N4111

PAPUA NEW GUINEA
IN THE NATIONAL COURT OF JUSTICE

WS NO 501 OF 2003

ALBERT ARENG
Plaintiff

V

GREGORY BABIA
First Defendant

NATIONAL HOUSING CORPORATION
Second Defendant

Madang: Cannings J
2010: 5, 19, 26 March

RULING

PRACTICE AND PROCEDURE – whether a garnishee notice can be served on a debtor of the National Housing Corporation – whether the National Housing Corporation forms part of "the State" for purposes of the Claims By and Against the State Act, Section 13.

The plaintiff secured a judgment for K68,352.00 against the National Housing Corporation, all of which remained unpaid after more than a year. He then sought leave of the court to serve a garnishee notice on the Corporation's bank (the garnishee), the intended consequences being to require the bank to pay the amount of the judgment debt to the plaintiff. The Corporation objected to the granting of leave to serve the garnishee notice on the ground that it was part of the State and protected against garnishee notices by Section 13 of the Claims By and Against the State Act, which provides that no process in the nature of attachment may be issued against the property of the State.

Held:

(1)	The National Housing Corporation is not part of the State for the purposes of the Claims By and Against the State Act.

(2)	To the extent that there is any doubt about whether the National Housing Corporation forms part of the State, that issue has been resolved for the purposes of this case by a previous ruling of the court so the doctrine of issue estoppel applies and the defendants are estopped (prevented) from arguing the point further.

(3)	There was no good reason to refuse leave to issue a garnishee notice, so leave was granted under Order 13, Rule 56(1) of the National Court Rules.

Cases cited

The following cases are cited in the judgment:

Albert Areng v Babia & NHC (2005) N2895
Albert Areng v Babia and NHC (2008) N3469
Anave Megaraka Ona v NHC (2009) N3623
Kilebo Sigo Mamae & Ors v NHC OS 844/2005, 27.01.06
Mt Hagen Urban LLG v NHC WS 1194/2002, 20.04.04
Naomi Vicky John v NHC (2005) N2770
Paul Rawaiya & Ors v NHC OS 429/2006, 14.08.06
Phillip Num v NHC OS 115/ 2003, 25.08.06

NOTICE OF MOTION

This was a motion for leave to file and serve a garnishee notice.

Counsel

B W Meten, for the plaintiff
J Kolkia, for the defendant

26 March, 2010 

1. CANNINGS J: The question raised by this motion is whether a garnishee notice can be served on a debtor of the National Housing Corporation.

2. In 2008, the plaintiff, Albert Areng, won an award of damages and interest against the Corporation (the second defendant) in the sum of K68,352.00 (Albert Areng v Babia and NHC (2008) N3469). That judgment debt remained unpaid for more than a year. The plaintiff (the judgment creditor) has, by motion, sought the leave of the court under the National Court Rules, Order 13, Rule 56(1) to file and serve a garnishee notice on Bank South Pacific (it being the nominated garnishee: a person who owes money to the judgment debtor, the National Housing Corporation).

3. The intended effect of a garnishee notice is to "attach" the garnishee's debt payable to the judgment debtor. The garnishee is then authorised to pay the amount of the attached debt into court. Or the garnishee can be ordered under Order 13, Rule 61, to pay the attached debt directly to the judgment creditor.

IS THE NATIONAL HOUSING CORPORATION PART OF THE STATE?

4. The Corporation objects to the granting of leave to serve the garnishee notice on the ground that it is part of the State and protected against garnishee notices by Section 13(1) of the Claims By and Against the State Act, which provides that no process in the nature of attachment may be issued against the property of the State.

5. Section 13(1) (no execution against the State) states:

In any suit, execution or attachment, or process in the nature of execution or attachment, may not be issued against the property or revenue of the State.

6. The question of whether the National Housing Corporation forms part of the State has been addressed in a number of previous decisions of the National Court. In some cases, it has been held that the Corporation is part of the State. In other cases, it has been held that it is not.

Cases saying NHC IS part of the State

7. These include:

•	Mt Hagen Urban LLG v NHC, WS 1194/2002, 20.04.04, Mogish J
•	Kilebo Sigo Mamae & Ors v NHC, OS 844/2005, 27.01.06, Davani J
•	Paul Rawaiya & Ors v NHC, OS 429/2006, 14.08.06, Gabi J
•	Phillip Num v NHC, OS 115/ 2003, 25.08.06, David J

Cases saying NHC is NOT part of the State

8. These include:

•	Naomi Vicky John v NHC (2005) N2770, Lay J
•	Albert Areng v Babia & NHC (2005) N2895, Sawong J
•	Anave Megaraka Ona v NHC (2009) N3623, Sevua J

Which line of authority should be followed?

9. Mr Kolkia, for the Corporation, pointed out that there is no Supreme Court decision on whether the NHC is part of the State and therefore I may follow either line of authority. He submitted that the first line of authority is the preferred one as it would give effect to the policy behind establishment of the National Housing Corporation and also to the purpose of the Claims By and Against the State Act. The Corporation was created by statute for a public purpose: implementing government housing policies – it was not created to generate income for the National Government. It should therefore get the same protection as the State does under the Claims By and Against the State Act.

10. These sorts of arguments have been carefully assessed in the three cases in which it has been decided that the NHC is not part of the State. I respectfully find the reasoning expressed in those cases as more persuasive than that expressed in the cases that have decided the issue differently.

11. There is an additional consideration that propels me towards concluding that the NHC is not part of the State. The Claims By and Against the State Act is generally an Act that regulates, modifies and to some extent trims down the rights of citizens who want to sue the State or enforce judgments against the State. In the event of doubt as to its interpretation the court should lean towards protecting the rights of individual citizens against those of the State.

Consequences of interpretation

12. So, the NHC is not, as a matter of law, part of the State. That means that a person does not have to give notice to the State under Section 5 of the Claims By and Against the State Act of his or her intention to make a claim against the NHC. It also means that if a person secures a judgment debt against the NHC, the NHC cannot rely on Section 13 to make it immune against the service of garnishee notices. In saying that, I acknowledge that in the three cases in which it was decided that the NHC was not part of the State the issue was whether the NHC was part of the State for the purposes of Section 5. The issue was not whether it was part of the State for the purposes of Section 13. However, that is of no consequence. The ambit of the term "the State" is the same in both provisions of the Act.

The NHC is not part of the State and Section 13 does not protect the NHC.

ISSUE ESTOPPEL

13. If I had reached the opposite conclusion – and agreed with Mr Kolkia's proposition that as a matter of law the NHC is part of the State – I would nonetheless have had difficulty applying that proposition in this case. As Mr Meten, for the plaintiff, pointed out: the issue of whether the NHC forms part of the State for the purposes of these proceedings – WS 501 of 2003 – has already been decided by Sawong J in Albert Areng v Babia & NHC (2005) N2895. His Honour dismissed a motion by the NHC to set aside a default judgment on liability against it. The motion was based on the plaintiff's failure to give notice under Section 5 of the Claims By and Against the State Act. His Honour ruled that Section 5 did not apply as the NHC was not part of the State. The doctrine of issue estoppel applies here: the NHC is estopped (prevented) from arguing the point further. It is a dead issue.

CONCLUSION

14. The National Housing Corporation is not part of the State for the purposes of the Claims By and Against the State Act. It follows that a garnishee notice can be served on a debtor of the National Housing Corporation. There is no good reason to refuse leave to issue a garnishee notice, so leave will be granted under Order 13, Rule 56(1) of the National Court Rules.

ORDER

(1)	The plaintiff is granted leave under Order 13, Rule 56(1) of the National Court Rules to file and serve on the garnishee, Bank South Pacific, a garnishee notice.

(2)	Costs of the hearing of the motion shall be paid by the second defendant to the plaintiff on a party-party basis, to be taxed, if not agreed.

(3)	Time for entry of the order is abridged to the date of settlement by the Registrar, which shall take place forthwith.

Judgment accordingly.
_____________________________

Narokobi Lawyers: Lawyers for the Plaintiff
Paul Paraka Lawyers: Lawyers for the Defendants