages to be assessed.

5. NFA now applies to amend it's statement of claim and the Cross Claimants apply to have NFA's claim for relief in the proceeding dismissed or struck out.

Amendment to statement of claim

6. NFA seeks to amend its statement of claim by adding amongst others:

a) an alternative claim that even if the Agreement is legal and binding, NFA and the State are entitled to be discharged from obligations under it as New Britain Resources failed to perform conditions precedent.

b) that the whole of the Agreement be rescinded and that the parties thereto be discharged from all obligations.

7. NFA submits that the alleged non-compliance by New Britain Resources with pre-conditions became apparent during the course of this proceeding and that many of the pre-conditions allegedly not met are requisites for fishing licences. These matters should be allowed to be pleaded, it is submitted, for the purpose of determining the real questions raised by the proceedings and to avoid a multiplicity of proceedings.

8. The Cross Claimants submit that the application to amend the statement of claim should be refused and NFA's proceeding should be dismissed or struck out as:

a) NFA has no standing to obtain any relief including the proposed amendment.

b) the issues raised by NFA in the original and proposed statement of claim are res judicata and are now of academic interest only.

9. I will consider the res judicata question first.

Res judicata

10. The Cross Claimants submit that NFA participated in the Cross Claimants successful application for summary judgment against the State and that judgment creates a res judicata as to liability under the Agreement.

11. NFA submits that as judgment was only against the State on the cross claim, there is no res judicata created in respect of the relief that NFA is seeking, which is amongst others, to have the Agreement declared illegal and unenforceable.

12. Res judicata is a legal doctrine recognized in Schedule 2.8(1)(d) Constitution, and has been considered in numerous cases in this jurisdiction including; Herman Gawi v. png Ready Mixed Concrete (1983) unnumbered, unreported, Bredmeyer J., Titi Christian v. Rabbie Namaliu (1996) unreported OS No. 2 of 1995, Tolom Abai v. The State (1995) N1402, Telikom PNG Ltd v. ICCC (2007) N3144, (2008) SC906, Yama v. PNGBC Ltd (2008) SC922.

13. A description of the rule as to res judicata is, "…where an action has been brought and judgment has been entered in that action, no other proceedings may be maintained on the same cause of action": Halsbury's Laws of Australia, para [190-45].

14. The present case concerns a claim of res judicata in the same proceeding in which judgment has been entered as opposed to a claim of res judicata in subsequent proceedings to those in which judgment was entered.

15. As to such a case as the present, Lord Diplock L.J. in Fidelitas Shipping Co. Ltd v. V/O Export-Chleb [1966] 1 Q.B. 630 at p. 642 said:

"Where the issue separately determined is not decisive of the suit, the judgment upon that issue is an interlocutory judgment and the suit continues. Yet I take it to be too clear to need citation of authority that the parties to the suit are bound by the determination of the issue. They cannot subsequently in the same suit advance argument or adduce further evidence directed to showing that the issue was wrongly determined."

16. Here, the summary judgment against the State determined that the State was liable to the Cross Claimants for breach of the Agreement and that damages are to be assessed. At the hearing for summary judgment there was representation and submissions made on behalf of NFA. NFA is bound on the determination of liability. To seek the relief that it is, that amongst others, the Agreement is illegal or unenforceable, NFA is in effect seeking to impugn the determination of liability already made in the proceeding. NFA cannot advance argument or adduce further evidence directed to showing that the issue of liability was wrongly determined. NFA would be required to do so to be successful.

17. I am satisfied that for the above reasons the doctrine of res judicata is applicable here and that for NFA to proceed with its claim would be an abuse of process.

No utility

18. The Cross Claimants submit that the issues that NFA seek to litigate are now merely of academic interest. As liability has been determined against the State in respect of the Agreement, all that is left is an assessment of damages. The Cross Claimants have elected to rescind the Agreement and they are not now seeking any of the orders previously sought in the cross claim against NFA. Consequently, it is submitted that this court should not make declarations in respect of an issue that has no practical utility.

19. NFA submits amongst others, that its claim is not merely of academic interest and that because of its rights and obligations under the Fisheries Management Act, it would be negligent of the NFA to stand by and not challenge the Agreement.

20. As referred to, liability in respect of the Agreement has been determined by virtue of the summary judgment. Liability cannot be revisited. Notwithstanding that NFA is concerned with its statutory rights and obligations, the liability issue has been determined.

21. The celebrated case of The Russian Commercial and Industrial Bank v. British Bank for Foreign Trade Ltd [1921] 2 AC 438, referred to in Ok Tedi Mining Ltd v. Niugini Insurance Corporation & Others (No. 2) [1988-89] PNGLR 425, set out factors that are required to be established before a declaratory order can be made. These factors include that there must exist a controversy between the parties and the issue must be a real one. It must not be merely of academic interest, hypothetical or one whose resolution would be of no practical utility.

22. I am satisfied that here, there is no longer an issue between NFA and the Cross Claimants. Consequently, the declaratory orders sought would have no practical utility and would be of academic interest only.

23. For the above reasons, NFA's claim for relief in the proceeding should be dismissed as an abuse of process. Given these findings it is not necessary to consider the other submissions made by counsel.

Orders

a) The orders sought in the notice of motion of the plaintiff dated 30th March 2009 and filed on 8th April 2009 are refused.

b) The plaintiff's claim for relief in the proceeding is dismissed.

c) The costs of and incidental to the plaintiff's proceeding are to be paid by the plaintiff to the first and second defendants.

______________________________________________________________________
Jerewai Lawyers: Lawyers for the Plaintiff/First Cross Defendant 
Pacific Legal Group: Lawyers for the First and Second Defendants/Cross Claimants 
Office of Solicitor-General: Lawyers for the Third Defendant/Second Cross Defendant