The Independent State of Papua New Guina v Downer Construction (PNG) Ltd (2009) SC979

• Jurisdiction: Papua New Guinea
• Judge: Gavara-Nanu, Kandakasi and Lay JJ
• Judgment Date: 02 July 2009
• Citation: (2009) SC979
• Docket Number: SCA No. 5 of 2008
• Court: Supreme Court
• Year: 2009
• Judgement Number: SC979

Full Title: SCA No. 5 of 2008; The Independent State of Papua New Guina v Downer Construction (PNG) Ltd (2009) SC979

Supreme Court: Gavara-Nanu, Kandakasi and Lay JJ

Judgment Delivered: 2 July 2009

SC979

PAPUA NEW GUINEA

[IN THE SUPREME COURT OF JUSTICE]

SCA No. 5 of 2008

BETWEEN

THE INDEPENDENT STATE OF PAPUA NEW GUINA

Appellant

AND

DOWNER CONSTRUCTION (PNG) LTD

Respondent

Waigani: Gavara-Nanu, Kandakasi and Lay JJ

2008: 25th August

2009: 02nd July

CIVIL LAW- Supreme Court Appeal – Whether notice under s. 5 of the Claims By and Against the State Act, required for claims made against the State in arbitration proceedings.

CIVIL LAW – Whether the word “claim” in s.5 of the Claims By and Against the State Act, includes a claim made in arbitration proceedings against the State.

CIVIL LAW- appeal - Claims by and Against the State Act s5 - whether the word "action" imports or includes "arbitration proceedings".

STATUTORY INTERPRETATION – Meaning of the words “claim”, “action” and “suit” in ss.1, 2 (1) and 5 of the Claims By and Against the State Act.

Facts

The Respondent brought arbitration proceedings against the Appellant pursuant to the provisions of a written contract between them. The Appellant made application for a declaration that the arbitration proceedings were unlawful because no notice of intention to bring those proceedings was given to the State pursuant to the requirement of s.5 of the Claims by an Against the State Act.

Held (Kandakasi J dissenting)

The word "action" as used in s.5 of the Claims by and Against the State Act does not import or include the meaning of arbitration proceedings. A notice under that provision is not required prior to commencing arbitration proceedings.

Cases Cited:

Chief Collector of Taxes v.T.A Field Pty Ltd [1975] PNGLR 144

Commissioner General of Internal Revenue Commission v. Douglas Properties Ltd (2002) N2192

Mai Kuri v. The State (No. 2)[1991] PNGLR 311

Mark Opur v. Darbar Enterprises Ltd(2004) N2528

Mas International Ltd v. David Sode (2008) SC 944

Rundall v. Motor Vehicle Insurance Trust[1988] PNGLR 20

Ruth Kaurigova v. Dr. Russo Perone and Ors SC 964

Ted Abiari v. The State (No.1)[1990] PNGLR 250

Enforcement Pursuant to Constitution s57; Application by Gabriel Dusava (1998) SC581.

PLAR No. 1 of 1980 [1980] PNGLR 326.

Re Morobe Provincial Government for and on behalf of the Morobe Provincial Executive Council (2002) SC693

Inakambi Singorom v. Klaut [1985] PNGLR 238.

Chief Collector of Taxes v Bougainville Copper Ltd; Bougainville Copper Ltd v Chief Collector of Taxes (2007) SC853.

Mairi v Tololo [1976] PNGLR 125.

Rundle v Motor Vehicle Insurance (PNG) Trust [1987] PNGLR 44

Paul Tohian, Minister for Police and The State v. Tau Liu (1998) SC566.

William Trnka v. The State [2000] PNGLR 294.

Daniel Hewali v. The State Ors (2002) N2233.

Patterson Lowa, & Ors. v. Wapula Akipe &Ors [1991] PNGLR 265;[1992] PNGLR 399. Kiee Toap v. The Independent State of Papua New Guinea and Department of Lands and Physical Planning (2004) N2766.

Kamopu Minatou v Phillip Kumo(1998) N1768

John Bokin v The State(2001) N2111

Rawson Construction Ltd v The State (2004) N2614

Reference by Western Highlands Provincial Government(1995) SC486

Overseas cases

Bank of England v. Vagliano Brothers [1891] AC 107

Brennan v. R (1936) 55 CLR 253

R v. Hare [1910] 29 NZLR 641

R v. Martyr [1962] Qd. R 398

Ward v. R [1972] WAR 36

Williamson Pty Ltd v. Barrowcliff [1915] VLR 450

Clunies-Ross v. Commonwealth (1984) 55 ALR 609

Re Bolton: Ex parte Beane (1987) 70 ALR 225.

Amatek Ltd v. Googooreworn Pty Ltd (1993) 112 ALR 1

Wacando v. Commonwealth 1981) 37 ALR 317

Re The Commercial Bank of Australia Ltd (1893) 19 VLR 333

Port of Melbourne Authority v. Anshun Pty Ltd (1981) 147 CLR 589

Henderson v. Henderson (1843) 3 Hare 100; 67 ER 313

Madras Electric Supply Corporation Ltd v Boarland [1955] AC 667

Inland Revenue Commissioners v Hinchy [1960] AC 748 at 766 (H. L.)

Commissioner for Railways (NSW) v Wynyard Holdings Ltd [1971] 2 NSWLR 70

R v Dunn [1973] 2 NZLR 481

Legislation Cited

Architects (Registration) Act 1989

Apprenticeship and Trades Testing Act 1986

Banks and Financial Institutions Act

Claims by and Against the State Act

Civil Aviation Act 2000

Central Banking Act

Civil Aviation (Aircraft Operators Liability) Act

Explosives Act

Motor Vehicles (Third-Party Insurance) Act

Organic Law on Peace Building in Bougainville Autonomous Bougainville Government and Bougainville Referendum

Public Finance (Management) Act

Statutory Interpretationby Donald Gifford

Texts Cited

Statutory Interpretation in Australia (5th Ed) [4.39]

Stroud’s Judicial Dictionary of Words and Phrases (7th Ed)

Osborn’s Concise Law Dictionary (10th Ed)

Counsel:

G.M.EganwithJ. Kumura, for the Appellant

J.H. Griffin QC, E. AndersonandN. Pitoi, for the Respondent

2 July, 2009

1. GAVARA-NANU J: On or about 4 December 1997, the appellant and the respondent (“the parties”) entered into a written contract for the respondent to carry out road works to upgrade and seal certain parts of the Ramu Highway in Madang Province (“the Contract”).

2. The project was funded jointly by the European Union through the European Development Fund under the Lome IV Convention and the appellant. The Contract price of the road works was agreed at K40m. The respondent completed the task in or around mid 2002, and was paid in excess of K71m thus the initial agreed Contract price was exceeded by K31m. This increase was as a result of a number of factors, including work variations, delayed payments, loss of productivity by the respondent, etc, etc.

3. Later, the respondent made an additional claim of K48m through the Department of Works through its appointed supervisor for additional works it claimed it did but were not paid for. Negotiations for the payment of the additional amount claimed by the respondent failed as the appellant refused to pay the amount, claiming that the claim was made contrary to the terms of the Contract and was time barred.

4. As a result, the respondent elected to initiate arbitration proceedings by giving notices of disputes under the Contract, alleging that there were disputes between the parties to the Contract, able to be resolved by arbitration under the terms of the Contract. On or about 19 December, 2002, the respondent commenced arbitration proceedings.

5. In December, 2007, the appellant made an application before the National Court seeking a declaration that the arbitration proceedings were unlawful, claiming that the Contract upon which the arbitration proceedings were based was illegal because it breached the Public Finances Management Act. The presiding judge Davani J ruled that the appellant was clutching at straws as the time to make the application had well passed and refused the application.

6. The appellant did not appeal the ruling.

7. In January, 2008, the appellant made another application, this time seeking a declaration that the arbitration proceedings were unlawful because the respondent had failed to give notice of its claim to the State, as required under s. 5 of the Claims By and Against the State Act, (CBASA). On 7 February, 2008, the presiding judge Hinchliffe J, refused the application ruling that the arbitration proceedings were not in breach of CBASA.His Honour also refused the injunctive orders sought against the continuation of the arbitration proceedings.

8. The election by the respondent to institute arbitration proceedings was made pursuant to the General and Special Conditions of Contract, and the Procedural Rules on Conciliation and Arbitration of Contracts Financed by the European Development Fund (“the Rules”).

9. The relevant parts of the Rules are Articles 5.12, 18.1, 18.2 and 18.3.

10. Article 5 is headed – “Conciliation”.

11. Article 5.12 is in these terms:

5.12.Should a settlement not result, the parties shall be at liberty to refer their dispute to arbitration under these Rules, in which case, nothing that has transpired in connection with the proceedings before the Conciliator or Conciliation Committee shall in any way affect the legal right of any of the parties at the tribunal.(my underlining).

12. Article 18 is headed - “Commencement of Arbitration Proceedings”.

13. Article 18.1, inter alia, provides that the claimant in an arbitration, shall give to the respondent a notice of arbitration, Article 18.2 provides that arbitration proceedings shall be deemed to commence on the date on which the notice of arbitration is received by the respondent and Article 18.3 prescribes matters which the notice must include. Notably, these Articles are in mandatory terms.

14. The Rules provide a very detail and elaborate procedural requirements for the disputing parties to follow and comply with in conciliation and arbitration proceedings....