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Gelu v Somare [2008] PGNC 166; N3526 (21 November 2008)

N3526

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO 654 OF 2008

ZACHARY GELU
First Applicant

ISAAC LUPARI
Second Applicant

TAU LIU
Third Applicant

V

SIR MICHAEL SOMARE MP
First Respondent

MAURICE SHEEHAN, JUSTICE CATHY DAVANI & DON MANOA
Second Respondents

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Third Respondent

Waigani: Cannings J
2008: 18, 21 November

RULING

JUDICIAL REVIEW – application for stay of proceedings following grant of leave to seek judicial review – National Court Rules, Order 16, Rule 3(8) – principles to apply when determining whether to grant a stay of proceedings.

Three persons who were granted leave to apply for judicial review of the decision of the Prime Minister to appoint a commission of inquiry applied for a stay of the proceedings of the Commission of Inquiry.

Held:

(1) As the applicants are ultimately seeking orders of prohibition and certiorari, the granting of leave for judicial review operates by virtue of Order 16, Rule 3(8)(a) of the National Court Rules as a stay of proceedings to which the application for judicial review relates – if the court so directs.

(2) A direction for a stay is not automatic. It is, rather, a matter of discretion to be exercised according to normal principles for granting interim injunctions.

(3) It is accordingly incumbent on the applicant to show that:

• (a) there are serious questions to be tried and that an arguable case exists;
• (b) an undertaking as to damages has been given;
• (c) damages would not be an adequate remedy if a stay is not granted;
• (d) the balance of convenience favours the granting of a stay; and
• (e) the interests of justice require that there be a stay of proceedings.
  

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

(4) As to (a), the court should make an assessment of the strength of the arguments; the standard applicable being higher than at the stage of granting leave for judicial review. Furthermore, if an applicant is seeking to stay an ongoing investigation being conducted by a proper authority under the laws of Papua New Guinea, the appropriate test to apply is that the grounds of judicial review be strongly arguable (Rimbink Pato v Anthony Manjin and Others (1999) SC622, Simon Ketan v Lawyers Statutory Committee (2001) N2290 considered).

(5) In the present case:

• (a) the applicants do not have a strongly arguable case;
• (b) an undertaking as to damages has been given;
• (c) damages would be an adequate remedy if a stay is not granted;
• (d) the balance of convenience does not favour the granting of a stay;
• (e) the interests of justice do not require that there be a stay.
  

(6) Only one of the five considerations favours the granting of a stay. It was outweighed by the other four. Accordingly, a stay of the proceedings was refused. However, in the circumstances it was appropriate to order a stay of publication of findings of the Inquiry without the leave of the Court.

Cases cited

The following cases are cited in the judgment:

Bank of Papua New Guinea and Wilson Kamit v Marshall Cooke QC and Others (2003) N2369
Bernard Hagoria v Ombudsman Commission (2003) N2400
Chief Collector of Taxes v Bougainville Copper Ltd (2007) SC853
Dan Kakaraya v Ombudsman Commission (2003) N2478
Ewasse Landowners Association Inc v Hargy Oil Palms Ltd (2005) N2878
Gelu v Somare (2008) N3524
Peter Makeng v Timbers (PNG) Ltd (2008) N3317
Pius Nui v Mas Tanda (2004) N2765
Rimbink Pato v Anthony Manjin and Others (1999) SC622
Simon Ketan v Lawyers Statutory Committee (2001) N2290

Abbreviations

The following abbreviations appear in the judgment:

Inc – Incorporated
J – Justice
Ltd – Limited
N – National Court judgment
No – number
OS – Originating Summons
PNG – Papua New Guinea
PNGLR – Papua New Guinea Law Reports
Pty – Proprietary
QC – Queen’s Counsel
SC – Supreme Court judgment
v – versus

APPLICATION

This was an application for a stay of the proceedings of a commission of inquiry following grant of leave to seek judicial review.

Counsel
N Tame, for the applicants
I Molloy & F Barton, for the respondents

21 November, 2008

1. CANNINGS J: Zachary Gelu, Isaac Lupari and Tau Liu were recently granted leave to seek judicial review of the decision of the Prime Minister to appoint the Commission of Inquiry into the Management Generally of Public Monies by the Department of Finance (Gelu v Somare (2008) N3524).

2. They are now applying for a stay of the proceedings of the Inquiry pending the outcome of their judicial review. They want the Court to order that the Inquiry cannot hold any public hearings or conduct any investigations or do anything in pursuit of the powers conferred on it by the Prime Minister until their judicial review is finally determined. They say that a stay of proceedings should be ordered as a matter of course as they have been granted leave to seek review. If a stay is not granted as a matter of course they argue that nonetheless the principles that the courts normally apply when deciding whether to grant an interim injunction favour the granting of a stay.

3. The issues in this case are:

• Does a stay of proceedings follow as a matter of course after the granting of leave for judicial review?
  
• If not, what principles apply when the court considers an application for a stay?
  
• What is the result of applying those principles in this case?
  

DOES A STAY OF PROCEEDINGS FOLLOW AS A MATTER OF COURSE AFTER THE GRANTING OF LEAVE FOR JUDICIAL REVIEW?

4. Mr Tame, for the applicants, hangs his submission that a stay should follow as a matter of course on Order 16, Rule 3(8)(a) of the National Court Rules, which states:

Where leave to apply for judicial review is granted, then ... if the relief sought is an order of prohibition or certiorari and the Court so directs, the grant shall operate as a stay of the proceedings to which the application relates until the determination of the application or until the Court otherwise orders.

5. Mr Tame points out that in the present case leave has been granted to apply for judicial review and the relief sought by the applicants is in the nature of both prohibition (stopping the Inquiry from continuing) and certiorari (quashing the decision to appoint the Inquiry). He also says that a formal application for review has been filed and the applicants have, by notice of motion, formally asked the court to direct that there be a stay of proceedings. All of the conditions precedent set by the Rules have been met. Therefore, he submits, the Court should direct that there be a stay, as a matter of course.

6. I do not accept this submission. The literal wording of Rule 3(8)(a) does not support it. The Rule does not say that, upon satisfaction of the pre-conditions, the court shall direct a stay. It simply says that if leave is granted and the relief sought is prohibition or certiorari, "and the court so directs" the grant of leave operates as a stay. Nothing in the Rule obliges the Court to give a direction.

7. The proper interpretation of the Rule is that it confers a discretion on the Court to decide whether to grant a stay (Peter Makeng v Timbers (PNG) Ltd (2008) N3317, para 22).

WHAT PRINCIPLES APPLY WHEN THE COURT CONSIDERS AN APPLICATION FOR A STAY?

8. Once it receives an application for a stay of proceedings the court must exercise its discretion judicially. This is done by applying the general principles that are applied whenever the court determines an application for an interim injunction pending the outcome of any civil trial. I do not see much point in drawing a distinction between a stay and an injunction. The principles are well developed in PNG. They were recently discussed by the Supreme Court in Chief Collector of Taxes v Bougainville Copper Ltd (2007) SC853.

9. It is incumbent on the applicant for a stay of proceedings to show that:

(a) there are serious questions to be tried and that an arguable case exists;

(b) an undertaking as to damages has been given;

(c) damages would not be an adequate remedy if a stay is not granted;

(d) the balance of convenience favours the granting of a stay; and

(e) the interests of justice require that there be a stay.

10. Those are the general principles. As to (a) – the need to show an arguable case – I consider that when the court is considering an application for a stay of proceedings following the grant of leave for judicial review, special considerations apply.

11. First, it is necessary for the court to make an assessment of the strength of the arguments. It is not sufficient for an applicant to point to the fact that they have an arguable case. Obviously there is an arguable case. Leave would not have been granted if there were not one. The standard is higher when the court is deciding whether to grant a stay of proceedings than at the stage of granting leave for judicial review.

12. Secondly, if, as in the present case, an applicant is seeking to stay an ongoing investigation being conducted by a proper authority under the laws of Papua New Guinea, I consider that the appropriate test to apply is that the grounds of judicial review be strongly arguable. I say this as there is a strong line of authority, led by the Supreme Court’s decision in Rimbink Pato v Anthony Manjin and Others (1999) SC622, saying that the court should exercise considerable caution before deciding to stay investigations of criminal or other allegedly wrongful or improper conduct being conducted by the Police Force or other proper investigating authorities under the laws of Papua New Guinea. National Court cases in which this principle has been developed include Simon Ketan v Lawyers Statutory Committee (2001) N2290; Bank of Papua New Guinea and Wilson Kamit v Marshall Cooke QC and Others (2003) N2369; Bernard Hagoria v Ombudsman Commission (2003) N2400; Dan Kakaraya v Ombudsman Commission (2003) N2478; and Pius Nui v Mas Tanda (2004) N2765.

13. Each case must be considered on its merits. However, it is only in a very clear case that the court should consider ordering a halt to an investigation that is being conducted by a proper authority under the laws of Papua New Guinea. If we do not insist on the rather strict test that I am referring to, the court will create the environment in which any person who is fearful of exposure by a commission of inquiry or another investigatory agency will come to the court, knowing that they only have to establish an arguable case. The investigation will be stopped in its tracks. Time will be bought. Perhaps time to hide evidence. The courts may unwittingly be protecting those with something to hide rather than protecting the more legitimate interests of those with a right to know: the People of Papua New Guinea.

WHAT IS THE RESULT OF APPLYING THOSE PRINCIPLES IN THIS CASE?

14. The principles can conveniently be applied by posing five questions. They are drafted so that a ‘yes’ answer will be a factor weighing in favour of granting a stay. A ‘no’ will work against granting a stay.

(a) Are there serious questions to be tried and do the applicants have a strongly arguable case?

15. They have been granted leave to argue eight grounds of judicial review. Six of the grounds raise constitutional issues. So there are serious, not trivial, questions to be tried. But I did qualify my finding that the points raised were arguable by saying that some of the grounds were novel; and one in particular was a struggle to appreciate. I cannot say that included in any of the grounds of review is any single point of law that stands out as being very strong or strongly arguable. There is no point of law that will obviously win the day for the applicants in the judicial review.

16. This is a high standard of ‘arguability’ to insist on. But I think it is the correct standard to apply given that the applicants are seeking a stay of the entire proceedings of a commission of inquiry that ostensibly has been set up properly under an Act of the Parliament and is exercising powers of investigation akin to those of other investigatory agencies such as the Police, the Ombudsman Commission, the Auditor-General and the Public Accounts Committee.

17. The answer is no, the applicants do not have a strongly arguable case.

(b) Has an undertaking as to damages been given?

18. Yes. Mr Molloy submitted that the undertaking means very little, given the ongoing costs of running the Inquiry. However, I am satisfied that the applicants did what was required of them by filing an undertaking as to damages on 22 October 2008, the date of filing their application for leave to seek judicial review.

(c) If a stay is not granted, would damages be an inadequate remedy?

19. What will happen if a stay is not granted, the Inquiry goes ahead and makes findings adverse to the applicants, but it turns out the Inquiry was unlawfully constituted? Would they be able to be compensated with damages? Would that be an inadequate remedy?

20. It is conceivable that the applicants will suffer injury to their professional and personal reputations if adverse findings are made against them. If such findings are made by an Inquiry that has been unlawfully constituted, it would appear that they would have a good case to claim damages against the State. The courts are well equipped, as a result of application of the laws of defamation, to make an assessment of damages commensurate with injury to reputation.

21. I conclude that, no, damages would not be an inadequate remedy.

(d) Does the balance of convenience favour the granting of a stay?

22. As I said in Ewasse Landowners Association Inc v Hargy Oil Palms Ltd (2005) N2878 this requires the court to ask: what is the best thing to do on an interim basis taking into account the conflicting interests? Where do the interests of justice lie? What will happen if a stay is not granted? What will happen if a stay is granted? Who will suffer the greatest inconvenience?

23. Mr Tame points out that if a stay is not granted and the Inquiry is allowed to continue, it will by about June 2009 render its final reports to the Prime Minister. If the judicial review has not been determined by then, it will become a futile, academic exercise to finish it.

24. He submits that the court needs to grant an immediate stay, to protect the integrity of the Court’s processes. Having decided that there is an arguable case for review it would be incongruous to let the Inquiry continue, with a question-mark hanging over its legality.

25. The Inquiry conducts public hearings and its proceedings are given wide publicity, which may have an adverse effect on the applicants. If the judicial review is ultimately decided in their favour, they will have suffered damage to their reputations and standing in the community for no good reason.

26. Mr Tame submits that if the Inquiry is stopped now, this will prevent a waste of time and resources that will be occasioned if the Inquiry proceeds, only to have its jurisdiction annulled by a successful judicial review.

27. Mr Tame asserts that there is no evidence that the person who set up the Inquiry, the Prime Minister, or the Inquiry itself or its commissioners will suffer prejudice (ie their interests will not be adversely affected) if an immediate stay is granted. He has objected to the admission into evidence of the affidavits of Chief Commissioner Maurice Sheehan, Counsel Assisting the Inquiry, Stephen Kassman, and Secretary to the National Executive Council, Winnie Kiap. He submits that they have no authority to give evidence as it is not their decisions which are subject to judicial review. The person who should be providing an affidavit is the Prime Minister. He has not provided an affidavit. He has shown no interest in the proceedings. So, Mr Tame submits, the Court should conclude that he will not suffer any prejudice if a stay is granted.

28. If the Court refuses the objection to the reception of those affidavits, Mr Tame asserts that there is still no evidence of prejudice to the respondents. Maurice Sheehan talks about the cost of the Inquiry and the deadline it has to meet. Mr Tame says his concerns are baseless. Costs will be saved if the Inquiry is stayed. And the Prime Minister has the prerogative to extend the deadline, which is the norm with commissions of inquiry, Mr Tame contends.

29. I agree with Mr Tame that it is not an entirely satisfactory state of affairs to have a commission of inquiry running while at the same time there is a judicial review pending that will determine whether the inquiry has been lawfully constituted. That is certainly a consideration that weighs in favour of granting an immediate stay. It is one consideration. There are others that also must be taken into account. One of the most important – which Mr Tame’s submissions largely ignored – is the public interest.

30. The statement of case published by the Prime Minister in National Gazette No G84 on 14 May 2008 states that "the expenditure of public monies has given rise to considerable public disquiet and debate. Disquiet has principally been in the manner in which claims and the authorisation for such payment of public funds have been made to the Department, the method used to quantify such claims and the authorisation for such payments to be made particularly in relation to consent and default judgments and out-of-court settlements entered against the State". No one has suggested that these concerns are not genuine. There is a genuine public interest in the subject matter of the Inquiry. If a stay is granted, that public interest will not be able to be satisfied, at least not in the short term. So the public will be prejudiced.

31. I do not accept Mr Tame’s submission that the respondents need to show that their personal interests will be prejudiced by a stay of proceedings. It is irrelevant that the Prime Minister has not given evidence for the purpose of these proceedings. The Chief Commissioner has given evidence, which is relevant, about the expenditure that would be incurred and the inconvenience that would be caused if the Inquiry were forced to stop its work immediately. I refuse the objection to the admission into evidence of Maurice Sheehan’s affidavit and the affidavits of Stephen Kassman and Winnie Kiap. They pass the test of relevance and that is really the only test that needs to be applied when determining whether to admit affidavit evidence. It was not necessary for the Prime Minister to give evidence.

32. Mr Sheehan deposes that the Inquiry has a fixed budget, that it has appointed staff (some of whom are on fixed term contracts) and that it has a deadline to meet (nine months after the commencement of hearing, September 2008). I accept that this is sufficient evidence that a court-ordered stay of proceedings will greatly inconvenience the Inquiry, add to its cost (which is borne by the public) and disrupt and prolong its proceedings. This will, inevitably, in my view, prejudice the public interest.

33. What prejudice will the applicants suffer if the Inquiry proceeds? There is a risk that publicity given to the proceedings will result in the applicants being implicated in some wrongdoing. Their reputations might suffer some harm. However, the Inquiry has no power to prosecute any person or deprive them of any property or other legal interests. Section 13 of the Commissions of Inquiry Act provides that a statement made by a witness in answer to a question put to him is not generally admissible in evidence against him in any civil or criminal proceedings. The Commission does not determine any rights. Its functions are confined to inquiring into the matters set out in its terms of reference and reporting its findings to the Prime Minister. It does not even directly publish its findings. Under Section 15 of the Commissions of Inquiry Act it makes a report of its proceedings and the results of its inquiries to the Prime Minister and records the reasons for its conclusions. The Prime Minister is then obliged by Section 17 to lay the report before the Parliament unless he certifies that its tabling would be contrary to the public interest.

34. The Inquiry is obliged to observe the principles of natural justice. It cannot make any adverse finding regarding the applicants or any other person without first giving them a right to be heard. In these circumstances, I cannot see that the applicants will be greatly prejudiced if the Inquiry is allowed to continue. The risk of prejudice to their interests is outweighed by the much greater likelihood of prejudice to the public interest that would result from an immediate stay of the Inquiry’s proceedings.

35. The balance of convenience does not favour the granting of a stay.

(e) Do the interests of justice require that there be a stay?

36. I do not see any injustice to the applicants or any other person by allowing the Inquiry to continue while at the same time there is a judicial review pending that will determine its legality. If the Inquiry clearly travels outside its jurisdiction the applicants or any other person with a sufficient interest will be able to approach the court for interim relief. This has not happened yet.

37. The interests of justice do not require that there be a stay.

REMAINING ISSUE

38. There is one issue still to address. The applicants sought not only a stay of proceedings but also an order to prevent the Prime Minister amending the instruments of appointment or the statement of case pending determination of the judicial review.

39. I see no good reason to make such an order. It has not yet been proven that the Prime Minister or any other person has committed any error of law when establishing the Inquiry or conducting its proceedings. The court should not pre-empt the exercise of administrative powers under an Act of the Parliament unless there is clear evidence of illegality. Here there is none.

CONCLUSION

40. Only one of the five factors – the giving of the undertaking as to damages – favours the granting of a stay. The remaining four factors favour a refusal of a stay order. Accordingly I exercise the discretion of the Court under Order 16, Rule 3(8)(a) of the National Court Rules to decline to direct that the proceedings of the Commission of Inquiry be stayed.

41. I will, however, given that the applicants have obtained leave and proven that they have an arguable (but not strongly arguable) case, order that the Inquiry not publish any findings or make any report to the Prime Minister without the leave of the Court. The effect of this is that the Inquiry will be able to continue its work, while at the same time the interests of the applicants will be substantially protected.

42. If the Inquiry reaches the stage where it wants to publish its findings or wants, or is obliged by its instruments of appointment, to make reports to the Prime Minister, it will need to apply to the Court for leave to do so. If, of course, before that stage is reached, the application for judicial review has been heard and determined, the Court might do away with that requirement to obtain leave.

ORDER

(1) The application for a stay of the proceedings of the Commission of Inquiry into the Management Generally of Public Monies by the Department of Finance is refused.

(2) The application for an order to prevent alteration of the instruments of appointment or terms of reference or any other instruments relating to the Commission of Inquiry is refused.

(3) The Commission of Inquiry may continue its proceedings but shall not publish any findings or make any report to the Prime Minister or any other Minister without the leave of the Court.

(4) Costs are in the cause.

(5) Time abridged.

Judgment accordingly.

N Tame Lawyers: Lawyers for the applicants
Solicitor- General: Lawyers for the 1st & 3rd respondents
Stephen L Kassman: Lawyer for the 2nd respondents