SCA NO. 79 OF 2007; Mount Hagen Urban Local Level Government v Sek No. 15 Limited (2009) SC1007

• Jurisdiction: Papua New Guinea
• Judge: Gavara-Nanu, Davani and Yagi JJ
• Judgment Date: 04 September 2009
• Court: Supreme Court
• Citation: (2009) SC1007
• Year: 2009
• Judgement Number: SC1007

Full Title: SCA NO. 79 OF 2007; Mount Hagen Urban Local Level Government v Sek No. 15 Limited (2009) SC1007

Supreme Court: Gavara-Nanu, Davani and Yagi JJ

Judgment Delivered: 4 September 2009

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) SC 905

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...