N9448

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 1440 OF 2016

BETWEEN:
NIUGINI STAR TRANSPORT LIMITED
Plaintiff

AND:
WESTERN HIGHLAND PROVINCIAL GOVERNMENT
First Defendant

AND:
THE STATE
Second Defendant

Waigani: Gavara-Nanu J.
2020:19th November
2021: 07th May

 CONTRACT – Claims for damages – Notice of intention to claim – Against the Provincial Government – Against the State – Section 5 notices – Validity of the claims – Provincial legislation – National legislation - Requirements for a s.5 notice.

Cases Cited:

Badastal Ltd v. Dr. Puka Temu (2011) SC1092
Hewali v. Police Force and The State (2002) N2233
Kondi v. Western Highland Provincial Government (2004) N2755
Minato v. Kumo and The State (1998) N1768 
Tohian & The State v. Tau Liu (1998) SC566
Welcos Engineering Ltd v. Hami Yawari and Others (2007) (Unreported)

Counsel:

D. Kamen, for the Plaintiff
E. Ngomba, for the First Defendant 
H. White, for the Second Defendant 

7th May, 2021 

1.    GAVARA-NANU J:  This is an application by the first defendant (applicant) made pursuant to a Notice of Motion filed on 28 October, 2019, seeking dismissal of the proceeding for failure by the plaintiff to give notice of its intention to make a claim against it under s. 5 of the Claims By and Against the Western Highlands Provincial & Local Level Government Act, 1999.  

2.    The application is made under Order 12 r 40 of the National Court Rules (NCR), that it is frivolous and vexatious and an abuse of process.

3.     It is settled law that where the State is named separately as a defendant, it must be given a separate notice under s. 5 of the Claims By and Against the State 1996. If the State is named as a defendant besides a Provincial Government as in this case, the Provincial Government must also be given a separate notice under the Provincial Government’s own legislation. See Welcos Engineering Ltd v. Hami Yawari and Others (2007) (Unreported) per Hartshorn J.  

4.    In this case, Mr. Kamen counsel for the plaintiff argued that Western Highlands Provincial Government and The State were each served with a notice of intention to claim under their respective legislations.  The State was served with a notice under s. 5 of the Claims By and Against the State Act 1996, in a letter dated 13th October, 2016.  

5.      The s. 5 notice to the State is not in dispute but the notice to the first defendant is.  The plaintiff claims its s.5 notice to the first defendant was given in a letter dated 23 September, 2016. Section 5 of the Western Highland Provincial and Local-Level Government Act 1999 is similar in terms as s. 5 of the Claims By and Against the State Act.  

6.      Ms. Ngomba, counsel for the first defendant argued that the letter the plaintiff is relying on did not give plaintiff’s intention to make a claim against the first defendant.  The letter is Annexure “WY1” to William Yakopya’s affidavit sworn on 11 November, 2019.  Mr. Yakopya is a director of the plaintiff company.  The relevant paragraph of the letter reads:

“You are forewarned that we will have no option but to commence legal proceedings against you and the State to claim what money is owed to us and also claim for General Damages for breach of contract.” 

7.	In the earlier paragraphs of that letter, the plaintiff told the first defendant that the letter was a follow-up of its earlier letter dated 11 May, 2016, in which it gave notice of the breach of contract between them.  In the letter, the plaintiff gave notice that it was terminating the contract effective from 23 September, 2016.  The plaintiff told the first defendant that pursuant to cl. 60 of the contract, the plaintiff having terminated the contract, the first defendant had 7 days to make the relevant termination payments.  The plaintiff also demanded reimbursement of its bond.   In the last paragraph of the same letter, the plaintiff offered to discuss its notice to terminate the contract and asked the first defendant to contact it before the end of the month.  The heading of that letter reads: “Termination of Contract”.

8.	The letter of 13 October, 2016 containing the s. 5 notice to the State was addressed to the Solicitor General.  The heading to the letter reads: “Notice to make a claim against the State by Niugini Star Transport Limited.” 

9.	The relevant paragraphs of the letter read:

“The contracts have never been terminated by the Western Highlands Provincial Government, and by way of a letter dated 11 My, 2016, we had followed up on this matter and provided two options for Western Highlands Provincial Government to take and are as follows:

1.	The Contracts can remain in place for parties to 
continue to completion and in the meantime Western Highlands Provincial Government can settle the invoices already rendered which amount was calculated at K1,160,151.55, or alternatively.

2.	Our company can invoke its powers under the contracts to terminate and claim payments for works done together with all other associated costs following the termination, which amount we calculated at K5,750,295.69.

Since then we did not receive any response from Western Highlands Provincial Government and so by way of a letter dated 23 September, 2016, we formally terminated both contracts. Following our termination of the contract, Western Highlands Provincial Government is then liable to pay us the payments for work done and associated costs and since there has not been any favourble response forthcoming from Western Highlands Provincial Government, we are left with no choice but to instigate legal proceedings to recoup what is due to our company.  With the Western Highlands Provincial Government being an entity of the State, this letter now serves as a formal Notice of Intention to make a Claim Against the State, pursuant s. 5 of the Claims By and Against the State Act, 1996.  Kindly, acknowledge service accordingly.”

10.	As a matter of construction, the paragraphs cited in the letter to both defendants must be read together to find their true and intended meaning because the case plainly turns on the proper construction of these paragraphs.  

11.	The defendants argued that the letter of 23 September, 2016, to the first defendant was about termination of the contract between the plaintiff and the first defendant as indicated by the heading of the letter.  They argued that there was no expression of intention by the plaintiff to make a claim against the first defendant.  Whereas in the second letter to the State, there was a clear expression of intention to make a claim.  

12.	The plaintiff was initially represented by Niuage Lawyers.  The current lawyers were engaged in 2019.  The two letters which have been alluded to were authored by Niuage Lawyers.  

13.	The plaintiff’s claims for damages were based on breach of contract between the plaintiff and the first defendant under which the plaintiff was engaged to construct roads.  The first defendant has already made part payments for the plaintiff's services.  The amounts paid totaled about over K2million.  The plaintiff asked for payments for work done by way of quantum-meruit.  The first defendant refused to pay the balance of plaintiff’s claims.  The plaintiff therefore claims the balance of the monies owed to it under the contract.  

14.	It is settled law that giving a s. 5 notice either to the first defendant under its own legislation or to the second defendant under the national legislation is a condition precedent to the validity of the actions taken against them.  See, Tohian & The State v. Tau Liu (1998) SC566.  

15.	The purpose of a s. 5 notice either under a Provincial legislation or the national legislation is to give the defendant early notification of the intended claim so that the defendant can make its own inquiries regarding the claims whilst the claims are fresh and to give the defendant opportunity to decide whether to settle or defend the claim.  See, Minato v. Kumo and The State (1998) N1768 and Kondi v. Western Highland Provincial Government (2004) N2755.

16.	A s.5 notice must be in writing and must be given within the prescribed statutory period. It must give sufficient details of the intended claim, including the date, time and place of the event or occurrence complained of so that the defendant is sufficiently informed of what to investigate and defend, should the defendant decide not to settle.  See, Badastal Ltd v. Dr. Puka Temu (2011) SC1092, Kondi v. Western Highlands Provincial Government (supra) and Hewali v. Police Force and The State (2002) N2233.  The plaintiff carries the onus to prove on the balance of probabilities that the letter of 23 September, 2016, was served on the first defendant because it claims the letter constituted its s. 5 notice under the Western Highlands Provincial and Local Level Government legislation.  

17.	In the affidavit of Wilma Natasha Yakopya, a director of the plaintiff company, sworn on 11 November, 2019, it is deposed that above letter was received by the first defendant on 26 September, 2016.  The letter was addressed to the Administrator of the Western Highlands Provincial Government and made attention to Joseph Neng.  

18.	In the affidavit sworn by Joseph Neng on 23 October, 2019, he denied receiving a notice of intention to make a claim against the first defendant by the plaintiff under s. 5 of the Western Highlands Provincial and Local Level Government legislation.  He deposed in the affidavit that no such notice was served on the first defendant.  

19.	However, Mr. Neng did not deny receiving the plaintiff’s letter of 23 September, 2016, which the plaintiff maintains was received by him on 26 September, 2016.  

20.	Thus, the question is - Did the letter of 23 September, 2016 constitute a valid s. 5 notice of intention by the plaintiff to make a claim against the first defendant under the Western Highlands Provincial and Local Level Government legislation?  

21.	To me, it did not matter how the heading of the letter of 23 September, 2016 was worded, what mattered was the intention behind that letter, particularly the paragraph which the plaintiff relied on for a s. 5 notice under the Western Highlands Provincial and Local Level Government legislation. The Court must decide whether the paragraph met the requirements of s. 5 of the Western Highlands Provincial and Local Level Government legislation. 

22.	Having considered the letter of 23 September, 2016, from the plaintiff to the first defendant, I have concluded that the letter constituted a s. 5 notice under the Claims By and Against the Western Highlands Provincial and Local Government Act. I find that the requirements for a s. 5 notice were met by the said letter. First, the notice was in writing, viz; letter of 23 September, 2016. Second, it was given within the prescribed statutory period. Third, the notice gave details of the plaintiff’s intended claims, including when and how those claims arose.  Fourth, the first defendant was given sufficient opportunity to investigate the claims and decide whether to defend or settle the claims.    

23.	There is undisputed evidence that the letter was served on the first defendant and the first defendant has not been able to disprove or deny service. 

24.	I am therefore satisfied that the first defendant was served with a notice of intention to claim by the plaintiff under s.5 of the Western Highlands Provincial and Local-Level Government Act.

25.	It is further noted in the letter of 23 September, 2016, that the first defendant was given until the end of September, 2016, to discuss possible settlement, failing which the plaintiff would be left with no alternative but to institute proceedings against it.  To me, that constituted a clear expression  of intention to make a claim, thus satisfying that vital requirement of s. 5 of the Western Highlands Provincial and Local-Level Government Act. 

26.	Consequently, when the first defendant failed to discuss settlement with the plaintiff by the end of September, 2016, it was proper for the plaintiff to institute this proceeding.  

27.	For these reasons, the first defendant’s Notice of Motion is dismissed with costs.
_____________________________________________________________ Kamen Lawyers: Lawyers for the Plaintiff
Tamutai Lawyers: Lawyers for the First Defendant
Solicitor General: Lawyers for the Second Defendant