National Capital District Commission v Yama Security Services Limited (2005) SC835

• Jurisdiction: Papua New Guinea
• Judge: Jalina, Sawong and Lay JJ
• Judgment Date: 09 December 2005
• Court: National Court
• Citation: (2005) SC835
• Docket Number: SCA No. 46 of 2004
• Year: 2005
• Judgement Number: SC835

Full Title: SCA No. 46 of 2004; National Capital District Commission v Yama Security Services Limited (2005) SC835

National Court: Jalina, Sawong and Lay JJ

Judgment Delivered: 9th December 2005

SC 835

PAPUA NEW GUINEA

[IN THE SUPREME COURT OF JUSTICE]

SCA No. 46 of 2004

BETWEEN:

NATIONAL CAPITAL DISTRICT COMMISSION

(Appellant)

AND:

YAMA SECURITY SERVICES LIMITED

(Respondent)

Waigani :Jalina, Sawong and Lay JJ

2004: 30th September

2005: 09th December

Contracts – Deed of Release – Entered into after judgment for damages to be assessed – Whether Deed of Release a “Contract” for purposes of the Public Finance (Management) Act s. 61 requiring Ministerial approval.

Contracts – Deed of Release – Entered into after judgment for damages to be assessed – Whether Deed of Release invalid for failure to obtain Ministerial approval under s.61 of Public Finance (Management) Act.

Cases cited:

Fly River Provincial Government –v- Pioneer Health Services Ltd , SC705

National Capital District Commission –v- Yama Security Services Pty Limited, SC707

Counsel:

F. Waleilia for the Appellant

B. Lomai for the Respondent

09 December, 2005

BY THE COURT: This is an appeal against a decision of the National Court dated 30th April 2004 (Sevua J) which found that a Deed of Release entered into between the Appellant and the Respondent under which the Appellant was to pay K8.5 million was valid and binding on the Appellant with a further order for the Appellant to pay to the Respondent that sum of money.

A brief history of these proceedings is that on or about 5th February 1998 and 27th March 1998, the Respondent and the Appellant entered into two Security Contracts, one being the principal and other supplementary, whereby the Respondent was to provide security services to the Appellant for a period of 48 months and 39 months respectively.

The Appellant terminated the two Security contracts on the 9th February 1999.

Upon termination of the Security Contracts by the Appellant, the Respondent sued the Appellant for breach of contract in proceedings WS No. 1221 of 1999 on 29th October 1999 claiming the sum of K7, 513, 835.84 being the amount the Respondent was to have been paid during the full term of the Security Contracts with interests and costs. The then City Administrator, Jamie Maxton Graham and the present Appellant (then in suspension) were made the first and second defendants while the National Executive Council and the State were made the third and fourth defendants respectively.

The third and fourth defendant’s Notice of Intention to Defend was filed by the Solicitor General on 10th November 1999 whilst that of the

first and second defendants were filed by A.G. Corren & Co on 12th November 1999.

On 7th December 1999 the first and second defendants filed a motion seeking leave to file their Defence out of time and on 9th December 1999 the Court granted an extension of time of 30 days from the original date of expiry of the time required for filing of the Defence.

On 7th January 2000 the Solicitor General filed the third and fourth defendant’s Defence denying that it entered into any contracts with the plaintiff (now the Respondent) and further stating that the second defendant was capable of being sued and suing in its own name and style under s.3 of the NCDC Act 1990. It also relied on the failure by the plaintiff to give notice under s. 5 of the Claims By and Against the State Act in addition to saying that the second defendant was soley liable for any damages suffered by the plaintiff, and that the proceedings did not disclose any reasonable cause of action against them.

On 12th January 2000 the plaintiff, after conducting a search at the National Court Registry and discovering that the first and second defendants had not filed their Defence within the extended time referred to above, filed a Notice of Motion seeking default judgment against the first and second defendants for K7,513,735.84 for failure to file their Defence and costs.

On the same day, 12th January 2000, the first and second defendants filed their Defence. In their Defence, apart from denying the claim and denying any breach of contract and further stating that the claim did not disclose any reasonable cause of action, the first and second defendants pleaded in the alternative the provisions of the Public Finance (Management) Act 1995 including the failure to obtain ministerial approval under s. 61of the Act.

On 19th January 2000 the plaintiff filed an amended Notice of Motion seeking default judgment for the above sum or alternatively default judgment for damages to be assessed and costs against the first and second defendants.

On 31st January 2000 the first and second defendants filed a Notice of Motion seeking a further extension of time to file their Defence out of time in the event that the Court found the Defence they had filed on 12th January 2000 which we have referred to above, to have been filed out of time.

Both the plaintiff’s motion for default judgment and the first and second defendants’ motion for further extension of time to file their Defence were heard by Los J on 10th March 2000. On 17th March 2000, His Honour rejected the defendants’ application and entered default judgment in favour of the plaintiff for damages to be assessed.

It should be noted that for more than a year since the decision of Los J on 17th March 2000 up to 25th November 2001when the second defendant’s Board of Commissioners passed a resolution to settle the claim by either re-engagement of the plaintiff, ,reduction of the amount payable under the contracts or payment by installments, the defendants took no steps at all to challenge the decision by way of an appeal to the Supreme Court or to apply to the National Court to set the default judgment aside on the basis that they had a defence on the merits.

Following this resolution, 3 days later Hon. Philip Taku on behalf of the Appellant and Mr. Peter Yama on behalf of the Respondent executed a Deed of Release on the 28th November 2001 to settle the Respondent’s claim for K8, 500, 000 inclusive of interest.

A few days after the execution of the Deed of Release, Hon. Philip Taku and his Commissioners were displaced by legislative changes made to the Appellant.

The Appellant did not pay the Respondent following the change in its administration and management and the Respondent filed an application by way of Notice of Motion on 7th March 2002 seeking the enforcement of the Deed to compel the Appellant to pay the sum settled in the Deed or alternatively that judgment be entered in the amount agreed to in the Deed. That application was opposed by the Appellant.

On 20th March 2002 the Notice of Motion was heard by Los J in the National Court and judgment was entered for the Respondent for K8.5 million on 27 March 2002.

The Appellant then appealed that decision in April 2002 to the Supreme Court in SCA No. 24 of 2002 but did not obtain a stay of the National Court decision until mid November 2002.

Prior to the stay order the Appellant in August 2002 made two payments to the Respondent being K500, 000.00 on 8th August 2002 and K1.5 million on 21st August 2002.

On 6 June 2003, the Supreme Court upheld the appeal by the Appellant and made the following orders:

“1. The Appeal is allowed;

2. The decision of the National Court be made on 27 March 2002 is quashed;

3. The question of assessment of damages pursuant to the judgment entered in favour of the Respondent on 1December2000 shall not proceed to trial until the validity of the Deed of Release entered into between the Appellant and the Respondent on 25 November 2001 is determined by the National Court.

4. The Respondent and / or the Appellant take steps to either amend the pleadings in WS No. 1221 of 1999 or institute fresh proceedings by way of Writ of Summons to plead the Deed of Release and the issue of the validity of the Deed of Release be determined by the National Court on the merits.

5. The Respondent shall pay the Appellant’s costs of this Appeal, if

6. not agreed, to be taxed.

7. Certify the appearance of Southern Counsel.”

Following the Supreme Court decision on 6 June 2003 in SCA No. 24 of 2002, the Appellant filed an application on 18 August 2003 as a “stated” case under Order 10 Rule 21 of the National Court Rules in WS No. 1221 of 1999.

This application was heard on 11th September 2003 by Davani J and on 22 September 2003, Her Honour dismissed the application on the basis that the issue of the validity of the Deed of Release needed to be properly heard or argued at trial.

Following that decision, the Respondent made an election pursuant to the Supreme Court decision in SCA No. 24 of 2002 and took out a fresh set of proceedings in the National Court in WS No. 1209 of 2003 on 26 August 2003 wherein the Deed was pleaded. The Original proceedings WS No. 1221 of 1999 was never discontinued and is still current or is still on foot to date.

The Appellant filed its Notice of Intention to Defend and Defence...