Tarere, Tobata, Bulmara, Waluta and Krepp v ANZ Bank [1988] PGLawRp 44; [1988] PNGLR 201 (7 November 1988)

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[1988] PNGLR 201 - Rose Tarere, John Tobata, Henry Bulmara, Theodore Waluta and Selwyn Krepp v ANZ Bank

IN THE MATTER OF AN APPLICATION BY ROSE TARERE, JOHN TOBATA, HENRY BULMARA, THEODORE WALUTA AND SELWYN KREPP

AUSTRALIA AND NEW ZEALAND BANKING GROUP (PNG) LTD AND IN THE MATTER OF S 41 OF THE CONSTITUTION OF THE INDEPENDENT STATE OF PAPUA NEW GUINEA

MORTGAGES - Mortgagee’s powers - Power of sale - Statutory power - Whether exercise unlawful as “harsh and oppressive” - Constitution, s 41, inapplicable - Land Registration Act (Ch No 191) - Constitution, s 41(1).

CONSTITUTIONAL LAW - Basic rights - Qualified rights - Proscribed acts - “Harsh and oppressive acts” - Whether constitutional protection applicable to mortgagee’s power of sale - Land Registration Act (Ch No 191) - Constitution, s 41(1).

The provisions of s 41 of the Constitution relating to harsh or oppressive acts done under a valid law, cannot be invoked in relation to the valid exercise of a mortgagee’s power of sale deriving from the Land Registration Act (Ch No 191).

SCR No 1 of 1984; Re Minimum Penalties Legislation [1984] PNGLR 314, not followed.

This was an originating summons in which the co-plaintiffs sought declarations pursuant to s 41(1) of the Constitution, that the actions of the defendant bank in selling various properties to a mortgagee’s power of sale were harsh and oppressive and/or not warranted by or were disproportionate to the requirements of the particular case.

HINCHLIFFE J.: The co-plaintiffs seek declarations pursuant to s 41 of the Constitution of Papua New Guinea. The matter arises out of the mortgagee sale by the defendant of eight properties at Rabaul. Rose Tarere owned one of the properties as did Theodore Waluta and Selwyn Andress Krepp. John David ToBata owned two properties and Henry Pikene Bulmara owned three. The co-plaintiffs claim that the circumstances in which the defendant proceeded with such action was unlawful and an example of the type of declaration sought is as follows:

“A declaration that the actions of the defendant in selling the property at Lot 1 Section 58, Rabaul is harsh and oppressive and/or is not warranted by or is disproportionate to the requirements of the particular case to Rose Tarere and by virtue of Section 41(1) of the National Constitution is an unlawful act.”

N2>(1) Notwithstanding anything to the contrary in any other provision of any law, any act that is done under a valid law but in the particular case —

(b) is not warranted by, or is disproportionate to, the requirements of the particular case; ...

N2>(2) The burden of showing that Subsection (1)(a)(b) or (c) applies in respect of an act is on the party alleging it, and may be discharged on the balance of probabilities.”

At the commencement of the hearing Mr Pato, who appeared for the co-plaintiffs conceded that the defendant was the mortgagee in possession of the various State Leases pursuant to its mortgages and had authority to foreclose under the terms of the subject mortgages under the relevant provisions of the Land Registration Act (Ch No 191) of the Revised Laws of Papua New Guinea.

That matter was not taken any further by the defendant which did surprise me to a certain extent because it seemed to me that it could be argued that if such a concession was made then the implication is that it is also conceded that s 41 of the Constitution does not apply. Needless to say the point was not raised and I do not propose to mention it again.

Mr O’Regan QC, who, together with Mr Coady, appeared for the defendant, submitted that s 41 of the Constitution did not apply to this case. If that submission was successful then of course that would be the end of the matter and the co-plaintiffs would fail from the outset in their bid to seek declaration.

Mr Pato submitted that the issue is now settled since SCR No 1 of 1984; Re Minimum Penalties Legislation [1984] PNGLR 314. He said:

“There can be no question as to the application of s 41 to the instant case. Hence, the defendant’s submission that s 41 does not apply is with respect misconceived.

It is clear that s 41 applies to the provisions of ‘any law’ notwithstanding anything to the contrary in any other law. The contextual applicability argument developed by Bredmeyer and McDermott JJ in SCR No 1 of 1984; Re Minimum Penalties Legislation (1984) PNGLR 314 and advanced by counsel has already been rejected by the majority of the judges in that Court, namely Kidu CJ, Kapi Dep CJ and Kaputin J. It is argued that Kaputin J cannot be said to have clearly supported the views of the Chief Justice and Deputy Chief Justice. We submit he did, when his Honour states at 351 of his judgment —

‘... Section 41 provides a controlling mechanism and whatever way we look at it, no statutory laws can avoid it.’ [Emphasis own.]

‘It is unfortunate that the power was slotted in between the qualified rights provisions. It could have been placed somewhere else in the Constitution as it is not limited to qualified rights only.’

It is submitted that it is implicit form these words that his Honour was speaking in the same vein as the Chief Justice and the Deputy Chief Justice that the application of s 41 is not limited to qualified and basic rights.”

“Indeed, support for this interpretation of the analysis of s 41 in that case may be found in the judgment of McDermott AJ as he then was in Raz v Matane [1986] PNGLR 38. His Honour, when commenting on the views of the Supreme Court in SCR No 5 of 1985; Re Raz v Matane (1985) PNGLR 329 stated at page 30 of his judgment as follows:

‘However, Amet J favoured a more limited role for s 41 and whilst I have differed on his view of the nature of this ‘right’, I too, in agreement with Bredmeyer J in SCR No 1 of 1984; Re Default Penalties [1984] PNGLR 418, limited an action under s 41 to rights set out in the Constitution. But on this issue we were in the minority; Kidu CJ, Kapi DCJ and Kaputin J favoured a wide interpretation for the section, and that is the present state of the law and how this case has thus come to pass.”

Sometime after final submissions from counsel, Mr Pato, by letter, referred me to Independent State of Papua New Guinea v Lohia Sisia [1987] PNGLR 102 at 111 of that judgment, where Bredmeyer J said:

“the ambit of s 41 was considered by the Supreme Court in SCR No 1 of 1984: Re Minimum Penalties Legislation [1984] PNGLR 314. The majority, Kidu CJ, Kapi Dep CJ and Kaputin J, decided that the section applies to any act done under a valid law and is not limited to an act done under law which restricts one of the constitutional rights.”

In that appeal Cory and Barnett JJ concurred with Bredmeyer J but they did not give any reasons.

The submission made by Mr O’Regan QC has caused me considerable concern because it seems to me that what Kaputin J said in SCR No 1 of 1984; Re Minimum Penalties Legislation may well not be supporting the views of the Chief Justice and the Deputy Chief Justice. If that is so then the situation now is that the s 41 argument is still undecided or the majority view is in fact that of Bredmeyer and McDermott JJ in SCR No 1 of 1984.

In his submissions, Mr Pato, did not refer to what Kaputin J said (at 350) of SCR No 1 of 1984, which I believe is of importance. It reads:

“After a close look at the purpose of s 41 I have now come to the view that such power does apply to protection of qualified rights as well as to basic and fundamental rights.”

What I glean from that is that his Honour was making it clear that s 41 applied to all of Pt III, Div 3 — Basic Rights, of our Constitution, and not only the qualified rights Subdivision C in which s 41 is situated. To my mind that makes sense when read together with the passages referred to by Mr Pato (at 351 and 352). Clearly the passage (at 351) is referring to statutory laws connected with Constitutional basic rights. The passage (at 352) is in effect confirming what his Honour said (at 351), that the power relates to all basic rights and not just qualified rights.

From my reading of Kaputin J’s judgment I am of the view that he did not take the matter any further and did not adopt the wider view of the Chief Justice and the Deputy Chief Justice. I am prepared to say that the judgment of Kaputin J is equivocal. I certainly could not say that he clearly supports the Chief Justice and the Deputy Chief Justice.

It seems that after SCR No 1 of 1984 it was taken for granted that Kaputin J was in the majority. Even the headnote (at 351) reads as follows:

“(Per Kapi Dep CJ and Kaputin J) The provisions of s 41 of the Constitution apply to all acts done under any valid law including constitutional laws and may apply to the non-discretionary judicial act of imposing a minimum penalty to the extent that such an act may in a particular case be declared invalid or unlawful by the Supreme Court.”

I am of the view that that part of the headnote is misleading as far as the judgment of Kaputin J is concerned.

As has already been referred to, McDermott AJ in Raz v Matane referred to the majority view in SCR No 1 of 1984 but did not analyse Kaputin J’s judgment and I am of the view that he erred in saying that Kaputin J was in the majority. It is clear that McDermott AJ took a different course to the one he took in SCR No 1 of 1984 because he thought Kaputin J was in the majority in SCR No 1 of 1984.

Likewise Bredmeyer J in Independent State of Papua New Guinea v Lohia Sisia took a different course to the one he took in SCR No 1 of 1984 because he thought that Kaputin J was in the majority. Bredmeyer J did not analyse the judgment of Kaputin J either and as previously stated Cory J and Barnett J, although concurring with Bredmeyer J, gave no reasons.

I am of the view that I am not bound to follow the conclusions reached by Bredmeyer J and McDermott AJ in the said cases when they stated that Kaputin J was in the majority in SCR No 1 of 1984. In the event that they had analysed Kaputin J’s judgment and then commented as to how it became part of the majority then that would be a different matter. But they did not and I cannot agree with them.

Therefore I am of the view that at its highest the judgment of Kaputin J in SCR No 1 of 1984 is equivocal and on that basis it would seem that the s 41 argument is still undecided. Returning to SCR No 1 1984. I concur fully with the judgment of Bredmeyer J and there is nothing I wish to add to it. It becomes clear that the submission of Mr O’Regan QC must succeed and that the co-plaintiffs must fail in this action.

Perhaps I should also refer to that part of Mr Pato’s submission where he stated as follows:

“Besides the contextual interpretation urged if correct on the basis on which it is put forward, should be rejected as in a developing country such as Papua New Guinea, such a construction of the Constitution is reflective of a literalist approach and this should be rejected as being inappropriate to the circumstances of Papua New Guinea and for the reasons given in PLAR No 1 of 1980 [1980] PNGLR 326 at 336 per Wilson J and 347 per Andrew J.”

I do not agree with that submission. I am of the view that the wider interpretation of s 41 could create confusion and uncertainty which is not good for stability. Stability is important in a developing country such as Papua New Guinea. A situation would arise, and probably by now has arisen, where acts have been done which are authorised by law (and having nothing to do with basic rights) only to discover that the acts could be declared unlawful. I agree with Mr O’Regan QC when he said:

“Planning commercial and indeed other activities on the basis that there was an ascertainable and settled legal order would be impossible.”

The wider interpretation could create an abuse of the court process and encourage people to take action under s 41 purely as a delaying tactic.

Even though my findings in regard to s 41 bring an end to the matter I still propose to discuss the second leg. That is:

“Is the conduct of the defendant harsh and oppressive and/or disproportionate to the requirements of the circumstances of the particular case.”

The lawyer for the co-plaintiffs submitted lengthy written submissions on why the court should find that the defendant was harsh and oppressive and so on. The lawyer for the defendant submitted lengthy written submissions in reply. I am indebted to both lawyers for their assistance and I now propose to consider the submissions.

[His Honour then considered the submissions referred to in a manner not calling for report and concluded:]

As is now quite obvious I disagree with most of the submissions that the co-plaintiffs rely upon in their endeavour to seek declarations under s 41 of the Constitution. Their application must fail.

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Papua New Guinea Law Reports

Tarere, Tobata, Bulmara, Waluta and Krepp v ANZ Bank [1988] PGLawRp 44; [1988] PNGLR 201 (7 November 1988)

Papua New Guinea Law Reports - 1988-89