N3523

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO 355 OF 2008

SAKA BEN WIA
First Plaintiff

GORDONS CHESS CLUB INC
TRADING AS CLUB 22
Second Plaintiff

YAMBARAN PAUSA SAKA BEN LTD
Third Plaintiff

V

LUCIANO CRAGNOLINI, CHAIRMAN,
AND MEMBERS OF NCD LIQUOR LICENSING COMMITTEE
First Defendant

ANGELA MAGETO,
DIRECTOR, REGULATORY SERVICES
Second Defendant

WAIGANI: CANNINGS J
3, 4, 7 NOVEMBER 2008

RULING

Practice and procedure – interim orders – dismissal of proceedings for failure to disclose reasonable cause of action – abuse of process.

Subordinate legislative enactments – inconsistency in two different enactments applying to same subject matter – Constitution, Section 9 (the laws).

The National Court made an interim order which stayed the decision of a liquor licensing committee not to renew a liquor licence to a company. The committee then moved the court to dissolve the order and dismiss the court proceedings commenced by the company on the ground that the proceedings failed to disclose a reasonable cause of action and were frivolous, vexatious and an abuse of process. During the hearing of the motion an issue arose as to the company’s right of appeal against the committee’s decision, as the parties did not agree on which law governed appeals against the committee’s decisions. 

Held:

(1)	The law governing appeals against decisions of the NCD Liquor Licensing Committee is the National Capital District Commission (Delegated Committees) Regulation 1991.

(2)	Under that law, a person whose application for a liquor licence has been refused has a right of appeal to the National Capital District Commission.

(3)	The plaintiffs lodged an appeal with the Commission and the appeal has not yet been determined; and, as that is the correct procedure, the interim orders of the National Court should not be set aside. The plaintiffs have a reasonable cause of action and the proceedings are not frivolous, vexatious or an abuse of process.

(4)	The defendants’ motion was accordingly refused. 

Cases cited

The following cases are cited in the judgment:
Kiee Toap v The State and Electoral Commission (2004) N2731
Mainland Holdings Ltd v Stobbs (2003) N2522
Mark Ekepa v William Gaupe (2004) N2694
PNG Forest Products Pty Ltd v The State and Genia [1992] PNGLR 85

Abbreviations

The following abbreviations appear in the judgment:
Inc – Incorporated 
Ltd – Limited
N – National Court judgment
NCD – National Capital District
NCDC – National Capital District Commission
No – number
OS – Originating Summons
PNGLR – Papua New Guinea Law Reports
Pty – proprietary
v – versus

NOTICE OF MOTION

This was a motion to dissolve interim orders and to dismiss the proceedings commenced by the plaintiffs. 

Counsel
P Ame for the plaintiffs
B Bakau for the defendants

CANNINGS J: This is a ruling on a motion by the defendants – in effect, the National Capital District Liquor Licensing Committee – to dissolve a previous National Court order and to dismiss proceedings commenced against the Committee by a disgruntled former liquor licensee, "Club 22".

The plaintiffs are the proprietors of Club 22, which is in Cameron Road, near Sir John Guise Stadium, Port Moresby. Until this year, they traded in liquor at the Club under a liquor licence issued by the Committee. However, in May 2008 the Committee refused an application by the Club to renew its licence and ordered it to stop selling liquor.

The Committee made its decision based on reports from licensing inspectors that the Club had sold liquor during prohibited hours, allowed patrons to unlawfully carry away liquor, operated premises that were unclean and committed many other breaches of the NCDC’s liquor laws despite numerous warnings to adhere to the conditions of its licence.

In June 2008 the Club appealed against the Committee’s decision to the Chairman of the NCDC, also known as the Governor, Hon Powes Parkop MP (see NCDC Act 2001, Sections 6 and 6A). The Club refuted the reports that it was trading contrary to the conditions of its licence and alleged that the Committee chairman, Luciano Cragnolini, was in a conflict of interests as he was the proprietor of an entertainment centre at the nearby Sports Inn, which competes for business with Club 22. 

A couple of days after lodging the appeal, the Club filed originating summons proceedings in the National Court, seeking orders to prevent the defendants – Mr Cragnolini and other members of the Committee and Angela Mageto, the Director of Regulatory Services with the NCDC – from closing down the Club’s liquor operations, pending resolution of the Club’s grievances with the Committee. 

On 27 June 2008 the matter came before me in Waigani and I made an interim order, staying (ie putting on hold) the Committee’s decisions regarding Club 22, pending a further Court hearing.

The defendants now want that interim order dissolved and Club 22’s court proceedings dismissed. They say that the Club has no reasonable cause of action and that the court proceedings are frivolous, vexatious and an abuse of process.

The issues I have to decide on are: Should the interim order be dissolved? Should the entire proceedings be dismissed?

THE DEFENDANTS’ ARGUMENTS 

The defendants’ counsel, Ms Bakau, put two separate arguments to the Court in support of the defendants’ motion. 

First, she relied on an affidavit by Irish Boroba, Acting Senior Liquor Inspector with the NCDC, which sets out the background of Club 22’s operations. Ms Bakau submitted that this evidence shows that Club 22 had consistently violated the conditions of its liquor licence. To allow the interim Court order to remain in force would undermine the attempts of the NCDC and the Liquor Licensing Committee to enforce the liquor licensing laws in the NCD.

Secondly, Ms Bakau submitted that the Club had a hopeless case as it had appealed to the wrong authority. According to Section 17 of the NCD Liquor Licensing Law 1984, the Club should have lodged its appeal with the District Court, not the NCD Governor. So there is no pending appeal. The Club is therefore abusing the processes of the Court. 

CLUB 22’S ARGUMENTS

The Club’s counsel, Mr Ame denied that his clients were breaking any laws. He relied on affidavits sworn by the Club’s manager, Saka Ben Wia, which describe the Club as an "elaborate, high quality entertainment centre", which traded in liquor in compliance with the liquor laws.

As to the strength of the Club’s case, Mr Ame emphasised that the Club had properly exercised its right of appeal to the NCDC but there had been no response. He argued that the law Ms Bakau was referring to had been supplanted by the National Capital District Commission (Delegated Committees) Regulation 1991, and under that law, the Club had to appeal to the NCDC, which it did on 25 June 2008.

IS THE CLUB COMPLIANT WITH THE LIQUOR LAWS?

This issue is largely irrelevant to what I have to rule on today. I only have to decide whether the interim order of 27 June 2008 should be continued and whether the entire proceedings should be dismissed. I am not hearing an appeal against the Committee’s decision so all I have to note on the issue of compliance is that there is a dispute over the facts. In the Committee’s view, Club 22 is a serial offender. But the Club regards itself as a model of liquor licensing virtue. Where the truth lies is a matter for another tribunal to sort out at another time.

HAS THE CLUB APPEALED TO THE CORRECT AUTHORITY?

This is the critical issue and to resolve it I have to decide which of the two conflicting laws applies.

On the one hand, Section 17 of the NCD Liquor Licensing Law 1984 states:

A person aggrieved by a decision, order, direction or requirement of the Commission under this Law may appeal to a Grade V District Court Magistrate, whose decision shall be final. 

On the other hand, Section 10 of the National Capital District Commission (Delegated Committees) Regulation 1991 states:

(1)	An applicant whose application has been refused or rejected by the Committee may apply to the Commission for re-hearing by the Commission.

(2)	If the Commission upholds the decision of the Committee the applicant may further appeal to the National Court.

Both laws regulate the sale and distribution of alcoholic liquor in the NCD. Both laws appear to have been properly made. And neither has been repealed. So which of them prevails?

Ms Bakau submitted that the 1984 law prevails as it was made under the provisions of the National Constitution, which expressly provide, in Section 4, for the creation of the National Capital District. She also refers to Section 9 of the Constitution, which sets out what comprises the laws of Papua New Guinea.

Section 9 states:

The laws of Papua New Guinea consist of—

(a)	this Constitution; and
(b)	the Organic Laws; and
(c)	the Acts of the Parliament; and
(d)	Emergency Regulations; and
(da)	the provincial laws; and
(e)	laws made under or adopted by or under this Constitution or any of those laws, including subordinate legislative enactments made under this Constitution or any of those laws; and
(f)	the underlying law,

and none other.

As I understand Ms Bakau’s submission, the argument is that the 1984 law is the equivalent of a provincial law. It is a specific law dealing with liquor licensing. Therefore it prevails over the 1991 Regulation, which was made under an Act of Parliament (the NCDC Act 1990) and is a general law dealing with committees generally, not just liquor licensing.

I am not persuaded by this argument. First, it is not clear that the 1984 law can be regarded as a "provincial law". Even if it can be categorised in that way, I am not convinced that it has any greater force as a source of law than a Regulation made under an Act of the Parliament. I am not convinced that a written law referred to in Section 9(da) of the Constitution prevails over a law falling within Section 9(e). I tend to think that both the 1984 Law and the 1991 Regulation are of equal force; so it is a matter of statutory interpretation to decide which law prevails in the event of an inconsistency.

I consider that, to the extent that it is inconsistent with the 1984 Law, the 1991 Regulation has impliedly repealed the 1984 Law. Therefore, the appeal provisions of the 1991 Regulation prevail over those in the 1984 Law.

Club 22 has a right of appeal to the NCDC, not to the District Court. The Club has appealed to the right authority. 

SHOULD THE INTERIM ORDER BE DISSOLVED? SHOULD CLUB 22’S CASE BE DISMISSED?

No. Nothing that the defendants have brought before the Court to support their motion has convinced me that the interim order should be dissolved. Interim orders should only be dissolved when there had been a significant change in circumstances or it is shown that the court made its orders on an erroneous legal or factual basis (Mainland Holdings Ltd v Stobbs (2003) N2522; Mark Ekepa v William Gaupe (2004) N2694).

As for the defendants’ move to dismiss the Club’s case, it is not plain and obvious that Club 22 has an unarguable case (PNG Forest Products Pty Ltd v The State and Genia [1992] PNGLR 85; Kiee Toap v The State and Electoral Commission (2004) N2731). Quite the contrary, the Club has appealed to the correct authority; and it appears to have a number of grievances (eg the claim that the Committee chairman is in a conflict of interests and that it was not given a right to be heard by the Committee) that should be properly aired. 

I conclude that Club 22 has a reasonable cause of action and the proceedings are not frivolous, vexatious or an abuse of process.

CONCLUSION

I will refuse the defendants’ motion and make some orders aimed at expediting resolution of this dispute. The defendants are entitled to costs because when the motion was first heard the plaintiffs’ lawyers were not present. 

ORDER

The defendants’ motion filed on 5 September 2008 is refused.

(1)	The interim order of 27 June 2008 continues until further order of the Court.

(2)	The NCDC shall make a decision on the plaintiffs’ appeal within 21 days, failing which the appeal shall be deemed to be refused, and the plaintiffs shall have 21 days within which to appeal to the National Court under Section 10(2) of the National Capital District Commission (Delegated Committees) Regulation 1991.

(3)	Costs of and incidental to the hearing of the defendants’ motion shall be paid by the plaintiffs on a party-party basis, to be taxed if not agreed.

(4)	Time abridged.

Judgment accordingly.

Lawyers for the plaintiffs			:	Ame Lawyers
Lawyer for the defendants		:	Principal Legal Officer, NCDC