CMSS (PNG) Limited v The Independent State of Papua New Guinea and National Capital District Commission (2014) N5717

• Jurisdiction: Papua New Guinea
• Court: National Court
• Judge: Hartshorn, J
• Judgment Date: 07 August 2014
• Citation: (2014) N5717
• Judgment Number: N5717
• Year: 2014
• Docket Number: WS 1404 of 2013 (Comm)

Full Title : WS 1404 of 2013 (Comm); CMSS (PNG) Limited v The Independent State of Papua New Guinea and National Capital District Commission (2014) N5717

National Court: Hartshorn, J

Judgment Delivered: 7 August 2014

N5717

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS 1404 of 2013 (Comm)

BETWEEN:

CMSS (PNG) LIMITED

Plaintiff

AND:

THE INDEPENDENT STATE

OF PAPUA NEW GUINEA

First Defendant

AND:

NATIONAL CAPITAL DISTRICT

COMMISSION

Second Defendant

Waigani: Hartshorn, J

2014: 14th April,

: 7th August

Section 5 Claims By and Against the State Act

Cases cited:

Paul Tohian v. Tau Liu (1998) SC566

Peter Komba v. National Capital District Commission (2007) Unreported, WS 451/07, Waigani, delivered 26/7/07

Global Constructions Ltd v. National Capital District Commission (2011) N4275

Paul Eddie v. Bill Kirokim (2012) N4932

Counsel:

Mr. A. Jerewai, for the Plaintiff

Mr. P. Bednall and Mrs. G. Awesa, for the First Defendant

Ms. L. David, for the Second Defendant

7th August, 2014

1. HARTSHORN J: This is an application by the first defendant, the State, to dismiss the proceeding as it is an abuse of process as amongst others, the plaintiff, CMSS (PNG) Ltd has failed to comply with s. 5 Claims By and Against the State Act (Claims Act). The application is opposed by CMSS. The second defendant, National Capital District Commission (NCDC) did not take a position on the application. Counsel for CMSS did not take objection to the form or content of the notice of motion seeking the relief sought.

Background

2. CMSS, NCDC and the State entered into a project agreement dated 22nd March 2007 (project agreement). Pursuant to the project agreement, CMSS was to construct a five-star hotel, including a casino in Boroko, National Capital District. Clause 2.3 of the project agreement provides:

“The State shall give the casino, bar and restaurant license before the construction of the five-star hotel facility….”

3. Construction of the hotel commenced in or about 2007 but has not been completed. The State concedes that the casino licence is yet to be granted to CMSS.

4. In or about 2013, the NCDC Building Board formed the view that the building had been defectively constructed and was a danger to the public. The Building Board subsequently issued a public notice advising of its intention to demolish the building subject to the consideration of objections from interested parties (demolition notice).

5. By letter dated 29th November 2013, CMSS purported to give a s. 5 notice pursuant to the Claims Act (CMSS s. 5 notice). CMSS then commenced proceedings by way of Writ of Summons and Statement of Claim on 6th December 2013.

Section 5 notice

6. The State contends that s. 5 Claims Act was not complied with as:

a) the CMSS s.5 notice was not given within six months of CMSS becoming aware of the alleged breach of contract, being the failure to issue a casino licence.

b) the CMSS s.5 notice failed to contain sufficient particulars of the claim and is invalid.

7. CMSS contends that:

a) the date of the breach of contract is when the notice to demolish the subject building was given by the NCDC Building Board. The CMSS s.5 notice was given within six months of that date and so is valid.

b) if the alleged breach is the failure to grant a casino licence, that breach is continuing as the casino licence has not been issued.

c) the CMSS s.5 notice is sufficiently particularised and in any event the Solicitor General had informed that the CMSS s.5 notice is sufficient notice.

8. I consider the issue of whether the CMSS s.5 notice has been given within time, first.

Whether s. 5 notice given in time

9. The State contends that CMSS has failed to serve the CMSS s.5 notice within six months from the occurrence out of which the claim for a breach of clause 2.3 of the project agreement arose or from when CMSS became aware of the breach, contrary to s. 5 (2) (a) and (b) Claims Act. Further, as no further period of time has been extended to CMSS, no cause of action exists against the State.

10. CMSS contends that the date of the breach of the project agreement is the date when the demolition notice was issued. This is because, if I understand correctly, there have been discussions between the new majority shareholder of CMSS and the Department of Trade and Commerce, part of the State, to progress the project. The project was proceeding pursuant to a memorandum of understanding that had been entered into, until the demolition notice was issued.

11. As to this contention, in the Statement of Claim of CMSS, it is pleaded at paragraph 11 that amongst others, the casino license was not issued under clause 2.3 of the project agreement, and at paragraph 16, that:

“By reason of failure in specific performance by the Defendants as pleaded in the preceding paragraph 11 hereof, i. e. the condition precedent to issue the Plaintiff the casino license, the Plaintiff suffered loss and damages.”

12. Further, part of the relief claimed is a declaration that the State is in breach of clause 2.3 of the project agreement. It is clear then, that notwithstanding the discussions and the memorandum of agreement to which counsel referred, which occurred before the Statement of Claim was filed, one of the causes of action of CMSS in its Statement of Claim is in relation to the alleged breach of clause 2.3 of the project agreement. The claim of CMSS in its Statement of Claim is not confined to its cause of action concerning the demolition notice.

13. Counsel for CMSS further contended that if, for the purposes of the Claims Act, the breach of contract is when clause 2.3 was breached, and not the issue of the demolition notice, the CMSS s.5 notice was given in time as the breach is continuing - the casino licence still has not been issued.

14. Counsel for CMSS also contended that the Acting Solicitor General in her letter dated 20th January 2014, had informed the lawyers for CMSS that the CMSS s.5 notice had been perused and its contents noted and that:

“I accept your notice as sufficient notice pursuant to s.5 of the Claims By & Against the State Act 1996.”

15. If I understand correctly, it is contended that the State is estopped by the content of this letter from denying that CMSS had given the requisite notice under s. 5 Claims Act.

16. Section 5 (2) Claims Act is:

“(2) A notice under this Section shall be given-

(a) within a period of six months after the occurrence out of which the claim arose; or

(b) where the claim is for breach of a contract, within a period of six months after the claimant became aware of the alleged breach; or

(c) within such further period as-

(i) the Principal Legal Adviser; or

(ii) the court before which the action is instituted,

on sufficient cause being shown, allows.”

17. Counsel for the State contended that clause 2.3 of the project agreement provides that the State was to issue the casino licence before the construction of the hotel facility and that CMSS has pleaded that this was a condition precedent to the obligation to construct the hotel. Construction of the hotel commenced in or about 2007 and CMSS would have been aware from that date that it had not been granted the casino licence by the State.

18. Counsel for the State further contended that the time for the purposes of s. 5 Claims Act started running from this time. Alternatively, at the very latest, by the time of the decision of the National Executive Council no. 113/2012 on 15th May 2012, pleaded in the Statement of Claim, CMSS knew that it had not been issued a casino licence. CMSS’s s.5 notice was not served until 29th November 2013. On any analysis of the facts, contends the State, the CMSS s. 5 notice was served out of time.

19. As to the argument of CMSS that as the breach of clause 2.3 is continuing and so the CMSS s.5 notice was given in time, as I said in Peter Komba v. National Capital District Commission (2007) Unreported, WS 451/07, Waigani, delivered 26/7/07, as to a contention that a continued outstanding payment constituted a continuing cause of action and so a s. 5 notice could be given at any time:

“This contention is not correct. The cause of action or the “occurrence out of which the claim arose” is when the event first happened. The question to be posed is, when did the money begin to be owed or when was it that the breach occurred?”

20. I also refer to the case of Global Constructions Ltd v. National Capital District Commission (2011) N4275, in which I stated the following concerning s. 5 (2) (a) and (b) Claims Act:

“9. Pursuant to s. 5 (2) (a) Claims Act, the occurrence out of which the claim arose, to my mind, is the alleged non-payment by NCDC of the amounts in respect of which progress certificates had been issued when those amounts were due to be paid: Caspar Kondi v. Provincial Administrator, Department of Western Highlands Province (2004) N2755, Peter Komba v. National Capital District Commission (2007) Unreported, WS 451/07 Waigani, delivered 26/7/07, Hartshorn J. In the statement of claim the particulars are to the effect that the...