SC843

PAPUA NEW GUINEA

[IN THE SUPREME COURT OF JUSTICE]

SCA NO 60 OF 2005

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
First Appellant

AND

DET. SGT. MAJ. FRANCIS NAMUES
Second Appellant

AND:

JIMMY TAMATE WALA
Third Appellant

AND

HON ANDREW KUMBAKOR MP
Fourth Appellant

AND

JOHN TALU TEKWIE
Respondent

Waigani: Salika, Lay and
Gabi JJ.

2005: 30 August
2006: 21 July

PRACTICE AND PROCEDURE ─ objection to competency ─ O.7 r.15 ─ application for leave to appeal ─ whether leave required ─ Supreme Court Act s.14(4) ─ unconditional leave to defend refused ─ whether leave required ─ whether leave should be granted when not required.

Cases Cited
Shelley v PNG Aviation Services Pty. Limited [1979] PNGLR 119
Christopher M. Smith v Ruma Constructions Limited (2000) N1982
Oio Aba v Motor Vehicles Insurance Limited (2005) SC779
Christopher M Smith v Ruma Constructions Limited (2002) SC695
Christian Revival Crusade v Eyo Taviviya & Ors
Boyepe Pere v Emmanual Ningi(2003) SC711
Waghi Savings and Loan Society Ltd v Bank of South Pacific Ltd (1980) SC185; 
Paul Tohian, Minister for Police and The State v Tau Liu SC566

Facts

The Appellant applied to the National Court for leave to defend which was refused because inter alia the grounds sought to be relied upon (s.5 of the Claims by and Against the State Act) had not been pleaded. Leave to defend was only granted on the issue of quantum and appeals from that decision. The Applicant objects to competency of the appeal.

Held

A conditional leave to defend is refusal of unconditional leave to defend within the meaning of Supreme Court Act s.14(4) and leave is not required from such an order.

Where leave is mistakenly sought when not required it should be granted if there is an arguable case. It was arguable that pleading was not the only way of bringing to Court lack of a condition precedent to a right to issue a writ, such as notice under s.5 of the Claims by and Against the State Act. Leave should be granted.

Counsel:
N. Kubak, for the Applicant Respondent
S. Jabson, for the First, Second & Third Appellants
No appearance for the Fourth Appellant

21 July, 2006

1. BY THE COURT: The Respondent has filed an objection to the competency of the Application for Leave to Appeal pursuant to O.7 r.15. 

2. In prior separate criminal proceedings in the National Court the Respondent was prosecuted on several counts that he did dishonestly apply money belonging to the State. He was found not guilty of those charges.

3. At the conclusion of the criminal trial the Respondent in the Court below commenced proceedings against the State for damages for malicious prosecution. The First, Second and Third Appellants failed to file a Defence. The National Court ordered on 24 November 2004 that:

"the substantive matter is to be listed by the Registrar for ex parte hearing as against the First, Second and Fourth Defendants."

4. On 20 April 2005, the Court further ordered that:

"For clarity the Court states that by reason of the Plaintiff serving an order to proceed to an assessment of damages as against the First, Second and Fourth Defendants and those Defendants being declined leave to file their defence out of time, they are not at liberty to raise issues going into the liability for the claim against them, but are at liberty and can be fully heard on the assessment of damages issue."

5. On 12 May 2005, the Appellants applied to (1) dismiss the National Court proceedings on the basis of the Respondent's failure to give his Notice of Intention to make a claim against the State pursuant to s.5 of the Claims by and Against the State Act and to (2) set aside the order for ex parte hearing and alternatively to (3) seek leave to file their defence out of time. That application failed and all of the orders sought were refused. The Appellants have sought leave to appeal from those orders.

6. The grounds of the Objection to Competency are that:

1.	The judgment sought to be challenged by way of appeal is not an interlocutory judgment as it is related to an application seeking "unconditional leave to file a defence" therefore, a Notice of Appeal setting out the grounds of appeal should have been filed within 40 days instead of the current Application for Leave to Appeal;

2.	The Section 5 notice required to be given to the State prior to the making of a claim by the Respondent, has been duly given and therefore the Appellant's application to set aside was not only frivolous and vexatious but was misconceived and unduly delayed.

3.	The orders being sought by way of motion on 12 May 2005, had been refused earlier but there was no appeal against such refusal orders and so the current application for leave to appeal is tantamount to an abuse of the court's process.

4.	The inter partes order for ex parte trial dated 24 November 2004 as confirmed by the court on 20 April 2005, has never been appealed and it is prejudicial and unjust not only to the Respondent but Mr Kumbakor as well (who is not the "State") to entertain this application for leave to appeal at this stage;

5.	The inter parties order of 24 November 2004 was granted pursuant to a formal application for an order for ex parte trial as against the Appellants on the basis of a default in filing a defence within the generous time period prescribed y the Claims by and Against the State Act;

6.	The Appellants did not file a defence within the prescribed time which defence could then plead the failure to file a Section 5 notice as a defence;

7.	Not only was there a failure to file a defence but there was a failure to advance the section 5 Notice argument when the respondent sought orders for ex parte trial which application was dealt with inter partes"

7. Section 14(4) of the Supreme Court Act is in the following terms:

"An order refusing unconditional leave to defend an action shall not be deemed to be an interlocutory judgement."

8. The Respondent contends this provision applies to the current circumstances as per ground (1) of his Objection to Competency and accordingly the Respondent did not require leave to appeal. Therefore the application for leave is incompetent. No Notice of Appeal has been filed. 

9. The Appellants submit that the provisions of Section 14(4) can only apply when there has been summary judgment entered after an inter parties hearing which determined the merits of the Defence and they rely upon Shelley v PNG Aviation Services Pty. Limited [1979] PNGLR 119 and Christopher M. Smith v Ruma Constructions Limited (2000) N1982 as illustrative of that proposition.

Our Reasons

10. Shelley v PNG Aviation Services is distinguishable on its facts from the present case. Both Prentice CJ and Raine J (Pritchard J agreeing with both judgments) pointed out that what had occurred in that case was the striking out of a Defence already filed and a direction for judgment to be entered. Their Honours held that those circumstances could not be construed as "refusing unconditional leave to defend". The case was decided under the now repealed Rules of Court and it should be noted, as it was in Oio Aba v Motor Vehicles Insurance Limited (2005) SC779, that the head note is partly incorrect as it states that "An order striking out a defence and counter claim, though final in its effect, is not an interlocutory judgment within the meaning of s.14(3) of the Supreme Court Act." The ratio of the decision is that the order is (not, "is not") an interlocutory judgment. In any event the facts of that case are not the facts and circumstances of this case. 

11. Christopher M. Smith v Ruma Constructions Limited (supra), although it discussed the application of s.14(4) of the Supreme Court Act, was an application in the National Court to set aside a judgment pursuant to O.12 r.8. In the context of the application pursuant to O.12 r.8 in the National Court the judge observed that when summary judgment has been entered inter parties the only remedy is appeal. He considered s.14(4) emphasised that point. However in our view that comment runs counter to the reasoning in Shelley v PNG Aviation Services Ltd where it was held that an order entering judgment was a different matter to an order refusing unconditional leave to defend. Separate Rules dealt with (1) entering judgment and (2) granting leave to defend, either conditionally or unconditionally (Prentice CJ at p122 and Raine DCJ at p123). The National Court decision was reversed on appeal in Christopher M Smith v Ruma Constructions Limited (2002) SC695. We therefore do not consider that the National Court decision can be regarded as authority on the application of s.14(4).

12. In our view this issue can be decided on its facts and by the application of the words of s.14(4) in their ordinary and natural sense. As this Court said in Christian Revival Crusade v Eyo Taviviya & Ors:

"It is trite principle of statutory interpretation that if "the words of a statute are themselves precise and unambiguous, then no more is necessary than to expound those words in their ordinary and natural sense." Wemas -v- Kepas Tumdual [1978] PNGLR 173 at 176 per Wilson J. adopted in SCA No. 6 of 1984 Re Provocation [1985] PNGLR 31."

13. What the judge did in this case was refuse the application to extend time to file a Defence. An application to extend time to file a defence is an application for leave to unconditionally defend. The Court then made an explanatory order which gave a partial right to defend in respect of quantum but not liability. The effect of the orders is to give a conditional right to defend. The unconditional right to defend sought by the Appellants was refused. The facts clearly fit the conditions of s.14(4). The subsection is applicable, the order was not interlocutory, and no leave was required to appeal.

14. In Paul Bari v John Rain (2004) SC768 (Salika, Mogish & Cannings JJ) the Court dismissed an Application for Leave to Appeal on an Objection to Competency. In that case the National Court had refused an application to set aside a default judgment and file a defence out of time. The Supreme Court held that the effect of the decision was to make the judgment final as between the parties. As leave was not required the Application for Leave to Appeal was incompetent. A Notice of Appeal was not filed; the appellant's were out of time to file one. The appeal was struck out.

15. In Oio Aba v Motor Vehicles Insurance Limited (4/3/2005) SC779 (Injia DCJ, Sawong & Lay JJ) the appellant filed an Application for Leave to Appeal, where the proceedings in the National Court had been struck out for failure to show a good cause of action because the plaintiff had not given notice of intention to claim pursuant to s.54(6) of the Motor Vehicles (Third Party) Insurance Act. The Court held that the Application for Leave to Appeal was unnecessary. However, following Boyepe Pere v Emmanual Ningi (2003) SC711(Los Kandakasi & Mogish JJ) it granted leave.

16. In this case, the Appellants ask the Court to apply Boyepe Pere v Emmanuel Niningi. The ratio of that case, shortly stated is, that because an appeal is incompetent where leave is required and not sought, it does not follow that an application for leave to appeal is incompetent where leave is not required and is sought. The Court said:

"What this means in short is that, the requirement for leave to appeal under s.14 of the Supreme Court Act is to ensure only meritorious cases go to the Supreme Court on appeal particularly in cases where leave is required. Does the same apply in a case where a party is granted a right of appeal as of right, but leave is sought any way? We are of the view that, the same does not apply. Where a person is granted a right of appeal by the Supreme Court Act or any other legislation or where there is no contest on an application for leave to appeal to the Supreme Court, the question of whether or not leave should be granted is not an issue… It should reasonably follow from this that, where a person has a right of appeal but seeks leave, he should be allowed to proceed with his appeal. We consider this important because in some cases there may be instances in which it might not be clear as to whether an appeal lies as of right or with leave. In such a case, it would be advisable to seek leave in order to avoid the risk of an appeal being found incompetent for leave not being first sought and obtained: Henzy Yakham & Anor -v- Meriam & Meriam case. In other cases, an appellant may inadvertently seek leave when it is strictly not required.

In either of these cases the application for leave must be considered on its merits. If the Court is satisfied that there is merit in the proposed grounds of appeal or that the appellant should have appealed as of right, the appellant should be granted leave or allowed to proceed to lodge his appeal. After all, the application does no harm or cause any prejudice to the other side. The only disadvantage any such application could cause to the respondent is costs. That can easily be compensated for by an order for costs. On the other hand, if an appellant is shut out purely on account of seeking leave instead of appealing right away, he might be left to suffer under the judgment he seeks to appeal against. The judgment the appellant wants to appeal against might be wrong in law or in fact or both. Unless that is corrected on appeal, it may continue to represent an error of judgment at the expense or loss of the party seeking to appeal." 

17. It appears that Boyepe Pere v Emmanuel Niningi was not drawn to the attention of the Court in Paul Bari v John Rain. As Boyepe Pere v Emmanuel Niningi is the unanimous decision of a bench of 3 judges we feel obliged to follow it so that there is not a multiplicity of views on a procedural point which should not be consuming large amounts of counsels and court time.

18. We will not dismiss the Application for Leave to Appeal solely on the basis that leave was not required.

19. As to the balance of the grounds of competency, "An objection to competency is really an objection to the jurisdiction of the Court to entertain the point…": Waghi Savings and Loan Society Ltd v Bank of South Pacific Ltd (1980) SC185 (Kearney DCJ, Andrew & Kapi JJ) per Kearney DCJ. We agree with the submission of the Appellants that grounds 2 to 7 are not grounds of competency. They raise issues which go to the merits of the application for leave. We consider it is not necessary to examine each ground in detail, as a brief reading of each is sufficient to see that it does not go to issues of jurisdiction. We therefore decline to strike out the Application for Leave on any of those grounds.

20. The Appellants submissions did not deal with the merits of the grounds of the Application for Leave. The submissions of the Respondent discuss the merits of the grounds. With the assistance of those submissions we are able to gain some view of the merits of the Application for Leave. It is not necessary on an application for leave that the grounds of the appeal be made out conclusively. It is sufficient for the purposes of granting leave if it appears that the grounds are arguable on the appeal, when the appeal does not involve an interlocutory decision within the discretion of the trial judge: The Right Honourable Sir Julius Chan v The Ombudsman Commission of Papua New Guinea SC607. In that Case Kapi DCJ, as he then was, argued that the "arguable case" standard should apply to all applications for leave. Sheehan and Jalina JJ in a joint judgment argue that where the decision appealed from is an interlocutory decision ordinarily within the discretion of the trial judge the applicant for leave should show that the decision goes to jurisdiction and will prevent some issue from being determined in the trial. In the case of Boyepe Peri v Emmanuel Ningi (supra) the Court approved the "arguable case" test set out by Kapi DCJ (as he then was) in Sir Julius Chan v Ombudsman without noting that his Honour was in the minority in that case and that the majority, although approving the "arguable case" test in some circumstances also indicated additional tests which should apply, particularly where the decision is interlocutory and within the ordinary discretion of the judge. That is not the case here, in that we have found the decision is not interlocutory. 

21. The first of the substantive points raised by the Application for Leave is, must the issue that the plaintiff has not given notice under the Claims by and Against the State Act s.5 be pleaded in a defence, does failure to plead it in a defence prevent the State from raising the issue? It is common ground to the parties that this is one of the reasons given by the trial judge for refusing the Appellants motion to strike out the proceedings.

22. Notice is a condition precedent to the establishment of a claim against the State. Notice must be served before proceedings are issued: Paul Tohian, Minister for Police and The State v Tau Liu SC566:(Kapi DCJ, Sheehan J Jalina J A.) The Plaintiff, where it has named the State as a defendant, must prove that it has complied with section s.5 before the issue of its proceedings. This condition precedent to commencement of a cause of action goes to the jurisdiction of the court. The Act provides:

"section 5 (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…"

23. The obligation to give notice arises before there is a right in the plaintiff to file and deliver a writ and statement of claim. It is a convenient practice to plead the lack of notice where a defence is delivered and it is arguable that where a defence is delivered O.8 r.14 requires such a pleading. However, as the obligation to give notice arises before a writ and statement of claim is delivered; it is at least arguable that raising the issue in a defence cannot be the only way of bringing the point before the court. We consider this ground has sufficient merit to allow leave. 
 
24. The Second issue in relation to the s.5 notice is whether delay in raising the issue of non compliance with the provision can preclude the State from raising the issue. Whether the circumstances of the delay can preclude the State from relying on the Act, whether for example a common law estoppel or laches can prevail against the Act, is an issue which ought to be properly argued on appeal. The generally accepted view is that an estoppel cannot be relied upon if the result of giving effect to it would be to allow something prohibited by law ─ see the discussion in Cross on Evidence 4th Ed. Butterworth's at p306. Our view is that it is at least arguable that mere delay cannot change the force and effect of an Act of Parliament or prevent a party from relying upon it when it goes to jurisdiction. The ground demonstrates sufficient merit to grant leave.

25. The third issue raised is whether there is jurisdiction to order that a trial be heard ex parte as to liability, which has the effect of excluding the defendant from participating in that part of the trial, except by the procedures contained in the rules for judgment to be entered. There is no specific provision in the National Court Rules for making an order that the trial proceed ex parte. There is of course ample power in the rules to make orders for expediting the proceedings, for example, O.4 r.31.

31. Directions. (5/7)
(1)	The Court may exercise its powers under this Rule at any time after the commencement of the proceedings.
(2)	The Court shall give such directions as are convenient for the just, quick and cheap disposal of the proceedings.
(3)	Without limiting the generality of Sub-rule (2), the Court may
(a)	make orders for defining the issues by pleading or otherwise; and
(b)	direct that the whole or any part of the evidence be given on affidavit or orally; and
(c)	make any orders relating to the conduct of the proceedings which it might make on motion by a party.

26. But even under that Rule the most appropriate provision is O.4 r.31(3)(c) which confines the Rule to orders which the court might make on motion by a party.

27. Where no defence is filed the position is that the allegations of fact made in the statement of claim are admitted: O.8 r.21(1). It is unnecessary to call evidence to prove those facts. In that context an order that the trial proceed ex parte on liability would seem to have no effect on the position of the defendant, except as to the ability to make submissions on what is the legal result to be drawn from the admitted facts. This is what the trial judge appears to have had in mind when he made the explanatory order of 20 April 2005 because the order speaks of "proceeding to an assessment of damages".

28. We are less certain of the merits of this last ground. However as we consider the first two grounds have sufficient merit to allow the appeal to proceed we grant leave to the Appellants. The Application for Leave to Appeal shall be treated as the Notice of Appeal unless the Appellants file a Notice of Appeal within the next 21 days.

29. It was the Appellant's error which has caused the filing of the Objection to Competency. The First, Second and Third Appellants shall pay the Respondents costs of the proceedings to date. No order in respect of the Fourth Appellants costs. 

ORDERS

(1)	Objection to Competency dismissed;
(2)	Leave to Appeal granted;
(3)	The Application for Leave to Appeal shall be treated as the Notice of Appeal unless the Appellants file a Notice of Appeal within the next 21 days. 
(4)	Proceedings WS No 1572 of 2003 are stayed until determination of the appeal;
(5)	The First, Second and Third Appellants shall pay the Respondent's costs of the proceedings to date.
________________________________________________________________________
Paul Paraka Lawyers: Lawyers for the Appellants
Norbert Kubak & Co Lawyers: Lawyers for the Respondent