|
|
Home
| Databases
| WorldLII
| Search
| Feedback
National Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
WS No. 1173 OF 2008
BETWEEN:
ROBIN TIMOT
Plaintiff (Judgment Creditor)
AND:
MOTOR VEHICLES INSURANCE LIMITED
Defendant (Judgment Debtor)
AND:
BANK SOUTH PACIFIC
Garnishee
Lae: Numapo AJ
2019: 26th September & 05th November
CIVIL PRACTICE AND PROCEDURE – Notice of Motion to dismiss Garnishee Proceedings - Competency of Application – Creation and operation of State entities for public purpose - Provision of ‘important and critical’ services to the public – MVIL is a State entity for purposes of sections 2,5,13 and 15 of CBASA -Exempted from the garnishee proceedings – Application to dismiss garnishee proceedings granted.
Held:
(i) A Notice of Motion filed by the Defendant/Judgment Debtor to dismiss
the garnishee proceedings without first setting aside the ex parte orders is misconceived, incompetent and an abuse of the Court’s process.
(ii) The two-tier test is that, firstly, those bodies or entities of government
charged with a duty and/or responsibility of providing an important and critical service such as provision of water, electricity, public housing, telecommunications, public transport, public banking, public health etc. are categorized as “State Entities “and secondly, those bodies or entities that receives government budgets or grants through annual budgetary appropriation to provide these basic essential services to the public are considered as “Governmental Bodies” and falls within the meaning of section 2 of the CBASA.
(iii) MVIL is an entity created for public purposes that provides compulsory
third-party insurance to all motor vehicle owners and provides cover to owners and drivers against legal liability claims made by third –parties for bodily injury or death arising out of motor vehicle accidents.
(iv) I find that the purpose for which MVIL was established is one that falls
into the category of services that traditionally were the function of the welfare states government.
(v) MVIL is a State entity for purposes of sections 2, 5 13 and 15 of the
CBASA and is therefore, exempted from garnishee proceedings and other enforcement proceedings.
(vi) Application to dismiss the garnishee proceedings is granted.
Case Cited:
Rosemary Gabriel v MVIL [2017] PGNC 122
PNG Power v Ian Augerea [2013] PGSC 53
Kendo Limited v Niugini Builders Supplies limited [2014] N5661
Kedmec Auto Repairs Ltd v PNG Power Ltd (2008) N7930
Reservation Pursuant to Section 15 of the Supreme Court Act (2001) SC672; SCR No 1 of 1988
Public Curator v Konz Kara [2014] SC 1420
Sengus Investment Ltd v National Broadcasting Corporation [2010] PGNC 14
Legislation
Constitution
Claims By and Against The State Act (CBASA)
Motor Vehicles (Third Party Insurance) Act Chap. No. 285
National Court Rules
Counsel:
Mr S Tedor, for the Plaintiff (Judgment Creditor)
Ms A Inia, for the Defendant (Judgment Debtor)
DECISION
05th November, 2019
1. NUMAPO AJ: The Defendant/Judgment Debtor (Defendant) in a Notice of Motion filed on the 14th March 2019 moved for the dismissal of the garnishee proceedings for disclosing no reasonable cause of action and being frivolous and vexatious pursuant to Order 12 Rule 40 (1) (a) & (b) of the National Court Rules (NCR).
2. On the 15th February 2019, the Plaintiff/Judgment Creditor (Plaintiff) obtained Leave to issue a Garnishee Notice accompanied by an Order Nisi against the Bank South Pacific Limited, Port Moresby Branch as the banker for the Defendant. The Garnishee Notice was duly granted. It was made returnable on the 12th March 2019.
3. Upon service of the Garnishee Notice on the Garnishee (Bank South Pacific) and Defendant, the parties responded accordingly. The Garnishee took no issue with the Garnishee Notice and advised that it will comply with the Notice upon receipt of the Order Absolute if and when it is made.
4. The Defendant on the other hand took issue with the Garnishee Notice and challenged the proceedings under which it was granted. By a Notice of Motion filed on the 14th March 2019, the Defendant sought to dismiss the garnishee proceedings, amongst other things.
5. The matter came before me on the 19th March 2019 to deal with the Notice of Motion filed by the Defendant to dismiss the Garnishee Notice pursuant to Order 12 Rule 40 (1) (a) (b). Parties were directed to file supplementary submissions including the relevant case authorities supporting their respective arguments on two issues; firstly, the competency or otherwise of the Defendant’s Notice of Motion to dismiss the garnishee proceedings on the basis of which Order Nisi and Garnishee Notice were taken out given that they were obtained ex parte, and secondly; whether or not the garnishee proceedings should be dismissed for disclosing no reasonable cause of action and for being frivolous and vexatious and an abuse of Court’s process pursuant Order 12 Rule 40 (1) (a) & (b) of NCR.
6. The first issue on the competency or otherwise of garnishee proceedings is in essence a preliminary matter whilst the second issue relates to the substantive matter which is the garnishee proceedings itself against the Defendant/Judgment Debtor. I will address the two issues separately for purposes of clarity.
7. But first, let me give some background to the case by stating the parties’ respective positions as follows:
(i) Defendant/Judgment Debtor’s Case
8. The Defendant claimed that the matter was resolved when it made a nominal payment of K3, 612.00 based on a claim lodged for a third-party insurance into the Plaintiff’s Lawyer’s account in August 2009. However, in July 2017, the Plaintiff’s Lawyer applied for Taxation of Cost at the sum of K21, 565.05. Before the Taxing Master could sign the correct version of the Certificate he was terminated from his job, setting over six (6) years of delay caused by excuses including loss of Court Files and other administrative excuses at no fault of the Defendant. The Defendant disputed the amount of K45, 541.01 put forth by the Plaintiff as interests and costs. It then moved for the dismissal of the garnishee proceedings based on the decision in Rosemary Gabriel v MVIL [2017] PGNC 122 which prohibits garnishee action against the MVIL. Defendant also relied on a similar case of PNG Power v Ian Augerea [2013] PGSC 53, where the Court held that no enforcement proceedings should be taken out against an entity of the State.
(ii) Plaintiff/Judgment Creditor’s Case
9. On the 27th July 2007, the Plaintiff obtained a default judgment against the Defendant for the sum of K3, 000.00 with interest payable thereon at 10% per annum, commencing on the 12th July 2007 with costs to be paid by the Defendant on a Solicitor/Client basis. Thereafter, the Defendant settled the judgment of K3, 000.00 but refused to pay the interest and costs ordered by the Court.
10. On the 18th April 2011, the Plaintiff filed an application for Tax on Bill of Costs. On the 28th April 2011, the costs were taxed and certified at K21, 564.95. However, before the Certificate of Taxation could be signed, the Taxing Officer Mr Michael Ole was terminated. On the 03rd April 2017 Mr Ian Augerea, the Registrar of the National and Supreme Court signed and endorsed the Certificate after six (6) years of the Plaintiff’s relentless effort to have the Certificate signed, given the fact that the Bill has been duly taxed.
11. The Certificate of Taxation was sent to the Defendant for payment on the 03rd April 2017. No response was received from the Defendant. This led to the Notice of Motion filed on the 09th June 2017 for conversion of the Certificate of Taxation of the 28th April 2011, into a formal Judgment.
12. On the strength of the Notice of Motion of the 09th June 2017, on the 07th September 2018 a default judgment was entered against the Defendant for the sum of K21, 564.94 with costs thereby formally converting the certified costs of the 28th April 2011 into a formal court judgment. On the 27th September 2018 the Defendants lawyers in Mount Hagen was served with the Court Order of the 07th September 2018 accompanied by a request for settlement.
13. By a Notice of Motion filed on the 29th November 2018, the Plaintiff sought Leave of Court to Issue a Garnishee Notice against the Bank South Pacific Limited, Port Moresby Branch. The Court granted leave on the 15th February 2019 to issue the Garnishee Notice to that effect along with an Order Nisi of the same date. The Garnishee Notice was made returnable. Thereafter on the 25th February 2019 the Garnishee Notice and the Order Nisi were served via email on the Granishee - Bank South Pacific, Port Moresby Branch.
14. The Garnishee undertook to pay upon receipt of the Order Absolute if made, whilst the Defendant filed a Notice of Motion on the 14th March 2019, against the Garnishee Notice seeking dismissal of the Garnishee Notice, hence this present proceedings.
15. I directed Counsels to firstly address the Court on the competency or otherwise of Notice of Motion itself as a preliminary matter before the Court proceeds on to deal with the substantive application on whether or not the garnishee proceedings against the Defendant should be dismissed.
16. Plaintiff submitted that the Notice of Motion filed by the Defendant pursuant to Order 12 Rule 40 (1) is misconceived and incompetent and amounts to an abuse of Court’s process and is frivolous and vexatious and should therefore, be refused. The crux of the Plaintiff’s argument is that the Defendant filed and moved the Notice of Motion without first setting aside the Garnishee Notice and Order Nisi, two orders which were granted ex parte to the Plaintiff on the 15th February 2019.
17. The relevant rules is Order 12 Rule 8 (3) of the NCR which says that:
“(3) The Court may, on terms, set aside or vary an order –
(a) Where the order has been made in the absence of a party, whether or not the absent party is in default of giving a notice of intention to defend or otherwise in default, and whether or not the absent party had notice of motion for the order; or
(b) Where notice of motion for the setting aside or variation filed before entry of order.”
18. Counsel for the Plaintiff Mr Tedor argued that the Garnishee Order and the Order Nisi that the Plaintiff obtained are ex parte orders that falls within the scope of Order 12 Rule 8 (3), hence should be subject to a treatment they are entitled to under the set-aside requirements of Order 12 Rule 8. The Defendant’s action in filing the Notice of Motion without first setting aside the Garnishee Notice and the Order Nisi is improper and an abuse of Court’s process. Mr Tedor referred to the case of Kendo Limited v Niugini Builders and Supplies [2014] N5661. The case sets out two propositions; firstly, that an Order Nisi and Garnishee Notice must first be set-aside before any issues arising out of the garnishee proceedings can be challenged. Secondly, that the right under Order 13 Rules 62 and 63 to challenge an Order Nisi and Garnishee Notice lies with the Garnishee, in this case Bank South Pacific Limited, not with the Defendant. Defendant simply does not have the right to challenge it. The decision was adopted in the recent case I did on Kedmec Auto Repairs Ltd v PNG Power Ltd (2008) N7930 (12th July 2019).
19. Counsel for the Defendant Ms Inia did not address the issue on the competency of its Notice of Motion nor did she file any submissions to that effect stating the grounds why the motion was moved under Order 12 Rule 40 (1) without first setting aside the ex parte orders of the 15th February 2019 under Order 12 Rule 8 given the ex parte nature of the orders it sought to dismiss. Where an ex parte order exists, the aggrieved party must first set aside that order pursuant to Order 12 Rule 8 before it proceeds further to determine the substantive matter.
20. In the present case, the Garnishee Notice and Order Nisi were obtained ex parte, and therefore, it must first be set-aside before any issues arising out of the garnishee proceedings can be challenged.
21. Based on the principles set out in Kendo Limited (supra) and Kedmec Auto Repairs Ltd (supra), I rule that the Notice of Motion filed by the Defendant to dismiss the garnishee proceedings without first setting aside the ex parte orders of the 15th February 2019 is misconceived, incompetent and an abuse of the Court’s process.
22. Defendant in a brief submission asked the Court to adopt the decision in Rose Gabriel (supra) and dismiss the garnishee proceedings. It argued that the Motor Vehicle Insurance Limited (MVIL) is a “State Entity” and as such it is protected under section 13 of the Claims By and Against The State Act (CBASA) which prohibits garnishee proceedings against State entities.
23. Section 13 of the Claims By and Against The State Act:
NO EXECUTION AGAINST THE STATE PROPERTY OR REVENUE
(1) “In any suit, execution or attachment, or process in the nature of execution or attachment, may not be issued against the property or revenue of the State.
(2) Where a judgment is given against the State, the registrar, clerk or other proper officer of the court by which the judgment is given shall issue a certificate in Form 1 to the party in whose favour the judgment is given.”
24. Schedule 1.2 of the Constitution defines the phrase “government body” to mean:-
(a) The National Government;
(b) A provincial government;
(c) An arm, department, agency or instrumentalities of the National Government or a provincial government; or
(d) A body set up by statute or administrative act for government or official purposes.”
25. The issue is: ‘Whether or not the Motor Vehicle Insurance Limited (MVIL) is an entity of government for purposes of sections 2, 5, 13 and 15 of the CBASA and therefore, is protected against garnishee and other enforcement proceedings?’
26. If the answer is in the affirmative then garnishee proceedings is not available to the Plaintiff/Judgment Creditor and it should therefore, consider other options to recover the judgment debt. If however, I find that the Defendant/Judgment Debtor is not a state entity and therefore, not protected under section 13 of CBASA, then the Plaintiff will proceed with its garnishee proceedings against the Defendant (MVIL).
27. The Supreme Court decision in Reservation Pursuant to Section 15 of the Supreme Court Act (2001) SC672 (Amet CJ, Los J, Salika J, and Sakora J) SCR No 1 of 1988 where the Court in determining whether or not an entity such as the provincial government is regarded as a “governmental body” applied a six (6) criteria test which was later approved and adopted by the Supreme Court in PNG Power Limited v Ian Augerea [2013] PGSC 53. It was held that, for an entity such as the provincial government to be regarded as a “governmental body” it must fulfill the following criteria:
(i) They are established by the Constitution;
(ii) They are part of the three tier structure of government enshrined under the Constitution;
(iii) They are constituted by elected representatives;
(iv) The national government exercises some control over the provincial governments in political, administrative and financial matters;
(v) They fall within the definition of “governmental body” contained in the Constitution; and
(vi) Judgment debts are recoverable from monies in the budgetary process of provincial governments.
28. The Supreme Court divided the six criteria test into two parts which I shall refer to as a two-tier tests. The first-tier comprised the first three factors that relates to the national government, provincial government and local-level government comprised of elected representatives whilst the second-tier comprised of the second three factors that relates to statutory entities managed by appointed board members and/or committees with the use of the term “the State” for the purposes of sections 2, 5, 13 and 15 of the CBASA. In distinguishing the two, the Supreme Court went on to say at paragraph 62:
“The very nature of most governmental bodies or entities other than the national government, provincial government, and local level governments established by the State or a provincial government would not easily meet all of the above factors, especially the first three factors. Yet they would be charged with a duty and responsibility of providing an important and critical services such the provision of water, electricity, public housing, public transport, public health, telecommunications ...........and the second three factors applies to government corporate-like entities.”
29. The test was later endorsed by the Supreme Court in Public Curator v Konze Kara [2014] SC 1420, when it held that:
“We respectfully adopt and endorse the further test propounded by the Supreme Court in PNG Power Limited and the reasons behind the formulation of the test. Applying that test, we find that the Public Curator of Papua New Guinea which is a statutory corporation with perpetual succession pursuant to section 2 (2) (a) (b) of the Public Curator Act and consequently capable of suing and being sued in his corporate name and style is deemed the “State” within the meaning of the CBASA more specifically for the purposes of section 2.”
30. The two-tier test is that, firstly, those bodies or entities charged with a duty and/or responsibility of providing an important and critical service such as provision of water, electricity, public housing, telecommunications, public transport, public banking, public health, public educational services etc. and secondly, those bodies or entities that receives government budgets or grants through the government’s annual budgetary process to provide these services to the public are considered as “Governmental Bodies” or “State Entities” and falls within the meaning of section 2 of the CBASA.
31. The Motor Vehicle Insurance (PNG) Trust was established under the Motor Vehicle (Third Party Insurance) Act Chapter No. 285 (“The Act”). The Motor Vehicle Insurance (PNG) Trust has now been corporatized as a successor company to the Motor Vehicles Insurance (PNG) Trust and operates as a company known “Motor Vehicles Insurance Ltd” (“the Company”) the shares of which is wholly owned by the State pursuant to section 66 of the Act.
32. A “Premium – Fixing Advisory Committee” is established pursuant to section 26 of the Act which consist of a Commissioner and a representative of the successor company appointed by the Minister and two other persons also appointed by the Minister. A Chairman is appointed by the Minister and meetings of the Committee is held annually in accordance with section 27 of the Act. The Committee reports to the Minister on the levels of premiums charged for third-party insurance. In addition to third-party insurance, MVIL also collects fees for vehicle registration, driver’s licenses and permits, and vehicle safety stickers. Monies collected are invested in securities or classes of securities approved by the Minister or in a manner authorized by section 57 of the Public Finances (Management) Act 1995. In addition, section 34 provides for monies paid into the Fund appropriated by Act – it refers to budgetary grants from the State to the Fund.
33. Sections 41 to 44 of the Act provides for MVIL to operate its own bank accounts, taking advances, borrow money and repay loan and keep its own accounts and records. MVIL can sue and be sued under its own style or name.
34. Above is essentially the corporate structure of MVIL and its purpose set out in its enabling legislation. The way MVIL carries on business and the type of services it provides will have to be carefully examined to determine if it is one of those entities or bodies of government that is traditionally charged with the duties and responsibility of providing important and critical services to the public such as the provision of electricity, water supply, public health and public housing etc. and therefore, is part of the State and caught and covered by the definition of “governmental bodies” under Schedule 1.2 (1) of the Constitution and consequently, as one of the entities caught by section 225 of the Constitution. In other words, to determine whether MVIL is an entity or body created and established for public purposes, one must look at its corporate structure and the kind or nature of service it provides and whether or not that type of service is one that falls into one of the critical functions traditionally provided by welfare States government.
35. The Supreme Court in PNG Power Ltd (supra) held that:
“.....the determinative test in our view to determine whether an entity is part of the State or not is the nature or kind of service and or duties and responsibilities the entity under consideration has or owes to a particular part of the country or the whole country. If the kind of service or duties and responsibilities the entity has, falls into one of the traditional critical functions and or duties and responsibilities of the State, and that entity is not operating as a private enterprise purely for profit, with all of the features of a private enterprise present, such an entity should easily qualify to be part of the State. Accordingly, we endorse Sawong J’s view in Sengus Investment Ltd v National Broadcasting Corporation [2010] PGNC 14 that it would be necessary to consider, amongst others, ‘the corporate structure and purpose of the organization as set out in the enabling legislation” as well as in the way it carries on its business basically”.
E. IS MVIL EXEMPTED FROM GARNISHEE PROCEEDINGS?
36. MVIL is a State-Owned Enterprise (SOE) and is the sole provider of Compulsory Third-Party Insurance to all vehicle owners in PNG. It provides insurance cover to owners and drivers of motor vehicles against legal liability claims made by third parties for bodily injury and/or death arising out of motor vehicle accidents.
37. Defendant argued that MVIL cannot be exempted from garnishee proceedings available to private companies and individuals in that its board is neither elected nor does judgment debts against it are recoverable from monies allocated from budget allocation by the State. MVIL being an incorporated body falls outside of the definition of state entity, hence subject to garnishee proceedings under the National Court Rules like any other private company. Defendant further argued that MVIL is a company incorporated under the Companies Act and therefore, subject to private law. Enforcement proceedings available to private organizations equally applies to MVIL under Order 13 Rule 63 of the National Court Rules.
38. In my respectful view, the Supreme Court decision in PNG Power (supra) has cast the net wide on the definition of an entity of State by stating that:
“.......all entities established by the National Government or a provincial government or a local level government, with some form of government control and ownership and funding is a governmental body. To this, we add the purpose for which the entity has been established. If it is for an important public purpose, the kind that traditionally were the function of welfare states governments as in the case of telecommunications, electricity, public transport, water and sanitation, health and education, this would render the entity a government body. This would be the case even if the entity appears to have private corporate status and structure.” (emphasis mine).
39. In my considered opinion, the decision clearly sets out three important criteria, amongst others, that determines if an entity is a State entity for purposes of sections 2, 5, 13 and 15 of CBASA. These are:
(i) The entity must have some form of government control and ownership,
(ii) The entity must exist for an important public purpose, and
(iii) Even if the entity appears to have private corporate status and structure.
40. A number of National Court decisions were overturned when the Supreme Court held for example; that the National Housing Corporation (NHC) existed for important public purpose in that it provides cheap and affordable public housing, See: Naomi Vicky John v NHC (2005) N2770; and the PNG Public Curator existed for an important public purpose in that it carries out a critical function namely, the administration of intestate deceased estates, which is traditionally welfare State government’s functions or service; see: Konze Kara v Public Curator of PNG (supra).
41. The Supreme Court however, upheld other decisions of the National Court such as; Okam Sakarius v Chris Tep (2003) N2355 when it held that the Cocoa and Coconut Extension Agency as part of the State and in Sakaruma Investment Ltd v Peter Merkendi (2004) N2629 where the Court found East Sepik Provincial Liquor Licensing Board as part of the State, so as in the case of Sengus Investment Ltd v National Broadcasting Corporation (NBC) (supra), when it held that NBC existed for an important public purpose and that is to disseminate information and news to the public.
42. The decisions in these cases clearly showed that, each of the entities had to deal with a specific National Government agenda, program, duty or service for the benefit of the public. They are not being established purely for the purposes for making profit for the government.
43. Applying the criteria set out in Reservation Pursuant to Section 15 (supra) and PNG Power (supra), I am satisfied that MVIL is owned by the government who is the sole shareholder and is established for an important public purpose and that is to provide third-party compulsory insurance cover for drivers and owners of vehicles for injuries and deaths arising out from motor vehicle accidents. Although, MVIL is a corporatized body incorporated under the Companies Act, it does not operate as a private enterprise and there is no evidence to suggest it was established purely for purposes of making profit. It’s enabling Act does not make any specific reference to revenue raising or paying of dividends from declared profit to the State. Hence, in my view, MVIL falls into the third category stated above.
44. I find therefore, that the purpose for which MVIL was established is one that falls into the category of services that is traditionally were the function of the welfare States government that is responsible for providing basic essential services that is important and critical to the public at the minimal and affordable costs. MVIL, for all intended purposes, is a ‘State entity’ and thus caught and covered by the definition of “governmental bodies” under Schedule 1.2 (1) of the Constitution. Consequently, a government body for purposes of section 225 of the Constitution.
45. My answer to the question therefore, is: MVIL is a State entity for all intended purposes under sections 2, 5, 13 and 15 of the CBASA and therefore, is exempted from garnishee proceedings and other enforcement proceedings.
46. Application to dismiss the garnishee proceedings is granted.
Costs be in the cause.
Orders Accordingly
Sialis Tedor & Associates : Lawyers for the Plaintiff (Judgment Creditor)
Manase & Co Lawyers : Lawyers for the Defendant (Judgment Debtor)
PacLII:
Copyright Policy
|
Disclaimers
|
Privacy Policy
|
Feedback
URL: http://www.paclii.org/pg/cases/PGNC/2019/408.html