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Chefs Secret Ltd v National Capital District Commission [2011] PGNC 16; N4217 (25 February 2011)

N4217

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS 547 OF 2009

BETWEEN:

CHEFS SECRET LIMITED
Plaintiff

AND:

NATIONAL CAPITAL DISTRICT COMMISSION
First Defendant

AND:

LESLIE ALU, in his capacity as CITY MANAGER,
NATIONAL CAPITAL DISTRICT COMMISSION
First Cross-Claimant

AND:

NATIONAL CAPITAL DISTRICT COMMISSION
Second Cross-Claimant

AND:

SIBONA KEMA, MANAGING DIRECTOR,
CHEFS SECRET LIMITED
First Cross-Defendant

AND:

CHEFS SECRET LIMITED
Second Cross-Defendant

Waigani: Sawong,
2011: 15 & 25th February

PRACTICE AND PROCEDURE – ruling on a motion to dismiss proceedings for failing to comply with the Claims Act – law on claims against the state is that issuance of a s.5 Notice precedes issuing of Writ of summons – whether NCDC is a governmental body – NCDC is a state entity therefore issuing of s.5 Notice is a requirement – no such notice was issued – application to dismiss proceedings upheld – s.5 Claims By and Against the State Act

Cases Cited
Sarakuma Investment Ltd v. Peter Merkendi (2004) N2629,
National Capital District Commission v. Jim Reima, on behalf of himself & 120 Youth Groups of Moresby North East, (2009) SC993

Counsel
Mr. I. K. Iduhu, for the Plaintiff/Cross-Defendants
Ms. L. R. Kila, for the Defendant/Cross-Claimants

RULING

25th February, 2011

1. SAWONG, J: This is a ruling on a motion by the Defendants to dismiss the entire proceedings brought by the Plaintiff. The Plaintiff is claiming a total sum of K 5, 773, 600.00 for loss of business, money loss and an unspecified amount for general damages.
   
2. The Defendants now assert that the Plaintiff failed to comply with Section 5 of the Claims By & Against the State Act ('the Act"). The Plaintiff opposes the application.
   
3. The brief background leading to instituting these proceedings are as follows. The Plaintiff entered into a lease agreement for the Plaintiff to lease from the National Capital District Commission; part of a property at Ela Beach. Subsequently in March 2007, the defendants issued a Notice to the Plaintiff to vacate the said premises and in the same month the defendants with the aid of the police forcibly evicted the Plaintiff from the premises. The Plaintiff then took out proceedings in the District Court. The dispute was not resolved amicably and as a result the current proceeding were commenced.
   
4. The principle issue to be determined is whether the Plaintiff gave the State and the Defendants the required notice under s.5 of the Act.
   

Section 5 reads: -

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.

5. As I understand there is no issue that National Capital District Commission is a governmental body and part of the State. There is a long line of authorities which establish that before a proceeding is issued against the Defendants, a prospective Plaintiff must give notice of its intention to make a claim and serve it on the proper offices.
   
6. In Sarakuma Investment Ltd v. Peter Merkendi (2004) N2629, Cannings J, provides guidelines in determining whether a Plaintiff has given Notice as required by s. 5 of the Act. Those principles or guidelines are: -
   

• A notice of an intention to make a claim is a condition precedent to issuing a writ of summons. Notice under Section 5 must be given first – before the writ is issued – even if the writ is issued within 6 months after the date of the occurrence out of which the claim arises. (Tohian and the State v Tau Liu (1998) SC566, Supreme Court, Kapi DCJ, Sheehan J, Jalina J.)

• Failure to comply with the mandatory requirements of the Claims Act is a ground on which a default judgment can be set aside. (Marinda v The State (1991) N1026, Woods J.)

• The purpose of requiring notice to be given is to give the State early notification, so that it can make enquiries as to the occurrence. It can carry out its own investigations while the trail of evidence is still fresh. It can meaningfully decide whether to settle an intended claim. (Minato v Kumo and The State (1998) N1768, National Court, Akuram J.)

• The requirement to give notice to the appropriate person and the method of serving the notice are mandatory. (Bokin v The Independent State of Papua New Guinea (2001) N2111, Davani J.)

• The notice under Section 5 must be in writing. It must give sufficient details of the intended claim, eg date, time and place of occurrence. If insufficient details are given, even a notice in writing will not comply with Section 5. (Hewali v Police Force and The State (2002) N2233, National Court, Kandakasi J.)

• The Attorney-General and the Court before which an action is instituted each has a discretion to extend the time for giving notice of a claim. "Sufficient cause" must be shown. There are no hard and fast rules. Good and acceptable reasons for delay must exist, eg inaccessibility to legal advice. (William Trnka v The State (2000) N1957, National Court, Sevua J.)

• The term "the State" in Section 13 of the Claims Act (no execution against the State) includes provincial governments and arms, departments, agencies or instrumentalities of provincial governments (See SCR No 1 of 1998; Reservation Pursuant to Section 15 of the Supreme Court Act (2001) SC672, Supreme Court, Amet CJ, Los J, Sheehan J, Salika J, Sakora J. In that case the Court preferred the view advanced by Injia J in Pupune v Makarai [1997] PNGLR 622 – "the State" includes provincial governments – to the opposite view of Kapi DCJ in Pato v Enga Provincial Government [1995] PNGLR 469.)

• The term "the State" in Section 13 of the Claims Act covers subsidiaries of governmental bodies. It includes companies owned and controlled by governmental bodies that are set up under the Companies Act. (Sakarius and Others v Tep and the Cocoa and Coconut Extension Agency (2003) N2355, National Court, Salika J. But compare with the Supreme Court's views on that point in SCR No 1 of 1998 at page 7.)

• If the Claims Act is not complied with, the Court has the discretion to strike out proceedings on its own motion. It does not have to wait for a party to apply to the Court. The Court should not take a back seat in such matters. It must be vigilant in its delivery of justice by ensuring that parties comply with stipulated, mandated procedures. (Bal v Taiya (2003) N2481, National Court, Davani J.)

7. I would adopt and apply the above principles in this case.
   
8. Recently the Supreme Court in National Capital District Commission v. Jim Reima, on behalf of himself & 120 Youth Groups of Moresby North East (2009) SC993, the Court held, inter alia, that NCDC is an entity of the State and that before any proceeding is instituted against the Commission a s.5 Notice of the Act must be given.
   
9. As I have said there is no issue between the parties that the NCDC is an entity of the State. It follows that s.5 Notice must be given.
   
10. The issue to determine is whether the Plaintiff infact gave a s.5 Notice to the State.
    
11. According to the Defendants, the Plaintiff has never given a s. 5 Notice of intention to make a claim. Here it relies on the letter from the Solicitor General's office dated 2nd November 2010. In that letter the Solicitor General stated that the Plaintiff had not given a s. 5 Notice before it filed its proceedings.
    
12. In the alternative, counsel for the Defendants submits that even if the Plaintiff did give a s. 5, which is denied, that notice was outside the time limit prescribed by the Act and no extension was sought nor granted for such a notice to be given.
    
13. It was therefore submitted that in either event the Plaintiff has not complied with the mandatory requirement and therefore the proceedings are incompetent and should be dismissed.
    
14. Mr. Iduhu, conceded that a letter or Notice given to Attorney General dated 30th June 2008, (annexure SK88 to Affidavit of Plaintiff) was not proper.
    
15. However, he submitted that there are other evidences on this aspect which demonstrate that a proper s.5 Notice had been given. Here he refers to a letter dated 11th November 2008, being annexure SK89 which was served on 13th November 2008. He also relies on the acknowledgment of service, annexures SK90 and 91. Mr. Iduhu, submitted that the Plaintiff had indeed given the relevant or appropriate notice before the writ was filed.
    
16. In order to determine if indeed proper notice was given, one needs to consider when the cause of action arose between the Plaintiff and the Defendant. Brief submissions were made by both counsels as to when the cause of action in this matter arose. The Defendants say it arose in March 2007. The Plaintiff says the cause of action arose in 2008.
    
17. Section 5(2) of the Act requires a prospective Plaintiff to give the required Notice with six (6) months from the date when the cause of action arose or where the Claim is for breach of Contract, within six months, after the claimant become aware of the alleged breach.
    
18. The answer to this preliminary issue can be found in the Affidavit of the Plaintiff filed on 24th June 2010 and the pleadings in the Writ of Summons. In paragraph 57 of her affidavit, the Plaintiff states that on 9th March 2007 the Acting City Manager issued a Notice to the Plaintiff to vacate the premises. Subsequently on 24th March 2007, the Plaintiff took out proceedings in the District Court – see paragraph 58 of her affidavit. Thereafter and as a consequence correspondences were entered into between the parties until the Writ was issued in May 2009. In the Writ, the Plaintiff pleaded in paragraph 15 that on March 2007 the Defendant advised the Plaintiff to vacate the premises. And on 24th March 2007, the Plaintiff forcibly evicted it.
    
19. It is clear to my mind, from the evidence I have referred to above that, the cause of action in this matter arose in March 2007 as that was when the agreement between the parties came to an end.
    
20. The six (6) months time limitation expired in or by at least the end of September 2007. There is no evidence that the required s. 5 Notice was given during that period. Indeed the purported Notice that was given in November 2008 are incompetent and is invalid, in that it was given outside the prescribed time limit. No extension of time to give notice was sought nor given as required by Section 5 (2)(c) of the Act. In the present case it is clear, and there is no evidence to the contrary that the Plaintiff gave notice to the State as required by Section 5(1)(a) & (b) or 5 (2)(a) & (b) of the Act.
    
21. From the reasons I have given, I find that the cause of action in this matter arose in March 2007. I further find that the Plaintiff did not give any s. 5 Notice before instituting the current proceedings. The purported Notice dated 11th November 2008 and served on 13th November 2008, is invalid and does not constitute notice as it was given outside the time limit prescribed. In addition there is no evidence that the Plaintiff applied for and obtained an extension of time to give that Notice. It is clear therefore that the Notice of 11th November 2008 was a nullity from the very beginning.
    
22. For the reasons I have given, I uphold the application. I make the following orders: -
    
    1. The entire proceeding, except for the cross-claim, is dismissed.
       
    2. The Plaintiff/Cross-Defendant pay the Defendant/Cross-Claimant costs, such costs to be agreed, if not taxed.
       

_________________________________________

Fairfax Legal: Lawyer for the Plaintiff/Cross-Defendants
Lari Raula Kila Lawyers: Lawyer for the Defendant/Cross-Claimants National Capital District Commission