OS 698 OF 2006; Manorburn Earthmoving Limited v The Independent State of Papua New Guinea (No.2) (2008) N3287

• Jurisdiction: Papua New Guinea
• Judge: Kandakasi J
• Judgment Date: 25 February 2008
• Court: National Court
• Citation: (2008) N3287
• Year: 2008
• Judgement Number: N3287

Full Title: OS 698 OF 2006; Manorburn Earthmoving Limited v The Independent State of Papua New Guinea (No.2) (2008) N3287

National Court: Kandakasi, J

Judgment Delivered: 25 February 2008

N3287

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

OS 698 OF 2006

MANORBURN EARTHMOVING LIMITED

-V-

THE INDEPENDENT STATE OF PAPUA NEW GUINEA

(No.2)

Waigani: Kandakasi, J.

2007: 20 August

2008: 25 February

PRACTICE & PROCEDURE – Belated claim of a defence – Issue open to be raised in defence of earlier proceedings – Earlier determination not challenged – Defendant precluded from re-agitating issues.

PRACTICE & PROCEDURE – Proceedings commenced by Originating Summons - Defence to - Claiming a defence without filing a defence and leave of the Court or without affidavit disclosing a defence on the merits – Defendant not at any liberty to raise a defence.

CLAIMS BY AND AGAINST THE STATE – Requirement to give notice – Claim on going – Issue not raised earlier in the proceedings – Separate earlier proceedings issued by the State raising the same issue dismissed – Lack of challenge of - State at no liberty to raise the same issues again.

CONTRACT LAW – Contract with the State – Requirements for tender and approval under the Public Finance Management Act 1998 – Appropriate time to raise issues – State required to raise the issues as soon as a claim is made to enforce a contract – State choosing to reach agreement – Effect of – State issuing fresh proceedings seeking to nullify the deed of release – Proceedings dismissed for want of prosecution – No appeal or proper challenge against the dismissal – Effect of – State precluded from raising the issues it should have raised in its proceedings and before entering into the agreement.

JUDGMENTS AND ORDERS – Judgment and orders – Public policy requires finality in litigation – All available issues must be raised when the opportunity is first presented – Failure to do so – Effect of – Party precluded from raising and re-agitating the issues.

Cases Cited:

Papua New Guinea Cases:

The State v. Zacchary Gelu, Solicitor-General and Manoburn Earthmoving Limited (2003) SC716.

Motor Vehicles Insurance (PNG) Trust v. James Pupune [1993] PNGLR 370.

National Capital District Commission v Yama Security Services Pty Limited (2003) SC707.

Richard Dennis Wallbank and Jeanette Minifie v. The Independent State of Papua New Guinea [1994] PNGLR 78.

Motor Vehicles Insurance (PNG) Trust v. Kulubala Salem [1991] PNGLR 305.

The State & 3 Others v Brian Josiah and 80 Others (2005) SC792.

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

Fly River Provincial Government v. Pioneer Health Services Limited (24/03/03) SC705. The Independent State of Papua New Guinea v. Barclay Brothers (PNG) Limited, SCA 62 and 63 of 2001 (delivered on 31/12/02).

Overseas Cases Cited:

R. v. Coney (1882) 8 Q.B.D. 534.

Counsels:

Mr. K. Kua, for the Defendant/Applicant.

Ms. E. Suelep, for Plaintiff/Respondent.

25 February, 2008

1. KANDAKASI J: This case has quite a history. The State decided to settle by way of a Deed of Release dated 31 July 2002 (“the Deed”), Court proceedings issued against it by Manorburn Earth Moving Limited (the Company) claiming, damages for breach of a services contract. Pursuant to the Deed, the State made part payment while the company discontinued its proceedings. Later, the State however, changed its mind and took out Court proceedings seeking a declaration that the Deed is invalid on the basis of fraud and a failure to meet tender and approval requirements under sections 59 and 61 of the Public Finances (Management) Act 1995, failure to meet the notice requirements under the Claims By and Against the State 1996 and the Attorney General’s approval and or signature pursuant to the decision of the Supreme Court in The State v. Zacchary Gelu, Solicitor-General and Manorburn Earthmoving Limited.

1 (2003) SC716.

1 For reasons only known to the State, it failed to prosecute those proceedings by reason of which, the proceedings got dismissed. Following that, the Company issued these proceedings.

2. These proceedings seek a declaration that the Deed is valid and an order that the State pay the balance of what is due and owing to it under the Deed. Without formally taking any step to protect its interest, the State belatedly at the trial of this matter, raised issues raised in its own earlier proceedings which were dismissed. Effectively, the State seeks a declaration that the Deed is invalid and tried to lead evidence from the bar table by Counsel for the State Mr. Kua. Mr. Kua also objected to Annexure B to an affidavit sworn by Mr. Mirupasi on 27th and filed on 28 September 2007 which was admitted into evidence in these proceedings. The company’s response is that, the State is precluded from raising these issues given the history of the case and the State’s failure to plead the issues it is now taking without any leave of the Court.

The Issue

3. Clearly, there are two main but inter related issues for this Court to consider and determine. The first is, whether the State is at any liberty to challenge the validity of the Deed? The second is, whether there is any impediment to a grant of the orders the Company is seeking? A determination of the first issue will form the foundation for a determination of the second issue. For a proper determination of these issues, it will be necessary to consider and determine:

(a) On a finding of the relevant facts on the evidence that is properly before the Court;

(b) The effect of the dismissal of the State’s earlier proceedings challenging the validity of the Deed and the State’s failure to appeal or otherwise take steps against that decision;

(c) On the effect of provisions of s. 59 and 61 of the Public Finances (Management) Act 1995 as amended;

(d) On the need to give notice under s. 5 of the Claims By and Against the State Act 1996;

(e) On the effect of the decision of the Supreme Court in The State v. Zacchary Gelu, Solicitor-General and Manorburn Earthmoving Limited;

2 Supra note 1.

2 and

(a) The State’s failure to state its defence to the Company’s claims earlier on in the proceedings.

Evidence and Facts

2. In order to give proper context to the issues presented and to have proper understanding and arrive at a considered decision, it is necessary to consider the relevant facts from the evidence before the Court. The relevant evidence is from the affidavit of Mr. Vincent Mirupasi sworn on 27 September 2007 and filed on 28 September 2007. That is the only evidence before the Court. The affidavit was filed and served with notice of an intention to use it long before the trial. The State did not give notice of any objection to the use of that affidavit as required by s. 35 (2) of the Evidence Act.

3 Chapter 48 as consolidated.

3 Consequentially, the State was in no position then and now to object to an admission into evidence of that affidavit. Despite that, the State objected to Annexure B of Mr. Mirupasi’s affidavit. Annexure B is a copy of the Deed signed by both parties on 31 July 2002. The basis for the objection was that, Mr. Mirupasi was not the author of the document and also not a party to the document.

3. I am disinclined to upholding the State’s objection for two reasons. First, s. 35 (2) of the Evidence Act precludes the State from taking the objection because it failed to give notice as required by that provision following the service of the affidavit and notice of the company’s desire to use the affidavit at the trial. Secondly, Annexure B has Mr. Mirupasi’s signature on it and as a witness to its execution. In his affidavit, Mr. Mirupasi states that, he is the principle of the firm of Mirupasi Lawyers and that he is conversant and familiar with the background and the matters giving rise to these proceedings. Also he says, he is familiar with all of the documentation and the issues relating to this matter. I contrast this case, with a person who knows nothing about a document and seeks to have it tendered into evidence.

4. Proceeding then on the basis of the affidavit of Mr. Mirupasi, I find that the Company is involved in a road construction and maintenance business based in Popondetta. The Company issued proceedings under WS. No. 285 of 2000 on 16 March 2000, claiming damages for unpaid invoices, for road works, loss of business, breach of contract, interests and costs against the State. The State failed to file and serve its defence to the claim. That resulted in an entry of default judgment with damages to be assessed on 21 August 2000.

5. The State appears to have accepted the default judgment confirmed by its decision to enter into out of court settlement negotiations with the Company on the Company’s damages rather than take steps to have the default judgment set aside and or appealed against. The negotiations resulted in an agreement between the parties on 31 July 2002. In that agreement, the State agreed to pay K8.6 million and the parties executed the Deed, a...