SC1007

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA NO. 79 OF 2007

BETWEEN:

MOUNT HAGEN URBAN LOCAL LEVEL GOVERNMENT
Appellant

AND:

SEK NO. 15 LIMITED
Respondent

Waigani: Gavara-Nanu, Davani and Yagi JJ.
2008: 28th August
2009: 4th September

APPEAL – Appeal against an interlocutory decision of the National Court – Application to dismiss a cause of action for disclosing no cause of action – Failure to plead a statutory or legal right to collect provincial land rates and taxes - National Court Rules O.12 r.40 – Power of National Court to dismiss proceedings – principles discussed – Whether trial judge erred in dismissing proceedings – Onus on the appellant to demonstrate error - no error in exercise of discretion.

PLEADINGS – Letter of delegation sought to be relied upon by appellant, not pleaded in the amended statement of claim – Appellant not entitled to rely on the letter.

Cases Cited:

Anna Wemay v. Kepas Tumdai [1978] PNGLR 173
Ronny Wabia v. BP Exploration Co. Limited & 2 Others [1998] PNGLR 8 (N1697)
PNG Forest Products Pty Ltd and Another v. The State and Genia [1992] PNGLR 85
Gabriel Apio Irafawe v. Yauwe Riyong (1996) N1915
Eliakim Laki and 167 Others v. Maurice Alulaku and Others (2002) N2001
Kiee Toap v. The Independent State of Papua New Guinea & Another (2004) N2766; 
Kerry Lerro trading as Hulu Hara Investments Limited v. Philip Stagg, Valentine Kambori & The State (2006) N3050
Philip Takori & Others v. Simon Yagari & 2 Others (2008) SC905

Counsels:

Mr. P. Kak, for the Appellant
Mr. R. Maguire, for the Respondent

DECISION

4th September, 2009

1. BY THE COURT: This is an appeal by the Mount Hagen Urban Local Level Government ("the appellant") against an interlocutory decision of the Mount Hagen National Court, of 13th July, 2007, where proceedings commenced in the National Court were struck out for failing to disclose a cause of action. 

2. The application was made pursuant to O.12 r.40 of the National Court Rules (‘NCR’). The Amended Writ that was struck out, sought payment of land tax of K56,175.05 from the defendant company, such sum was sought pursuant to the Provincial Land Tax Act No. 10 of 1985. The appellant instituted these proceedings as a local level government or authority, which proceedings or claim covered a period of 6 years commencing from 1997. The claim is contained in the amended Statement of Claim which was filed on 29th September, 2005 and which effectively was that the respondent owns a property described as Section 21 Allotments 36, 37 and 38 situated within the town of Mount Hagen and had failed to pay to the appellant the land rates and taxes in respect to the property since 1997.

3. In striking out the proceedings, the National Court held that the appellant did not have the legal authority to collect land rates and taxes because the purported delegation of power by letter of 5th November, 1990, was not saved by the subsequent amendment to the law. The National Court also found that the appellant’s pleading, in particular the amended Statement of Claim, was deficient or defective in that it failed to plead the letter purporting to delegate such power.

Background

4. In or about 1985, the Western Highlands Provincial Government (‘WHPG’) enacted a provincial legislation called the Provincial Land Tax Act No. 10 of 1985, which expressly authorized and empowered the Western Highlands Provincial Government to impose and collect land rates and taxes. This responsibility was delegated to the Mount Hagen Town Authority by the WHPG’s letter dated 5th November, 1990.

5. In 1995, the National Parliament repealed the Organic Law on Provincial Governments (‘repealed Organic Law’) and enacted the Organic Law on Provincial Governments and Local Level Governments (‘Organic Law). The Organic Law provided for the transition and savings in respect of provincial laws passed by the old provincial government.

6. Under the Organic Law, the Mount Hagen Town Authority was succeeded by the Mount Hagen Urban Local Level Government.

7. Following the enactment of the Organic Law, the Western Highlands Interim Provincial Government enacted a provincial law, namely, Western Highlands Interim Provincial Government (Adoption of Laws) Act 1995 which enabled the Western Highlands Interim Provincial Government to adopt certain previous laws made by it under the repealed Organic Law.

8. Amongst others, the Western Highlands Provincial Government adopted the Provincial Land Tax Act No. 9 of 1985 and the Provincial Land Tax (Amendment) Act No. 1 of 1986.

The Appeal

9. The grounds of appeal as pleaded in the Notice of Appeal are as follows;

"(a) The trial judge erred in law in summarily striking out the proceedings prematurely under Order 12, Rule 40 of the National Court Rules when the material before him did not support such a finding.

(b) His Honour erred in law in holding that the delegation letter by the Western Highlands Provincial Government to the Appellant did not survive the repeal of the old Organic Law on Provincial and Local Level Government.

(c) His Honour erred in law and fact in holding that the delegation letter did not survive the repeal of the old Organic Law on Provincial and Local Level Government.

(d) His Honour failed to take into account the fact that the new Organic Law on Provincial and Local Level Government came into existence sometime in 1995 and the Appellant had continued to collect the land taxes up to and including parts of 2007, which was allowed by the Western Highlands Provincial Government.

(e) His Honour failed to take into account the fact that the community within the Western Highlands Province had faithfully paid their land tax since the coming into operation of the new Organic law on Provincial and Local Level Government."

10. Mr. Kak of Counsel for the appellant raised two issues in his submissions in support of the appeal. These are;

(i) the Court erred in striking out the proceedings under O.12 r.40 of the NCR;

(ii) the Court erred in holding that the delegation letter did not survive the repeal of the old Organic Law on Provincial Governments.

11. Appellant’s counsel made submissions in relation to grounds (b), (c), (d) and (e) of the appeal together as issue no. (ii), then argued ground (a) separately as issue no. (i). Therefore, we will address these grounds and submissions in that manner.

12. We consider it appropriate to deal firstly with the second issue raised by the appellant, as this will require a determination on a question of law which should also determine the first issue, but which we will also discuss.

The claim before the National Court

13. As stated earlier, the appellant instituted proceedings in the National Court claiming unpaid land rates and taxes including penalty fines against Sek No. 15 Limited ("the respondent"). It claims that pursuant to the Provincial Land Tax Act No. 10 of 1985, it is empowered to collect land rates and taxes from property owners situated within the town of Mount Hagen. Furthermore, it claims that it is also empowered to claim default penalty fines. It claims that its power to collect land rates and taxes under that Provincial Land Tax Act No. 10 of 1995 was delegated to it by the Western Highlands Provincial Government by way of a letter dated 5th November, 1990.

14. In response to the amended Statement of Claim, the respondent filed its amended Defence on 26th January, 2006, which, amongst others, pleaded and denied the existence of the Provincial Land Tax Act No. 10 of 1985. It pleads further that there is no power or authority given to the appellant to impose and collect land rates and taxes. It also gave notice to the appellant of its intention to apply to strike out the proceedings.

15. The appellant did not withdraw the proceedings and consequently, on 3rd July, 2006 the respondent filed an application in the National Court seeking an order for the dismissal of proceedings under O.12 rr.40(1) (a), (b) and (c) of the NCR supported by an affidavit sworn by Mathew Porami Tamutai on 3rd July, 2006. 

Submissions in the appeal and analysis of evidence and the law

(i). Second Issue; The Court erred in holding that the delegation letter did not survive the repeal of the old Organic Law on Provincial Governments. 

16. The Appellant relies on the provisions of the Provincial Land Tax Act No. 10 of 1985 and says that by virtue of this enactment, the appellant is empowered to collect land rates and taxes within its boundary.

17. The following facts are not in dispute: 

- Under the repealed Organic Law, the Western Highlands Provincial Government was empowered to enact provincial legislations to impose and collect land rates and taxes.

- In 1985 the Western Highlands Provincial Government passed a provincial legislation called the Provincial Land Tax Act No. 10 of 1985.

- The Provincial Land Tax Act No. 10 of 1985 authorized and empowered the Western Highlands Provincial Government to impose and collect land rates and taxes.

- The function and responsibility of collecting land rates and taxes was delegated by the Western Highlands Provincial Government to the Mount Hagen Town Authority by way of letter dated 5th November, 1990.

- In 1995, the National Parliament repealed the old Organic Law on Provincial Governments and adopted the new Organic Law on Provincial Governments & Local Level Governments. 

- The new Organic Law on Provincial Governments & Local Level Governments created and established the Appellant as the new Town Authority succeeding the Mount Hagen Town Authority.

- The new Organic Law on Provincial Governments & Local Level Governments provided the transition provisions for the saving of provincial laws passed by the Western Highlands Provincial Government under the repealed Organic Law.

18. Mr. Kak, of counsel for the appellant, submitted that the new Organic Law on the Provincial Governments & Local Level Governments provided the transitional provisions which saved certain provincial laws including the Provincial Land Tax Act No. 10 of 1985 and the Provincial Land Tax (Amendment) Act No. 1 0f 1986 passed by the Western Highlands Provincial Government under the repealed Organic Law.

19. He further submitted that pursuant to the Provincial Land Tax Act No. 10 of 1985, the Western Highlands Provincial Government delegated to the Mount Hagen Town Authority the function and responsibility of collecting land rates and taxes. This delegation undercover of the letter dated 5th November, 1990, he submitted, was transferred to the appellant under s.29 of the Local Government Administration Act of 1997.

20. The appellant therefore argues that the Provincial Land Tax Act No. 10 of 1985 is a provincial law that is saved under the provisions of the new Organic Law on the Provincial Governments & Local Level Governments and is therefore valid and enforceable.

21. The respondent submits that the Provincial Land Tax Act No. 10 of 1985 was repealed in 1995 when the new Organic Law on Provincial Governments & Local Level Governments came into operation. It further submitted that the provisions of ss. 83 and 87 of the new Organic Law on Provincial Governments & Local Level Governments expressly exclude the appellant, being a Local Level Government entity, from imposing land taxes. 

22. The National Court found that the Provincial Land Tax Act No. 10 of 1985 did not confer on the Appellant any power or authority to do anything required under that act. At paragraph 8 of his reasons, (p. 138 of the appeal book) the trial judge said:

"A perusal of the Western Highlands Provincial Land Tax Act establishes that there is no mention of the Plaintiff (Appellant) and the Plaintiff is not authorized to do anything by the Act. All the Act purports to do is impose tax on all land in the Western Highlands Province other than land owned by certain persons in s. 7 and certain types of interest in land specified by s. 9"

23. We also note from the pleading in the amended Statement of Claim that the appellant claims that its authority to collect land rates and taxes derives directly from the Provincial Land Tax Act No. 10 of 1985.

24. The appellant submits that the letter dated 5th November, 1990, is a delegation of power, that survived when the new Organic Law on Provincial Governments & Local Level Governments came into effect on 19th July, 1995, and subsequently the coming into force of the Western Highlands Provincial Government (Adoption of Laws) Act 1995 and the Local Level Government Administration Act 1997.

25. We appreciate the submission by the Appellant, however, we find the argument unconvincing. This is because the argument is premised on the presumption that the Provincial Land Tax Act No. 10 of 1985 either expressly or by necessary implication, including the purported delegation by letter of 5th November, 1990, gave or delegated to the Mount Hagen Town Authority the requisite power and authority to collect land rates and taxes. We have thoroughly perused the Provincial Land Tax Act No. 10 of 1985 and find no where in the legislation, either an express or implied power to the Mount Hagen Town Authority to collect land rates and taxes. 

26. We do not think it necessary to consider the other laws including the Organic Law on the Provincial Governments & Local Level Governments because firstly, that was not pleaded in the amended Statement of Claim and secondly, they were not raised and argued before the trial Court.

(ii). First Issue; The Court erred in striking out the proceedings under O.12 r.40 of the NCR. 

27. The terms "vexatious", "frivolous", "abuse of the process of the Court" and "reasonable cause of action" under O.12 r.40 of the National Court Rules have been judicially considered, defined and expounded in a number of decisions in both the National and Supreme Courts. These cases include Ronny Wabia v. BP Exploration Co. Limited & 2 Others [1998] PNGLR 8 (N1697); PNG Forest Products Pty Ltd and Another v. The State and Genia [1992] PNGLR 85; Gabriel Apio Irafawe v. Yauwe Riyong (1996) N1915; Eliakim Laki and 167 Others v. Maurice Alulaku and Others (2002) N2001; Kiee Toap v. The Independent State of Papua New Guinea & Another (2004) N2766; Kerry Lerro trading as Hulu Hara Investments Limited v. Philip Stagg, Valentine Kambori & The State (2006) N3050; Philip Takori & Others v. Simon Yagari & 2 Others (2008) SC 905. These cases say the same thing. 

28. The law with regard to an application for dismissal of proceedings based on O.12 r.40 is settled in our jurisdiction. We note that the principles are succinctly set out in Kerry Lerro’s case (supra) and which has more recently been approved and applied by the Supreme Court in Philip Takori’s case (supra). 

29. The phrase ‘disclosing a reasonable cause of action’ consists of two parts; cause of action and form of action. A cause of action is defined as a legal right or form of action known to law whereby a plaintiff in a statement of claim must plead all necessary facts and legal elements or ingredients to establish or prove his claim. The principles stated by these cases can be summarized as follows:

(i) A plaintiff or claimant should not be driven from the judgment seat in a summary manner and that the Court should be cautious and slow in exercising its discretionary power.

(ii) The Court has an inherent jurisdiction to protect and safeguard its processes from abuse.

(iii) The purpose of O.12 r.40, is to give the Court power to terminate actions or claims which are plainly frivolous or vexatious or untenable.

(iv) A frivolous claim is one that is characterized as a claim that is plainly and obviously untenable, that cannot possibly succeed and bound to fail if it proceeds to trial.

(v) A vexatious claim is one that is said to be a sham and cannot succeed where it seeks to merely harass the opposing party and put that party to unnecessary trouble and expense in defending or proving the claim.

30. In an application under O.12 r.40 of the NCR, the Court may dismiss a proceeding or action where it is satisfied that the pleading in the statement of claim is seriously wanting where a necessary fact or legal element has not been pleaded.

31. In determining the application before him, the trial judge took into account a number of factors. Firstly, the appellant sought to rely on the purported letter of delegation of 5th November, 1990, whereby it asserts that by virtue of that letter it had the power to impose and collect land taxes. However, the trial judge found that the letter of delegation was never pleaded in the Statement of Claim by the appellant and rejected the argument.

32. Secondly, the trial judge found that the Provincial Land Tax Act No. 10 of 1985 made no mention or reference at all to the appellant and therefore concluded that the Provincial Land Tax Act No. 10 of 1995 did not grant to the appellant power to do anything including collecting taxes and so on and held that what the Act purported to do was merely impose tax on all land within the Western Highlands Province. 

33. It is an ordinary rule in statutory interpretation that in the absence of ambiguity or uncertainty in a statute, that it is unnecessary or inappropriate to look beyond the particular statute for aids in interpretation: Anna Wemay v Kepas Tumdai [1978] PNGLR 173.

34. In the present case, we do not see any ambiguity or uncertainty in the statute. It was not necessary for the trial judge to look beyond the statute itself. 

Conclusion

35. For the foregoing reasons, we find no error in the judgment given by the trial judge. 

36. We will dismiss the appeal with costs.

Formal Orders

The orders of the Court are:

1. The appeal is dismissed.

2. The appellant shall pay the respondent’s costs of the appeal.

__________________________________

Paulus M Dowa Lawyers: Lawyer for the Appellant
Tamutai Lawyers: Lawyer for the Respondent