National Capital District Commission v Jim Reima, on behalf of himself and 120 Youth Groups of Moresby North East and Balus Sokele and Robane Pisimi (2009) SC993

• Jurisdiction: Papua New Guinea
• Judge: Davani, Manuhu, David JJ
• Judgment Date: 25 September 2009
• Court: Supreme Court
• Citation: (2009) SC993
• Docket Number: SCA 79 OF 2008
• Year: 2009
• Judgement Number: SC993

Full Title: SCA 79 OF 2008; National Capital District Commission v Jim Reima, on behalf of himself and 120 Youth Groups of Moresby North East and Balus Sokele and Robane Pisimi (2009) SC993

Supreme Court: Davani, Manuhu, David JJ

Judgment Delivered: 25 September 2009

SC993

PAPUA NEW GUINEA

[IN THE SUPREME COURT OF JUSTICE]

SCA 79 OF 2008

BETWEEN:

NATIONAL CAPITAL DISTRICT COMMISSION

Appellant

AND:

JIM REIMA, on behalf of himself and

120 YOUTH GROUPS OF MORESBY NORTH EAST

First Respondent

AND:

BALUS SOKELE and ROBANE PISIMI

Second Respondent

Waigani: Davani, Manuhu, David .JJ

2009: 30th April

25th September

STATUTORY AUTHORITY – NCDC is a corporation – NCDC is a statutory authority – NCDC is an entity of the State – a claimant must give s.5 Notice under the Claims By and Against the State Act 1996 - s.4 of NCDC Act 1990.

CONTRACTS – Youth and Community Groups and other prospective contractors – must comply with proper processes – must make the necessary enquiries before engaging in work – contracts exceeding K100,000.00 – must comply with tender process – ss.59 and 61 of Public Finances (Management) Act 1995.

Facts

1. The respondents are the owners of vehicles and representatives of a Youth group. They were engaged by a manager with the NCDC to perform cleaning activities in Port Moresby. This engagement was by letters of engagement, signed by the appellant’s Manager, and agreeing to engage the first respondent, of which there were 120 groups, at K1,200.00, each group, per fortnight and the second respondent, for the hire of their trucks, at K2,200.00 each per fortnight, a total of K4,400.00 per fortnight. After 4 months, the work bill was at K1,728,000.00 for the first respondent youth groups and K334,400.00 for the second respondent’s two trucks. Upon the respondent demanding payment, the appellant refused to pay claiming that the respondents had not complied with ss.59 and 61 of the Public Finances (Management) Act 1995 (‘PFMA’) and had also not given notice under s.5 of the Claims By and Against the State Act (‘CBASA’).

2. The appellant applied to the National Court by motion seeking, amongst other orders, dismissal of the whole proceedings, because the respondents had not given s.5 Notice and had not obtained the necessary approvals under ss.59 and 61 of the PFMA. The Trial Judge dismissed the appellant’s motion and held, basically, that s.5 Notice need not be given because, amongst others, the NCDC is a corporation and can sue and be sued. He also held that it was not necessary for the respondents to obtain approvals under ss.59 and 61 of the PFMA.

3. The Appellants appealed.

Held

The NCDC is an entity of the State. It is a public body and a statutory body. That any person, company, individual or community group looking to secure a contract with the NCDC, must firstly ensure that the total amount to be eventually paid out under the Contract will not exceed K100,000.00. If it does, then the persons concerned must make the necessary enquiries with the NCDC as to the processes to be complied with, more particularly tender processes, before embarking on work. If they commence work without making the necessary enquiries and complying with processes, then they do so at their own peril and detriment.

Cases Cited

Papua New Guinea Cases

· Paul Tohian v. Tau Liu, SC 566;

· The Independent State of Papua New Guinea v. Barclay Brothers (PNG) Ltd (2001) N2090

· Olympic Stationery Ltd v. The Independent State of Papua New Guinea (2001) N2194

· Okam Sakarius & six (6) others v. Chris Tep, Project Manager and Cocoa, Coconut Extension Agency, (2003) N2355

· Delphi Corporate Investigations Limited and Bernard Kipit, City Administrator and National Capital District Commission, dated (2003 N2480

· Mathew Totori v. Bob Nenta (2003) N2373.

· Yawasoro Poultry Farm v. The PNG Defence Force and the State (2004) N2736

· Otto Napi v. National Capital District Commission (2004) N2797

· Daniel Hewali v. PNG Police Force and the State, N2233

· Albert Purane v. Asi Tipurupeke Land Group Incorporated and Mineral Resources Development Company Ltd and Secretary for Department of Petroleum & Energy, (2005) N2806

· Eliakim Laki & Ors v. Guau K Zurenuoc & 2 Others (2005) N2818

· John Kuman trading as Gulba Contractors v. NCDC, WS 1395 of 2002 dated 23rd June, 2005

· Lawrence B.W. Titimur v. The Executive, Jackson Sarea, John Vailala, Rex Lai & Wilson Thompson for themselves and on behalf of the National Capital District Commission Workers Union & the National Capital District Commission, WS 1695 of 2002 dated 25th October, 2007

Counsel

J. Haiara, for the appellant

W. Bigi, for the first and second respondents

25th September, 2009

DECISION

1. BY THE COURT – This is an appeal from a decision of the National Court of 8th July, 2008 where the Trial Judge refused to dismiss proceedings where the respondents had not complied with ss.59 and 61 of the Public Finance (Management) Act (‘PFMA’) and s.5 of the Claims By and Against the State Act (‘CBASA’).

2. The appeal is brought with leave of the Court granted on 19th September, 2008.

Background

3. The Trial Judge had before him two (2) Motions filed by the appellant and the respondents. The respondents’ Motion sought orders for summary judgment. The appellant’s Motion sought orders that the respondents’ Motion be struck out for being defective and incompetent and further orders that the entire proceedings be dismissed;

(i) for lack of notice under s.5 of the CBASA;

(ii) for lack of proper consent and authority by the respondents;

(iii) or alternatively, that the whole proceedings be struck out for non-compliance with ss.59 and 61 of the PFMA.

4. His Honour the Trial Judge refused the appellant’s motion and held that;

(i) The appellant is not an entity of the State so s.5 Notice under the CBASA need not be given;

(ii) That the National Capital District Commission (‘NCDC’) is a body that can sue and be sued in its own name and style and is a corporation with perpetual succession;

(iii) That the NCDC is not an entity of the State because the NCDC Act does not state specifically that persons wishing to sue the NCDC must first give notice under s.5 of the CBASA;

(iv) That the requirements of ss.59 and 61 of the PFMA need not be complied with because the contracts or agreements entered into between the NCDC and the respondents were not the kind that required tender approval.

Grounds of appeal

5. There are two (2) main grounds of appeal which are summarised as;

(i) The National Court erred in law when it held that it was not necessary to give notice under s.5 of the CBASA, contrary to well-established authorities;

(ii) The National Court erred when it failed to dismiss the respondents’ claim for the reason that the respondents’ Contract was awarded to them in breach of ss.59 and 61 of the PFMA.

Issues for determination

6. Basically, the issues for determination in this appeal are;

(i) Does s.5 of the CBASA apply to the NCDC and should persons intending to sue the NCDC, firstly give notice to the State under s.5 of the CBASA;

(ii) Whether a youth group or community groups or other like companies or individuals, must comply with tender processes under ss.59 and 61 of the PFMA, when seeking or applying to be awarded contracts by the NCDC?

Analysis of submissions

7. We refer firstly to the Trial Judge’s reasons as related to the issues before us.

Issue No. (i) – Whether the NCDC is an entity of the State?

8. The Trial Judge relied on s.4 of the National Capital District Commission Act 1990 (‘NCDC Act’) and held that the NCDC is a corporation with perpetual succession. Section 4 of the NCDC Act states that the Commission can sue and be sued in its own name and style. It reads;

“4. NATIONAL CAPITAL DISTRICT COMMISSION.

(1) The National Capital District Commission is hereby established.

(2) The Commission –

(a) is a corporation; and

(b) has perpetual succession; and

(c) shall have a seal; and

(d) may –

(i) acquire, hold and dispose of land, interest in land and property; and

(ii) sue and be sued in its corporate name; and

(iii) enter into contracts; and

(iv) subject to the prior written approval of the Minister, conduct business enterprises.”

9. His Honour said this in relation to the giving of notice under s.5 of the CBASA and s.4 of the NCDC Act.

“It authorises the Commission to enter into contracts or any kind magnitude with anyone or body. It is not required to go to the Attorney General or the Solicitor General to seek approval to enter into any such contractual arrangements. When it finds itself being sued for alleged breach of contract, it tells that party to go to the Attorney General or the Solicitor General first. To me, this is absurd. An organisation empowered by its own enabling legislation able to easily engage with others contractually but is difficult to get at, to me is not fair. Why can’t a person sue the NCDC direct because its own law says it can be sued in its own name and style? Why couldn’t the NCDC Act be amended to say that any person wishing to sue NCDC, must first give notice under s.5 of the Claims By and Against the State Act.” (par. No.11 of Trial Judge’s published reasons)

10. In our view, the NCDC Act was established to govern the National Capital District as required by s.4 of the Constitution. The...