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National Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]
OS (JR) NO. 768 OF 2014
BETWEEN
PETER KEWA as the CHAIRMAN OF PAPUA NEW GUINEA SMALLHOLDERS
COFFEE GROWERS INC.
Plaintiff
AND
ANTON BENJAMIN as the ACTING CEO OF COFFEE INDUSTRY CORPORATION
First Defendant
AND
HONOURABLE TOMMY TOMSCOLL as the MINISTER FOR AGRICULTURE & LIVESTOCK
Second Defendant
AND
HONOURABLE PETER O'NEILL as the PRIME MINISTER & CHAIRMAN OF THE NATIONAL EXECUTIVE COUNCIL
Third Defendant
AND
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Fourth Defendant
Waigani: Makail, J
2015: 09th & 16th December
JUDICIAL REVIEW – Appointment of Chairman and non ex-officio directors of Board – Regulatory Statutory Authority – Board of Coffee Industry Corporation Limited – Duty on Minister to facilitate appointment – Failure to facilitate appointment – Process of appointment discussed – Regulatory Statutory Authority (Appointment of Certain Officers) Act, 2004 – Section 10.
JUDICIAL REVIEW – Review of decision to appoint Acting Chief Executive Officer – Coffee Industry Corporation Limited – Regulatory Statutory Authority – Locus standi – Lack of standing to institute proceedings – Regulatory Statutory Authority (Appointment of Certain Officers) Act, 2004 – Section 9.
JUDICIAL REVIEW – Remedies – Mandamus – Order sought to compel public official to perform duty – Duty imposed by statute – Statutory duty – Failure to perform duty – Delay of three years – Unreasonable – Order granted – National Court Rules – Order 16, rule 1.
Cases cited:
Joe Ponau v. Teaching Service Commission Disciplinary Committee (2006) N3059
Ombudsman Commission v. Peter Yama (2004) SC747
Mision Asiki v. Manasupe Zurenuoc (2005) SC797
Skate v. Barter (2005) N2925
Counsel:
Mr. S. Wanis, for Plaintiff
No appearance, for First and Second Defendants
Ms. B. Kulumbu, for Third and Fourth Defendants
JUDGMENT
16th December, 2015
1. MAKAIL, J: This is an application for judicial review under Order 16 of the National Court Rules. First, the Plaintiff seeks an order in the nature of mandamus to compel the Second Defendant the Minister for Agriculture and Livestock ("the Minister") to perform his statutory duties to appoint a Board for the Coffee Industry Corporation Limited ("CIC") pursuant to Section 10 of the Regulatory Statutory Authority (Appointment of Certain Officers) Act 2004 ("RSA Act"). Secondly, an order in the nature of a declaration that the appointment of the First Defendant as Acting Chief Executive Officer is null and void.
2. I have heard submissions and also read written submissions of counsel for the Plaintiff and counsel for the Third and Fourth Defendants and I am very much indebted to their invaluable assistance. Each has ably canvassed the relevant law and its application to the facts of this case. With respect, I shall refer to them in the course on my decision. As to the First and Second Defendants, no-one appeared for them and so I do not have the benefit of their submissions.
Brief Background
3. The uncontested evidence is the Plaintiff is the Chairman of the Papua New Guinea Smallholders Coffee Growers Association (Inc) and Chairman of Western Highlands Small Coffee Growers Association and a former Chairman of the CIC Board. The Plaintiff and other Directors of the CIC Board were appointed by the Acting Governor General commencing 01st of December, 2010. I refer to a copy of the Gazettal Notice found in Annexure "A" to the Plaintiff's affidavit filed on the 30th of March 2015 (exhibit "P3"). Their term was for three years. On 01st of December, 2013 the CIC non ex-officio Directors' term of office expired. After that, no new appointment was made by the Minister.
Grounds of Review
4. The Plaintiff relied on the following grounds of review:
4.1. Breach of natural justice.
It is alleged since the expiry of the Plaintiff and other Directors' appointment, the Minister has failed to inform them whether they will be reappointed. Instead, the Board is run by the Minister, the First Defendant and the Company Secretary.
4.2. Unreasonableness.
The Minister unreasonably failed to perform his statutory obligation for more than 3 years when the entire Coffee Industry body was in dire need of a proper Board to oversee the CIC management and funds appropriation. The Minister is engaged in an idle position no other reasonable person or Minister would do for such a lengthy period of time.
4.3. Error of law
When the former Chief Executive Officer of the CIC Mr. Navi Anis was suspended, the First Defendant was appointed as Acting Chief Executive Officer in breach of Section 9 of the RSA Act.
Appointment of Directors of Board
5. I adopt the manner in which Ms. Kulumbu of counsel for the Third and Fourth Defendants has addressed the grounds in her submissions. She has addressed the first and second grounds together and I will address them in that manner. The CIC is a statutory company incorporated under the Companies Act 1997. This industry does not have shareholders but members. Like all big companies, the CIC has a company constitution. According to Section 8 of the constitution the members should be 12 people from the following groups:
6. According to Section 13 of the company constitution the 12 representatives from the above member groups can be appointed Directors. Under the RSA Act the six representatives from the Small Growers Associations stated above are appointed by the Governor General and gazetted. Directors can be any number of more than 7 and less than 12. These Directors then constitute the CIC Board. Section 10 of the constitution of the company states, the Chairman of the Board is voted by the Directors. However, a representative from the State and Exporters Council cannot be appointed Chairman.
7. It s alleged the CIC gets an annual National Government budget allocation of K100 million and also receives more than K80 million in donor funding from other countries yearly. The industry also collects export levies in excess of K50 million each year. Thus, the CIC begins a financial year with a base of almost K200 million. The CIC constitution sets an expenditure limit. Any figure beyond that limit is subject to the Board's approval.
8. As to the appointment of the members of the Board, the process is provided under Section 10 of the RSA Act. It states:
"10. Appointment of non ex officio members of Boards of Regulatory Statutory Authorities.
(1) Where, in relation to a Regulatory Statutory Authority, an appointment of a member of the Board, other than an ex officio member, is required to be made in accordance with the Act or other instrument of incorporation under which the Regulatory Statutory Authority is established, the appointment shall be made, notwithstanding any provisions to the contrary, by the National Executive Council.
(2) Where an appointment to which Subsection (1) applies is to be made, the Minister shall—
(a) prepare a list of candidates for the office; and
(b) submit the list to the Ministerial Executive Appointment Committee for its consideration.
(3) Where, under an Act or other instrument of incorporation, an appointment to an office to which Subsection (1) applies is to be made to represent a particular group, the Minister shall, prior to submitting a list to the Ministerial Executive Appointment Committee under Subsection (2)(b)—
(a) carry out genuine consultations with the particular group concerned on its proposed nominees for the office; and
(b) from the consultations made, compile a summary of the nominees made by the interest group,
for submission to the Ministerial Executive Appointment Committee for its consideration.
(4) On the receipt of a list under Section 2(b), the Ministerial Executive Appointment Committee shall consider whether each applicant satisfies a "fit and proper person criteria" based on the following:—
(a) whether the person is a fit and proper person to hold the particular office; and
(b) whether the person is competent and of sound judgement to fulfill the responsibilities of that office; and
(c) whether he is a person whose previous conduct and activities in business or financial matters is not in question and, in particular, that he may not have—
(i) committed an offence involving fraud or other dishonesty or violence; or
(ii) been engaged in or been associated with any financial loss due to dishonesty, incompetence or malpractice; or
(iii) been engaged in any business practices appearing to be deceitful or oppressive or otherwise improper (whether unlawful or not) or which otherwise reflect discredit on his conduct; or
(iv) engaged in or been associated with any other business practices or otherwise conducted himself in such a way as to cast doubt on his competence and soundness of judgement,
and shall make appropriate recommendations and advice on appointment to the Minister.
(5) In the event that the National Executive Council approves the recommendation of the Ministerial Executive Appointment Committee under Subsection (6), it shall advise the Head of State to make an appointment of a non ex officio member of the Board of the Statutory Regulatory Authority.
(6) . . . Repealed."
9. At page 8 of her written submission except for the reference to the Public Service Commission, Ms. Kulumbu has correctly set out, step by step, the procedure by which the Minister must follow to facilitate the appointment of the members of the Board and I respectfully adopt them here. It starts with the Minister and he must:
(1) Carry out genuine consultations with the particular group concerned on its proposed nominees for the officer (sub-section 3(a)).
(2) From the consultations made, compile a summary of the nominees made by the interest group, for submission to the Ministerial Executive Appointment Committee for its consideration (sub-section 3(b)).
(3) Prepare a list of candidates for the office (sub-section 2(a)).
(4) Submit the list to the Ministerial Executive Appointment Committee for its consideration (sub-section 2(b)).
(5) On receipt of the list, the Ministerial Executive Appointment Committee shall consider whether each applicant satisfies a "fit and proper person criteria" based on the specific grounds prescribed under sub-section 4(4), (b), (c) (i), (ii), (iii) and (iv) and thereafter make appropriate recommendations and advice on appointment to the Minister (sub-section 4).
(6) On receipt of the advice of the Ministerial Executive Appointment Committee, the Minister shall make a submission on appointment to the National Executive Council for its consideration (sub-section 5).
(7) If the National Executive Council approves the recommendation of the Minister, it shall advise the Head of State to make an appointment of a non ex officio member of the Board of the Statutory Regulatory Authority.
10. I also accept Ms. Kulumbu's submission who submitted that from the procedure as briefly outlined, it is the Minister who is given the responsibility to facilitate the appointment of the CIC Board and not the Third Defendant, the National Executive Council ("NEC"). The NEC cannot recommend to the Head of State to appoint members of the Board if there is no list of persons submitted to it by the Minister after approval by the Ministerial Executive Appointment Committee. So it is absolutely critical that the Minister must waste no time and initiate the process of appointment.
11. Counsel for the Plaintiff Mr. Wanis submitted there is no evidence that the Minister complied with the duty under Section 10. Ms. Kulumbu conceded this point. On the other hand, the uncontested evidence is the Plaintiff and outgoing Directors had on numerous occasions requested the Minister to cooperate and facilitate the appointment of new Directors of the Board by asking him to conduct a consultation with interest groups. When the Minister did not respond, they resubmitted names of nominees to him to further submit to the Public Service Commission (now replaced by the Ministerial Executive Appointment Committee). The Plaintiff and others considered that it was in the best interest of the parties that they take this step and inform the Minister so that he could facilitate the appointment of new Directors of the Board. However, again the Minister did not respond.
12. Further, there is evidence that after receiving no response from the Minister, the Plaintiff met with the Prime Minister on two occasions to see if there was any way the Prime Minister could assist to ensure the Minister complied with his duty in facilitating the appointment of new Directors of the Board. Nothing fruitful eventuated from these meetings and to date, the CIC still is without a proper Board. Although not necessary and the Prime Minister of the country should not be troubled by a matter that should be sorted out by the portfolio Minister, I am satisfied that the Plaintiff as a concerned former member and Deputy Chairman of the Board, has exhausted all possible avenues to seek redress. He has run out of options and has come to Court for assistance.
13. There is a combination of factors at work here. First, despite the Plaintiff and other former Directors using their own initiatives to bring the matter to the notice of the Minister, he did not respond. The uncontested evidence is that the Minister did not give reasons for not facilitating the process of appointment of new Directors of the Board. Secondly, the delay of three years is unreasonable.
14. Cannings, J explained in Joe Ponau v. Teaching Service Commission Disciplinary Committee (2006) N3059 the duty to give reasons is now regarded in Papua New Guinea as an integral part of the duty of a public official to accord natural justice to those affected by the official's decisions. If a decision-maker has a duty to accord natural justice, there is a duty to give reasons; and if no reasons are given, that means there are no good reasons and the decision-maker will have acted in excess of jurisdiction. If there is no express duty to give reasons, the duty will be implied. Those principles were applied by the Supreme Court in Ombudsman Commission v. Peter Yama (2004) SC747 and Mision Asiki v. Manasupe Zurenuoc (2005) SC797 and many others.
15. The Supreme Court said that the duty to give reasons exists if there is a duty to comply with the principles of natural justice. To establish that there is a duty to give reasons the Plaintiff must first show that there was a duty to accord natural justice (Mision Asiki v. Manasupe Zurenuoc (2005) SC797). I agree with this statement.
16. In this case I am unable to find an expressed duty in Section 10 requiring the Minister to give reasons for not facilitating the appointment of new Directors of the Board. For this reason, I am not satisfied the Minister is obliged to give reasons. Likewise, I am not satisfied that the duty to give reasons can be inferred. This is because no-one has been appointed. If a new Board were appointed, as it were, then those who miss out may have an argument if they were not given reasons as to why they missed out. For these reasons, I am not satisfied the Plaintiff has been denied natural justice. This ground is dismissed.
17. However, is a delay of three years reasonable? Growing and selling coffee is a big industry in Papua New Guinea. There are small growers to big growers from the Highlands to some coastal parts of the country who are involved in this industry. It shows that the coffee industry is so divest and faces many challenges. At the helm of the industry is the CIC. The diversity of the industry is evident in the composition of the Board as highlighted at [5] above. The Board is made up of individuals representing different interest groups. The success or otherwise of the industry, in my respectful opinion, depends very much on these individuals and the kind of decisions they make.
18. Another factor which I consider relevant and significant is this, any industry, whether fishing, forestry, cocoa, copra and so forth need money to sustain itself and grow. Coffee industry is no exception. If what is alleged is true, then the CIC starts each financial year with a base of almost K200 million (refer to [7] above). Any expenditure beyond the expenditure limit set by the CIC constitution is subject to the Board approval. So when there is no Board, how does an expenditure exceeding the expenditure limit gets approved? Who approves it? In my view it is necessary for the smooth running of the CIC that there be in place, a Board to oversee the management and affairs of the CIC, including its expenditure of funds. This can only happen when a proper Board is in place and in charge.
19. Finally, there is evidence that substantial funds were misused. The Plaintiff deposed in his affidavit (exhibit "P1") that in 2011, allegations of financial mismanagement of CIC funds arose. The management then comprised of Chief Executive Officer (Mr. Navi Anis) and the Company Secretary (Ms. Shirley Maladina) was alleged to have colluded with the current Minister to siphon millions of kina into private bank accounts for private use. To cut the long story short, an investigation was done by a private law firm and a chartered accounting firm and a report dated 06th December, 2013 was produced.
20. From my understanding of Mr. Wanis's submission, he relied on this evidence to show that the Minister's failure to facilitate the process of appointment of new Directors is deliberate because potentially, the report on the mismanagement of funds may be used by the new Board to expose him and the management. If that is Mr. Wanis' submission, then I am of the view that this evidence goes to establish bad faith or improper motive which has not been pleaded and relied upon by the Plaintiff in this case. For this reason, I decline to consider it.
21. However, the other matters show to me that the Board plays a significant role in the sustenance and growth of the industry. On the other hand, it has not been drawn to my notice by counsel a provision in the RSA Act or the Coffee Industry Corporation (Statutory Functions and Powers) Act, 1991 granting power to the Minister or the NEC to appoint an interim Board pending appointment of a new Board.
22. Mr. Wanis referred me to Section 13 of the RSA Act which provides for "Department to exercise functions of Board" and submitted that it does not apply to this case because there was a Board and its Directors' term had expired. This does not mean that there was no Board. Secondly, this provision was intended to be an interim remedy. If, indeed, an interim Board exists, a delay of three years to appoint a permanent Board cannot possibly be described as an interim remedy.
23. Section 13 states:
"13. Department to exercise functions of Board.
Where, in relation to a Regulatory Statutory Authority, there is no Board or other controlling or governing body, the functions of a Board specified under Parts II, III and IV of this Act shall be exercised by the Department responsible for personnel management matters."
24. I have considered Section 13 and it appears where there is no Board of a Regulatory Statutory Authority, the functions of the Board are exercised by the Department of Personnel Management. To that extent, I do not accept the first reason given by Mr. Wanis but I do accept the second reason to the extent that Section 13 is intended to be an interim remedy and the power of the Board is exercised by the Department of Personnel Management. However, there is no evidence that the Department of Personnel Management has been running the affairs of the Board. So any reliance on this provision to counter the Plaintiff's claim of undue delay in the appointment of new Directors of the Board is unsupported by evidence and must fail.
25. In the end, when all these factors are taken into account, I am satisfied that a delay of three years is unreasonable and no Minister in his right frame of mind would delay facilitating such an important appointment process for that long. I uphold the submission of the Plaintiff and find that the Minister has failed to comply with the duty under Section 10.
Remedy
26. The next issue is whether an order for mandamus should lie to compel the Minister to perform his duty under Section 10. In judicial review proceedings, even though the grounds of review are upheld, the Court may grant or decline to grant relief sought by a Plaintiff. The remedy still remains a matter of discretion. In this case the Plaintiff seeks an order in the nature of mandamus to compel a public official to perform a duty. It is a relief that may be granted pursuant to Order 16, rule 1 of the National Court Rules. The duty is imposed by statute. It is a statutory duty. It has been established that the public official has failed to perform the duty and no reasons have given for not performing the duty.
27. I accept Mr. Wanis' submission who submitted that the National Court has treated cases of this nature as properly before it. He referred to the case of Skate v. Barter (2005) N2925. In that case leave was granted and the matter proceeded to substantive hearing and the Court refused to grant the relief sought by the Plaintiff. Even though the National Court refused the relief on grounds of judicial interference, it approved the statement of law in de Smith on Judicial Review of Administrative Action (2nd ed.) at page 561:
"Mandamus lies to secure the performance of a public duty, the performance of which the applicant must show that he has demanded performance of the duty and the performance has been refused by the authority obliged to discharge it. It is per-eminently a discretionary remedy and the Court will decline to award if another legal remedy is equally beneficial, convenient and effective."
28. The Court further cited with approval de Smith (supra) at page 576:
"But where a statute has imposed a duty on an expressly-designated public official, and his duty is to be wholly discharged by him in his capacity, as distinct from his capacity as adviser or to instrument of the crown, the courts have shown readiness to grant mandamus."
29. I am satisfied the statute imposed a duty on the Minister to initiate and facilitate the process of appointment of Directors of the Board. As the evidence has established, despite numerous attempts to get the Minister to perform his duty, he has failed. I am satisfied the Plaintiff has demanded performance of the duty and the Minister failed to perform the duty. And so an order for mandamus should lie against the Minister. As to the terms of the order, I will shortly come to it.
Appointment of Acting Chief Executive Officer
30. For now I address the second aspect of the Plaintiff's case. He further alleged that the then acting Chief Executive Officer (the First Defendant) was not properly appointed by failing to follow due procedures under Section 9 of RSA Act. As a result, his appointment is illegal. Section 9 states:
"9. ACTING APPOINTMENT OF CHIEF EXECUTIVE OFFICERS
(1) Where, the relation to a Regulatory Statutory Authority –
- The chief executive is unable to undertake his duties for any reasons; or
- The Board considers if necessary to make an acting appointment pending a new substantive appointment the Board shall recommend to the Minister a suitable person to act for a period not exceeding three months, from a pre-selected list of suitable persons endorsed by the Public Service Commission based upon an assessment of the prescribed minimum person specification.
(2) On receipt of a recommendation under subsection (1), the Minister shall recommend to the National Executive Council to make an acting appointment, and the National Executive Council shall make the acting appointment."
31. The main contention here is under Section 9 the term of appointment of an acting Chief Executive Officer shall not exceed three months. The First Defendant continued in office beyond three months contrary to Section 9. Mr. Wanis further submitted that despite this, this year the First Defendant was replaced by a Charles Dambu and there is still a question mark over the legality of the appointment and he sought leave to replace the First Defendant with Mr. Dambu in these proceedings. This is simply because there is no proper Board to recommend to the Minister to appoint an acting Chief Executive Officer and there is a prescribed procedure to follow when an appointment of an acting Chief Executive Officer is to be made under Sections 4, 5 and 6 of the RSA Act. Mr Wanis has covered the procedure at page 7 of his written submission which I adopt.
32. However, with respect, in the present proceedings the Plaintiff has sought orders which included the Court to appoint an interim Board so that the latter may appoint an interim Chief Executive Officer and later, a permanent Chief Executive Officer. In my view the proposed orders fall outside the jurisdiction of the National Court and inappropriate for the Court to grant.
33. Secondly, Ms. Kulumbu submitted that the challenge to the appointment of the First Defendant (or Mr. Dambu) constituted a separate cause of action and required the Plaintiff to institute separate proceedings to challenge the decision of the decision-making authority. With respect, I think what she is in fact conveying here is that the Plaintiff does not have standing to challenge it simply because he is not a person directly affected by the decision. In other words, he is not a person who missed out of being appointed as acting Chief Executive Officer. And while it may be that he has been granted leave to challenge the subject decision, it still remains a matter of discretion whether the Court is satisfied that he has standing to challenge the subject decision. And I am not satisfied that he does.
34. For these reasons, the review sought against the decision to appoint the First Defendant as acting Chief Executive Officer is dismissed.
Conclusion
35. I return to the terms of the order. The orders sought by the Plaintiff in the originating summons are set out below:
Mr John Edwards, acting member – representing Coffee Exporters Council Inc.
shall constitute the interim Board.
Order
36. The orders sought are premised on the CIC being a company and urgently needs a proper Board to oversee its management and affairs. I do appreciate the reason for the Plaintiff to seek these orders. However, with respect, it must not be forgotten that it is not the function of the Court to appoint members of the Board. That is the function of the Head of State pursuant to the exercise of executive power through the NEC under Section 10. I refuse the orders sought.
37. Notwithstanding this, I will order the Minister to initiate the process of appointment of new Directors of the Board by conducting genuine consultation with particular interest groups on proposed nominees for office within 60 days of this order, excluding Public Holidays of 25th December 2015 (Christmas Day), 26th December 2015 (Boxing Day) and 01st January 2016 (New Years Day). Thereafter, within a further 30 days, the Minister shall prepare and submit a list of candidates for office (appointment) to the Ministerial Executive Appointment Committee for its consideration.
38. This is as far as the Court can go to order the Minister to comply with the duty under Section 10. The assessment of suitability of candidates falls within the jurisdiction of the Ministerial Executive Appointment Committee and I do not think an order for mandamus should lie against it. However, it is expected to play its part in the whole process of appointment by carrying out assessment and making its recommendation to the Minister within a reasonable time so that the Minister may present it to the NEC for consideration before it advises the Head of State to make the appointment. I make orders in those terms.
39. Secondly, the review sought against the decision to appoint the First Defendant as acting Chief Executive Officer is dismissed.
40. Finally, the Defendants shall pay the costs of the proceedings, to be taxed, if not agreed.
Judgment and Orders accordingly.
_______________________________________________________________
Warner Shand Lawyers: Lawyers for the Plaintiff
Acting Solicitor-General: Lawyers for the Third and Fourth Defendants
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