Asakusa v Kumbakor [2006] PGNC 157; N3257 (19 October 2006)

N3257

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS NO. 639 OF 2006 (JR)

IN THE APPLICATION FOR JUDICIAL REVIEW
PURSUANT TO ORDER 16 RULE 3 OF
THE NATIONAL COURT RULES

Between:

PAUL ASAKUSA
Applicant

AND:

ANDREW KUMBAKOR
AS THE MINISTER RESPONSIBLE
FOR HOUSING AND URBAN DEVELOPMENT
First Respondent

AND:

THE NATIONAL HOUSING
CORPORATION BOARD
Second Respondent

AND:

THE NATIONAL EXECUTIVE COUNCIL
Third Respondent

AND:

THE INDEPENDENT STATE
OF PAPUA NEW GUINEA
Fourth Respondent

Waigani: Injia, DCJ.
2006: 19 October

JUDICIAL REVIEW – PRACTICE AND PROCEDURE – Application for stay and interim injunctive orders prior to grant of leave for judicial review – Issue to be determined in an appropriate case at another time – National Court Rules O 16 r 3(8).

JUDICIAL REVIEW PRACTICE AND PROCEDURE – Application for stay and interim injunctive orders under s 155(4) of the Constitution – Dismissal of Chief Executive Officer of Statutory Corporation – Serious issues to be tried – Mandatory removal procedures prescribed by enabling statute not followed– Exercise of discretion – Stay order and interim injunctive orders granted – National Housing Corporation Act 1990, s 17; Regulatory Statutory Authorities (Appointment to Certain offices) Act 2004, s 6; Public Services (Management) Act 1995, s 41.

Cases cited:

Albert Kuvah v UPNG [1993] PNGLR 494
Thaddeus Kambanei v NEC, N3064

Counsel:

V. Narokobi, for the Plaintiff
D. Kakaraya, for the First Respondent
D. Datoana, for the Second Respondent
J. Divete, for the Third and Fourth Respondents

19 October, 2006

1. INJIA, DCJ: By Motion filed on 21 September 2006, the First Respondent applies to set aside the interim restraining orders issued ex parte by Salika, J on 15 September 2006. The interim orders restrained the Respondents, in particular the NEC and Minister for Housing from suspending the Applicant as Managing Director of NHC until 22 September 2006 at 9.30a.m.

2. The First Respondent’s motion came before Salika, J on 22 September 2006. On that date, it is not clear if Mr Kakaraya for the plaintiff moved his client’s motion and both parties were heard and the judge ruled on the application. Mr Narokobi submits the motion was heard and determined, whereby His Honour extended the interim order to 2 October 2006. Mr Kakaraya submits the motion was not heard and determined. The Court order taken out states "order of 15th September 2006 be extended to 2nd October 2006 and will be reviewed at the times of the leave application as to whether or not the order of 15th September 2006 should be confirmed". It seems to me from the wording of this order that the First Respondent’s Motion was not heard and determined. In any case, the questions of interim orders of 15 September 2006 were not permanent and the question of its extension was open to be considered on the return dates on 22 September 2006 and 2 October 2006. It is on this basis that I decided to hear and determine first Respondent’s motion first. The leave application will be heard separately.

3. From the affidavits filed by both parties, I am able to make the following preliminary findings of fact for purposes of determining the application before me.

(1) On 12 March 2006, the NEC revoked the appointment of the then Acting Managing Director of NHC, Mr Walter Kapty and appointed the Applicant as Managing Director of NHC, for a period of 4 years commencing from the date of gazettal of the instrument of appointment. The NEC also decided that the State and the Applicant enter into and execute a Contract of Employment under S.17 of the National Housing Corporation Act 1990 (NHCA), s.6 of the Regulatory Statutory Authorities (Appointments to Certain Officers) Act 2004 (RSAA) and s.41 of the Public Services Management Act 1995 (PMSA).

(2) Between 31 August 2006 – 7 September 2006, certain allegations of mismanagement, etc against the applicant were brought to the attention of the First Respondent and the Parliamentary Public Accounts Committee (PAC). The allegations were brought to NEC’s attention. On 31 August 2006, the NEC and PAC invited the applicant to respond to those allegations. On 7 September 2006, the applicant sent his response to PAC. He was preparing his response to the NEC, when on 7 September 2006, the NEC suspended him and appointed Mr Phillip Kikala to act in his position pending investigations into the allegations and charges being laid. The NEC appointed a team of investigators comprising of Secretaries of the Department of Attorney-General, DPM and Finance to investigate the allegations and report back to NEC.

(3) The effecting of the NEC decision has been put on hold by order of the Court issued on 15 September 2006. At that time, the applicant was not aware of the exact decision of the NEC so when he filed these proceedings and sought interim orders, he was able to apply for orders restraining the NEC from suspending him and preventing "Mr Kikala" from taking office. The disclosure of the NEC decision came as a result of my direction on 2 October 2006.

4. The propriety of the procedure employed by the Minister and the NEC in suspending the applicant is contested by the Applicant. The Minister has deposed to the following facts:-

1. On 4 July 2006, Mr Kumbakor was appointed the new Minister for Housing. Upon assuming office, he discovered the Board had not met for the last 7 months. Between July – September 7th, there was no board meeting. A letter written by the Minister to the Board Chairman Mr Neres Wurim to convene the Board meeting was not acted upon.
   
2. On 1 September 2006, he received a petition from staff of NHC containing serious allegations of mismanagement and maladministration against the applicant. On 31 August 2006, he received a letter containing serious allegations from the PAC Chairman. On 1 September 2006, he wrote to the applicant seeking his response to the allegations.
   
3. On 7 September 2006, he took up the matter with NEC. The NEC suspended the applicant from office and appointed Mr Kikala to act in the position. On 12 September 2006, the Minister requested the Board chairman to call an extra-ordinary meeting on 15 September 2006 at 10.00a.m. The Board met on that day and "endorsed" the NEC decision.
   

5. Mr Kakaraya raised two preliminary points which I dispose off quickly. First, he submits the Court lacked jurisdiction to grant the interim injunctive orders because such orders can only be granted after leave is granted and a substantive application is filed under O.16 r.5. He relies heavily on the wording of O.16 r.3(8) which he submits reflects the common law position and this is strengthened by Sheehan J in Albert Kuvah v UPNG [1993] PNGLR 494. He submits the interim order applied for and granted under O.14 r.9 of he National Court Rules, which come under O.16 r.3(8)(b) have no application. Mr Narokobi appears to concede this point but submits the Court used its inherent power under s.155(4) of the Constitution. The direct reference to "orders in the nature of prerogative writs" in s.155(4) brings interim orders issued in judicial review proceedings under Order 16 within the terms of s.155(4).

6. This is an interesting argument. Mr Kakaraya may well be right on this point but as I intimated during argument, this is a substantive procedural point which has the potential of unsettling the current practice amongst many judges where interim injunctive relief is granted in judicial review proceedings before leave is granted. I am one of those judges. I have held the view that interim orders in judicial review proceedings before leave is granted is permissible under s.155(4) of the Constitution.

7. However, my view is tentative only and I would prefer full argument on this issue in order to determine this issue properly. I do not think this issue has been fully argued in this case. I leave that to be argued and determined in another case in the future. For the present purpose, I am content with s.155(4) argument as providing the jurisdiction to this Court to issue, vary or set aside interim restraining orders.

8. The second argument is that the act or event intended to be restrained has already occurred and the continuation of the interim orders should serve no purpose. It is apparent to me that the procedure in effecting the suspension is incomplete and the interim orders therefore do serve its purpose. For instance, an instrument of suspension is yet to be issued by the Head of State and gazetted. Variation of the interim orders to reflect this position is a matter of formality.

9. The principles on grant of interim restraining orders are the same as those canvassed and expounded upon in my decision in Thaddeus Kambanei v NEC, N3064. Both parties have addressed me at length on the ten (10) considerations enumerated in that case. That was a case in which I granted leave and then went on to consider the issue of interim restraining orders but as submitted by Mr Narokobi, the principles are equally applicable to the present case.

10. Of the ten (10) principles set out in Kambanei’s case, the first is that the applicant must have a serious issue to be tried in the leave application. The applicant’s main contention is that the suspension of the plaintiff was done in breach of the procedure prescribed by law. After hearing full submissions on the correct procedure to be followed, I am satisfied that the plaintiff has serious issues to be tried in an application for leave for judicial review. When the NEC first appointed the applicant on 12 March 2006, the NEC correctly identified the procedure by making reference in its decision to s.17 of NHCA, s.6 of the RSAA and s.41 of PSMA. In its recent decision, the NEC did not cite the statutory provision under which the two decision were made, but by implication, the relevant provisions would apply. Section 17(1)(a) of NHCA as amended by the RSAA states that the Managing Director "shall be appointed, suspended or dismissed in the manner as is specified in the Regulatory Statutory Authorities (Applicant to Certain Officers) Act 2004". By virtue of s.3(3) (b) and (c) and Schedule 2 of RSAA, s.17(1)(a) of NHCA was repealed and replaced with paragraph (a) which I have just quoted. In my view, there is no room to invoke provisions of the Constitution such as Sch.1.10 cited by Mr Kakaraya. There is no inconsistency between s.17(1)(a) of NHCA and Sch.1.10 of the Constitution.

11. Under s.6, s.7 and s.8 of RSAA, the NEC still remains the ultimate appointing and suspending authority respectively, through a merit-based procedure which ensures only persons with merit are appointed. Similarly, it provides for a process of consultation with the Board of NHC before any action is taken to suspend the Chief Executive Officer of NHC on disciplinary grounds. In my view, on the evidence before me, it is clear that the NHC Board played no part in the decision.

12. Under s.8(1) of RSAA the First Respondent tables before the NEC a recommendation for suspension made by the NHC board under s.8(1) and (2). The suspension is to facilitate a full investigation into the allegations by the Board of NHC. The actual investigation is then conducted by the Board under s.7. The Minister must table the recommendation for suspension of the Board before the NEC who will make the decision. As for Acting appointments, under s.9 of RSAA, the Board considers its necessity and makes a recommendation to the Minister who then takes the recommendation before the NEC for a decision. It is clear from the scheme of s.7, s.8 and s.9 of RSAA that the matter of suspension of the Managing Director, the appointment of Acting Managing Director and investigations into the allegations against the Managing Director are dealt with together by the NHC Board.

13. These procedures are prescribed in mandatory terms by statute. These are not mere administrative guidelines of practical convenience. They are designed to ensure that only person with merit are appointed or continue to remain in office once appointed and their suspension or dismissal is effected, according to law. The other salient feature is that they seek to minimize political interference in the appointment and removal of key officers in key positions in public regulatory bodies or corporations.

14. On the evidence before me, it is clear that the Board of the NHC had no part to play in the suspension of the applicant. It is also clear that the PSC and the Board had no part to play in the appointment of the Acting Managing Director. In my view, there is a serious case to be tried on the propriety of the suspension of the plaintiff and appointment of the Acting Managing Director.

15. It appears from the evidence that the Minister subsequently realized the flaw and got the board to meet to ratify the NEC decision. If that is actually what happened, then that is contrary to the prescribed procedure. The only face saving way out of this mess is for the NEC to revoke its decision and refer the matter back to the Board for consideration, following the proper procedure. When the matter comes to the Board for consideration, the Minister and the board members who participated in the supposed decision of 15 September 2006 will have to allow reason, rational judgment and fairness to prevail.

16. As to the balance of convenience, the question of damages as an adequate remedy and public interest in the good administration of NHC and all other related considerations, can be dealt with together.

17. There is no question that the applicant could be adequately compensated in damages by way of payments for the balance of the term of his appointment if he was successful in this review. However, because the applicant was first appointed through a merit-based process and he was suspended only a little over 6 months into his 4 year term, the public interest in maintaining the integrity of the appointment process prevails over monetary aspects of his appointment.

18. I accept Mr Kakaraya’s submission that there are serious allegations made against the plaintiff which should be investigated by the appropriate body which is the board. The complaints which came from the NHC staff which went to the Minister and the PAC and the NEC should properly go to the Board for investigation. Whilst these allegations are pending consideration by the Board, the applicant’s position in terms of continuing employment with NHC as its Chief Executive officer needs to be considered properly. And it is for the NHC Board to consider if he should be suspended. The NEC and the Minister may want to re-consider the NEC decision and refer the allegations to the NHC Board to deliberate.

19. In the meantime, there should not be a vacuum left in the office of the Chief Executive of this important statutory corporation. The only two people who can fill the vacancy left by the NEC’s decision are the applicant or Mr Kikala. The applicant’s term of appointment is still current by 30 months. The allegations aside, his eligibility to hold the position is not an issue. His initial appointment is also not in issue. As for Mr Kikala, his eligibility for appointment is not in issue. He also has experience working for NHC as an advisor to the Minister for a short term. Whether that places him in a conflict of interest situation as submitted by Mr Narokobi is a matter I am not able to determine on the material before me. Compared to the applicant, Mr Kikala is a newcomer to NHC. The plaintiff’s employment with NHC dates back to 1990, mainly as a Senior Officer. Further, it seems that Mr Kikala’s appointment was made in contravention of the procedure prescribed by s.9 of the RSA in that the Board of NHC did not recommend him and there is no evidence that the PSC was consulted by NEC on the appointment.

20. The facts of this case are slightly different from Kambanei’s case in important aspects. Unlike in Kambanei’s case, a suitable career Senior Officer with NHC has not been identified by the NEC to fill in the temporary vacancy. Instead a non-career NHC senior officer has been brought in. There is no evidence before me that the affairs of NHC will be jeopardized if the applicant is allowed to remain in office. Finally, unlike Kambanei’s case where Mr Kambanei was a departmental head who was directly accountable to the NEC, the NHC is a public body corporate, whose corporate affairs are controlled by the Board. The Board has a direct and critical say on matters of appointment, suspension and dismissal of the Managing Director. When the Board’s involvement is wanting, the position of the Managing Director should not be easily interfered with. Public interest in the continuity in office of the Chief Executive Officer of a public corporation is better served by allowing the Chief Executive Officer to remain in office until his suspension or dismissal is properly done with the involvement of the controlling body of the Corporation, which in this case is the NHC Board, as provided for by statute. In such cases, the public interest in ensuring the business or commercial interest of the corporation is protected from all forms of undue interference is also an important consideration.

21. In my view, there must be a balance struck between three important and to some extent competing public interests – (1) public interest in ensuring that the good administration of the public office is maintained, (2) public interest in ensuring that the Chief Executive of a public, corporation is not removed from office without the say of the controlling body of the corporation, and (3) the public interest in ensuring that serious allegations of mismanagement of the corporation’s affairs are properly and fully investigated and dealt with by the appropriate authority. I have already addressed the first and second considerations. On the third consideration, I must state that if there is any suggestion of interference in the investigative disciplinary process by the applicant, the Court should not hesitate to discharge the interim orders. The balance of convenience favours the extension of the interim orders.

22. For these reasons, I make the following orders:

1. The First Respondents’ application filed on 21 September 2006 is dismissed.
2. The orders made by Salika J are extended until the leave application is heard and determined. The interim orders shall now be varied to restrain the First, Third and Fourth Respondents from giving effect to the decision of the Third Respondent made on 7 September 2006.
3. The applicant’s application for leave to apply for judicial review is fixed for hearing on 24 October 2006 at 9.30a.m.
4. Costs of the Motion shall be costs in the leave application.

________________________________________________________

Narokobi Lawyers: Lawyer for the plaintiff
Kakaraya Lawyers: Lawyer for the First Respondent
Solicitor-General: Lawyer for Second & Third Respondents