Selon Limited and Sali Tagau v Madang District Development Authority and the Independent State of Papua New Guinea (2020) N8440

• Jurisdiction: Papua New Guinea
• Judge: Narokobi J
• Judgment Date: 05 August 2020
• Court: National Court
• Citation: (2020) N8440
• Docket Number: WS NO. 532 OF 2019
• Year: 2020
• Judgement Number: N8440

Full Title: WS NO. 532 OF 2019; Selon Limited and Sali Tagau v Madang District Development Authority and the Independent State of Papua New Guinea (2020) N8440

National Court: Narokobi J

Judgment Delivered: 5 August 2020

N8440

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE]

WS NO. 532 OF 2019

BETWEEN:

SELON LIMITED

First Plaintiff

AND:

SALI TAGAU

Second Plaintiff

AND:

MADANG DISTRICT DEVELOPMENT AUTHORITY

First Defendant

AND:

THE INDEPENDENT STATE OF PAPUA NEW GUINEA

Second Defendant

Madang: Narokobi J

2020 : 14th July, 5th August

CLAIMS BY AND AGAINST THE STATE ACT 1996–District Development Authority – Whether a District Development Authority falls within the meaning of “the state” for purposes of Section 13(1) of the Claims By and Against the State Act 1996 – Criteria for an entity to fall within the meaning of the state considered and applied

GARNISHEE – Whether leave should be granted to serve notice on garnishee- relevant considerations for leave to be granted

Facts:

The Plaintiffs obtained a judgment sum of K400,000 against the Madang District Development Authority. The court ordered that the money be paid within a period of 90 days. The District Development Authority did not pay, and the plaintiffs have applied to the court to obtain leave to serve the garnishee, a garnishee notice on the judgement debtor’s bank.

Held:

(1) When determining whether an entity falls within the meaning of the “state” for purposes of Section 13(1) of the Claims By and Against the State Act 1996, the criteria are as determined in SCR No1 of 1998; Reservation Pursuant to Section 15 Supreme Court Act (2001) SC672.

(2) These criteria have been summarised in John v National Housing Corporation (2005) N2770 as follows:

“1. They are established by the Constitution;

2. They are part of the three-tier structure of government enshrined in the Constitution;

3. Like the other tiers of government they are constituted by elected representatives;

4. The National Government exercises some control over provincial governments in political, administrative and financial matters;

5. They fall within the definition of "governmental body" contained in the Constitution.

6. Judgement debts are recoverable from monies allocated in their budgetary process.”

(3) To determine whether an entity is a governmental body, the criteria to apply are as established by the Supreme Court in Application by Air Niugini Ltd and Rei Logona pursuant to Constitution, Section 18(1) (2020) SC1922 as follows:

(i) Is it established pursuant to statute?

(ii) Are the terms and conditions of its employees set in the same way as those of officers of the National Public Service under the Public Services (Management) Act 1995?

(iii) Are its board and its chief executive officer appointed by the government of the day?

(iv) Is it obliged to give effect to the policies of the government (and not pursue its own corporate will and desire), and is it accountable to the people of Papua New Guinea through a Minister as its political head?

(v) Was it established to perform traditional government functions?

(vi) Are its operations funded by government?

(vii) Is it subject to government direction and control on a day to day basis?

(viii) Is it subject to government control in the engagement of staff?

(ix) Does it operate as a monopolistic service provider, as distinct from operating in a commercial environment in competition with other similar entities?

(4) A seventh consideration to the six considerations developed in John v National Housing Corporation is whether the entity has a separate legal existence, capable of suing and be sued and owning property.

(5) In the circumstances, although a District Development Authority is a governmental body, it is not part of the state as it is a separate legal entity and did not satisfy a majority of the criteria in SCR No1 of 1998; Reservation Pursuant to Section 15 Supreme Court Act.

(6) Since the conditions for the grant of leave to serve garnishee notice has been satisfied, leave is accordingly granted with the proviso that the Madang District Development Authority be given opportunity to settle the debt through appropriate arrangements before the order nisi is made absolute.

Cases cited:

The following cases are cited in the judgment:

Air Niugini Ltd v Kavieng District Development Authority (2019) N8158

Albert Areng v Babia & NHC (2005) N2895

Albert Areng v Gregory Babia (2010) N4111

Albert Purane v Ase Tipurupeke Land Group Inc (2005) N2806

Application by Air Niugini Ltd and Rei Logona pursuant to Constitution, Section 18(1) (2020) SC1922

Aure v Sai Business Group Inc (2008) N3349

Davidwestern Advertising Group Ltd v HIRI 152 Developments Ltd (2019) N8112

Habolo Building & Maintenance Ltd v Hela Provincial Government (2016) SC1549

Kambaka v Dick (2018) N7209

Kedmec Auto Repairs v PNG Power Ltd

John v National Housing Corporation (2005) N2770

Mapiso v Enga Provincial Government (2018) N7722

MAPS Tuna Limited v Manus Provincial Government (2007) SC857

Moresby Plumbing Suppliers & Services Ltd (trading as Plumbers & Builders Supplies) v Timkumba Holdings Ltd (2020) N8309

Pato v Enga Provincial Government (1995) N1340

Pupune v Makarai, Administrator Eastern Highlands Provincial Government (In Suspension) (1997) N1647

Pupune v Makarai, Administrator Eastern Highlands Provincial Government (In Suspension) (1998) N1777

Ruta trading as Ariti Road & Building Maintenance v Eastern Highlands Provincial Government (1998) N1814

SCR No 1 of 1978; Re Ombudsman Commission Investigations of the Public Solicitor [1978] PNGLR 345).

SCR No 1 of 1998; Reservation Pursuant to Section 15 of the Supreme Court Act (2001) SC672

Legislation Cited

Claims By and Against the State Act 1996

Constitution of the Independent State of Papua New Guinea

District Development Authority Act 2014

Interpretation Act, Chapter 2.

International Treaties Cited

Montevideo Convention on the Rights and Duties of States 1933

Counsel:

Mr. M. Yalapan, for the Plaintiffs

Mr. E. Manihambu, for the Madang District Development Authority

JUDGMENT

5th August, 2020

1. NAROKOBI J: The first and second plaintiff have filed a Notice of Motion on 26 June 2020 seeking to serve a garnishee notice on the Bank South Pacific Madang Branch to satisfy a judgment sum of K400,000.00 they obtained against Madang District Development Authority (“DDA”), or judgment debtor. The application is opposed by lawyers from the Office of the Solicitor-General. This is my ruling on the application.

A BACKGROUND

2. The first and second plaintiff sued five defendants. The third defendant was the Madang District Development Authority (DDA). The other defendants, including the Madang Provincial Government (fourth defendant) and the State (fifth defendant) did not have liability entered against them. Assessment of damages proceeded only against the third defendant.

3. Liability was determined by default on 11 February 2020 when the court entered default judgment in the following manner:

“Pursuant to Order 12 Rules 25 and 28 of the National Court Rules, default judgement is entered against the third defendant on liability, subject to a trial on assessment of debt and damages,”

4. The third defendant is the Madang DDA. As I stated above, since the other defendants did not have liability entered against them, they are considered to have been removed from the proceedings. The court deemed that the responsible entity to pay for the damages was the third defendant.

5. On 3 March 2020 there was a trial on assessment of damages. The third defendant was not present. The trial was conducted by affidavit and the court made the following orders:

1. The third defendant is liable in debts and damages to the first plaintiff in the sum of K400,000.00 which shall be paid to the first plaintiff within a period of 90 days after service of the order on the third defendant.

2. In-addition, the third defendant shall pay interest to the first plaintiff on the sum of K400,000.00 calculated at the rate of 2% per annum in respect of the period commencing 2 August 2019 and ending on 3 March 2020 which shall be paid to the first plaintiff within a period of 90 days after service of the order on the third defendants.

3. The third defendant shall pay the plaintiff’s costs of the proceedings on a party-party basis which shall, if not agreed, be taxed.

6. The affidavit of Samson Tagau filed on 26 June 2020, states they have served the order and it is over 90 days and the judgement sum has not been paid. The plaintiffs now want to garnishee the account of Madang District Development Authority held at the Bank South Pacific for the judgment sum and costs.

7. During submissions, I asked Counsels if a DDA was immune from enforcement proceedings by virtue of the Claims By and Against the State Act 1996 (Claims Act). Mr Manihambu submitted that a DDA was part of the state and referred me to the case of Albert Purane v Ase Tipurupeke Land Group Inc (2005) N2806 where the National Court...