N8112
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 1075 OF 2018 (COMM)

BETWEEN
DAVIDWESTERN ADVERTISING GROUP LIMITED
Plaintiff

AND
HIRI 152 DEVELOPMENTS LIMITED
First Defendant

AND
PAPA RESOURCE DEVELOPMENTS LIMITED
Second Defendant

AND
BURIA REAREA CAUTION BAY LIMITED
Third Defendant

AND
BOERA ENTERPRISES LIMITED
Fourth Defendant

AND
POREBADA INVESTMENTS LIMITED
Fifth Defendant

AND
HIRI SPECIAL PURPOSES AUTHORITY 
Sixth Defendant

Waigani: Anis J
2019: 7 & 20 November

NOTICE OF MOTION – dismissal of proceeding – abuse of court process – Order 12 Rule 40(1) – National Court Rules–section 5(1) – Claims By and Against the Sate Act 1996 - whether section 5 notice under the Claims By and Against the State Act 1996 required against the 6th defendant – section 3 – Interpretation Act Chapter No. 2 –meaning of “the State” considered - whether the 6th defendant is the Independent State of Papua New Guinea within the meaning of section 3

Cases Cited:

RimbinkPato v. Enga Provincial Government [1995] PNGLR 469
Maps Tuna Ltd v. Manus Provincial Government (2007) N857
Habolo Building and Maintenance Ltd v. Hela Provincial Government (2016) SC1549
Davidwestern Advertising Group Ltd v. Hiri 152 Developments Ltd and Ors (2019) N7952

Counsel:

Mr T Boboro, for the Plaintiff
Mr T M Rei, for the 3rd and 6th Defendants

RULING

20th November, 2019

1.	ANIS J:	The 6th defendant applied to dismiss the proceeding against it, on 7 November 2019.  Its application was contested.  I heard the application on that day and reserved my ruling.

2.	Parties have been notified so I will rule on it now.

BACKGROUND

3.	I summarized the facts in my earlier ruling of 19 August 2019, and I will repeat them here as follows:  

The Hiri Local Level Government (LLG) is part of Central Province or the Central Provincial Government.  A portion of its land area is regarded as part of the Papua New Guinea Liquefied Natural Gas (PNGLNG) impact area.  Landowners from within the impact area created various companies including the 5 defendants.

In 2012, various developments were undertaken at the impact area in Hiri in the Central Province.  The plaintiff was engaged to carry out civil works including engineering, construction, road grading and sealing to and from the various Hiri villages that were within the LNG impact area.  The plaintiff had alleged that despite the work that it had undertaken as agreed to, the 5 defendants and the Central Provincial Government, had failed to settle its claim.  So in an earlier proceeding, that is, WS 654 of 2014, the plaintiff claimed a total sum of K9, 122,101.40 against the 5 defendants and the Central Provincial Government.  That matter was discontinued after consent orders were signed between the parties whereby a sum of K4, 500,000 was paid out by the Central Provincial Government, to the plaintiff.  The plaintiff has since commenced the present proceeding against the 5 defendants and the 6th defendant, to claim the remaining balance of K4, 622, 101.40 which it says is still outstanding.  So far, the plaintiff has obtained default judgment against the 1st, 2nd, 4th and 5th defendants. 

MOTION

4.	The 6th defendant’s notice of motion was filed on 10 September 2019 (motion).  It seeks orders under Order 12 Rule 40(1)(a), (b) and (c) of the National Court Rules.  It claims that the proceeding should be dismissed for abuse of the Court process on the basis that the plaintiff had failed to give notice of its intention to sue the State under the Claims By and Against the State Act 1996 (CBASA) before it commenced this proceeding.  It claims that it is a state entity and therefore section 5(1) of the CBASA applies in this instance.

ISSUE

5.	The main issue is on the question of law, which is, whether a section 5 notice under the CBASA is required before one may sue the 6th defendant, and if so, whether this claim should be dismissed because the plaintiff had failed to give the notice before it filed this proceeding.

LAW

6.	Section 5(1) of the CBASA states, and I quote in part:

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.

7.	I refer to the Interpretation Act Chapter 2 (Interpretation Act).  Section 3 defines the word “the State” as follows:  “the State” means the Independent State of Papua New Guinea.

8.	I next refer to the Local-level Governments Act 1997 (LLG Act).  Part VII sets out the provisions for, amongst others, the appointment of and the purpose or functions of a Local-level Government Special Purpose Authority.  Its provisions include, and I quote: 

PART VII.—LOCAL-LEVEL GOVERNMENT SPECIAL PURPOSES AUTHORITIES.

42.	Establishment of Authorities.

(1)	The Head of State, acting on advice, may, by proclamation, establish a Local-level Government Special Purposes Authority in and for an area of one or more Local-level Governments.
(2)	A proclamation under Subsection (1) shall specify the purposes for which the Authority is established and such other matters as may be necessary.

43.	Recommendation for Establishment of an Authority.

(1)	The National Executive Council may advise the Head of State under Section 42 after considering a recommendation to establish an Authority submitted by the Minister—

(a)	on his own initiative, after consultation with the Local-level Governments concerned; or
(b)	otherwise in accordance with the provisions of this section.

(2)	Where one or more Local-level Governments is or are of the opinion that an Authority should be established to assist the implementation of one or more Local-level Government functions, the Local-level Government or Local-level Governments concerned shall so recommend to the Minister.
(3)	A recommendation under Subsection (1)(a) or (2) shall be in writing and shall contain particulars of—
(a)	the general purpose; and
(b)	the management; and
(c)	the funding; and
(d)	the staffing,
of the recommend Authority, and the requirements for—
(e)	the particular function or functions to be implemented; and
(f)	the area or areas to which it should apply; and
(g)	such other particulars as are considered relevant.
(4)	The Minister shall consider a recommendation made under Subsection (2) and where he considers the establishment of the Authority desirable shall submit the recommendation to the National Executive Council for consideration as to whether the Head of State should be advised to make the proclamation.

44.	Incorporation of Authorities.

An Authority—
(a)	is a corporation; and
(b)	has perpetual succession; and
(c)	shall have a seal; and
(d)	has power—
(i)	to acquire, hold, dispose of, mortgage or pledge property; and
(ii)	to enter into contracts; and
(iii)	to borrow money; and
(iv)	to invest funds; and
(v)	to institute and defend actions, suits and other legal proceedings; and
(vi)	to do all things necessary for the effective exercise and performance of its powers and functions.

45.	Management and operations, etc., of Authorities.

(1)	The affairs of an Authority shall be conducted by a managing body.
(2)	In principle, the membership of a managing body shall not include members of a Local-level Government.
(3)	The operations of an Authority shall be at arms length from a Local-level Government.
(4)	The membership, manner of appointment and terms and conditions of appointment of members of a management body are as prescribed.

46.	Variation, etc., of Authorities.

(1)	The Head of State, acting on advice, may, by proclamation—
(a)	vary the general purpose; or
(b)	vary the composition of membership of the management; or
(c)	vary the funding; or
(d)	vary the staffing; or
(e)	vary the particular function or functions to be implemented; or
(f)	vary the area or areas; or
(g)	change the name; or
(h)	vary such other particulars as are considered relevant and as might be provided for in the proclamation being varied,
of or by an Authority or
(i)	amalgamate, in whole or in part, two or more Authorities.
(2)	In a proclamation under Subsection (1) or by a subsequent proclamation, the Head of State, acting on advice, may make provision for the taking over by—
(a)	the State; or
(b)	another Authority; or
(c)	a Local-level Government or Local-level Governments,
of the whole or part of the assets and liabilities of the Authority.

47.	Dissolution of Authorities.

(1)	The Head of State, acting on advice, may, by proclamation dissolve an Authority.
(2)	A proclamation under Subsection (1) may only be made following consideration by the National Executive Council of a recommendation to dissolve the Authority in a manner similar to that set out in Section 43.
(3)	A proclamation under Subsection (1) shall make provision for the taking over by—
(a)	the State; or
(b)	another Authority; or
(c)	a Local-level Government or Local-level Governments,
of the assets and liabilities of the Authority.

48.	Powers and functions of Authorities.

(1)	Subject to this section, the Head of State, acting on advice, may by proclamation vest in an Authority any of—
(a)	the powers, other than—
(i)	the power to make Local-level laws; or
(ii)	the power to impose or levy rates, taxes, charges or fees; or
(iii)	executive powers; or
(iv)	a power, which any other law may forbid an Authority from exercising,
of a Local-level Government; and
(b)	the duties and responsibilities of a Local-level Government.
(2)	The powers which may be vested under Subsection (1) shall not exceed the powers of a Local-level Government.
(3)	No power may be vested in an Authority so as to have the effect of divesting a Local-level Government of that power.
(4)	An Authority may, and where the Head of State, acting on advice, so directs, shall, act as agent for the National Government in relation to any matter within its purposes, and the State shall fully and effectively indemnify and hold safe the Authority against all claims that may be made or taken against the Authority as a result of its acting as agent.
(5)	The Head of State, acting on advice, may direct an Authority to exercise and perform a power, authority, function, duty or responsibility vested in it and it is the duty of the Authority to comply with such a direction.
(6)	An Authority has no power or function over a Ward Committee.

6th DEFENDANT

9.	The real issue here is whether the 6th Defendant is “the State” within the meaning of section 5(1) of the CBASA.  I do not believe that the definition of “the State” is difficult to determine, and I will state or discuss my reasoning in line with some of the Supreme and National Court case authorities whose views I share.  The definition of the name “the State”, in my view, is expressly stated by an Act of Parliament, namely, the Interpretation Act.  No other Acts or statutes including the Constitution, expressly defines the name “the State” with clarity and of its application to the Acts of Parliament and statutes in general, than the Interpretation Act. There are other Acts for example the Public Private Partnership Act 2014 and the Kumul Minerals Holdings Act Authorisation Act 2015 that define the name “the State”.  However, their definitions are limited to the confines of these Acts.  
10.	It is also important at this juncture that I remind myself of my role or the role of Courts in the judiciary, which is, to state or interpret the law as it is written and of course to dispense justice in the process.  It is not the role of Courts to make a law or to interpret a word or a term with the aim of giving it another meaning when the law or its meaning is expressly defined or stated under a law or a statute.  Creation of laws of course is left with and it is the role of the first arm of the government which is the Parliament, to perform.
11.	Having reminded myself of this role, I begin by referring to section 1 of the Interpretation Act.  “Statutory provision” therein is defined to mean, amongst others, and I quote, the whole or any part of……an Act.  An Act of course is in reference to an Act of Parliament.  And section 3 of the Interpretation Act defines or interprets the name “the State” to mean, the Independent State of Papua New Guinea. This was also explained earlier by the former Chief Justice Sir Mari Kapi in the case of Rimbink Pato v. Enga Provincial Government [1995] PNGLR 469.  His Honour stated, and I quote in part:
The Constitution does not define the word "State", but it defines the name "Papua New Guinea" under Sch 1.2 to mean the Independent State of Papua New Guinea. The Independent State of Papua New Guinea derives its legal existence or capacity from the Constitution of Papua New Guinea (see Preamble to the Constitution). The power and the authority of the people are vested in the State of Papua New Guinea, and this power is exercised by the National Government (see s 99 of the Constitution). Subject to any other provision of the law, the term "the State", for purposes of Claims By and Against the State Act, means the National Government or an arm, department, agency, or instrumentality of the National Government. This does not include a provincial government.

The provincial government system is separately established by the Constitution (see s 187A). Establishment of a particular provincial government is a matter left to an Organic Law to provide for (see s 187B of the Constitution). Part II of the Organic Law on Provincial Government sets out the manner in which a provincial government may be granted. The Enga Provincial Government would have been granted under these provisions.

Section 12 of the Organic Law provides:

"12.	Legal capacity of provincial governments.
A provincial government-
(a) 	may acquire, hold and dispose of property of any kind; and
(b) 	may sue and be sued,
and a provincial law may make provision for and in respect of the manner and form in which it may do so."

12.	The said decision was regarded by the Supreme Court in Maps Tuna Ltd v. Manus Provincial Government (2007) SC857.  The Supreme Court stated, and I quote in part:

39.	Provincial Governments are established by PART VI (Sections 187A to 187J of the Constitution and Section 10 of the Organic Law on Provincial Governments and Local Level Governments. Because such governments are State entities they have the capacity to acquire, hold and dispose of any property and they have the legal capacity to sue or they can be sued independently according to s.6 of the Organic Law on Provincial Governments and Local Level Governments which provides for the legal capacity of the Provincial Governments and Local Level Governments.
40.	The State also has its legal capacity to sue and it can be sued and acquire, hold or dispose of property. That capacity originates from s.247 of the Constitution. That Section provides: 
“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.”
……
46.	If a Provincial Government is sued and where the State is not a party to the proceedings, why should service pursuant to s.5 of the Claims By and Against the State Act be served on The State when s.7 of the Organic Law specifically provides for service to be effected on Provincial Governments and Local Level Governments designated officers? To this Court, it would seem that there is plurality in the modes of service in cases where a Provincial Government is sued. It is our view that, the questions that were referred to the trial judge were legitimate and they ought to have been answered.      
13.	And under the CBASA, which is an Act of Parliament, it refers to the name “the State” under its various provisions.  In particular and under section 5(1), it states and I quote in part, 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.  Pursuant to section 3 of the Interpretation Act, what this means is that a person cannot sue the Independent State of Papua New Guinea in an action unless he or she gives notice to the Independent State of Papua New Guinea of his or her intention to sue.  And the processes for that are set out under the provisions of the CBASA.
14.	The 6th defendant is set up under the LLG Act as a body which has its own Constitution and which is subject to the LLG Act.  Its powers include its ability to act as an agent for the State or an agent of the Independent State of Papua New Guinea.  I refer to section 48(3) of the LLG Act which states and I quote:

An Authority may, and where the Head of State, acting on advice, so directs, shall, act as agent for the National Government in relation to any matter within its purposes, and the State shall fully and effectively indemnify and hold safe the Authority against all claims that may be made or taken against the Authority as a result of its acting as agent.

15.	I note that it may be argued that the 6th defendant had, at the material time, acted on the matters alleged, as an agent of the State or the Independent State of Papua New Guinea.  That may be something which the parties may raise or argue at the trial which is entirely up to them if the matter reaches that stage.  But to me, it is not the issue at hand with this application.  Here, we are concern with whether the 6th defendant is the State within the meaning of section 5 of the CBASA.  

16.	The first material fact to note, in my view, is that the State or the Independent State of Papua New Guinea is not named as a party to this proceeding.  In my view, section 3 of the Interpretation Act is expressly clear.  The 6th defendant is not the Independent State of Papua New Guinea as defined under section 3.  It may be a public body or an entity of the State.  However, it is not, in my view, the State as defined by the Act of Parliament, namely, by the Interpretation Act.  The Supreme Court in Habolo Building and Maintenance Ltd v. Hela Provincial Government (2016) SC1549, also expressed its view on point, which I find to be accurate, and I quote in part:
20.   It has been presumed that the appellant was obliged to give a Section 5 notice before commencing the proceedings. In fact, a Section 5 notice was not necessary as there was no claim against “the State”. If a person sues a provincial government, as distinct from the State, and does not sue the State, it is not necessary to give a Section 5 notice. 

17.	The 6th defendant, the Hiri Local Level Special Purpose Authority is being sued as one out of a total of 6 defendants.  And it claims, by this application, that a section 5(1) notice under the CBASA was warranted and should have been issued to the State before the plaintiff filed this proceeding.  It claims that a section 5(1) notice was required because it was, and still is, part of the State; that it is a state entity. In my view, and as stated above, the 6th defendant may be a public entity or body of the State, but it is not the Independent State of Papua New Guinea.  I note that it can acquire assets and sue or be sued under its own name or style, that is, amongst its other capabilities as stated under the LLG Act and its Constitution.  I think this may be better illustrated if we picture the State as a holding or parent company.  Its subsidiaries may be related or be wholly owned by it, but they are also regarded as separate entities who may acquire assets and they may sue or be sued under their names or styles.  But they are not the parent company so if one wishes to sue the parent company, then it must name the parent company and sue the parent company as a separate legal person.  In this case, the 6th defendant may be an independent public entity or body that is related to or which may or may not form part of the State through the provincial or local-level government or pursuant to the provisions of the LLG Act, but it cannot, in my view, be regarded as the State within the meaning of section 3 of the Interpretation Act and section 5 under the CBASA.  Only the Independent State of Papua New Guinea is, in my view, defined as the State and therefore only the Independent State of Papua New Guinea shall be notified under section 5(1) of the CBASA if a person intends to commence an action against it.  Similarly, a section 5(1)notice under the CBASA is not required if one intends to sue entities that may relate to or be part of but are not the Independent State of Papua New Guinea within the meaning of section 3 of the Interpretation Act.

COURT DECISION OF 19 AUGUST 2019

18.	Counsel for the 6th defendant also submits that this Court has already made a determination that the 6th defendant was a State entity in its decision published on 19 August 2019.  The un-reported reference number is Davidwestern Advertising Group Ltd v. Hiri 152 Developments Ltd and Ors (2019) N7951.  As such, counsel submits that a section 5 notice was required and that since the plaintiff had not given the said notice to the State before commencing this proceeding, proceeding against it (i.e., the 6th defendant) should be dismissed by this Court.

19.	I refuse the argument for 2 reasons.  Firstly, the argument is misconceived.  I did not make any definitive determination as alleged by counsel.  I note that I had asked counsel to point to the actual decision or paragraph alleged in my earlier decision.  In response, counsel referred the Court to paragraph 19.  It reads, and I quote in part:

19.	When I consider these provisions, they tend to support the plaintiff’s contentions in relation to the establishment of the 6th defendant and its purpose, that is, to act as an agent for the State in implementing development projects including infrastructure, social and economic projects in the district.  I therefore see prima facie reasons which support the plaintiff’s position in naming or including the 6th defendant in this proceeding with the other 5 defendants.  Full arguments on point of course may be raised and be dealt with at the trial proper.

20.	My view, after having carefully read the paragraph, has not changed as stated above as well as at the hearing.  The second reason is the reason I give in my findings on the main issue herein.  That is, the 6th defendant may be an independent public entity or an instrument of the Hiri Local Level Government which is a governmental body which is or may be part and parcel of the Central Provincial Government, but it is not the State as defined under section 3 of the Interpretation Act.  To be precise, the 6th defendant is not the Independent State of Papua New Guinea. 

SUMMARY

21.	In summary, I will dismiss the application.

COST

22.	Cost is discretionary.  I will order cost to follow the event on a party/party basis to be taxed if not agreed.

THE ORDERS OF THE COURT

23.	I will make the following orders:

1.	The 6th defendants’ notice of motion filed on 10 September 2019 is dismissed.

2.	Cost of the application shall be paid by the 3rd and 6th defendants to the plaintiff, on a party/party basis which may be taxed if not agreed.

3.	Time for entry of these orders is abridged to the date of settlement by the Registrar of the National Court which shall take place forthwith.

The Court orders accordingly.
_______________________________________________________________
Chesterfield Lawyers:	Lawyers for the Plaintiff
T M Rei Lawyers:	Lawyers for the Third and Sixth Defendants