SC1101

PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]

SCA NO 106 OF 2010

PNG WATERBOARD
		First Appellant

PEPI KIMAS, as SECRETARY FOR 
DEPARTMENT OF LANDS & PHYSICAL PLANNING 
Second Appellant

THE INDEPENDENT STATE OF PAPUA NEW GUINEA 
Third Appellant

V

JOHN KUA for and on behalf of himself and 97 OTHERS 
Respondents

Waigani: Cannings J, Gabi J, Makail J
2011: 27th April & 25th May 

SUPREME COURT - PRACTICE & PROCEDURE - Application for want of prosecution - Failure to prosecute appeal with due diligence - Grounds of - Failure to file and serve draft index to appeal book - Failure to attend date for settlement of draft index to appeal book - Failure to obtain transcript of National Court proceedings - Reasons for failure unsatisfactory - Application upheld - Appeal dismissed for want of prosecution - Supreme Court Rules - Order 7, rules 27, 40, 41, 42, 43 & 53.

EVIDENCE - Reasons for delay - Evidence of - Lack of - Vagueness - Hearsay - Reasons for delay not sufficiently established - Application upheld - Appeal dismissed for want of prosecution - Supreme Court Rules - Order 7, rule 53.

The National Court on 5 August 2010 entered judgment in favour of the respondents in the sum of K6,825,970.70 as compensation for land use. The appellants filed a notice of appeal on 17 August 2010. On 10 September 2010 the Supreme Court stayed the decision of the National Court pending determination of the appeal. By February 2011 the appellants had failed to settle a draft index for the appeal book and failed to take other steps necessary to have the appeal set down for hearing. The respondents applied for dismissal of the appeal for want of prosecution. The appellants opposed the application, arguing amongst other things that the delay in prosecuting the appeal was not lengthy and that it was not an unreasonable delay given that the parties were negotiating towards settlement of the appeal and that the respondents had contributed to the delay. 

Held:

(1)	Out of Court settlement negotiations might, depending on the circumstances, be a reasonable explanation for delay in want of prosecution cases. 

(2)	(Gabi J dissenting). However, on the evidence before the Court, there is insufficient evidence establishing a satisfactory explanation for the delay in the prosecution of this appeal. The appellants failed to diligently prosecute the appeal without a satisfactory explanation. 

(3)	Per Gabi J: Dismissal of an appeal for want of prosecution is a matter of discretion and here the discretion should be exercised against the respondents as they initiated discussions with the appellants and pursued it with one objective: to have the appeal withdrawn and the release of the cheque. The respondents not only contributed significantly to the failure by the appellants to comply with the Rules but also intended that consequence. The application should accordingly be dismissed. 

(4)	By majority (Gabi J dissenting): the application was granted and the appeal dismissed. 

Cases cited

John Midan & Anor -v- Oscar Lisio as Chairman of Directors of Kandrian Timber Investments Ltd (2010) SC 1086
General Accident Fire & Life Assurance Corporation Ltd -v- Ilimo Farm Products [1990] PNGLR 331
Burns Philp (NG) Ltd -v- Maxine George [1983] PNGLR 55
Tenge Kai Ulo -v- Acting Public Prosecutor & Anor [1981] PNGLR 148

Counsel

Mr P Siminzi, for First Appellant
Mr P Mawa, for Second & Third Appellants
Mr Boma, for 33 Respondents 
Mr P Ame, for 65 Respondents 

25th May, 2011
RULING

1.      CANNINGS J & MAKAIL J:  In this application, the respondents applied to dismiss the appeal for want of prosecution pursuant to Order 7, Rule 53 of the Supreme Court Rules.  They relied on essentially three grounds to support their application for dismissal.  They were:

1.	The non-service of the notice of appeal on them by the appellants;

2.	The non-filing and service of a draft index to the appeal book including failure to attend the settlement of the draft index on the appointed date; and

3.	The failure to request and obtain a transcript of the National Court proceedings.

2	Except for ground 1, it was contended on their behalf by Mr Ame and supported by Mr Boma that the appellants had failed to file and serve the draft index to the appeal book on the respondents since the filing of the notice of appeal on 17th August 2010.  The appeal followed the decision of the National Court of 5th August 2010 which entered judgment in favour of the respondents in the sum of K6,825,970.70 as compensation for land use for water supply for Kundiawa town.

3	They also contended the appellants benefited immensely from an order obtained from the Supreme Court on 10th September 2010 which stayed the decision of the National Court pending the determination of the appeal by doing nothing to prosecute the appeal with due diligence.  They pointed the Court to the appellants’ failure to attend the settlement of the draft index to the appeal book on the appointed date for settlement on 8th September 2010 and also their failure to request and obtain the transcript of the National Court proceedings for inclusion in the appeal book as examples of instances where the appellants had failed to diligently prosecute the appeal.

4	In relation to service of the notice of appeal on the respondents, the respondents were divided on the issue.  Thirty-three of them whom Mr Boma represented conceded service of the notice of appeal had been given effect to through Boma Lawyers and also the principal respondent Mr John Kua.  This has been confirmed by counsel for the second and third appellants Mr Mawa.  As a result, Boma Lawyers had filed a notice of appearance on behalf of the respondents on or around 19th August 2010 and appeared with Mr Win Thomas of Win Thomas Lawyers at the hearing of the application for stay on 10th September 2010.  The remaining respondents through their counsel Mr Ame contended otherwise. They contended service of the notice of appeal on them was defective because service on Boma Lawyers or Mr Kua had not been in compliance with Order 7, Rule 12 of the Supreme Court Rules which required service on each party to the appeal. 

5	We are not satisfied the lack of service of the notice of appeal on the respondents has been sufficiently made out for the appeal to be dismissed for want of prosecution. While Order 7 Rule 12 of the Supreme Courts Rules states that service of a notice of appeal shall be served without delay by or on behalf of the appellant on each party to the appeal and that, the appellants had served the notice of appeal on Boma Lawyers and also on Mr Kua, we consider the respondents had, by their conduct, acquiesced in the defective service of the notice of appeal when they did not raise any objection to Boma Lawyers to first, accepting service of the notice of appeal on their behalf, secondly filing a notice of appearance on 19th August 2010 on their behalf, and thirdly allowing Boma Lawyers and Win Thomas Lawyers to appear for them at the hearing of the application for stay on 10th September 2010.  

6	In other words, by their conduct, they accepted service of the notice of appeal and cannot turn around now and deny it.  Further, they had not shown any real prejudice or harm caused to them by the purported defective service of the notice of appeal.  We reject this ground of dismissal.  

7	However, we are satisfied the respondents have demonstrated that the appellants failed to:

1.	file and serve a draft index to the appeal book and failed to attend its settlement on the appointed date which was 8th September 2010; and

2.	request and obtain a transcript of the National Court proceedings for inclusion in the appeal book.

8	These procedural requirements for getting an appeal ready for hearing are provided under Order 7, Rules 40-43(h) of the Supreme Court Rules. For more discussion on these procedural requirements, see John Midan & Anor -v- Oscar Lisio as Chairman of Directors of Kandrian Timber Investments Ltd (2010) SC1086.

9	The appellants had not taken further steps since the filing of the notice of appeal on 17th August 2010 and its service on the respondents on or around 19th August 2010 to prosecute the appeal.  Their failure to prosecute the appeal may be fatal to the entire appeal because the Supreme Court has on numerous occasions in the past emphasised the importance of complying with the Supreme Court Rules in relation to the prosecution of appeals.  In General Accident Fire & Life Assurance Corporation Ltd -v- Ilimo Farm Products [1990] PNGLR 331, the Supreme Court after referring to some of the considerations relevant to the exercise of discretion in the context of rule 25 (setting down appeal) of the old Supreme Court Rules (1977) in want of prosecution cases in Burns Philp (NG) Ltd -v- Maxine George [1983] PNGLR 55 warned that:

“None of this is to say that Rule 25 will be regarded lightly.  It is a Rule of Court and any appeal which does not meet its requirements is at risk of being dismissed.”

10	It was therefore imperative that the appellants complied with the requirements of the Supreme Court Rules because a failure to comply may result in the dismissal of the appeal and, as far as we are concerned, the respondents have demonstrated to us that the appellants had failed to comply with the requirements of the Supreme Court Rules. The onus then shifts to the appellants to demonstrate to the Court why the appeal should not be dismissed.  They must provide a reasonable explanation for the delay in prosecuting the appeal:  see Tenge Kai Ulo -v- Acting Public Prosecutor & Anor [1981] PNGLR 148.  If the Court is satisfied with the explanation, it may refuse the application to dismiss and allow the appeal to proceed to substantive hearing.  

11	Mr Mawa contended the primary reason for the appellants’ failure to attend to the appeal expeditiously was because the parties had been negotiating an out of Court settlement.  He submitted it had been the respondents who had led the appellants to believe that the matter could have been settled out of Court.  The respondents had aggressively pursued out of Court settlement of the claim with the appellants and in most cases with threats and intimidation against the officers of the various State authorities responsible for settling land compensation claims.  He cited instances where the respondents had threatened and intimidated the lawyers and officers in the Solicitor-General’s office to settle the claim and instances where they had entered the water supply facility in Kundiawa and disrupted water supply to the residents in Kundiawa town.

12	He referred the Court to a number of meetings held between Mr John Kua and the then Minister for Justice & Attorney-General, Honourable Ano Pala, in which the Minister had noted the respondents’ claim for compensation and directed that it be settled.  This point was confirmed by Mr Ame.  He also referred to his discussions with Mr Kerenga Kua of Posman Kua Aisi Lawyers where he had been discussing an amicable solution with him for the immediate claim and also a permanent solution for the entire water supply dispute.  This was because Mr Kerenga Kua was also a landowner of the water supply land.  From these discussions with Mr Kerenga Kua, he was presented with a draft deed of settlement by Mr Kua which contained all the relevant matters and an acceptable solution to the whole dispute between the parties to then present to the Minster for Justice & Attorney-General for consideration and endorsement.

13	When he was about to present the draft deed of release to the Minister, a cabinet reshuffle occurred which resulted in Honourable Ano Pala being replaced by Honourable Sir Arnold Amet.  The change in the political head further delayed the out of Court settlement because he had to then brief the new Minister on the background of the claim and the way forward.  He had yet to receive a response from the new Minister.  He was surprised to find that following the opening of the legal year in February this year, the respondents had filed and served on him a notice to dismiss the appeal for want of prosecution.

14	We consider that out of Court settlement negotiations might, depending on the circumstances, be a reasonable explanation for the delay in want of prosecution cases.  In Burns Philp (NG) Ltd’s case (supra), the Supreme Court held that the power to dismiss an appeal for want of prosecution is discretionary and the discretion is to be exercised having regard to all the circumstances including, inter alia:

1.	The length of and reasons for delay on the appellant’s part;
2.	The extent the evidence likely to be adduced may lose cogency;
3.	The availability of transcript; and
4.	Any negotiations between parties. (Emphasis added).

15	We further note, in that case, the Supreme Court noted the negotiations must be directed towards the settlement of the appeal.  After taking into account this consideration and all other circumstances including the appeal being set down and ready to proceed, it refused the application to dismiss the appeal for want of prosecution. 

16	We would add, for the appellant to make out a case of any negotiations between parties as a reasonable explanation for the delay, there must be clear and admissible evidence to establish it.  In this case, the appellants’ evidence in relation to the parties’ negotiations on an out of Court settlement of the claim is vague.  At paragraphs 10-18 of his affidavit sworn and filed on 2nd March 2011, Mr Mawa had not stated the dates and times between 10th September 2010 and December 2010 he met with the lawyers for the respondents to discuss settlement of the claim.  Indeed, there is absolutely no evidence on this aspect to support his contention that he had been negotiating settlement with the lawyers for the respondents.

17	He tried to explain that while the respondents had been in negotiation with Minister Pala, he too had been in discussions with Mr Kerenga Kua, discussing an amicable solution to the entire dispute.  We consider that Mr Kua may be a landowner but he was not a respondent in the appeal. There is also no evidence before the Court that he had been retained as lawyer for the respondents.  Therefore, he had no authority or standing to represent the interests of the respondents in negotiating an out of Court settlement.  It follows Mr Mawa had negotiated an out of Court settlement with a wrong party and this has contributed to the delay in the prosecution of the appeal.

18	What is apparent though is that the respondents through the principal respondent Mr John Kua took the lead and bypassed their lawyers and met  with the then Minister for Justice & Attorney-General Honourable Ano Pala and discussed the settlement of the claim.  This was confirmed by the respondents at paragraphs 6-7 of the supplementary affidavit of Mr John Kua sworn on 7th April and filed on 9th April 2011.  Mr Kua went on to state a meeting was held amongst the relevant State authorities comprising the then Minister for Justice & Attorney-General, Acting Solicitor-General, Acting Secretary for Department of Lands & Physical Planning, Managing Director of the first appellant and Secretary for Department of Justice regarding the settlement of the claim.  This resulted in a letter issued by the Minister to Paul Mawa Lawyers dated 3rd December 2010 advising him to withdraw the appeal and release the cheque to the respondents if the identification of landowning clans had been completed.

19	Following Minister Pala’s letter of 3rd December 2010, there is no evidence from the appellants to establish that the identification of the landowning clans had been completed and the appeal withdrawn.  It appears the negotiations had reached a stalemate, prompting the application for dismissal.  There is also no evidence before the Court that Mr Mawa had briefed the new Minister for Justice & Attorney-General in relation to the claim.  All the Court heard was his submission from the bar table that he had briefed the new Minister about the claim and was awaiting the new Minister’s response.  This submission is not supported by evidence and we reject it.

20	The evidence in relation to the respondents threatening and intimidating officers of the relevant State authorities, including the disruption of the water supply at Kundiawa, is hearsay because Mr Mawa had not witnessed these alleged events.  Even if he had been personally threatened or intimidated, his evidence at paragraph 16 of his affidavit (supra) is vague.  He had not stated the dates, times, places and persons who had threatened or intimidated him.  Given the vague evidence, we find it is insufficient to establish that he had been threatened or intimidated.  This means there is insufficient evidence to explain the delay in prosecuting the appeal.

21	This in turn supports Mr Ame’s contention in relation to the appellants benefiting immensely from the stay order of 10th September 2010.  His contention has merit because after the appellants obtained the stay order, their lawyers did nothing to get the appeal ready for hearing, except for their claim that there had been negotiations between the parties.  Worse still, they had not entered into negotiations with the respondents’ lawyers.  Instead they negotiated with a party who was not even a respondent to the appeal.

22	We believe had it not been for the determination of the respondents through the leadership of Mr John Kua in pursuing the settlement of the claim out of Court directly with the relevant State authorities like the then Minister for Justice & Attorney-General, the negotiations would not have progressed to the stage where the Minister had directed Paul Mawa Lawyers to release the cheque upon completion of the identification of the beneficiaries of the compensation on 3rd December 2010.  

23	If the appellants had been concerned that a substantial amount of money was involved in this case, they should have been decisive at the outset.  They should have put one position to the respondents through their lawyers immediately following the National Court decision.  That is to say, whether the claim would be settled or the appeal would be pursued.  They did not and cannot now use that as a reason to justify their failure to prosecute the appeal expeditiously.

24	Looking at the whole circumstances of this case, it is clear to us the appellants have not filed an appeal book.  They could not have done so because there was no draft index to the appeal book.  And because there was no draft index, they could not attend the date appointed for settlement of the draft index.  That was on 8th September 2010.  That date came and went.  They could not have requested for a new date because it was obvious, they had no draft index prepared for deliberation at settlement.  Coupled with the lack of a draft index, they made no efforts to obtain the relevant transcript of the National Court proceedings for inclusion in the appeal book.  In summary, the appellants were in no position to compile an appeal book.  The end result was, there was no appeal book. As there was no appeal book, the appeal could not be set down for hearing.

25	On the evidence before the Court, there is insufficient evidence establishing a satisfactory explanation for the delay in the prosecution of the appeal.  It follows that we must find the appellants had failed to diligently prosecute the appeal.  We uphold the application, discharge the order of 10 September 2010 and dismiss the appeal for want of prosecution with costs to the respondents.
_________________________________________

GABI J:     This is an application by the respondents to dismiss the appeal for want of prosecution pursuant to Order 7, Rule 53 of the Supreme Court Rules.   I have had the opportunity of reading the reasons and conclusions in this matter of my learned brethren on the Court, Cannings and Makail, JJ.   I agree with the principles of law.   However, I am unable to exercise my discretion in the same manner as the other two members of the Bench.

27	The background and the grounds of the application are set out in the majority decision and I do not wish to repeat the same here except to say that I agree with my learned brethren that the respondents have not made out the ground of lack of service of the notice of appeal.   The remaining grounds are the failure to prepare and file a draft index and the failure to obtain transcript of the National Court proceedings.

28	In Burns Philp (NG) Ltd vs. Maxine George [1983] PNGLR 55, the Supreme Court held that the power to dismiss an appeal for want of prosecution is discretionary and the discretion is to be exercised having regard to all the circumstances including, inter alia:

“1.     The length of and reasons for delay on the appellant’s part;
 2.     The extent the evidence likely to be adduced may lose cogency;
 3.     The availability of transcript; and
 4.     Any negotiations between parties. (Emphasis added).”

29	There is no doubt that there had been negotiations between the parties.   Mr John Kua took an active and leading role in meeting with the then Minister for Justice & Attorney-General, Honourable Ano Pala, on at least three occasions to discuss the settlement of the claim. This confirms or corroborates Mr Mawa’s point that the respondents’ prime concern was to exert maximum pressure on the State to discontinue the appeal and release the cheque before the close of the 2010 financial year.   It is obvious to me that the respondents’ motive was to defeat the appeal by political means despite the fact that serious questions of law were raised in the appeal which are worthy of deliberations by the Supreme Court.

30	There is no evidence that the State initiated the negotiations. The respondents initiated the discussions and pursued it with one objective and that is to have the appeal withdrawn and the release of the cheque.   The respondents not only contributed significantly to the failure by the appellants to comply with the Rules but also intended that consequence from the beginning of their negotiations with Honourable Ano Pala.  It is mischievous of the respondents to now ask the Court for dismissal of the appeal as if they have been eagerly waiting to argue the appeal.

31	For the above reasons, I would dismiss the application with costs and order that the appeal be prosecuted with due dispatch.
_______________________________________
Ninai Lawyers:	Lawyers for 1st Appellant
Paul Mawa Lawyers:	Lawyers for 2nd & 3rd Appellants
Brian Boma Lawyers:	Lawyers for 33 Respondents
Philip Ame Lawyers:	Lawyers for 65 Respondents