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National Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
OS 553 of 2000
ALOYSIUS EVIAISA DIRECTOR – PUBLIC OFFICER
SUPERANNUATION FUND BOARD
- Plaintiff -
SIR MEKERE MORAUTA PRIME MINISTER & MINISTER FOR
FINANCE & TREASURY
- First Defendant -
PUBLIC OFFICERS SUPERANNUATION FUND
- Second Defendant -
CES IEWAGO
- Third Defendant -
WAIGANI : Kandakasi J
2001 : 28th July & 21st August
21st September
9th November
PRACTICE & PROCEDURE – Cross-examination of witnesses in judicial review cases – Generally not permissible because facts usually not in contention and because of risk of Court becoming judge of primary facts – Court has power to allow for cross-examine of witness where facts are in contest with warning of the risks – Failing to cross-examine witnesses and failing to call evidence in rebuttal – Effect of – Court entitled to accept and act on unrebutted evidence
ADMINISTRATIVE LAW – Judicial Review – Review of decision to recommend appointment of managing director contrary to intent, mean and or purpose of statute – Decision secured through threat, duress and intimidation – Decision in conflict with earlier decision or recommendation not yet acted upon – Subsequent decision null and void – National Goals and Directive Principles Goal No. 2 – Constitution ss. 25 and 55.
Employment of heads of Statutory Corporations or bodies - Need to give equal opportunity to all citizens – Boards of such bodies to act independently and are not subject to control or direction of the government of the day or anybody else – National Goals and Directive Principles Goal 2 - Constitution ss.25 and 55 - Public Officers Superannuation Fund Act 1990 s. 12.
Cases Cited:
Sir Julius Chan v. The Ombudsman Commission (unreported judgement) N1738.
Peter Ipu Peipul v. Sheehan J. Mr. Ori Karapo & Iova Geita (Leadership Tribunal and Ors) (unreported judgement) N2096.
Aloysius Eviaisa and Anor v. Roy Yaki & Ors (unreported judgement) N1642.
Niggints v. Tokam [1993] PNGLR 66.
Kelly Yawip v. Commissioner of Police & The State [1995] PNGLR 93
Counsel:
Mr. S. Ketan for the Plaintiff
Mr. C. Coady for the Defendant
9th November 2001
KANDAKASI, J. This is a review of a decision of the first defendant in his capacity as Minister for Finance and Treasury ("the Prime Minister") to appoint the third defendant ("Mr. Iewago") as managing director of the second defendant ("POSF") on the recommendation of the Board of the POSF ("the Board"). Leave was originally denied by the National Court and on appeal, the Supreme Court granted leave for the decision in question to be reviewed.
Following the Supreme Court decision, the matter returned to the National Court initially before the Chief Justice on the 18th of May 2001, then on a number occasions before me with the final one on the 25th of May 2001, when the matter was adjourned for various reasons. The principle reason for the adjournment was for the defendants to file and serve their affidavits in reply to those filed for and by the plaintiff. The matter returned before me for hearing on the 20th July 2001, but was adjourned again because the defendants were not able to secure the appearance of the Chairman of the Board, Mr. Koiari Tarata on medical grounds. Thereafter the matter was yet again adjourned on numerous occasions and the matter finally came before me on the 21st of August 2001, to complete the hearing. At that time, Mr. Tarata was still not able to attend. The defendants therefore choose not to insist on calling him and hence an exclusion from the Court file and the Court’s consideration, Mr. Tarata’s affidavits sworn on 1st of June 2001 and an earlier one of 31st May 2001. They called in his place, Mr. Soiat Williams, a member of the Board.
The plaintiff’s argument is that, the Prime Minister through the Chairman of the Board Mr. Koiari Tarata, directed and forced the Board to recommend the appointment of Mr. Iewago as managing director. He claims there was intimidation, threat and duress involved in the process. He also claims and argues that the correct procedures for the appointment of a managing director, such as advertisement of the position and an independent and impartial consideration of a number of candidates for the position by the Board and then make a recommendation to the responsible minister a suitably qualified candidate for appointment, were not followed. The appointment of Mr. Iewago is therefore null and void and he is arguing for a declaration to that effect. Also he is arguing for a declaration that Mr. John Ban who was previously recommended by the Board to be appointed to the position of the managing director, be appointed.
On the other hand, the defendants argue that the relevant meeting of the Board which recommended Mr. Iewago’s appointment was conducted democratically with no threat, duress and intimidation. The recommendation was therefore, properly arrived at in accordance with the relevant provisions of the Public Officers Superannuation Fund Act of 1990 ("the POSF Act"). Accordingly, the recommendation and the eventual appointment by the Prime Minister was validly made. The resolution of the Board to appoint Mr. Iewago superseded the earlier recommendation to appoint Mr. John Ban and as such, that recommendation no longer exists. Ultimately, therefore, the defendants argue for a dismissal of the proceedings with costs against Mr. Eviaisa.
These arguments present a number of questions to be determined. These are as follows:
The evidence for Mr. Eviaisa is in the affidavits of himself sworn on the 18th and 21st of September 2000, Mr. Madoka Suari sworn on the 19th September 2000 and Mr. Michael Malabag sworn on the 10th of May 2001. Paragraphs 6 and 7 of Mr. Malabag and paragraphs 4 and 5 of Mr. Suari were struck out so those paragraphs do not form part of the evidence for the plaintiff. As such, I will not take those into account for the purpose of this judgement.
For the defendants are two affidavits by Ms. Nora Lavett sworn on the 1st of June 2001, and her oral evidence under cross-examination. There is also the affidavit of Mr. Soiat Williams, sworn on the 21st of August 2001, together with his oral evidence.
The relevant facts from these evidence are these. On the 12th of April 2001, the Board met at the Park Royal Hotel Board room and unanimously resolved to recommend to the Prime Minister that, Mr. John Ban, the then acting managing director be appointed to the position of managing director. There is no dispute that, that recommendation was communicated to the Prime Minister though, the date of the communication is not clear. There is no evidence of the Prime Minister acting on the recommendation, either by rejecting it or by appointing Mr. Ban per the recommendation.
Meanwhile, on the 15th of August 2000, the Board Secretary issued a notice to all the board members of a special Board meeting to be held at the request of the Chairman, Mr. Tarata on the 18th of August 2000. That meeting proceeded on the 18th of August 2000, and amongst others it recommended that Mr. Iewago be appointed as managing director. The recommendation was communicated, on the 21st of August 2000, by the Chairman, Mr. Tarata to the Prime Minister. Mr. Eviaisa did not receive notice of the special meeting so he did not attend. He challenged the validity of that meeting on the basis that the requirements for notice of seven days minimum under s.10 (3) of the POSF Act were not met. He also expressed concern over the manner and way in which the recommendation in favour of Mr. Iewago was arrived at. There was no advertisement for the position of the managing director. But the board treated Mr. Iewago as having applied for the position through the Chairman who provided the Board, Mr. Iewago’s curriculum vitae (see: the oral evidence of Ms. Lavett under cross examination and paragraph 2 of her affidavit of the 1st of June 2001)
The protest of Mr. Eviaisa resulted in a further special Board meeting. This time there was due compliance of the notice requirements under s.10 (3) of the POSF Act. It was convene on the 4th of September 2000. At that meeting Mr. Eviaisa (paragraph 2 of his affidavit) insisted upon his concern over the Prime Minister not acting on the recommendation for Mr. Ban to be appointed managing director and urged the Board to reaffirm its decision since it would not be proper to make another recommendation. He made a formal submission to that effect to the Board. A copy of that is annexure ‘E’ to his affidavit of the 18th of September 2000. He says the Board considered the submissions he made but it did not deliberate on what it should do about the recommendation in favour of Mr. John Ban. Without deciding that issue, the Board resolved by a margin of 2 to 3 to recommend the appointment of Mr. Iewago as managing director.
At paragraph 14 of his affidavit, Mr. Eviaisa deposes to the order of events leading to that vote in the following terms:
"(a) The meeting was opened by the Chairman at about 10:00 am. In attendance were Messrs Koiari Tarata, Soiat Williams, Michael Malabag, Madado Suari, Mr. John Ban, the Board Secretary, Ms. Norah Lavett, Mr. Leon Buskins and myself.
(b) After the usual greetings, the Chairman introduced a motion to accept the meetings of the last board meeting held on the 18th August, 2000. I was not present at the meeting on the 18th August 2000 because of the fact that the required seven (7) days notice was not given. Consequently, I raised objections in respect of the resolutions passed on the 18th August 2000 on the basis that the meeting was null and void. Following my objections the Chairman proposed that the matters discussed on the 18th August, 2000 be reviewed and resolutions passed therein be rectified. The Members of the Board agreed to this.
(c) The Chairman then introduced the agenda of the appointment of the Managing Director and asked the Management or staff to leave the venue. The Management team then left the venue of the meeting for the Board to discussion the issue of appointment of the Managing Director’s post.
(d) The Chairman then said that due to the fact that the meeting of the 18th August, 2000 was convened without complying with the POSF Act the current Special Board Meeting of 4th September, 2000 was convened to discuss the appointment of the Managing Director.
(e) I then read the submissions I prepared and referred to herein as Annexure ‘E’ at paragraph 12 below to the Board Members and in the process urged them to reaffirm their decision to recommend Mr. John Ban to be appointed as the Managing Director on the 12th April 2000. At the mention of John Ban’s name, the Chairman quickly interjected by saying that John Ban cannot be appointed because of the controversy surrounding the Cairns Conservatory Purchase and the Ombudsman Commission’s conclusions that he had acted wrongly in certain instances giving rise to the purchase.
(f) I then emphasized on the requirements of s.12 of the POSF Act in respect of the Board’s duty to appoint a suitably qualified person to be the Managing Director. I reminded the Board that the decision of 12th April 2000 to appoint Mr. John Ban was still valid and that there was no impropriety on the part of John Ban in respect of his role in the Cairns Conservatory Purchase. I then produced to the Board a copy of a Legal Opinion by Blake Dawson Waldron Lawyers supporting my contention that Mr. John Ban did not do any thing wrong in the Cairns Conservatory Deal. Following this, I recommended that the resolution of the Board on the 12th April, 2000 to recommend for John Ban’s appointment be adopted.
(g) Before I could move a motion to adopt the resolution of the Board on the 12th April 2000 to recommend for John Ban’s appointment, the Chairman quickly intervened and said "The Government’s position and my position is that John Ban will not be appointed to the position of Managing Director. Ces Iewago will be appointed to the post." The Chairman went on to say "John Ban has been found to have committed some wrong in the Cairns Conservatory Deal by the Ombudsman Commission and therefore he cannot be considered for any appointment.
(h) At this juncture, I raised my voice and said that each Board member has to be given the opportunity to decide as to who is the suitable candidate for the position and it is not up to the Government of the day nor he Chairman to dictate to the Board as to who is to be appointed. The Chairman then threatened Mr. Malabag and myself saying "you and Mr. Malabag have also been implicated in the Ombudsman Commission Report into the Cairns Conservatory Deal and despite moves to force you out of the Board, I have been doing my best to retain you." I then told the Chairman that his comments were unfair because they derived from the Ombudsman Commission Report alone.
(i) I was again about to move a motion to adopt the resolution of the Board on the 12th April, 2000 to recommend for Mr. Ban’s appointment when Mr. Soiat Williams intervened and suggested for us to request for a second legal opinion in respect of John Ban’s role in the Cairns Conservatory Deal. However, the Chairman said that they cannot ever clear John Ban’s name over the Cairns Conservatory Deal and therefore there is nothing else to do but to appoint Ces Iewago. At this stage, I was very upset and I got out of my seat, stood up and announced that since I cannot be afforded the complete liberty to choose as to whom to appoint, I might as well leave. However, Mr. Soiat Williams insisted that I should stay and deliberate on the issues before the Board. I then sat down again and insisted that if here is to be a nominee, then a recommendation must be made on merits.
(j) At this stage, a pool of names including Richard Kassman, Isaac Lupari, Pila Niningi, Leon Buskins, John Ban and Ces Iewago was introduced. Mr. Williams objected to Mr. Lupari’s name on the basis that he did not come from the Board but from the Minister for Public Service. The Chairman said that they have got the curriculum vitae for the nominees and he requested that we consider the names before us for possible appointment. I then asked that the meeting be adjourned to enable us to study the CV’s and references for the candidates for the post but the Chairman refused to adjourned the meeting, saying "the meeting will proceed and that a decision must be made to appoint Ces Iewago as the Managing Director of the POSF Board."
(k) I then suggested that the names be short-listed and screened through the elimination system of voting to arrive at a recommendation. However, Mr. Williams complained that the process of elimination would take too long to complete. At this juncture, the Chairman reiterated again that John Ban cannot be appointed to the post. By now it was 12:30m, and thus the Chairman suspended the meeting to enable us to have lunch. He then left the room with Mr. Williams and whilst outside, the Chairman sent for Mr. Malabag and so Mr. Malabag left to follow them.
(l) The meeting was recommenced at 12.45 pm. In his opening words the Chairman again emphasized that Ces Iewago must be appointed as the Managing Director since he is the nominee of the Government of the day and that this meeting cannot be deferred. After hearing this, I again asked for an adjournment. The Chairman however, insisted that we go through the list to recommend the nominee for appointment.
(m) I again suggest that John Ban be appointed, however, the Chairman raised his voice and said "I do not want to hear John Ban’s name." Mr. Malabag then suggested that Mr. Richard Kassman’s name be deleted because he has been appointed to another public post. Consequently, Mr. Kassman’s name was deleted from the list. The Chairman then asked me to deleted Pila Niningi’s name because he has been appointed as Board Chairman of Telikom. We were then left with the names of John Ban, Leon Buskins and Ces Iewago.
(n) The Chairman then said "I do not want to repeat myself. I do not want John Ban. The Government has decided." I then insisted that John Ban be appointed however, the Chairman demanded that John Ban’s name be deleted from the list. Having heard what the Chairman said I requested that each one of the members of the Board take a vote on the names to eliminate those which were not suitable instead of acting upon the directions of the Chairman alone. At this point in time the Chairman again insisted that John Ban’s name be deleted from the list. Mr. Ban’s name was deleted upon the unilateral persistence and demands by the Chairman.
(o) We then proceeded to conduct a secret ballot on the short-listed names and it so happened that Ces Iewago was recommended in a vote of 3-2 in his favour.
Further Mr. Eviaisa says that Mr. Iewago was not an employee of the POSF at any time. He is a political ally of the Prime Minister and was one of the Senior Managers of the Resources and Investment Finance Limited, a subsidiary of PNGBC which has been wound up. Consequently, he says he believes that Mr. Iewago is not a suitably qualified candidate for the managing director’s post as is required under s.12 (1) of the POSF Act. Mr. Ban on the other hand, he says has been an employee of the POSF most of his working life and he is a prudent and efficient manager. This has been demonstrated in the posting of increased profitability since Mr. Ban took office as acting managing director on the 24th of September 1999. In order to maintain sustainability within the POSF and the Board, it is imperative that a person who has been employed with the POSF be appointed to the managing director’s post. This would also help restore and maintain staff moral and a good working relationship between the Board and the management. That cannot be achieved by appointing a person from outside the POSF which would cause instability within the organization as was shown in the previous appointments. This he says, was one of the major reasons why other super funds such as the NPF have made a lot of loss. He goes on to say that, to effectively serve the POSF and the Board, the management must be free from any political interference. The plaintiff is supported on his evidence by Messrs Suari and Malabag’s affidavits.
As already noted, the Chairman of the Board, Mr. Tarata, failed to present himself for cross-examination despite numerous adjournments for him to do that. Apart from at least one medical report covering one of the adjournments, there was no further medical reports or any other evidence explaining his unavailability. He is the man accused of breaching the requirements of s.10 (3) of the POSF Act in relation to notice requirements before conducting the meeting of the 18th of August 2000, which amongst others, recommended Mr. Iewago to be appointed managing director. He is the man also accused of conducting the subsequent meeting of the 4th of September 2000, with the use of duress, threat and intimidation following successful objections to the earlier meeting by Mr. Eviaisa. Further he is the man that has filed two affidavits sworn respectively on the 20th and 31st of May, in reply to Mr. Eviaisa’s affidavits.
In the end the defendants choose not to rely on the affidavits of Mr. Tarata and called Mr. Soiat Williams in his place. Mr. Williams is the National Government’s representative on the Board. Neither Mr. Williams nor Ms. Lavett were able to deny or admit the specific matters claimed against Mr. Tarata by Mr. Eviaisa as to the conduct of the meeting by Mr. Tarata on the 4th of September 2000. They only said, as far as they could recall, the meeting was conducted democratically and there was no force, threat or duress. Importantly however, Mr. Williams said, whether or not there was threat, intimidation or duress, was a matter each Board member had to assess based on the member’s perception. He said he was personally not threatened or put under any duress or intimidation. This has to be contrasted with what the plaintiff says with the support of Mr. Malabag and Mr. Suari.
The Secretary to the Board Ms. Norah Lavett says she initially took a tape recording of what was happening at the Board meeting. Then based on that, she drafted the minutes. The draft was first given to the Chairman who corrected it and was finalised after that. A copy of the Board meeting is annexed to Ms. Lavett’s affidavit sworn on the 1st of June 2000 as its last annexure. She claims the tape recording was destroyed by reason of it being reused for other purposes. But given the background leading to that meeting and the legal challenge on that, which was initiated by filing these proceedings on the 19th of September 2000, I note that no care was taken to preserve that tape for evidence of what actually transpired at the Board meeting, which is critical to a determination of this challenge.
As the plaintiff and his witnesses were ready, willing and available to be cross-examined, I find no reason not to accept their evidence as opposed to the evidence called by the defence. Indeed, counsel for the defendants argued as a preliminary point, for a ruling that all witnesses be not cross-examined. In so doing, he relied on the judgement in Sir Julius Chan v. The Ombudsman Commission (unreported 15/07/98) N1738 which cited Lord Diplock in O’Reilly v. Mackman [1983] UKHL 1; [1982] 3 All ER 1124 saying:
"... it will only be on rare occasions the interests of justice will require that leave be given for cross-examination of deponents on their affidavits in applications for judicial review. This is because of the nature of the issues that are normally raised on judicial review. The facts can seldom be a matter of relevant dispute on an application for judicial review and to allow cross examination presents the court with a temptation not always easily resisted to substitute its own review of the facts for the decision making body on whom the exclusive jurisdiction to determine the facts have been conferred by Parliament".
I overruled that objection on the basis that the facts in this case were seriously in dispute and the Court has to decide which version of the facts to accept to ultimately determine the outcome of the case. Besides, I ruled that, there was no blanket prohibition on the need to cross-examine witnesses. As such, the Court was within its discretion to determine in appropriate cases where it considers appropriate to order cross-examination of witnesses. Of course, a Judge ordering cross-examination has to warn him or herself of the risks warned of by Lord Diplock, and I did remind myself of such risks, when I ordered as I did.
Mr. Eviaisa’s at the meeting of the Board of the 4th of September 2000, accuses Mr. Tarata of some misconduct as Chairman of the Board initially that was on medical grounds. As already noted, Mr. Tarata filed affidavits in reply but was not available to be cross-examined despite a number of adjournments to allow for that situation to improve. Initially that was on medical grounds. No further medical report was furnished to show whether his medical condition either worsened or did not improve. By reason of that, he was not available to be cross-examined on his affidavit. Counsel therefore made a choice not to insist upon any reliance on Mr. Tarata’s affidavits and instead called Mr. Williams.
Mr. Williams was not clear as to his recollection of what transpired at the relevant meeting. He required the assistance of the minutes to refresh his mind and obviously was in no position to recall what exactly happened. He also did not comment on any of the claims levelled against Mr. Tarata especially in terms of the words said and exchanged between Mr. Eviaisa and Mr. Tarata. He did however state that, whether a Board member was intimidated or put under duress, or pressure or was threatened, was a matter entirely up to individual Board member and as such he was not able to deny or refute Mr. Eviaisa’s claims. Likewise, Ms. Lavett was not able to address any of the specific allegations raised against Mr. Tarata and the Board by Mr. Eviaisa and his witnesses.
As I mention before, given the background leading to the special Board meeting of the 4th of September 2000, and the reaction to it by Mr. Eviaisa and ultimately these proceedings, the alleged tape recording of the proceedings of the Board would have been preserved and made available for this Court to consider but that did not happen. I consider it also important to note that the earlier meeting which was in breach of section 10(3) of the POSF Act, dealt with and resolved amongst others, to recommend Mr. Iewago to be appointed to the managing director’s post. However on the plaintiff’s strong objection with the support of a legal opinion from Blake Dawson Waldron Lawyers, the meeting of the 18th of August 2000, was considered null and void and the special Board meeting of the 4th of September 2000, was convened purposely to reconsider the same resolutions that were passed at that invalid meeting. Further, it is also important to note that, the communication of the Board’s recommendation for the appointment of Mr. Iewago initially on the 18th of August 2000, and subsequently on the 4th of September 2000, was almost immediate and the appointment took place without delay as well. This is to be contrasted with the earlier recommendation of the 12th of April 2000, which appears not to have been actioned one way or another by the Prime Minister. Furthermore, I note too that, there is no reference in the minutes of the meeting of the 4th of September 2000, of the earlier recommendation of the Board in favour of Mr. Ban. This was despite Mr. Eviaisa’s insistence upon that recommendation being given effect to.
Still further, as noted earlier, there was no advertisement for interested persons to apply for the position of the managing director of the POSF for the Board’s consideration before recommending a suitably qualified person to be appointed by the Minister responsible in accordance with s.12 (1)(a) of the POSF Act. Instead, candidates were considered on the suggestion, nomination or direction of the Prime Minister or his government through Mr. Tarata, other members of the Board and even a government Minister. Ms. Lavett under cross-examination said this has always been the practice and she does not know why there was no advertisement. She even said, it is not her duty to advertise vacant positions as that is not within her duty statement.
Also under cross-examination, Ms. Lavett said at the meeting of the 18th August 2000, which initially recommended Mr. Iewago to be appointed as managing director was called on Mr. Tarata’s own accord. At that meeting, Mr. Tarata informed the Board that the Minister was reluctant to appoint Mr. Ban because the Ombudsman did not clear him. However the recommendation for Mr. Ban to be appointed to the position of the managing director on the 12th of April 2000 was reached even in the light of the Ombudsman Commission Report. Also, there was no formal action on that recommendation by the Prime Minister.
As I have said in a number of cases already, including that of Peter Ipu Peipul v. Sheehan J. Mr. Ori Karapo & Iova Geita (consisting the Leadership Tribunal and Ors.) (Unreported judgement 25/5/01) N2096 (the out come reversed by the Supreme Court) at page 6:
"It is well settled law now that, the purpose of judicial review is not to examine the reasoning of the subordinate authority with a view to substituting it, with the courts own decision. Instead, judicial review is concerned with the decision making process, and not the decision itself. The circumstances under which judicial review may be available are, where the decision making authority lacks, exceeds or abuses it powers, commits an error of law, breaches the principles of natural justice and reaches a decision, which reasonable tribunal could have reached. This position has been made clear in a large number of cases, decided by both this and the Supreme Court. A recent example of that, is the case John Joe Nemembo v. Peter Peipul & The State SC475, a decision of the Supreme Court, delivered on the 21st of December 1994. See also the case of Kekedo v. Burnsphilip [1988-1989] PNGLR 122 per Kapi DCJ at 124."
In the present case, the claim by Mr. Eviaisa is that, the proper meaning, intent and or the purpose of section 12(1)(a) of the POSF Act, have not been complied with in the appointment of Mr. Iewago. Mr. Eviaisa also claims that as a public body and or institution, the Board was required to advertise the position of the managing director to give opportunity to any person who was interested in applying for that position to apply for the Board’s consideration. The argument is that, only through an advertisement, could appropriately qualified persons be given an opportunity to apply. This is apart from ensuring transparency and fairness on the part of the Board in recommending a person to be appointed to the post of the managing director. Mr. Eviaisa further argues that Mr. Iewago was a candidate put to the Board by the Prime Minister or his government through the Chairman Mr. Koiari Tarata who used force, duress, threat and intimidation to secure the Board’s recommendation. In so arguing, Mr. Eviaisa argues that, the true meaning and intent of s.12 (1)(a) of the POSF Act was reversed. The true intent, it is argued, is for the Board to independently consider suitably qualified persons to be appointed to the managing director’s position and not for the government or the Minister of the day responsible for the POSF to cause the Board to appoint a person of their choice and use the Board as a front or just a rubber stamp.
Section 12(1)(a) reads as follows:
"12. Staff of the Board.
The Board shall –
(a) recommend to the Minister a suitably qualified person to be appointed Managing Director of the Fund."
This provision was considered in the case of Aloysius Eviaisa and Anor v. Roy Yaki & Ors (unreported judgement 15/10/97) N1642. It was argued for the Minister in that case that, the Minister had wider powers rather then merely rubber stamping a Board recommendation on the appointment of the managing director. It was argued that, although it was clear that, for an appointment of the managing director it is mandatory that there shall first be a recommendation from the Board, once such a recommendation of one or more suitably qualified persons has been made, the Minister can accept or reject those recommendations and instead put in any other person of his choosing, whether that person has being recommended by the board or not. It was argued by counsel for the Minister in that case that, anything less would be an unlawful restriction on the Minister’s discretion. In rejecting that argument His Honour, Justice Sheehan said at pages 7-8:
"I do not accept that is the case, but even were it so the Minister does not have the discretion to act other then on the recommendation made. It is certainly true that the Minister is not compelled to accept a recommendation. He may in his discretion reject a recommendation. But in doing so he must refer the matter back to the Board for a further recommendation.
This is made clear by the Supreme Court in SCR No. 1 of 1984 re: Morobe Provincial Government 1984 PNGLR 212 at 219 cited by Mr. Lowing for the plaintiff where a similarly provision regarding recommendation was considered.
...
(b) recommendation
‘This is the final step before an appointment is made. It has a much stronger effect. It plays a prominent role in the final appointment. At this level the Provincial Government screens and eliminates names of people. When the appropriate person is recommended, that person should ordinarily be appointed by the Prime Minister. The Prime Minister cannot appoint any person outside the recommendation.
The Prime Minister, however has the final discretion whether to appoint the person recommended. If he exercises his discretion not to appoint the recommended person, then the matter has to go back to the process of recommendation by the Provincial Government. ...’
Fears of possible stalemate voiced by counsel for the Defendants are more theoretical than real because the Minister has the ultimate controller over the appointments to the Board. In any case, this Board had already indicated a willingness to cooperate.
From these, it will become apparent that the Board has the duty and obligation to recommend a suitable person for the post of managing director. As to who is a suitable person and who should be recommended to that post is a decision the Board has to independently arrive at. There is no provision in the POSF Act or any other provision that I am aware of, that empowers the responsible Minister or any other person in Government to direct a board such as the POSF Board to arrive at a particular recommendation. In our system of government and in the interest of maintaining transparency, fairness and equality, boards of public authorities such as the POSF, it is necessary that they be left to independently make a choice as to who should be appointed to head such organizations.
In this case, the evidence is that, on the 12th of April 2000, the Board recommended Mr. Ban be appointed managing director and that recommendation was communicated to the Prime Minister as the Minister responsible to make the appointment. There is no dispute that the Prime Minister has not yet acted on that recommendation. According to Mr. Eviaisa’s evidence, the Chairman of the Board Mr. Tarata (verbally) informed the Board that the Prime Minister decided not to appoint Mr. Ban because of him been implicated in the Cairns Conservatory Report by the Ombudsman Commission. Yet there is evidence of a preparedness to appoint Mr. Ban as deputy managing director, a position not available under the management structure. There is no evidence of the Prime Minister’s decision on the matter.
It is an accepted principle of law that, where a recommendation is required and is made, the person who is required to act on the recommendation must make a decision as to whether or not to accept the recommendation and act on it or reject it. If he decides to reject it, he must give reasons for that decision. The principle was first enunciated by Amet J (as he then was) in the case Niggints v. Tokam [1993] PNGLR 66 particularly at page 71 in these terms:
"The statement of principle I now enunciate is that the departmental head who decides in the exercise of his discretion, on proper consideration of the Public Service Commission’s recommendation, not to accept it should state the reasons for not so accepting the recommendation. It is not sufficient to dismiss the recommendation in the way the first respondent did:
‘Recommendations from the Public Service Commission are only recommendations. I do not accept the Public Service Commission recommendations and therefore, you remain dismissed.’
If no reasons are stated other than this kind of statement, it leaves the court no option than to conclude that there were no good reasons at all. Public officials discharging public duties are required for public accountability to provide reasons for their actions and decisions. If their decision affects substantial interests and welfare of other officers and their families good management and commonsense principles of fairness require that reasons be given.
Powers such as the power to dismiss and power to accept or not to accept a recommendation are not absolute and unfettered. They are not intended to be exercised arbitrarily and without good reasons."
That principle was cited with approval accepted and applied by Justice Injia in Kelly Yawip v. Commissioner of Police & The State [1995] PNGLR 93 at page 99.
In this case, as I said, there is no evidence of what decision the Prime Minister arrived at, in relation to the recommendation of the Board of the 12th of April 2000. Instead, there is only the suggestion in the exchanged between Mr. Eviaisa and Mr. Tarata on that issue that, the Prime Minister decided not to appoint Mr. Ban because of the Cairns Conservatory Report of the Ombudsman. There is no evidence establishing that, that is in fact, what the Prime Minister decided upon following the recommendation. It follows therefore that, the recommendation of the 12th of April 2000, remains to be acted upon.
In the meantime, the Board rushed to appoint Mr. Iewago by initially calling a meeting in breach of s.10(3) of the POSF Act which calls for a minimum of 7 days notice. That defect was sought to be corrected by the subsequent meeting of the 4th of September 2000, because of the protest of Mr. Eviaisa. Nevertheless, even at that meeting, the Chairman made it clear as far as he and the government of day were concern, Mr. Ban was not to be appointed but Mr. Iewago was to be. The government of the day through Mr. Tarata and Mr. Tarata himself were only prepared to appoint Mr. Iewago to the managing director’s post and they went to the Board as a matter of formality only to meet the requirements of s.12(1)(a) of the POSF Act. Mr. Eviaisa’s evidence per paragraph 14 of his affidavit as set out above from page 6 to 8 clearly supports the contention and I so find that there was, threat, duress and intimidation from Mr. Tarata to secure the recommendation for Mr. Iewago.
There can be not much of an argument that the intended purpose of having section 12(1)(a) of the POSF Act is to ensure transparency and accountability in the appointment of managing directors. The power is vested in the Board and not on a individual Board member or the government of the day or the Minister responsible. The Board as a collective body has to make that decision. That power is not subject to any direction or control of the government or any other person. If as was done in this case, the Board is use merely as a rubber stamp to give approval to a decision already made by a Minister or the government of the day or an individual Board member, be the Chairman or another to appoint an individual to the important position of managing director, it is not the kind of action contemplated, intended or approved by s.12(1)(a) of the POSF Act. Further the Board members should be allowed to exercise their powers without fear or favour and certainly free from any pressure, duress, threat and intimidation. A decision secured through the use of such, can not be a valid decision and cannot be allowed to stand.
In my view, Parliament made no mistake in drafting the provisions of s.12(1)(a) in the way it did so as to avoid political interference, corruption and appointment of relatives, friends, political cronies and other associates of politicians or individual members of the Board or the government of the day. It was instead to ensure and allow for an appointment of a person to the important position of managing director on merits given the importance of the position and more importantly that public officers would have to look upon the ability of the POSF to raise enough capital or money to continue to pay retirement benefits, once one’s active and working life has come to an end. The Board as a whole and the members individually are trustees of the contributors to the POSF. This is an important consideration for which the legislature has made provision for it in the POSF Act in s.4(4) in these terms:
"The members of the Board are trusties of the fund and upon taking office each members of the board shall –
(a) sign a Trust Deed in the form determine by the Minister which shall make each member of the board individual and jointly responsible for the proper management of the Fund;
(b) a declaration of office in form 1."
Clearly therefore, the members of the Board as trustees of the contributors of the POSF are made personally and jointly responsible for the proper management of the POSF for the benefit of the contributors.
In my view, this means the members of the Board have to make decisions for the benefit of the contributors more then the interest of the Board members either collectively or an individually, the government of the day, or the Minister responsible for the POSF or anybody else.
The evidence of Mr. Eviaisa was not challenge in any way by the person accused of advancing or pushing forward the government of the day’s position as well as his own. They wanted to secure a recommendation from the Board for Mr. Iewago’s appointment to the managing director’s position. The speed at which the Chairman Mr. Tarata acted, initially in getting the Board to recommend Mr. Iewago to be appointed albeit in breach of s.10(3) of the POSF Act by the Board meeting of the 18th of August 2000, and subsequently the meeting of the 4th of September 2000, and immediately communicating the recommendation to the Prime Minister as Minister responsible and the Minister almost immediately appointing Mr. Iewago, adds credibility to Mr. Eviaisa’s claim.
Further, the preparedness of Mr. Tarata and the government of the day to see Mr. Ban being appointed to the next immediate position of deputy managing director, an office that did not exist, but they were prepared to create it despite the very reasons for which they were reluctant to appoint him regardless of the Board’s earlier recommendation of the 12th of April 2000, adds further credibility to Mr. Eviaisa’s claim.
Given all of the above, I have no hesitation in finding that the recommendation of the Board for Mr. Iewago to be appointed to the position of managing director was contrary to the meaning, intent and or purpose of s.12(1)(a) of the POSF Act, that is the procedure prescribed therein.
Further, there was no advertisement for the position of managing director to give equal opportunity to all interested parties or persons to apply for that position. The defendants argue that, there is no obligation under the POSF Act or any other law requiring the Board to advertise the position before exercising its powers under s.12(1)(a) of the POSF Act. On the other hand, Mr. Eviaisa argues that, as a public institution and body and going by the fact that individual members of the Board are trustees of the contributors to the POSF, they are required to advertise the position so that all suitably qualify persons interested in the job could be given the an equal opportunity to apply for the position. Then out of that, the Board could have the advantage of a broad range of candidates to choose from and recommend the best out of the whole lot to be appointed.
Indeed, upon independence, the people of Papua New Guinea set before themselves are number of important National Goals and Directive Principles which underpin our Constitution. One of the important principle is the principle of equality and participation in Goal 2. That goal in relevant parts reads:
"We declare our second goal to be for all citizens to have an equal opportunity to participate in, and benefit from the development of our Country.
WE ACCORDINGLY CALL FOR –
(1) a equal opportunity for every citizen to take part in the political, economic, social, religious and cultural life of our country; and
...
(3) every effort to be made to achieve an equitable distribution of incomes and other benefits of development among individuals and throughout the various parts of the country."
Section 25 of the Constitution then provides:
"25. Implementation of the National Goals and Directive Principles-
(1) except to extent provided in subsection (3) and (4), the National Goads and Directive Principles are non- justifiable.
(2) nevertheless, it is the duty of all government bodies to apply and give effect to them as far as lies within their respective powers.
(3) where any law or any power conferred by any law (whether the power be of a legislative, judicial, executive, administrative or other kind), can reasonably be understood, applied, exercised or enforced, without failing to give effect to the intention of Parliament or to this Constitution, in such a way as to give effect to the National Goals and Directive Principles, or at least not to derogate them, it is to be understood, applied or exercise, and shall be enforce in that way.
(4) Subsection (1) does not apply to the jurisdiction of the Ombudsman Commission or of any other body prescribe for the purposes of Division III.2 (Leadership Code), which shall take the National Goals and Directive Principles fully into account in all cases as appropriate."
Clearly, the National Goals and Directive Principles are non-justifiable. However, they are to be taken into account by all government bodies and all leaders are required to give effect to them in so far as it lies within their respective powers. In other words, in the discharge of the duties and responsibilities public bodies and public office holders have, they are required to be guided by the National Goals and Directive Principles. Section 25(4) of the Constitution makes it clear that the Ombudsman Commission in the exercise of its jurisdiction over leaders is not bound by the non-justifiability principles setout in subsection 1 of s.25 of the Constitution. Further s.55 of the Constitution, (which is justifiable) makes all persons in Papua New Guinea equal. It therefore follows, in my view that, all leaders are obliged to be guided by the National Goals and Directive Principles as well as s.55 of the Constitution.
In the context of filling of vacancies in public offices, I am of the view that, Goal No. 2 of the National Goals and Directive Principles and 2.55 of the Constitution can best be given effect to by advertising any vacancy in any public office or public bodies such as the POSF for people with appropriate qualification, experience and competence to apply for such positions. Once an advertisement is placed, it would give the opportunity to apply for and attract interested persons to apply for such positions. After responses are received, the public body or authority would go through the applications on their merits and appoint a person who is most suitable amongst a pool of people who have responded to the advertisement. A failure to do so not only does it fail to give effect to that important national goal but, it also paves the way for a possible breach of the Leadership Code, which may occur as a result of a friend, relative, or a close friend or associate being appointed by people in power and who have the responsibility of making a decision.
In my view therefore, all public bodies and leaders in all government institutions and corporations such, as the POSF are obliged to advertise positions that become vacant before appointing someone to fill the vacancy. When that is done, transparency and accountability will be seen to have been given effect to as opposed to any suggestion that a friend, relative or a crony has been appointed to an important office such as the managing director’s post in this case. I am of the view that, even if the POSF Act does not provide for a specific requirement that the position of the managing director be advertised before the Board recommends a person to be appointed to that position, the Board has a Constitutional duty in terms of the Leadership Code, the National Goals and Directive Principles more particularly Goal No. 2, s.55 of the Constitution and as a trustees of the contributors, to advertise such positions and then decide from a pool of applicants a best suitable candidate to be appointed.
As there was no advertisement for the position of the managing director and the true meaning and intent and or purpose of s.12(1)(a) of the POSF Act has not complied with, I find that the recommendation by the POSF Board of the 4th of September 2000, and the subsequent appointment of Mr. Iewago to the managing director’s post is null and void.
This then leaves the question of, whether the subsequent decision to recommend Mr. Iewago to be appointed as the managing director superseded the earlier recommendation of the Board of the 12th of April 2000 which has not been challenged in any way and has not been acted upon by the Prime Minister as Minister responsible still valid?
Mr. Eviaisa argues that, because the subsequent Board meeting of the 4th of September 2000, or any other meeting for that matter did not rescind the earlier resolution to recommend Mr. Ban to be appointed as managing director of POSF, that recommendation still stands. As such the Prime Minister in his capacity as Minister responsible for the POSF, should make the necessary appointment. On the other hand, the defendants argue that the subsequent decision of the Board on the 4th September 2000 to recommend Mr. Iewago’s appointment superseded the decision or recommendation of the 12th of April 2000. As a result, that earlier recommendation no longer exists. Neither of the counsel were able to assist me with any authority on point.
It is common for companies to keep records of meetings of shareholders and board of directors. Decisions at such meetings are normally carried by resolutions. Such resolutions are recorded in formal minutes of such meetings. The company secretary in most instances takes notes and keeps such records. This is indeed the procedure that has being adopted by the POSF in this case. Ms. Lavett has been the secretary at all relevant times and she has been taking notes and keeping them. She is the one that took notes of the minutes of the meetings of the 12th of April 2000, the 4th of September 2000, and the 18th of August 2000. She also recorded the relevant resolution recommending Mr. Ban to be appointed as managing director by the meeting of the 12th of April 2000, the subsequent resolutions of the invalid meeting of the 18th of August 2000, and the valid meeting of the 4th of September 2000, to recommend Mr. Iewago to be appointed managing director.
The later recommendation or resolution went in direct competition to the earlier resolution of the 12th of April 2000. It is the normal practice in most companies for a formal resolution to be passed to rescind an earlier resolution if it is in fact changed at a subsequent meeting. Of course, there would be debate or a careful consideration of the need to resile from an earlier resolution. If a decision is taken at a meeting to rescind or resile from an earlier resolution, formal resolution would be passed and recorded on the minutes of the relevant meeting rescinding the earlier resolution.
In my view, given that resolutions are usually arrived at for good reasons, it would be appropriate and would be in keeping with the normal practice of companies and other meetings, for the minutes to record resolutions once passed and any variation or rescission must also be recorded. It therefore follows in my view that, a formal decision has to be arrived at and should be recorded on the minutes of the relevant meeting rescinding an earlier decision. This is to avoid the existence of two conflicting resolutions. I consider this more important and necessary in institutions such as the POSF which is a public authority in the interest of accountability. It is also to ensure that formal resolutions to rescind earlier decisions are passed before passing a resolution that would effectively run contrary to an earlier solution. A failure to do that, may bring into operation principles of equity which would allow for the first in time to take priority over the second in time.
In the case before me, I find on the evidence that, the plaintiff made a repeated attempt at getting the Board on the 4th of September 2000, to affirm and go back to its earlier recommendation of the 12th of April 2000. It seems the Board did not discuss that on its merits despite the fact that the agenda put forward by the Chairman of the Board in relation to the appointment of the managing director was going to run contrary to the earlier resolution. I also find that, there is no evidence of any formal resolution by the board of directors at the meeting of the 18th of August 2000, or the 4th of September 2000, rescinding the earlier decision of the 12th of April 2000, recommending Mr. Ban to be appointed. Instead, the Board proceeded without considering the inconsistency it was going to create, by proceeding to recommend that Mr. Iewago be appointed managing director.
In view of the above, I find that the decision of the Board of the 12th of April 2000 to recommend Mr. Ban to be appointed managing director still stands. Even if I were wrong on that, I consider that my finding in relation to the recommendation for Mr. Iewago to be appointed by the Board on the 4th September 2000, being null and void, has the effect that the earlier resolution which has not been rescinded remaining on foot to be acted upon by the Prime Minister as Minister responsible for the POSF.
In summary I find as follows:
(2) The Board when exercising its powers under s.12(1)(a) of the Act is required to take into account and be guided by the National Goals and Directive Principles in particular the need to give equal opportunity to citizens to participate in the economic life of the country and s.55 of the Constitution. They could discharge that duty or responsibility by placing advertisements of vacancies in the office of the managing director for suitably qualified people to apply for, so that the Board and therefore the POSF and the contributors can have the opportunity of appointing a person to that important position who is suitably qualified in a manner that is more transparent and accountable, so as to ensure that associates, friends and relatives of individual Board members, the government of the day or the Minister responsible is not appointed by virtue of that or such a relationship. This is to safeguard against any harm to the POSF that would adversely affect its contributors.
(3) As trustees for the contributors to the POSF, individual Board members or directors are obliged under the Leadership Code not to use their position to appoint persons of their choice without making the process of appointment or recommendation for the appointment of managing director’s transparent and open for all interested persons to apply whenever there is a vacancy. In this case, the Board failed to advertise the position and therefore failed to facilitate an appearance of transparency and accountability in the process leading to the recommendation for Mr. Iewago to be appointed managing director.
(4) The recommendation of the Board of the 12th of April 2000, for Mr. John Ban to be appointed as managing director was not rescinded. In the absence of any resolution rescinding that recommendation, I find that recommendation is current and is now incumbent upon the Prime Minister as Minister responsible for POSF to give effect to that recommendation.
On these findings I make the following declaratory and other orders which Mr. Eviaisa asks for in his originating summons from paragraphs 3 to 7.
_______________________________________________________________________
Lawyers for the Plaintiff : Ketan Lawyers
Lawyers for the Defendants : Henao Lawyers
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