Papua New Guinea National Stevedores Pty Ltd v Bank of South Pacific Ltd [2001] PGNC 144; N2069 (6 April 2001)

N2069

PAPUA NEW GUINEA

[IN THE NATIONAL COURT OF JUSTICE AT WAIGANI]

WS No. 364 of 1995

BETWEEN:

PAPUA NEW GUINEA NATIONAL STEVEDORES PTY LTD

First Plaintiff

AND:

BANK OF SOUTH PACIFIC LIMITED

Second Plaintiff

AND:

THE HONOURABLE ANDREW BAING

First Defendant

AND:

PAPUA NEW GUINEA HARBOURS BOARD

Second Defendant

AND:

THE INDEPENDENT STATE OF PAPUA NEW GUINEA

Third Defendant

AND:

BANK OF SOUTH PACIFIC LIMITED

Cross Claimant

AND:

PNG NATIONAL STEVEDORES PTY LTD

Cross Defendant

Waigani : Kapi DCJ
2, 6 April 2001

CAUSE OF ACTION – Stevedoring license restricted to citizens by By Laws and subsequently relaxed to allow non citizens with ownership of up to 49% shareholding – Whether Harbours Board estoppel from amending the By Laws – Whether the amendment of the By Laws amount to unconscionable conduct – Scope of Delegated Legislation considered.

Counsel:
K. Frank for the First Plaintiff
I. Molloy for First and Third Defendants

6 April 2001

KAPI DCJ: This matter has come before me to determine whether the Amended Statement of Claim filed by the PNG National Stevedores Pty Ltd (First Plaintiff) against the Honourable Andrew Baing (First Defendant) and the State (Third Defendant) discloses any cause of action.

The facts are not in dispute. On or about 16 June 1994 the Papua New Guinea Harbours Board under delegated legislative power, enacted Harbours Board (General Amendment) By-Law 1994. So far as it is relevant to the present case, s 192 of the By-Law as amended required all holders of stevedoring licences for declared ports to be companies 100% beneficially owned by citizens of Papua New Guinea. In anticipation of being able to carry on stevedoring operations free from foreign competition, and indeed, free from competition from any existing licence stevedores, the First Plaintiff was incorporated as a 100 % citizen owned company and obtained a stevedoring licence from the Harbours Board on 1 July 1994.

Section 192 of the By-Law was subsequently amended in January 1995 with the effect that applicants for stevedoring licences need have only a 51% citizen shareholding, and such companies were permitted to apply for licences under this amendment. The First Plaintiff claims that this further amendment enabled further competition which nullified the advantage which it had when in 1994 s 192 of the By-Law required applicants to be 100% citizen shareholding. In its Amended Statement of Claim, the First Plaintiff claims a mandatory injunction against the First and Third Defendants to take all necessary steps to repeal the Statutory Instrument No. 2 of 1994 which reduced the requirement for 100% citizen ownership to 51% on the basis of principles of estoppel. In the alternative, the First Plaintiff claims damages for unconscionable conduct in reducing the requirement of 100% ownership by citizens of Papua New Guinea to 51% under Statutory Instrument No. 20 of 1994.

Counsel for the First Plaintiff simply handed up a statements of facts and made no submissions whatsoever in support of the Amended Statement of Claim. Counsel for the First and Third Defendants did not dispute the statement of facts handed up by counsel for the First Plaintiff with the exception of point 7 and point 8 in which counsel for the First Plaintiff appears to be asserting that the amendments were made by the Minister rather than the Harbours Board.

In essence counsel for the First and Third Defendants submits that the Statement of Claim does not disclose any cause of action. First, he submits that if the First Plaintiff has any cause of action it should be against the PNG Harbours Board. In fact the First Plaintiff in the writ of summons named the PNG Harbours Board as the Second Defendant to the action. Under the Harbours Board Act Ch. 240 Harbours Board is empowered by s 30 to make By-Laws not inconsistent with the Act for the control, regulation and management of the declared ports and of the affairs of the Board and in particular providing for or in relation to regulation and licensing of the stevedoring. Under s 31 of the Act, the By-Laws that may be enacted by the Harbours Board are not effective until they are approved by the Head of State acting on the advice of the National Executive Council and published in the National Gazette. When this matter came before me on the 16 March 1998 on an application to set aside the default judgment, Mr Frank who appeared for the First Plaintiff relied on an affidavit sworn by Gregory James Shepherd on the 15 March and filed on the 14 April 1998. Mr Shepherd in paragraph 36 disposes that he had received instructions from the First Plaintiff to consent to a dismissal of the action against the Second Defendant. In view of this instruction, I dismissed the action against the Second Defendant. So far as the Harbours Board Act is concerned, the Harbours Board has the authority to enact the By-Laws in question. This is a separate entity and it is capable of being sued (see s 3(2)(c)). In fact the First Plaintiff sued the Harbours Board but by consent dismissed the action against it. Counsel for the First Plaintiff did not call any evidence before me to prove any role that was played by the First Defendant and I find that it can not maintain an action against the First and Third Defendants.

In relation to the cause of action pleaded on the basis of estoppel, counsel for the First and Third Defendants submits that estoppel may arise in the contexts of delegated legislation. However, he submits that estoppel does not arise in this case because the defendant has not entered into a contract as a consequence of the By-Laws as was the case in PNG Coffee Industry Board v. Panga Coffee Factory Pty Ltd [1990] PNGLR 363 at 376. There is no question of any contract entered into between the Harbours Board, the State and the Plaintiff. I accept the submission by counsel for the Defendants that the cause of action based on estoppel is misconceived.

I also find that the action based on unconscionable conduct is misconceived. The equitable doctrine of unconscionable conduct is most usually called in aid to set aside a contract or other transaction. The principles are set out by Deane J in Commercial Bank of Australia Limited v. Amadio [1983] HCA 14; (1983) 151 CLR 447 at 474:

"Jurisdiction of Court’s iniquity to relieve against unconscionable dealing ... this long establishes extending generally to circumstances in which (i) a party to a transaction was under his special disability in dealing with the other party with a consequence that there was an absence any reasonable decree of quality between them and (ii) that disability was sufficiently evidence to the stronger party to make it prima facie unfair or unconscientious that he procure, or accept, the weaker parties assent to the impugned transaction in the circumstances in which he procured or accepted it. The circumstances are shown to be registered, the onus is cast upon the stronger party to show that the transaction was fair, just and reasonable."

There is no evidence that the defendants entered into a contract or some other transaction to enable the plaintiff to be the sole agent for stevedoring services under the umbrella of the By-Laws. The By-Laws simply gave different companies to apply for license. At one point, the By-Laws required applicants to be companies with 100% shareholding by citizens and subsequently reduced that requirement to companies with 51% owned by citizens. The practical effect of these By-Laws is that in 1994 the By-Laws restricted competition to citizens only and in 1995 the By-Laws allowed participation by non citizens with up to 49% ownership. This type of legislation is envisaged by s 55(3) of the Constitution.

Furthermore, the Harbours Board has the authority under delegated legislative power to prescribe condition for license within its discretion. The effect of the remedies sought by the First Plaintiff is tantamount to interference with the exercise of legislative power. This Court has no power to question the reasons of the By-Laws. The Court may only enquire into whether or not the Harbours Board acted within its delegated legislation. I adopt what I said in Minister for Lands v. The State [1980] PNGLR 433 at 458-459 with respect to delegated legislation. There is no such issue in the present case.

In the result, I dismiss the claim against the First and Second Defendants. I further order that the First Plaintiff bears First and Second Defendants’ costs of this action and that I certify for counsel from Australia.
_____________________________________________________________________
Lawyers for the 1st Plaintiff : MALADINAS
Lawyers for the 1st and third Defendants : KASSMAN & ASSOCIATES