N7209 
PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS (JR) NO. 773 OF 2016

BETWEEN
FRANCIS KAMBAKA – District Administrator of Ambunti-Dreikikier & CEO of Ambunti-Dreikikier District Development Authority 
 First Plaintiff

AND
AMBUNTI-DREIKIKIER DISTRICT DEVELOPMENT AUTHORITY 
 Second Plaintiff

AND
MICHAEL DICK - Acting Chief Ombudsman
First Defendant

AND
RICHARD PAGEN - Acting Ombudsman
Second Defendant

AND
OMBUDSMAN COMMISSION OF PAPUA NEW GUINEA 
Third Defendant

AND
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Fourth Defendant

Waigani: Makail, J
2017: 4thMay & 2018: 3rd April   
JUDICIAL REVIEW – Application for judicial review – Review of direction – Stop on transactions on accounts of District Authority – Freezing of funds – Power of – Scope of power – Reasonableness of exercise of power – Jurisdiction to review direction – Competency of proceeding – Constitution – Sections 27 (4) & 217 
Cases cited:
In re Constitutional Amendment Law 2008, Reference by the Ombudsman Commission Supreme Court Reference (2013) SC1032
The Honourable Sir Dr Puka Temu & Ors v. Ombudsman Commission of Papua New Guinea (2016) N6388
Special Reference by the Attorney-General pursuant to Constitution section 19 (2016) SC1534

Counsel:
Mr. J. Holingu, for Plaintiffs
Mr. M. Efi, for First, Second and Third Defendants 
No appearance, for Fourth Defendant 
  
JUDGMENT
3rd April, 2018

1.	MAKAIL J:  By this application for judicial review under Order 16 of the National Court Rules, the plaintiffs seek the following orders: 

1.1.	a declaration that the decision, or action, or inaction, or omission by the Ombudsman Commission in neglecting, or failing or refusing, or not performing their duties diligently in replying to the requests by the plaintiff to lift the Constitutional Direction dated 23rd May 2014 that restricts all withdrawals from the bank accounts of Ambunti-Dreikikier District is harsh and oppressive, unreasonable, breaches natural justice and also is unlawful pursuant to Section 41 of the Constitution. 

1.2.	a declaration that the continual restrictions by the Ombudsman Commission on all withdrawals from the bank accounts of Ambunti-Dreikikier District is harsh and oppressive, unjust, unfair, prejudicial, discriminatory, unreasonable and disproportionate to the plaintiffs and the people of Ambunti-Dreikikier under circumstances of the investigation by the Ombudsman Commission and is unlawful.

1.3.	A permanent injunction requiring the Ombudsman Commission to remove or uplift (sic) the Constitutional Directions that imposes restrictions on all withdrawals from the bank accounts of Ambunti-Dreikikier District Account No. 1000878702 and the Ambunti-Dreikikier District Services Improvement Program Account No. 1001372286 held at BSP.

Background Facts

2.	In May 2014, the Ombudsman Commission received information that K92, 705.00 was deposited into the bank account of a company called Kumurop Investment Ltd held with Westpac Bank.  The Member for Ambunti-Dreikikier Open electorate Ezekiel Anisi is a Director of Kumurop Investment Limited.  The sources of the funds were from Ambunti-Dreikikier District Services Improvement Program Account No. 1001372286. Mr. Anisi is a Leader under the Leadership Code.  

3.	Upon further investigations, further irregularities were discovered regarding the concerned accounts and investigations were conducted into the conduct of the Leader.  To protect public funds from being abused in the process, the Commission exercised its powers pursuant to Section 27(4) of the Constitution and on 23rd May 2014 issued a Direction over these accounts and other accounts which had transacted public funds from these accounts. 
4.	As the investigations were almost complete the Commission had originally considered lifting the Direction, but further discovered that despite the issuance of the Direction, the funds were used, and in most cases, it appeared that funds were either accessed without complying with procurement processes or no proper acquittals made.
5.	After waiting for more than two years with no information from the Commission in relation to the lifting of the Direction, the plaintiffs wrote to the defendants on three separate occasions; first on 9th August 2016, second on, 13th September 2016 and last on, 11th November 2016 requesting for the defendants to withdraw restrictions imposed on the Ambunti-Dreikikier District Treasury Account and District Services Improvement Program Account and allow them access to the funds in the respective bank accounts.

6.	On 28th September 2016 the defendants and the plaintiffs’ lawyers met and it was disclosed to the plaintiffs’ lawyers that further irregularities were discovered in the transactions after the Direction was issued.

7.	The defendants’ investigations are nearing completion and are in contact with the Leader’s lawyers to progress the matter to the next stage.  In the meantime, parties reached an agreement for the defendants to access funds from the accounts subject to provision of relevant supporting documents and further, approval from the Commission.  A consent order was endorsed by the Court to reflect that agreement and the plaintiffs have been, accordingly, accessing funds from the accounts.

Grounds of Review

8.	The plaintiffs questioned the exercise of power by the defendants under Section 27 (4) of the Constitution alleging that the Direction issued by the Commission was unfair and unjust, harsh and oppressive, discriminatory, a misuse or abuse of power, unreasonable, in breach of natural justice, made in bad faith or motive and biased.  

9.	All these grounds were mooted to have the Direction quashed and the plaintiffs have access to the funds because of the prolonged delay by the Commission in completing the investigation.

10.	Section 27 (4) states:

“(4)	The Ombudsman Commission or other authority prescribed for the purpose under Section 28 (further provisions) may, subject to this Division and to any Organic Law made for the purposes of this Division, give directions, either generally or in a particular case, to ensure the attainment of the objects of this section.”

Independence of Ombudsman Commission

11.	Mr. Efi of counsel for the defendants in his submissions objected to the competency of the proceeding on the ground that the Court’s jurisdiction to review the exercise of power by the Commission under Section 27 (4) of the Constitution is limited and restricted to excess of jurisdiction under Section 217 (6) of the Constitution. Any other ground would be outside the jurisdiction of the Court.  

12.	In this case, excess of jurisdiction is not the ground and for this reason alone, the application for judicial review should be dismissed.

13.	The purpose of putting a restriction on the Court’s role in matters falling within the ambit and jurisdiction of the Commission is well founded and acknowledged.  The Commission must be given that independence and freedom to carry out its constitutionally mandated functions without unnecessary interference from outside as proposed by the Constitutional Planning Committee in the pre-constitution time.  

14.	It may be argued that In re Constitutional Amendment Law 2008, Reference by the Ombudsman Commission Supreme Court Reference (2013) SC1032 is a case which reinforces the principle of independence of the Commission.  That was a case where the Supreme Court found certain provisions of amendments to the functions and powers of the Commission to be unconstitutional for interfering with the Commission’s independence under Section 217 (5) of the Constitution.

15.	But it was also acknowledged by counsel that this is a general rule.  If there is a clear case of abuse of power by the Commission, the Court can intervene.  In Special Reference by the Attorney-General pursuant to Constitution section 19 (2016) SC1534 in considering the nature and extent of the power conferred on the Commission under Section 27 (4) of the Constitution the Supreme Court held that such power cannot be exercised arbitrarily.  The Court set out eleven factors and appeared to have said that the Commission must satisfy them before the Commission may invoke Section 27 (4) and issue a Direction.

16.	The case of The Honourable Sir Dr Puka Temu & Ors v. Ombudsman Commission of Papua New Guinea (2016) N6388 which decision was delivered about two weeks prior to the decision in Special Reference by the Attorney-General, appears consistent with the position taken by the Supreme Court where the Commission’s exercise of power under Section 27 (4) has been questioned or challenged not only on excess of jurisdiction but on grounds of unreasonableness. It would appear then that the Commission’s challenge on the competency of the proceeding is not determinative of the proceeding.

Direction of 23rd May 2014

17.	On the other hand, at the heart of the dispute is the Direction of 23rd May 2014.  Parties are at odds as to its application, the plaintiffs contending that it was issued for a specific purpose and, that is that, it was to stop all transactions on the bank accounts of the District Authority pending investigation of the suspected breach or misconduct by the Leader in relation to the payment to Kumorop Investment Limited.

18.	The defendants contended that it was wide enough to cover other suspected breaches or irregular payments by the Leader, his associates and District officials.  Thus, when suspected breaches or irregularities in the payments were identified during investigation, it was necessary for the Commission to maintain the Direction or restriction on the bank accounts until the investigation of the further breaches or irregularities are completed.  

19.	Significantly, the Commission discovered that despite the Direction, funds were being withdrawn from the bank accounts.  It alleged that this was in breach of the Direction.  In order to stop further breaches or transactions on the bank accounts, it determined that it was necessary to maintain the Direction.  Its position was not revealed to the plaintiffs because of the confidential nature of the investigation.

20.	The position taken by the defendants explains why the restriction on the bank accounts remained for more than two years until 28th September 2016 when parties met and the defendants disclosed the Commission’s reason to the plaintiffs. 

21.	But it cannot be emphasised enough that the Direction was issued for a specific purpose and for an unspecified or indefinite period.  The purpose was to stop all transactions on the bank accounts of the District Authority because it was alleged that moneys in the bank accounts were paid to Kumorop Investment Limited of which Mr. Anisi is a Director.  The stop on all transactions to the bank accounts of the District Authority will cease on either of the two conditions being fulfilled:

	21.1.	The Commission has completed its investigation, or
	
21.2.	The Commission has determined and is satisfied that the alleged payment of the public funds to Kumorop Investment Limited is in order and justified by compliance.

22.	If that is the purpose of the Direction and the stop on all transactions on the bank accounts, the Commission would be acting contrary to the purpose of the Direction or outside its scope when it further found unrelated suspected breaches or irregular payments and even suspected unrelated payments made while the Direction was in force and decided to maintain the restriction.

23.	In so doing, the Commission could not possibly be found to be fair, just and reasonable in its investigation of the Leader and ultimately, the District Authority.  That is not to say that the Commission cannot commence investigation on its own initiative but that is a different issue and not the issue here.  The issue here is whether the District Authority and its officials represented in this case by the first plaintiff should have been informed of the further reason for the restriction on the bank accounts of the District Authority.  

24.	Further, the Commission will be found to be in breach of natural justice if it gave no reasons to the plaintiffs for the restrictions on the bank accounts.  I so find.  The Commission’s concern that moneys were withdrawn from the bank accounts while the Direction was in force is noted.  There is no doubt in my mind that, what the Commission has done was genuinely fitting under the prevailing circumstances at that time, that is that, to stop further suspected abuse or misuse of public funds of the District Authority by its officials and third parties.  Thus, it cannot be guilty of maintaining the Direction in bad faith or with ulterior motive.  Nor am I convinced that it was biased.  

25.	But to maintain the Direction while apparently the investigation of the Leader may have been almost completed is not a legitimate way of addressing the alleged breach of the Direction. To do that is irrelevant and indeed, contradictory.  

26.	For the Direction is unequivocally clear.  At page 4, it is stated:

“(b)	 that if any of the persons in (1) to (5) above fails to comply with this direction he or she will be guilty of misconduct in office under Section 27(5)(b) of the Constitution and liable to prosecution before a leadership tribunal and subject to penalties under Section 28(1)(g)(ii) of the Constitution, Section 27(5) of the Organic Law on the Duties and Responsibilities of Leadership and Section 2 of the Leadership Code (Alternative Penalties) Act, including dismissal from office ; and

(c)	if any of the persons described in (7) to (12) above fails to comply with this direction he or she may be subject to enforcement proceedings in the National Court under Section 23 of the Constitution.”
	
27.	According to this statement, if the Direction is or has not been complied with by persons listed from paragraphs (1) to (12) of the Directions, there are different sanctions that the Commission may seek to have imposed on them.  For example, in the case of the plaintiffs, the Commission can commence enforcement proceedings in the National Court under Section 23 of the Constitution.  That is the remedy for the Commission if it has evidence of breach of the Direction.

28.	By not pursuing the sanctions against the plaintiffs as stated in the Direction and instead, maintaining the Direction, it has open itself up to criticism and accused of arbitrary exercise of power, a matter the Supreme Court did warn the Commission of in Special Reference by the Attorney-General.   The plaintiffs have described the Commission’s exercise of power as harsh and oppressive and an unjust deprivation of the people of Ambunti Dreikikier of funds.

29.	The assertion appears to have some legitimacy where there is uncontroverted evidence from officials and local level government members including the first plaintiff that since the Direction, the District Authority has been unable to access funds to carry out or implement its projects and deliver goods and services to the people of the District.  

30.	The District Authority was almost at the brink of collapsing had it not being for the persistence of the plaintiffs to get the defendants to make some concession.  When its ability to access and use funds to deliver goods and service to the people is restricted to a point where it is non-existent, it is difficult to see how the plaintiffs’ persistent requests can amount to a direction to the Commission to lift the Direction as asserted by the defendants. 

31.	Finally the Commission did realise the enormity of the impact the Direction had on the District and it was through the concession it made, that an agreement was reached for the defendants to access funds from the accounts, subject to provision of relevant supporting documents and further, approval from the Commission.  A consent order was endorsed by the Court to reflect that agreement and the plaintiffs have been, accordingly, accessing funds from the accounts.

32.	But if according to the second defendant that the investigation of the leader has been completed, the Direction has served one of its purpose and must be lifted so that funds in the bank accounts can be accessed.  If the Commission wants to investigate further suspected breaches or irregular payments unrelated to the Kumorop case, they can be subject of a further Direction.  

33.	For now, the Direction must be lifted.	 All orders in force must also be lifted to allow the plaintiffs access to the funds in the bank accounts.

Order

34.	The orders are:

1.	A declaration that the decision, or action, or inaction, or omission by the Ombudsman Commission in neglecting, or failing or refusing, or not performing their duties diligently in replying to the requests by the plaintiff to lift the Constitutional Direction dated 23rd May 2014 that restricts all withdrawals from the bank accounts of Ambunti-Dreikikier District is harsh and oppressive, unreasonable, breaches natural justice and also is unlawful pursuant to Section 41 of the Constitution. 

2	A declaration that the continual restrictions by the Ombudsman Commission on all withdrawals from the bank accounts of Ambunti-Dreikikier District is harsh and oppressive, unjust, unfair, prejudicial, discriminatory, unreasonable and disproportionate to the plaintiffs and the people of Ambunti-Dreikikier under circumstances of the investigation by the Ombudsman Commission and is unlawful. 
	
3.	Subject to further Direction from the Ombudsman Commission, an injunction requiring the Ombudsman Commission to remove or lift the Constitutional Direction that imposes restrictions on all withdrawals from the bank accounts of Ambunti-Dreikikier District Account No. 1000878702 and the Ambunti-Dreikikier District Services Improvement Program Account No. 1001372286 held at BSP.

4.	All interim orders in force are dissolved forthwith.

5.	The defendants shall pay the costs of the proceeding, to be taxed, if not agreed.
6.	Time for entry of these orders shall be abridged, to the date of settlement, which shall take place forthwith.
_______________________________________________________________
Holingu Lawyers			: Lawyers for Plaintiffs
Ombudsman Legal Counsel	: Lawyers for First, Second & Third Defendants
Solicitor-General			: Lawyers for Fourth Defendant