N8772

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO.1402 OF 2015

BETWEEN:
TOPI WALUN for himself and on behalf of persons named
in the Schedule attached to the writ
Plaintiffs

AND:
NATIONAL HOUSING CORPORATION
Defendant

AND:
BANK OF SOUTH PACIFIC LIMITED
Garnishee

Waigani:  David, J
2021:  17th & 19th February

GARNISHEE PROCEEDINGS – application to make garnishee order nisi absolute to compel payment of debt attached – National Court Rules, Order 13 Rule 61.

Cases Cited:
Papua New Guinea Cases

Philip Aure v Sai Business Group Inc (2008) N3349
Kendo Ltd v Niugini Builders Supplies Ltd (2014) N5661
Kedmec Auto Repairs Ltd v PNG Power Ltd (2019) N7930
PNG Power Ltd v Augerea (2013) SC1245
Public Curator of Papua New Guinea v Kara (2014) SC1420
Niugini Building Supplies Limited v National Housing Estate Limited, SCA No.57 of 2018 (Kandakasi, DCJ, Manuhu, J and Yagi, J),

Overseas Cases:

Watson v Morrow (1880) 6 VLR (L) 134
Granger v Granger [1919] VLR 288   

Counsel:

Adam Token, for the Plaintiffs
Abel Tol, for the Defendant
No appearance for the garnishee 

RULING
19 February, 2021

1.	DAVID, J:   INTRODUCTION: This is the ruling of the Court in relation to the plaintiffs/judgment creditors’ (plaintiffs) application moved by notice of motion filed on 17 November 2020 that arises from a garnishee order nisi granted by the Court on 14 October 2020.  By that order, the plaintiffs were granted leave to file and serve a garnishee notice on the Bank of South Pacific Limited (garnishee) pursuant to Order 13 Rule 56 of the National Court Rules.  A garnishee notice was filed on 19 October 2020 and served on the garnishee on 20 October 2020.  The garnishee notice specifies the debt owed by the defendant to the plaintiffs as K236,565.20.  It appears from the Court’s record as per Court order granted on 21 October 2019 that judgment on liability was entered against the defendant/judgment debtor (defendant) and damages assessed subsequently. There is no dispute that both the judgment on liability and judgment on assessment of damages have not been appealed.  The matter was made returnable before the Court on 21 October 2020, but has been adjourned several times for one reason or another and according to the Court file endorsement of 21 October 2020, one reason being that the decision of 14 October 2020 was the subject of an appeal in the Supreme Court.  The application essentially is to make the garnishee order nisi absolute relying on Order 13 Rule 61 of the National Court Rules which, if granted, will compel the garnishee to pay.  There is no concrete evidence before the Court to ascertain whether an appeal against the grant of the garnishee order nisi and the subsequent issue of the garnishee notice was instituted in the Supreme Court or that a stay of the garnishee order nisi or garnishee proceedings was obtained in the Supreme Court so I am not barred from determining the merits or otherwise of this application. 

EVIDENCE

2.	The plaintiffs rely on and read the following affidavits:

1.	Affidavit of Tony Walun sworn on 16 November 2020 and filed on 17 November 2020; and
2.	Affidavit of Tony Walun sworn on 18 November 2020 and filed on 19 November 2020.

3.	The defendant relies on and reads the affidavit of Abel Tol sworn and filed on 10 November 2020.

ISSUE

4.	The main issue that arises from the application is whether the order nisi granted by the Court on 14 October 2020 should be made absolute so that the garnishee can pay the plaintiffs the debt attached from funds held by the garnishee.  

SUBMISSIONS

5.	The plaintiffs’ through counsel Mr. Token contend that the order nisi granted on 14 October 2020 should be made absolute as the debt attached remains outstanding and that the garnishee has confirmed that it holds some funds to the credit of the defendant from which the debt attached can be satisfied.

6.	The defendant through Mr. Tol submits that the defendant fell within the definition of “State” in the Claims By and Against the State Act and therefore was protected from proceedings for execution or attachment or processes in the nature of execution or attachment under the provisions of Sections 12, 13 and 14 of that Act. 

CONSIDERATION
 
7.	Order 13 Rule 61 of the National Court Rules states:

	61.	Payment to judgement creditor. (46/8)

	Subject to Rules 62 and 63, the Court may, on motion pursuant to the garnishee notice, order the garnishee to pay to the judgement creditor the debt attached to the extent specified in the garnishee notice, or so much of the debt attached to the extent so specified as is required to satisfy the judgement or order on which the garnishee proceedings are taken together with interest and such costs of the garnishee proceedings as may be payable to the judgement creditor out of the debt attached.

8.	A garnishee can only dispute the debt owed by him to the judgment debtor:  Order 13 Rule 62, Kendo Ltd v Niugini Builders Supplies Ltd (2014) N5661, Kedmec Auto Repairs Ltd v PNG Power Ltd (2019) N7930.  He cannot contest the validity of the judgment against the judgment debtor:  Watson v Morrow (1880) 6 VLR (L) 134; Granger v Granger [1919] VLR 288.   The garnishee here is doing none of these things.  A sum standing to the credit of a judgment debtor in a bank account is a debt due by the bank to its customer:  Order 13 Rule 54.  Here, the garnishee’s response after being served with the garnishee notice was through a letter to the plaintiffs’ lawyer (Office of the Public Solicitor) by letter dated 9 November 2020 stating that it had minimal credit balance available to fully satisfy the debt attached and the relevant parts of the letter for this purpose state as follows:

“With compliance of the Orders, we have imposed a restriction for the judgment sum of K236,565.20 against the account of National Housing Corporation, and we further advise that there is minimal credit balance available to fully satisfy the judgment debt……

National Housing Corporation will be advised of the garnishee proceedings brought against it and, if it so disputes liability, it will notify you directly.”     

9.	The exercise of the Court’s power under Order 13 Rule 61 is discretionary and should be exercised on proper principles or basis.  

10.	The exercise of the power under Order 13 Rule 61 is clearly subject to Rules 62 and 63.  

11.	Rule 62 states:

	“62.	Dispute of liability by garnishee. (46/9)

	Where, on the hearing of a motion by the judgement creditor pursuant to the garnishee notice, the garnishee disputes liability to pay the debt attached, the Court may hear and determine the questions in dispute and direct the entry of such judgement, or make such order, as the nature of the case requires.”

12.	There is no dispute concerning the liability of the garnishee to pay the debt attached.

13.	Rule 63 states:
	
	“63.	Claim by other person. (46/10)
	
	Where it appears to the Court that any person other than the judgement debtor is, or claims to be, entitled to money paid into Court under Rule 59 or to the debt attached or to any charge or lien on, or other interest in that money or debt, the Court may make orders for giving to that person notice of the proceedings and may hear and determine his claim, and may direct the entry of such judgement, or make such order in respect of the claim, as the nature of the case requires.”

14.	There is no evidence showing any claim by any other person in relation to the debt attached or to any charge or lien on, or other interest in that money or debt.

15.	Does this Court have jurisdiction?  Yes.  Order 13 Rule 61 grants the Court jurisdiction as the exercise of the discretionary power is already subject to Rules 62 and 63.   In addition, under Order 13 Rule 61, the Court is asked on application by motion to compel the garnishee, through an order, to pay to the judgment creditor the debt already attached following the grant of the garnishee order nisi and the service of the garnishee notice on the garnishee.    

16.	In addition, a garnishee order nisi is usually obtained ex parte without filing or serving a notice of the motion with the leave of the Court for the issue of a garnishee notice on the satisfaction of a number of pre-conditions for leave to be granted under Order 13 Rule 56 including that, first, there is a debt owing to the plaintiff by the defendant, second, the judgment debt is unsatisfied, and third, there is a debt due or accruing to the judgment debtor from the garnishee:  Order 13 Rule 56(1), (2) and (3), Philip Aure v Sai Business Group Inc (2008) N3349, Kedmec Auto Repairs Ltd v PNG Power Ltd (2019) N7930.  The exercise of power under Order 13 Rule 56 is subject to any Act and this would include the Claims By and Against the State Act.

17.	Following the grant of leave, the plaintiff is required by Order 13 Rule 57 to serve the garnishee notice on the garnishee personally and on the judgment debtor.  Upon receipt of a garnishee notice by a garnishee, all debts mentioned in the garnishee notice and due or accruing to the judgment debtor from the garnishee are attached and bound in the hands of the garnishee to the extent of the amount specified in the garnishee notice so the garnishee is prevented from dealing with any part of the debt for any other purpose:  Order 13 Rule 58.  

18.	The decision of the Supreme Court in PNG Power Ltd v Augerea (2013) SC1245 which was followed by Public Curator of Papua New Guinea v Kara (2014) SC1420 and Niugini Building Supplies Limited v National Housing Estate Limited, SCA No.57 of 2018 (Kandakasi, DCJ, Manuhu, J and Yagi, J), has essentially revisited what entities are to be included in the definition of “State” in the Claims By and Against the State Act.  This court is bound by those Supreme Court decisions.   The defendant clearly is included in the definition of “State” in the Claims By and Against the State Act.  
 
19.	To my understanding, a garnishee order is issued in two stages, first, as an order nisi and second, as an order absolute.  A garnishee order nisi is an order obtained on an interim basis and following a hearing, subsequent to the grant of the garnishee order nisi, under Order 13 Rule 61, the Court may decide whether to make the order nisi absolute and when it does so, the garnishee order absolute comes into force and is binding. When an order absolute is made and on receipt of the order, the garnishee has to pay the debt attached to the plaintiff/judgment creditor. 

20.	In addition, the Court is duty-bound under Section 158(2) of the Constitution to give paramount consideration to the dispensation of justice when interpreting the law. I have allowed the defendant to be heard although it has been said that only a garnishee should be heard in applications of this nature:  Kendo Ltd v Niugini Builders Supplies Ltd (2014) N5661.  Even if the defendant were not allowed to make submissions, I would still have raised the issue with the plaintiffs about the protection accorded to the State under Sections 12, 13 and 14 of the Claims By and Against the State Act on my own volition and in the exercise of my inherent powers and give them an opportunity to address it before making a decision.    

21.	For these reasons, I will refuse to make absolute the garnishee order nisi granted by the Court on 14 October 2020.  Consequently, the plaintiffs’ application seeking an order for the garnishee, Bank South Pacific Limited to pay K236,565.20 to the plaintiff/judgment creditor pursuant to Order 13 Rule 61 of the National Court Rules by way of an order absolute is refused and dismissed.

JUDGMENT AND ORDERS

22.	I direct the entry of judgment in the following terms:

1.	The plaintiffs’ application seeking an order for the garnishee, Bank South Pacific Limited to pay K236,565.20 to the plaintiffs/judgment creditors pursuant to Order 13 Rule 61 of the National Court Rules by way of a garnishee order absolute is refused and dismissed.
2.	The plaintiffs and the defendant shall meet their own costs.
3.	Time is abridged.
Ruling and orders accordingly.
____________________________________________________________________
Public Solicitor: Lawyer for the Plaintiffs 			
NHC In-house Lawyers: Lawyer for the Defendant