N11011

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO. 23 OF 2021 (COMM)

BETWEEN:
NIVANI LIMITED
Plaintiff

V
WEST NEW BRITAIN PROVINCIAL GOVERNMENT
Defendant

Waigani: Anis, J
2024: 3rd May & 25th September

APPLICATION FOR STAY & SET SIDE – notice of motion – Order 12 Rule 1 – National Court Rules – ss.13 and 14 – Claims By and Against the State Act 1996 – whether the defendant is part of the State and if so, whether ss. 13 and 14 of the Claims By and Against the State Act apply – whether properties or assets owned by state entities or bodies constitute properties owned by the State within the meaning of s.13(1) – Claims By and Against the State Act 1996 - whether enforcement orders sought against the defendant should be set stayed or set aside pending full observance or compliances with the process for payment of State debts and liabilities – consideration and ruling

Cases Cited:

David Western Advertising Group Ltd v. Hiri 152 Development Limited and Ors (2019) N8112
Habolo Building and Maintenance Ltd v. Hela Provincial Government (2016) SC1549
Air Niugini Limited v. Kavieng District Development Authority and the State (2019) N8158
SCR No. 1 of 1998: Reservation Pursuant to s. 15 of the Supreme Court Act (2001) SC672
Maps Tuna Ltd v. Manus Provincial Government (2007) SC857
Niugini Building Supplies Ltd v. National Housing Estate Ltd (2020) SC1985
Mineral Resources Development Company Ltd v. Mathew Sisimolu (2010) SC1090
Ona v. National Housing Corporation (2009) N3623
Wasu Ipi and Ors v. Green Timber (PNG) Limited and Or (2021) N8898
Clinton Capitol Partners Pty Ltd v. Kumul Petroleum Holdings Ltd and Ors (2021) N9112
National Capital District Commission v. Internal Revenue Commission and Ors (2022) N9592

Counsel:

L Evore, for the Plaintiff
J Nigs, for the Defendant

DECISION

25th September 2024

1.	ANIS J:  This was a contested matter where I had, after the hearing on 3 May 2024, reserved my ruling to a date to be advised.  The defendant filed a notice of motion on 26 April 2024 (NoM) to stay and set aside various enforcement orders that were obtained by the plaintiff.

2.	Parties have been notified so I will give my ruling now.

BACKGROUND

3.	This proceeding concluded on 21 February 2022 in favour of the plaintiff.  The purpose why the plaintiff had come to Court, was to sanction arbitration awards that had been made by an arbiter, namely, Rodney Hansen QC, in relation to a dispute that had arisen between the parties.  The plaintiff had been engaged by the defendant in 2016, to construct sports infrastructure/facilities for the 7th PNG Games which was to be held in Kimbe, West New Britain Province.  Various contracts were signed between the parties for the project.  In 2017, a dispute arose between the parties in regard to the project.  That then led to various actions including proceeding WS NO. 920 of 2018.  The National Court in the said proceeding granted orders for the dispute to be resolved by arbitration.  Mr. Hansen was appointed as the Arbitrator to arbitrate on the matter.  An arbitration agreement was signed in that regard on 31 March 2021.  The Arbitrator made 2 awards.  The first award, which was interim but substantive, was made on 4 June 2021.  The second award was made on 19 July 2021 which addressed interest and costs.

4.	The defendant was ordered to pay K11,181,436.31 plus accrued interest to the date of settlement of the full sum.  The sum remained unsatisfied which was why the plaintiff commenced this proceeding, to convert the arbitration awards into a judgment, and to enforce that against the defendant.

5.	In an ex-tempore ruling on 21 February 2021, Her Honour Tamade AJ made these final orders:

1.	Leave is granted pursuant to section 12 of the Arbitration Act 1951 (Chapter 46) (as amended) that the Interim Arbitration award of Rodney Hansen QC (the Arbitrator) in favour of the plaintiff on the arbitration matter between the plaintiff and the defendant dated 27 May 2021 in the amount of K11, 930, 967.51 be enforced against the defendant, which matter was duly referred to arbitration as declared by the National Court on 24 August 2020 in proceeding WS No. 920 of 2018.

2.	Pursuant to section 12 of the Arbitration Act 1951 (Chapter 46) (as amended), the defendant shall pay forthwith the Interim Arbitration Award of Rodney Hansen QC (the Arbitrator) dated 27 May 2021 in the amount of K11, 930, 967.51, which was made in favour of the plaintiff.

3.	Leave is granted pursuant to section 12 of the Arbitration Act 1951 (Chapter 46) (as amended) that the Arbitration award of Rodney Hansen QC (the Arbitrator) as to Interest and Costs in the amounts of K238, 452.28 and K2, 625 in favour of the plaintiff on the arbitration matter between the plaintiff and the defendant dated 19 July 2021 be enforced against the defendant, which matter was duly referred to arbitration as declared by the National Court on 24 August 2020 in proceeding WS No. 920 of 2018.

4.	Pursuant to section 12 of the Arbitration Act 1951 (Chapter 46) (as amended), the defendant shall pay forthwith the Arbitration Award of Rodney Hansen QC (the Arbitrator) as to Interest and Costs dated 19 July 2021 in the amounts of K238, 452.28 and K2, 625, which was made in favour of the plaintiff.

5.	The defendant shall pay forthwith interest on the amounts payable in the Interim Arbitration Award of Rodney Hansen QC dated 27 May 2021, from 27 May 2021 to the date of enforcement and payment, as stipulated in the Contract and as awarded by the Arbitrator at the rate set out under clause 12.7 of ‘New Zealand standard: Conditions of Contract for Building and Civil Engineering and Construction NZS3910:2013’.

6.	The defendant shall pay forthwith interest on the amounts payable in the Arbitration Award of Rodney Hansen QC as to Interest and Costs dated 19 July 2021, from 19 July 2021 to the date of enforcement and payment, as stipulated in the Contract and as awarded by the Arbitrator, at the rate set out under clause 12.7 of ‘New Zealand Standard: Conditions of Contract for Building and Civil Engineering and Construction NZS3910:2013’.

7.	The Administrative head of the defendant, the Provincial Administrator of West New Britain Province, shall forthwith arrange for settlement of the judgment sum from the West New Britain Provincial Government’s finances by 21 April 2022, failing which he shall be summoned to appear before the National Court at Waigani to show cause why he ought not to be charged for contempt, or failing which a writ of capias ad satisfaciendum be issued by the Court pursuant to section 12 of the Arbitration Act Chapter 46. 

8.	Costs of this proceeding is awarded to the plaintiff on an indemnity basis.

9.	The time for entry of these orders is abridged to the time of settlement by the Registrar which shall take place forthwith.

6.	The judgment appears unsatisfied to date.

MOTION

7.	With the present NoM, the defendant seeks the following relief:

“1.	Pursuant to Order 12 Rule 1 of the National Court Rules, Sections 13 and 14 of the Claims By and Against the State Act (the Act) and the Supreme Court decision in SCR No 1 of 1998; Reservation Pursuant to Section 15 of the Supreme Court Act (2021) SC672, the Defendant is the ‘State’ for purposes of Section 13 and 14 of the Act and execution and satisfaction of a judgment debt against it must comply with those sections.

2.	Subject to the Court granting Order 1 above, pursuant to Order 13 Rule 10, Order 13 Rule 11, Order 13 Rule 21 and Order 12 Rule 1 of the National Court Rules, the Court order of 21 February 2022 entered on 1 March 2022 is stayed subject to compliance with the process set out under Section 13(2) and Section 14 of the Act.

3.	Subject to the Court granting Order 1 and 2 above, pursuant to Order 12 Rule 8(4) and Order 12 Rule 1 of the National Court Rules, the Court order ordered 30 May 2023, the Warrant of arrest issued on 30 May 2023 and the Warrant of Committal issued on 30 May 2023 are set aside.
……”

EVIDENCE

8.	In support of the NoM, defendant relies on the following affidavits, (i), Affidavit of Leo Mapmani filed 14 March 2024, (ii), Mr. Mapmani’s second affidavit filed 26 April 2024, and (iii), Affidavit of service of Tau Uamaki file 2 May 2024.

9.	The plaintiff did not make specific references to affidavits that have been filed against the NoM.  Its submission was centered on arguments of law.

ISSUE

10.	The main issue I am being asked to consider is this, whether the defendant is part of the State within meaning of sections 13 and 14 of the Claims By and Against the State Act 1996 (CBASA).  

CONTENTION

11.	I note the submissions of the parties.

12.	The defendant contends that it is part of the State or the Independent State of Papua New Guinea, and that being the case, sections 13 and 14 of the CBASA shall apply in regard to payment of the judgment sum that is obtained in this proceeding because its properties and assets are properties and assets of the State; it argues that the plaintiff therefore must follow or observe the mandatory process for payment that is stipulated under ss. 13(2) and 14 of the CBASA.

13.	The plaintiff argues to the contrary.  It submits that the defendant and the State are separate and distinct entities.  It submits, amongst others, that the State is defined as Independent State of Papua New Guinea under s. 3(1) of the Interpretation Act Chapter No. 2 (Interpretation Act).  It submits that references made to the term “State” under the CBASA including ss. 5, 13 and 14, refer to the Independent State of Papua New Guinea and not the defendant.  Therefore, it submits that the defendant is not protected by ss. 13 and 14 of the CBASA.

CONSIDERATION

14.	I begin by setting out ss 5, 13 and 14 of the CBASA herein:

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 and Section 5A by the claimant to -4

(a)	the Departmental Head of the Department responsible for justice matters;  or

(b)	the Solicitor-General.
……

13.  NO EXECUTION AGAINST THE STATE.

(1)  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.

(2)  Where a judgment is given against the State, the registrar, clerk or other proper officer of the court by which the judgment is given shall issue a certificate in Form 1 to the party in whose favour the judgment is given.

14.  SATISFACTION OF JUDGMENT AGAINST THE STATE.

(1)	The certificate referred to in Section 13(2) shall be served on the Solicitor-General by –

(a)	personal service; or

(b)	leaving the document at the office of the Solicitor-General with the person   apparently occupying the position of personal secretary to the Solicitor-General  between the hours of 7.45 a.m. and 12 noon 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 (Chapter 321).

(2)	The Solicitor-General shall, within 60 days from the date of service upon him of a certificate under Section 13(2), endorse the certificate in Form 1.

(3)	Upon receipt of the certificate of a judgment against the State bearing the Solicitor-General’s endorsement that judgment may be satisfied, the Departmental Head responsible for finance matters shall, within reasonable time, satisfy the judgment out of moneys legally available.

(4)	Any payment in satisfaction of judgment may, in the absolute discretion of the Departmental Head responsible for finance matters, be made by instalments, provided the judgment is thereby satisfied within reasonable time.

(5)	No action –

(a)	for or in the nature of mandamus; or

(b)	for contempt of court,

or otherwise lies against the Solicitor-General or the Departmental Head responsible for finance matters in respect of the satisfaction of a judgement under this Act, other than for failure to observe  the requirements of Subsection (2), (3) or (4), as the case may be, or unless other exceptional circumstances can be shown to the satisfaction of the court.

(Underlining mine)

15.	Let me begin this way.  I note that I have answered the question on the definition of “State” in my earlier decisions which have been referred to by the parties.  In summary, I interpreted ‘State’ to mean the “Independent State of Papua New Guinea” as defined by an Act of Parliament, namely, s.3(1) of the Interpretation Act.  Section 3(1) defines “State” to mean the Independent State of Papua New Guinea.  See cases:  Ona v. National Housing Corporation (2009) N3623, David Western Advertising Group Limited v. Hiri 152 Development Limited and Ors (2019) N8112, Habolo Building and Maintenance Ltd v. Hela Provincial Government (2016) SC1549, Air Niugini Limited v. Kavieng District Development Authority and the State (2019) N8158, Wasu Ipi and Ors v. Green Timber (PNG) Limited and Or (2021) N8898, Clinton Capitol Partners Pty Ltd v. Kumul Petroleum Holdings Ltd and Ors (2021) N9112 and National Capital District Commission v. Internal Revenue Commission and Ors (2022) N9592.

16.	At the outset, there are misconceptions which must be clarified.  They are to do with the definition of State as a legal entity that must be served with a section 5 notice, and the enforcement requirements of State properties as defined by s.13(1).  The requirement to give notice of intention to sue the State under s. 5 of the CBASA (section 5 notice) is clear.  Notice must be served on the State if a plaintiff intends to sue the State in a civil suit that is commenced by way of writ of summons and statement of claim.  And as defined by s. 3(1) of the Interpretation Act, the State is the Independent State of Papua New Guinea.  Further, there are state entities or bodies that are created by legislation or instruments that are part of the State.  These entities may not be regarded as State as defined under the Interpretation Act, but that does not also mean that they cannot be regarded as part of it.  For example, at para. 16 in David Western Advertising Group Limited v. Hiri 152 Development Limited and Ors (supra), I stated in part:

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.

(Underlining mine)

17.	Earlier in 2016, the Supreme Court in Habolo Building and Maintenance Ltd v. Hela Provincial Government (supra), also stated at para. 20, which I find to be accurate, as follows:

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.

18.	In the present matter, the pressing issue has nothing to do with giving section 5 notice under the CBASA and whether that has been complied with.  Rather, it is a situation where the matter has concluded and the parties are at the enforcement stage.  And the question asked now is whether the defendant is part of the State, and if so, whether the ss. 13 and 14 ought to be complied with.

19.	I make these observations.  First, and consistent with my earlier decisions, the defendant, being a provincial government, which is established under statute, is not the State per se.  However, and as held in the case law, whilst an entity may not be the State, it does not mean that it cannot be part of it.  

20.	Secondly, I refer to the submission by the plaintiff that there should be no separate interpretation on the definition of State under the CBASA for s. 5 and ss. 13 and 14; that reference made to ‘State’ under ss. 13 and 14, refer to the Independent State of Papua New Guinea.  Whilst I do agree with that, that does not therefore mean that it resolves the issue at hand.  And I have to ask myself this question:  If the Court finds or it is not disputed that an entity is part of the State, like the defendant herein, can a third party or a plaintiff like in this case, take enforcement proceedings against the properties or assets held by the said entities who are regarded as part of the State?  I think it goes without saying in general that properties or assets that are acquired by a state entity or public body are considered as ‘State properties’ or properties that belong to the State which is the Independent State of Papua New Guinea.  The only exceptions may be rules or laws that are in place that provide qualifications.  For example, a state entity or enterprise that is established under the provisions of the Companies Act 1997 or an instrument.  Cases:  SCR No. 1 of 1998: Reservation Pursuant to s. 15 of the Supreme Court Act (2001) SC 672, Mineral Resources Development Company Ltd v. Mathew Sisimolu (2010) SC1090 and Niugini Building Supplies Ltd v. National Housing Estate Ltd (2020) SC1985.

21.	Let me also say that it is not correct to say or assume for example that the wealth and assets of West New Britain Provincial Government or of any provincial government for that matter, are private properties of these provincial governments.  These assets and properties are acquired or owned by the State through its established system of government under the Constitution.  To expound on this view, I refer first to ss. 187A and 187B of the Constitution and s. 12 of the Organic Law on Provincial Governments and Local-level Governments (OLPGLLG).  The provisions read:

PART VIA. – PROVINCIAL GOVERNMENTS AND LOCAL-LEVEL GOVERNMENTS.

187A. PROVINCIAL GOVERNMENTS AND LOCAL-LEVEL GOVERNMENTS SYSTEM.

There shall be a system of Provincial Governments and Local-level Governments for Papua New Guinea in accordance with this Part.

187B. GRANT OF PROVINCIAL GOVERNMENT AND LOCAL-LEVEL GOVERNMENT.

An Organic Law shall provide for, or make provision in respect of, the form and the manner of establishment of the Provincial Governments and the Local-level Governments.

………………………………………………………………………………………..

6.  LEGAL CAPACITY.

A Provincial Government or a Local-level Government–
(a)	may acquire, hold and dispose of property of any kind; and
(b)	may sue and be sued,
and a provincial law or a local-level law may make provision for and in respect of the manner and form in which each respective government may do so.

22.	With that, I now come to the pertinent point to the issue at hand.  I am reminded by s.13(1) of the CBASA, which bars or prevents enforcement actions against the property or revenue of the State.  What that means, in my view, is this; that whilst a provincial government or a state entity is not the “State” per se as defined under s.3(1) of the Interpretations Act, it is an entity that is created by statute which is part of the State and its system of government.  This is also restated in the case law.  See cases:  SCR No. 1 of 1998: Reservation Pursuant to s. 15 of the Supreme Court Act (supra), Maps Tuna Ltd v. Manus Provincial Government (2007) SC857 and Niugini Building Supplies Ltd v. National Housing Estate Ltd (supra).  The Supreme Court in SCR No. 1 of 1998: Reservation Pursuant to s. 15 of the Supreme Court Act (supra) stated what may be relevant for this purpose, when it said:

The Claims By and Against the State Act 1996 does not define "the State". The Interpretation Act defines "the State" as "the Independent State of Papua New Guinea." A provincial government is thus at least a "governmental body". Is it a part of "the State"? Is it a part of the governmental body making up the "Independent State of Papua New Guinea?" We believe it is and therefore it’s assets and finances must be protected from execution in the same way as the assets and finances of the National Government. The State therefore must also include a provincial government.

[Underlining mine]

23.	This means that the defendant’s properties, revenue and assets belong to the State.  And s.13(1) of the CBASA, in my view, captures or includes that.  I also believe that the Court should, and I am minded, to take judicial notice in that regard.  Assets or wealth that are acquired or bestowed within the country’s system of government, including its entities, generally belong to or are owned by the State.  I remind myself, in making this finding, that I am not setting 2 separate interpretations on the definition of ‘State’.  The definition of State used under ss. 5, 13 and 14 of the CBASA is the same.  A section 5 notice must be served on the State if the State is going to be sued, as required by s.3(1) of the Interpretation Act.  The distinction that applies under ss. 13 and 14 is that whilst the defendant is not the State per se where section 5 notice may not be required if one intends to sue it, there is no issue that it is a state entity who is part of the State.  Therefore, the fact that the defendant is part of the State means that its assets and properties are properties of the State within the meaning of s. 13(1) of the CBASA, thus are protected by law from enforcement proceedings.

SUMMARY

24.	In summary, I am minded to grant the relief sought in the defendant’s NoM in general, as well as grant the consequential orders to (i) stay the Court Order of 21 February 2022 and (ii) set aside the orders of 25 May 2023 made against Mr. Mapmani.  However, I will make variations based on my findings.  I will not rule that the defendant is the “State” as is sought but that it is part of the State which means that its assets and properties belong to the State or are State properties within the meaning of s.13(1) thus are not subject to enforcement proceedings, but rather, to the prescribed processes that are set out under ss. 13(2) and 14 of the CBASA.

REMARKS

25.	Let me make the following remarks in closing.  A litigant who intends to sue a state entity or body must also name the State as a second defendant, if the intention is to hold the State vicariously liable for the action(s) or inaction(s) of the tortfeasor.  This must always be the practice which, in my view, is consistent with the intention of the CBASA.  State institutions are not the State per se but are part of the State as revealed in legislations and the case law. 

26.	If a plaintiff decides not to name the State as a defendant but only names the tortfeasor (as the defendant) who is a state entity or an entity that is part of the State, then that ought to be deemed contrary to the intention of the CBASA; it would mean that the State may not be held vicariously liable for the actions or inactions of the tortfeasor. 

27.	I have observed in general, not specifically with this case, that litigants sometimes try to avoid the requirement of giving section 5 notice by not naming the State but rather only naming a state entity or body, to make a claim against the State.  However, without following the due process as highlighted above, a litigant may not achieve a full satisfactory outcome.  For example, whilst s.13(1) may allow for all state properties, including those acquired by its various state entities, to be considered as State properties, s.13(2) expressly states, Where a judgment is given against the State…, (underlining mine) which, to me, signifies the importance of naming the State as a party if a plaintiff plans to utilize s.13(2) and 14 of the CBASA if successful in his or her claim against a state entity or body.  There may be serious consequences where there is failure in that regard.  See case:  Air Niugini Limited v. Kavieng District Development Authority and the State (supra).  However, I will not dwell there as this may raise issues that are not properly before me for consideration.

28.	Therefore, and for clarity, it is imperative in my view that any future claims that are made against any state entities, organizations or public bodies, that the State must also be named as a defendant.  Failure to observe this pre-requisite should render a proceeding defective or incompetent and be susceptible to dismissal at the outset.

COST

29.	An order for cost is discretionary.  I will order cost to follow the event.

ORDERS OF THE COURT

30.	I make the following orders:

1.	The Defendant is not the ‘State’ per se as defined under s. 3(1) of the Interpretation Act Chapter No. 2 but is nevertheless part of it.

2.	Because the Defendant is part of the State, its assets and properties are State properties within the meaning of s. 13(1) of the Claims By and Against the State Act 1996.

3.	Because the Defendant’s assets and properties belong to the State or may be termed as State properties, ss. 13 and 14 of the Claims By and Against the State Act 1996 and execution and satisfaction of a judgment debt against it must comply with those sections.

4.	Consequently, the Court order of 21 February 2022 entered on 1 March 2022, is stayed subject to compliance with the process set out under Section 13 and Section 14 of the Claims By and Against the State Act 1996.

5.	Consequently, the Court order ordered on 25 May 2023, the Warrant of arrest issued on 25 May 2023 and the Warrant of Committal issued on 25 May 2023 against Leo Mapmani are set aside.

6.	The plaintiff shall pay the defendant’s cost of the notice of motion on a party/party basis to be taxed if not agreed.

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

The Court orders accordingly.

________________________________________________________________
Ashurst PNG: Lawyers for the Plaintiff
Dentons PNG: Lawyers for the Defendant