Bougainville Copper Foundation v Minister for Trade & Industry and Nida [1989] PGLawRp 1; [1988-89] PNGLR 110 (31 March 1989)

Papua New Guinea Law Reports - 1988-89

[1988-89] PNGLR 110 - Bougainville Copper Foundation v Minister for Trade & Industry and Nida 

[1988-89] PNGLR 110

N747

PAPUA NEW GUINEA

[NATIONAL COURT OF JUSTICE]

BOUGAINVILLE COPPER FOUNDATION

V

THE MINISTER FOR TRADE AND INDUSTRY THE HONOURABLE MR GALEVA KWARARA AND THE NATIONAL INVESTMENT AND DEVELOPMENT AUTHORITY

Waigani

Bredmeyer J

17 March 1989

31 March 1989

STATUTES - Interpretation Act - Statutory powers - Exercise of - No power to revoke, alter or vary - Power to grant exemption - No power to revoke grant of exemption - Power deriving from Interpretation Act - Power exercisable in same manner as power to grant - National Investment and Development Act (Ch No 120), s 7 - Interpretation Act (Ch No 2), s 35.

ADMINISTRATIVE LAW - Judicial review of administrative acts - Natural justice - Revocation of statutory licence or exemption - Scope of power to revoke - Revocation affecting livelihood - Duty to give prior notice, grounds for and opportunity to be heard - Minister acting on report of departmental officer - Revocation of statutory exemption to foreign enterprise - Rules of natural justice breached - National Investment and Development Act (Ch No 120), s 7.

The National Investment and Development Act (Ch No 120), s 7, empowers the relevant Minister to exempt a foreign enterprise from the operation of specified provisions of that Act “after receiving a report from the National Investment and Development Authority” and “by notice in the National Gazette”. No provision is made for revoking exemptions so made.

The Interpretation Act (Ch No 2), s 35, provides:

“Where a statutory provision confers a power to make an instrument or decision (other than a decision of a court), the power includes power, exercisable in the same manner and subject to the same conditions (if any), to alter the instrument or decision.”

The Minister, acting on the report of a departmental officer, authorised the publication of a notice of revocation in the National Gazette of an exemption previously given to the Bougainville Copper Foundation.

On an application for judicial review of the decision of the Minister to revoke the exemption on the grounds that the notice of revocation was ultra vires and/or made in breach of the rules of natural justice,

Held

N1>(1)      The general power of revocation contained in s 35 of the Interpretation Act applied to s 7 of the National Investment and Development Act.

N1>(2)      Accordingly, the Minister had power to revoke, alter or vary the exemption granted under s 7 of the National Investment and Development Act; such power to be exercised in the same manner and subject to the same conditions as the granting of the exemption, that is, on receipt of a report from the National Investment and Development Authority and by notice in the National Gazette.

N1>(3)      In the circumstances, the Minister had not exercised the power of revocation according to its terms by acting on the report of a departmental officer and not of the National Investment and Development Authority.

N1>(4)      The power to revoke an exemption granted under s 7 of the National Investment and Development Act, was a decision which directly affected personal property rights including the means of livelihood or ability to carry on business and the Minister or his investigating officer was required to observe the rules of natural justice, to the extent at least of providing the exemption holder with prior notice of the nature of the case against him and a fair opportunity to be heard.

R v Barnsley Metropolitan Borough Council; Ex parte Hook [1976] 3 All ER 452; Selvarajan v Race Relations Board [1976] 1 All ER 12 at 19; Public Disclosure Commission v Isaacs [1989] 1 All ER 137 at 142; Wiseman v Borneman [1971] AC 297 and Re Pergamon Press Ltd [1970] 3 All ER 535, considered and applied.

N1>(5)      In the circumstances, there had been a breach of natural justice in failing to disclose the evidence or facts upon which the recommendation for revocation of exemption was to be granted and in failing to provide an opportunity to contravert those facts which vitiated the revocation of the exemption.

Cases Cited

Pergamon Press Ltd, Re [1970] 3 WLR 792; [1970] 3 All ER 535.

Public Disclosure Commission v Isaacs [1989] 1 All ER 137.

R v Barnsley Metropolitan Borough Council; Ex parte Hook [1976] 1 WLR 1052; [1976] 3 All ER 452.

Selvarajan v Race Relations Board [1975] 1 WLR 1686; [1976] 1 All ER 12.

Wattle Park Pty Ltd v Commissioner of Highways (1973) 6 SASR 69.

Wiseman v Borneman [1967] 3 WLR 1372; [1967] 3 All ER 1045.

Wiseman v Borneman [1971] AC 297.

Judicial Review

This was an application for judicial review to quash a decision made by the Minister for Trade and Industry revoking an exemption from parts of the National Investment and Development Act (Ch No 120) previously granted to the plaintiff Foundation. Leave to apply for judicial review had previously been granted.

Counsel

I M Molloy, for the plaintiff.

Z Gelu, for the defendants.

Cur adv vult

31 March 1989

BREDMEYER J: Bougainville Copper Foundation (the Foundation) was a company incorporated under another name in 1971. It took its present name in 1984 and in 1985 it got permission to drop the word “Limited” from its name. It is a company limited by guarantee and thus has no shareholders. In 1983 it was granted tax-exempt status which was backdated to 1 January 1982. The company is a foreign enterprise as defined by the National Investment and Development Act (Ch No 120) (the NIDA Act) which established the National Investment and Development Authority hereinafter called NIDA. By a notice published in the National Gazette of 25 April 1985, Mr Karl Stack, the then Minister for Industrial Development, exempted the company under s 7 of the Act from Pt VI and Pt VIII of the Act.

Following complaints made by the North Solomons Provincial Government to the Minister for Trade and Industry, Sir Julius Chan, NIDA sent its project officer, Mr Peter Werei, to conduct an investigation into the activities of the company and into the activities of a related company, Arawa Enterprises Ltd which is the subject of separate litigation. Mr Werei went to Bougainville and was engaged on his investigation between 15 and 17 March 1988. During that time he had a number of conversations with Mr Douglas Fishburn, the general manager of Bougainville Copper Foundation. On 6 May 1988, Mr Werei completed his 11-page report into the activities of the company and submitted it to his superior, Mr Oki George, the acting executive director of NIDA. On 9 May, Mr George submitted the report to the Minister, Sir Julius Chan, with the following words:

“Attached is the report on the investigation undertaken by Mr Peter Werei in Arawa from 14th to 17th March 1988 for your perusal and comments.”

Sir Julius wrote on the bottom of that letter the following comments:

“For three days this is a very specific report, brief and to the point. Well done! For very limited staff of NIDA this is all it is required to do in future re complaints. Findings and recommendation approved and signed.”

This note is signed by him and dated 25 May 1988. On the same day he signed the notice revoking the exemption previously given in the National Gazette of 25 April 1985. The notice recites that the revocation is “by virtue of the powers conferred by s 7 of the NIDA Act and all other powers me enabling, having received a report from NIDA (or its duly appointed delegate)”. The notice also stated that the company was required to submit an application for registration in accordance with s 55 and s 57 of the NIDA Act. There was some delay in publishing the notice and it was not published in the National Gazette until 20 October 1988.

The Foundation applied for judicial review of the Minister’s decision reasonably promptly. The documents were filed in this Court on 22 November 1988 and leave was granted on 25 November. The Foundation’s first argument was that the Minister had no power to revoke an exemption from registration. Section 7 of the NIDA Act does not contain an express power of revocation. Contrast this with s 50 of the NIDA Act which provides that the Head of State, acting on advice given after receiving a report from NIDA, may exempt a foreign enterprise from all or any of the provisions of Pt VI of the Act. Section 62 provides an elaborate and fair procedure before an exemption from registration can be cancelled. If the Minister, after receiving a report from NIDA, is of the opinion that the exempt foreign enterprise has contravened or failed to comply with a condition of the exemption he shall refer the matter to the National Executive Council which may give the enterprise notice that it proposes to cancel the exemption. After the expiry of that notice, or the receipt of representations from the enterprise, the National Executive Council shall consider the matter and advise the Head of State as to whether the exemption should be cancelled. The Foundation argued that the statute should be looked at as a whole and that the express reference to a revocation in s 50 indicates that without such reference the power is excluded from s 7 and that the expressio unius rei est exclusio alterius rule of statutory interpretation applies. That rule is that the express mention of one thing is the exclusion of another. The Foundation argued that the contrary view would mean that by ministerial act an enterprise’s business activities can be terminated summarily so that, if it continues to carry on those activities, it will commit an offence under s 66 of the NIDA Act. Furthermore, it argued that there are no transitional provisions (compare s 65) and no express procedural safeguards such as adequate prior notice to the enterprise which are given in s 62. The argument was that if the legislature had intended such a result it would have expressly provided for revocation as it did under s 50 of the Act. The Foundation argued that s 35 of the Interpretation Act (Ch No 2), which I quote below, has no application as that section, and all the rules in that Act, do not apply where the particular Act indicates a contrary intention.

I can see the force of that argument, nevertheless I consider it should fail. It is highly desirable that there should be a power of revocation and I believe that it was intended. I consider that the general power of revocation contained in s 35 of the Interpretation Act applies to s 7. Section 35 reads as follows:

N2>“35.    Implied Power to Alter

Where a statutory provision confers a power to make an instrument or decision (other than a decision of a court), the power includes power, exercisable in the same manner and subject to the same conditions (if any), to alter the instrument or decision.”

Note that that power must be exercised in the same manner and subject to the same conditions as was the granting of the exemption in the first place. Those formal requirements are mandatory: see D C Pearce, Delegated Legislation in Australia and New Zealand (1977), par 228 and Wattle Park Pty Ltd v Commissioner of Highways (1973) 6 SASR 69 at 83, per Wells J.

The Foundation argued that the Minister’s decision to revoke the exemption was ultra vires because he failed to observe the formal requirements of that section. Section 7 of the NIDA Act reads as follows:

N2>“7.      Exemptions

If, after receiving a report from the National Investment and Development Authority, the Minister is of the opinion that the purpose, structure, control or operation of a foreign enterprise or class of foreign enterprises is such that it is not necessary that the enterprise or class of enterprises should be treated for the purposes of any provision of this Act as a foreign enterprise, the Minister may, by notice in the National Gazette, exempt the enterprise or class of enterprises from the operation of that provision on such conditions as the Minister thinks proper.”

Note that the Minister can only act after receiving a report from NIDA and that the exemption becomes effective by notice in the National Gazette. Contrast this with provisions in other statutes which provide that a power is exercised on the signing of the notice and that gazettal is only for the purposes of notification. The effect of s 35 of the Interpretation Act when applied to s 7 of the NIDA Act is that the Minister can only revoke an exemption after receiving a report from NIDA and his revocation takes effect “by notice in the National Gazette”. In this case the revocation recites that the Minister “received a report from NIDA (or its duly appointed delegate)” but the evidence does not support that. NIDA is an authority and under its Act its affairs are controlled by a board which consists of a chairman and approximately 12 members. The board is required by s 19 to meet every two months and to keep minutes. In this case counsel for the defendants has not been able to produce to me any evidence that Mr Werei’s report went to the NIDA Board and from the Board to the Minister, nor was he able to show me any delegation of NIDA’s powers to Mr Werei. Mr Werei is a project officer with NIDA and his report dated 6 May 1988 went to the acting executive director of NIDA, and from him with a covering letter dated 9 May 1988, which I have already quoted, to the Minister. The Minister acted on that report and wrote his approval of the recommendation, which I have already quoted, on the bottom of the covering letter. It is clear to me that Mr Werei’s report never went to the NIDA Board and hence the Minister made his decision without receiving a report from NIDA as required by s 7 of the Act. Furthermore, the delay between signing the exemption notice of 25 May 1988 and its publication in the National Gazette of 20 October is significant because in between those dates there was a change of government and Sir Julius Chan ceased to be the Minister for Trade and Industry. This meant that, on 20 October 1988, when the Gazette was published, Sir Julius Chan was no longer the Minister. Thus the Minister, Sir Julius Chan was acting within power when he signed the notice on 25 May 1988 but by s 7 of the NIDA Act an exemption becomes effective by publication in the National Gazette and, by operation of s 35 of the Interpretation Act, a revocation or cancellation likewise becomes effective by publication in the National Gazette. At the time of publication Sir Julius Chan was no longer the Minister so its publication then was of no legal effect.

The arguments I have mentioned are important and they are sufficient to grant the relief sought by the Foundation but there are procedural irregularities which could be overcome by Mr Werei’s report being submitted to the NIDA Board and by the current Minister signing and publishing the revocation notice. I propose therefore to consider the Foundation’s third and most lengthy argument, that the Minister in revoking the exemption from NIDA failed to observe the principles or rules of natural justice. Those rules are part of the underlying law of Papua New Guinea and we are enjoined by s 59 of the Constitution to apply and extend those rules. There are two broad principles or rules of natural justice, namely that no man shall be a judge in his own cause (nemo judex in causa sua), and that no man shall be condemned unheard (audi alteram partem). These rules must be observed by courts, tribunals, arbitrators and all persons and bodies having a duty to act judicially: Halsbury’s Laws of England (4th ed), vol 1, par 64.

The English Courts have held that the rules of natural justice apply in a number of situations, one of which is where a decision directly affects a person’s property rights including his means of livelihood or ability to carry on a business. An example of this principle is the cancellation of a trading licence. In R v Barnsley Metropolitan Borough Council; Ex parte Hook [1976] 3 All ER 452, for example, the Court of Appeal held that a street stallholder’s licence could not be revoked unless the local authority complied with the rules of natural justice. According to de Smith’s Judicial Review of Administrative Action, 4th ed (1980) at 224, there ought to be a strong presumption that prior notice and opportunity to be heard should be given before a licence can be revoked. This should be especially strong where revocation causes deprivation of livelihood or serious pecuniary loss, or is dependent on a finding of misconduct.

On the facts of this case the revocation of the exemption from NIDA is akin to the cancellation of a trading licence because the Foundation is engaged in a number of businesses as well as charitable enterprises, two of its business enterprises being a large-scale poultry project and a large-scale piggery. The effect of the revocation is that the Foundation has to apply for registration of its business activities under s 55 and s 57 of the NIDA Act. Poultry production and piggery production are two reserved activities under the Act, that is, reserved for citizens only, which means that the Foundation is unlikely to get registration for these activities which in turn means that it will have to close down or sell off these major commercial projects. As I have stated above, by the operation of s 7 of the NIDA Act and s 35 of the Interpretation Act, the Minister can only revoke a NIDA exemption after considering a report of the NIDA Board. Lord Denning M R in Selvarajan v Race Relations Board [1976] 1 All ER 12 at 19 said:

“In recent years we have had to consider the procedure of many bodies who are required to make an investigation and form an opinion ... In all these cases it has been held that the investigating body is under a duty to act fairly; but that which fairness requires depends on the nature of the investigation and the consequences which it may have on persons affected by it. The fundamental rule is that, if a person may be subjected to pains or penalties, or be exposed to prosecution or proceedings, or deprived of remedies or redress, or in some such way adversely affected by the investigation and report, then he should be told the case made against him and be afforded a fair opportunity of answering it.”

That statement was recently applied by the Privy Council in Public Disclosure Commission v Isaacs [1989] 1 All ER 137 at 142, an appeal from the Court of Appeal of the Bahamas.

On these authorities the Minister must observe natural justice and, referring to the second rule, he must give the Foundation an opportunity to be heard. He did not because he acted on Mr Werei’s report. In that situation, one or other of them, either the Minister or Mr Werei, should have given the Foundation an opportunity to be heard. I mention two authorities for that view. In Wiseman v Borneman [1967] 3 All ER 1045, Inland Revenue Commissioners carried out investigations into a share transaction made by Mr and Mrs Wiseman and then referred the matter to a five-man tribunal established under the Finance Act 1960 (UK). The Inland Revenue Commissioners gave notice to the Wisemans of their intention to cancel a tax advantage to them and gave them a statutory declaration setting out their version of the facts and circumstances of the share transaction under scrutiny. The Wisemans were invited to submit statutory declarations on the allegations. They wanted to be heard by counsel before the Commissioners or see the counter statement prepared by the Commissioners after the receipt of their statutory declarations. These rights were refused by the Commissioners and the Court of Appeal held rightly so because the Commissioners only had to decide if there was a prima facie case. That is, the Commissioners could decline to observe natural justice in full because theirs was only a preliminary decision and the tribunal, whose task was to make the final decision, was bound to observe those rules. That decision was upheld by the House of Lords in Wiseman v Borneman [1971] AC 297. Applying that reasoning to the facts of the case before me which is the converse situation; as the Minister was not going to observe natural justice, it was imperative that his investigating officer, Mr Werei, did. In Re Pergamon Press Ltd [1970] 3 All ER 535, inspectors from the Board of Trade carried out an investigation into the affairs of Pergamon Press Ltd. Their duty was to report to the Board of Trade. The Court of Appeal held that, although the proceedings before the inspectors were only administrative and not judicial or quasi-judicial, yet the characteristics of the proceedings required the inspectors to act fairly, in that if they were disposed to condemn or criticise anyone in a report they must first give him a fair opportunity to correct or contradict the allegation. To do this an outline of the allegation would suffice; it was not necessary that the directors be given a transcript of evidence adverse to them, nor be given the right to cross-examine witnesses.

Applying the words of Lord Denning to the facts of this case, the Foundation should have been told the case made against it by Mr Werei and afforded a fair opportunity of answering it. I am convinced that this was not done. Mr Werei made a three-day visit to Bougainville and he saw two leading officials of the Foundation on two days. He clearly and fairly told them that he was there to investigate the Foundation with the aim of revoking its exemption from NIDA registration. But he spent those three days in fact-finding, observing what he could and speaking to a good number of officials and public servants getting their views. He at no time disclosed to the Foundation the evidence or facts on which his recommendation was going to be based. He did not have to disclose to the Foundation his opinions and value judgments but he was required to disclose to the Foundation the facts upon which those opinions and value judgments were based, and having disclosed them, he was required to give the Foundation an opportunity to contravert them. He did not do this; thus he failed to observe natural justice and that failure vitiated the Minister’s decision based on Mr Werei’s report.

If the Foundation had been given an opportunity to comment and produce answering material, a number of the key “facts” in the report would have been shown to be false. For example, at p 3 of the report Mr Werei states that three of the five nationals who are on the executive committee of the Foundation “are purported to have BCL [Bougainville Copper Ltd] alliance”. At p 11 of his report he says that “approximately 90% of the committee is made up of persons who are directly or indirectly associated with BCL”. Those statements are not accurate. There are nine members on the executive committee, four of whom are expatriates and five are nationals. Four of the expatriates on the executive committee are associated with BCL as is one of the nationals, Joseph Auna, who is general manager of personnel for BCL. But the other four nationals have no connection with BCL. Bill Searson is the National Government representative on the committee. He is the secretary of the Department of Minerals and Energy. Steven Eka is a businessman in the Kieta area who briefly worked for BCL many years ago and Carolus Ketsimur is a prominent local businessman at Tinputz. John Siau, the fifth national on the board at the time, was the Provincial Secretary of the North Solomons Provincial Government. So the truth is that one of the five nationals is associated with BCL, not three out of five as stated in the report, and that five out of the nine members of the executive committee, or 55.5 per cent are associated with BCL, and not 90 per cent as stated in the report. Secondly, Mr Werei discussed the Foundation’s piggery project at Mananau, about 25 km from Panguna. That piggery was not then in production and he reported at p 4 of his report that it was anticipated to provide 300 carcasses per week and that “in essence” it would monopolise all existing market avenues for rural farmers. The truth is that the project was intended to provide 100 dressed pigs per week and its aim was to supply 60 per cent of the total local market.

At p 10 of the report, Mr Werei states:

“Although BCF was declared under s 251a of the Taxation Act as a charitable organization meaning that 80% of the profits must go towards charity, the government has no means of confirming this. In other words, BCF would perhaps be channelling 40% or even less of the required 80% and repatriating the rest overseas.”

The factual statement in this is that the government has no means of confirming this. The Foundation has argued before me that that is just not true. Its accounts are published every year and are audited by an independent auditor. The government has two representatives on the Executive Committee, a National Government representative and a Provincial Government representative. A copy of the accounts are submitted each year to the Registrar of Companies. The Taxation Office has wide powers to inspect the books of the Foundation. The Foundation has published details of its charitable donations over the past 10 years and they cover 25 pages of accounts. Presumably if these are thought to be false, the recipients could be asked whether they received the donations or not. And finally, by its memorandum and articles of association, the Foundation has no shareholders and does not declare any dividends.

For the reasons given above I declare that the revocation of exemption from NIDA in respect of Bougainville Foundation published in the National Gazette on 20 October 1988 at p 1154 is void. I order the defendants to pay the plaintiff’s costs to be agreed upon or taxed. And in view of the large amount of money involved in the Foundation’s business enterprises, I certify the case as an appropriate one to engage overseas counsel.

Revocation of exemption declared void

Lawyers for the plaintiff: Gadens.

Lawyer for the State: Moses J Jalina, Acting State Solicitor.