N4377

PAPUA NEW GUINEA
IN THE NATIONAL COURT OF JUSTICE

OS NO 11 OF 2009

BETWEEN

WAGUO GOIYE, PETER PINE, SOLOMON MINGE, BETTY FRANK, ANDY SIURE & GERARD PHILIP
Applicants

AND

DR CLEMENT MALAU - SECRETARY OF DEPARTMENT OF HEALTH
First Respondent

AND

HONOURABLE MR SASA ZIBE, MINISTER FOR HEALTH
Second Respondent

AND

THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Third Respondent

AND

TONZI AURE, JERRY KAPKA, HERMAN DAVID TAMBAGLE, PALMA EMBIA, REV JAMES BOYD, KARO KAMU, LADY REGINA KILAGE, PASTOR BARRY KUPO AND MEK DEGEME
Fourth Respondents

Mount Hagen: Makail, J
2011: 15th, 18th February & 17th May

JUDICIAL REVIEW - Review of decision of Minister for Health - Appointment of members of board of General Hospital - Public hospital - Regulatory Statutory Authority - Process of appointment discussed - Consultation with various stakeholders - Meaningful or genuine consultation - Criteria for eligibility for appointment discussed - Whether Minister acted ultra vires - Whether Minister committed error of law - Constitution - Sections 155(3), 193(3), 208A & 208B - Public Hospitals Act, 1994 - Sections 4, 5, 6, 7, 8 & 10 - Regulatory Statutory Authorities (Appointment to Certain Offices) Act, 2004 - Section 10 - National Court Rules - Order 16, rules 1 & 9.

Cases cited in this judgment:

John Napi -v- Kundiawa General Hospital Board (2006) N3047
Ricky Mitio & Anor -v- William G Gardner & 6 Ors (2005) N2792
The Public Services Commission -v- The Independent State of Papua New Guinea [National Executive Council] [1994] PNGLR 603
Mision Asiki -v- Manasupe Zurenuoc, Morobe Provincial Administration & The State (2005) SC797

List of legislations:

Constitution
Public Hospitals Act, 1994 
Regulatory Statutory Authorities (Appointment to Certain Offices) Act, 2004

Counsel:

Mr K Peri, for Applicants 
Ms J Y Doa, for Respondents 

JUDGMENT

17th May, 2011

1. MAKAIL, J: On 19th January 2009, the applicants filed an application for judicial review against the respondents asking the Court to review the decision of the second respondent to over look them and appoint the fourth respondents as members of the Kundiawa General Hospital Board. On 20th January 2009, I granted interim orders preventing the fourth respondents from taking office and allowed the applicants to remain in office until further orders. 

2. The applicants sought orders in the nature of certiorari to quash the decision of the second respondent to over look them and appoint the fourth respondents as members of the Kundiawa General Hospital Board and a declaration that the appointment of the fourth respondents as members of Kundiawa General Hospital Board as illegal, ultra vires, null and void pursuant to section 10 of the Public Hospitals Act, 1994 ("PH Act, 1994") and section 10 of the Regulatory Statutory Authorities (Appointment to Certain Offices) Act, 2004 ("RSA(ACO) Act, 2004"). 

3. They also sought declarations that the appointments of Jerry Kakpa as Chairman and Tonzi Aure as Deputy Chairman of Kundiawa General Hospital Board were illegal, ultra vires, null and void pursuant to section 10 of the PH Act, 1994 and section 10 of the RSA (ACO) Act, 2004 and a further order compelling the second respondent to carry out a genuine inquiry with the Acting Chief Executive Officer of Kundiawa General Hospital and a new submission with a list of names of nominees to be forwarded to the Public Services Commission and for the Public Services Commission to recommend to the second respondent a list of names for appointment as members of the Kundiawa General Hospital Board.

4. They claimed, following the expiry of their appointment in July 2008, the second respondent had not followed the process of appointment of new members of the Board of a General Hospital prescribed by section 10 of the PH Act, 1994 and section 10 of the RSA (ACO) Act, 2004 when he over looked them and appointed the fourth respondents as members of the Kundiawa General Hospital Board. Because of that, they claimed, the second respondent acted illegally and ultra vires his powers. As a result, his decision is illegal, null and void.

5. They also claimed some of the fourth respondents were not eligible for appointments under section 10 of the PH Act, 1994 and section 10 of the RSA (ACO) Act, 2004 because these two provisions set out the criteria for appointment of members of the Board of a General Hospital. When the second respondent appointed them, he committed an error of law. Therefore, their appointments were illegal, null and void.

6. According to the affidavit filed by the principal applicant Mr Waguo Goiye and located at pp 18-52 of the review book, the applicants were former members of the Board of Kundiawa General Hospital. Their term expired in July 2008 and the second respondent appointed the fourth respondents as the new members of the Board. The new members' names were published in the National Gazette which appeared on 09th January 2009. The previous members of the Board were Gerard Philip as Chairman, Waguo Goiye as Deputy Chairman and the members were Peter Pine, Solomon Minge, Betty Frank, Andy Siure, William Asue (deceased), Gigmai Getru and Dr Bonny Wau.

6. By a letter dated 02nd May 2008, the Acting Chief Executive Officer Sister Opha Tugo wrote to the first respondent proposing that the following persons be considered for appointment:

1. Gerard Philip 		6. Andy Siure
2. Waguo Goiye 		7. Rev James Boyd
3. Jeffrey Siki 			8. Michael Robert
4. Diana Ulka 			9. Tonzi Aure
5. Peter Pine			10. Karo Kamu

7. The above names were submitted to the first respondent following consultation with respective stakeholders including the National Department of Health's Technical Advisor Mr William Paya, the Simbu Governor Fr John Garia and the Acting Provincial Administrator Mr Steven Yakali. The second respondent did not appoint the nominees presented by Sister Opah Tugo in her letter dated 02nd May 2008. Instead, the second respondent was provided with a different list of nominees and went ahead and appointed the fourth respondents.

8. When Sister Opha Tugo became aware of a different list, she wrote to the first respondent and asked him as to where this list came from and the first respondent replied on 05th September 2008 advising her inter-alia, that:

"I see that the lists agree on four candidates but your list still retaining (sic) four previous members, which I don't think is in the best interest of the Kundiawa Hospital and its services to the people of the Simbu Province. Unless you provide your unbiased reasons and the backing of the Provincial Administrator, who is the Chairman of the Provincial Health Board and the Governor, the four previous members will be dropped from the final list."

9. Based on that letter, the Acting Provincial Administrator Steven Yakali wrote to the first respondent on 15th September 2008. On the same date, the Governor of Simbu Province Fr John Garia also wrote to the first respondent advising that the applicants be re-appointed for a further term as under the management of the applicants, the hospital experienced sound financial position and the applicants had performed exceptionally well.

10. The concern raised by Fr John Garia and Mr Steven Yakali, including Sister Opha Tugo and the principal applicant Mr Goiye was that, there were two persons from the same biological family being appointed as members of the Board. They were Mr Herman David Tambagle and Lady Regina Kilage. They were blood brothers and sisters. Then there was Pastor Barry Kupo who was another member and related to Mr Tambagle. Pastor Barry had signed an affidavit in a legal proceeding commenced by Mr Tambagle against Kundiawa General Hospital seeking a declaration and an injunction. The proceeding was filed at the Goroka National Court.

11. One of the fourth respondents has been arrested and charged for misappropriation and should not have been appointed. There were also two pastors on the Board. One was Pastor Barry Kupo from the Help Ministry, a local religious denomination and the other was Rev James Boyd, the District President of the Simbu District of the Evangelical Lutheran Church of PNG and also a local denomination. 

12. The first respondent and the second respondent had not consulted the Acting Chief Executive Officer Sister Opha Tugo in relation to the possible nominees for membership of the Board. If they had, Sister Opha would have also consulted the various interest groups on the ground such as the local business sector, the local religious denominations, and local women's groups in Simbu and would have prepared a summary of nominees from the interest groups and presented it to them.

13. As the first respondent and the second respondent had not followed this process, the applicants missed out and this had denied them the opportunity to be re-considered for re-appointment as there was no impediment against Sister Opha Tugo proposing them for re-appointment as members of the Board as long as genuine consultation had been made with the stakeholders.

14. From the evidence, it is clear the dispute is in relation to the membership of the Board of a General Hospital, in this case, the Board of Kundiawa General Hospital. The threshold issue therefore is, whether the second respondent breached the provisions of the PH Act, 1994 and the RSA (ACO) Act, 2004. In other words, did the second respondent act ultra vires his powers or commit an error of law when appointing the fourth respondents as members of the Board of Kundiawa General Hospital under the PH Act, 1994 and the RSA (ACO) Act, 2004?

15. The General Hospitals we have in the country are public hospitals and public hospitals are established by section 4 of the PH Act, 1994. It states:

"4. Establishment, etc., of Public Hospitals.

(1) The Minister may establish and maintain a hospital in any place in the country, and may declare a hospital to be a public hospital for the purposes of this Act.

(2) A public hospital established under Subsection (1) shall be administered and maintained in accordance with this Act.

(3) A public hospital established under Subsection (1) shall have a name determined by the Minister with the words "General Hospital" appearing after the name of that public hospital."

16. Section 6 establishes a Management Board for each public hospital. It states:

 "6. Establishment of Management Boards.

(1) There is established a Management Board for each public hospital.

(2) The Board of a public hospital -

(a) is a Corporation, with perpetual succession; and

(b) shall have a seal; and

(c) may acquire, hold and dispose of property; and

(d) may sue and be sued in its Corporate name.

(3) All courts, judges and persons acting judicially shall take judicial notice of the seal of a Board affixed to a document and shall presume that it was duly affixed." 

17. Sections 7 and 8 set out the functions and powers of the Board and section 10 sets out the constitution of the Board. How the members of the Board are appointed is not prescribed by the PH Act, 1994. But section 10 makes it clear as to who is eligible for appointment as a member of the Board. It states:

 "10. Constitution of Boards.

(1) Subject to this section, the Board of a public hospital shall consist of nine members of whom -

(a) one shall be a representative of the Department responsible for health matters, or his nominee; and

(b) three shall represent the local business sector; and

(c) one shall represent the local religious denominations; and

(d) one shall represent the staff of that public hospital; and

(e) three shall represent the local community of whom one shall be a woman nominated by the women's group in the local community.

(2) A Board constituted under Subsection (1) shall also include, as an ex officio member, the Chief Executive Officer who shall be an advisory member of the Board.

(3) A person appointed under Subsection (1) -

(a) shall be appointed, on the nomination of the Minister, by the Head of State, acting on advice; and

(b) shall hold office for a period of three years; and

(c) shall be eligible for re-appointment; and

(d) shall hold office on such terms and conditions as are determined under the Boards (Fees and Allowances) Act (Chapter 299).

(4) The persons appointed as advisory members of the Board under Subsection (2) shall be entitled to attend all meetings of the Board of which they are a member and shall be entitled to take part in debate but shall not vote on any matter or be counted towards a quorum."

18. How the members of the Board are appointed is not clearly stated in the PH Act, 1994. There were two conflicting opinions on this issue. The applicants said, the procedure for appointment of members of the Board is set out in section 10 of the RSA (ACO) Act, 2004 and that was the governing legislation for appointment of members of the Board. The respondents said otherwise and submitted section 10(3)(a) of the PH Act, 1994 sufficiently sets out the procedure for appointment of members of the Board. There, the members are appointed, on the nomination of the Minister, by the Head of State, acting on advice.

19. But I am not persuaded by the submissions of the respondents that section 10(3)(a) of the PH Act, 1994 sufficiently sets out the procedure for appointment of the members of the Board. Although it briefly states that a person (member) shall be appointed, on the nomination of the Minister, by the Head of State, acting on advice, I am not satisfied, it is adequate because it does not set out the process by which the Minister goes about to make the nominations for the Head of State, acting on advice to appoint the members of the Board. 

20. This is where I consider the process of appointment set out under the RSA (ACO) Act, 2004 relevant and applicable in cases of appointment of members of the Board of public hospitals. I say this for a number of reasons. First, a new part was inserted to Part VII of the Constitution which comprise of sections 208A and 208B. Section 208A reads:

"2. NEW PART VIIA.

The Constitution is amended by inserting after Part VII the following new Parts -
 
"PART VIIA. - REGULATORY STATUTORY AUTHORITIES.

 "208A.   DECLARATION OF REGULATORY STATUTORY  AUTHORITIES.

(1) The following are Regulatory Statutory Authorities for the purposes of this Part -

(a) a body corporate established by an Act of Parliament to perform specific statutory functions; and

(b) a body corporate incorporated by authority of an Act of Parliament,

and declared by an Act of Parliament to be a body to which this Part applies.

 (2) An Act of the Parliament may make provision for or in respect of other Regulatory Statutory Authorities to which this Part applies."

21. Section 208A above defines Regulatory Statutory Authorities as a body corporate established by an Act of Parliament to perform specific statutory functions and a body corporate incorporated by authority of an Act of Parliament and declared by an Act of Parliament to be a body to which the new Part VIIA of the Constitution applies. That Act of Parliament is the RSA (ACO) Act, 2004 and I will give my reason for saying so in a moment.

22. As to the process of appointment of persons to hold offices in the Regulatory Statutory Authorities, section 208B is the relevant provision and reads:

"208B. APPOINTMENTS TO CERTAIN OFFICES OF    REGULATORY STATUTORY AUTHORITIES.

(1) This section applies to and in respect of the following offices and positions -

(a) all offices of chief executive officers of Regulatory Statutory Authorities; and

(b) all offices of non ex officio members of Boards of Regulatory Statutory Authorities; and

(c) such other offices and positions as are prescribed by an Act of Parliament for the purpose.

(2) All appointments (whether temporary or substantive) to offices to which Subsection (1) (a) applies shall be made by the Head of State, acting with, and in accordance with, the advice of the National Executive Council given after considering recommendations from the relevant Minister, acting on the advice of the relevant Board in accordance with the recommendation from the Public Services Commission, following procedures prescribed by an Act of Parliament.

(3) All temporary appointments (whether temporary or substantive) to offices to which Subsection (1) (a) applies shall be made by the National Executive Council given after considering recommendations from the relevant Minister, acting on the advice of the relevant Board in accordance with the recommendation from the Public Services Commission, following procedures prescribed by an Act of Parliament.

(4) The revocation of appointments of persons appointed under Subsection (1) (a) shall be made by the Head of State, acting with, and in accordance with, the advice of the National Executive Council given after considering recommendations from the relevant Minister, acting on the advice of the relevant Board in accordance with the recommendation from the Public Services Commission, following procedures prescribed by an Act of Parliament.

(5) The suspension from office of persons appointed under Subsection (1) (a) shall be made by the Head of State, acting with, and in accordance with, the advice of the National Executive Council given after considering recommendations from the relevant Minister, acting on the advice of the relevant Board in accordance with the recommendation from the Public Services Commission following procedures prescribed by an Act of Parliament.

(6) All appointments (whether temporary or substantive) to offices to which Subsection (1) (b) applies shall be made by the Head of State, acting with, and in accordance with, the advice of the National Executive Council given after considering recommendations from the relevant Minister following procedures prescribed by an Act of Parliament." (Emphasis added).

23. In the case of appointments of non ex-officio members of Boards of Regulatory Statutory Authorities, section 208B (1)(b) & (6) above, relevantly states that all appointments (whether temporary or substantive) to offices of Boards shall be made by the Head of State, acting with, and in accordance with, the advice of the National Executive Council given after considering recommendations from the relevant Minister following procedures prescribed by an Act of Parliament.

24. Again, that Act of Parliament is the RSA (ACO) Act, 2004 and the reason for saying that is this; when one reads the preamble of that Act, it expressly states that it is an Act of Parliament to implement Part VIIA of the Constitution relating, inter-alia, to the appointment of non ex-officio members of Boards of Regulatory Statutory Authorities.

25. To my mind, when sections 208A and 208B of the Constitution and the preamble of the RSA (ACO) Act, 2004 are read together, it is plainly clear what they were intended to achieve and that is, appointments of non ex-officio members of Boards of Regulatory Statutory Authorities, in this case, the members of the Kundiawa General Hospital Board are to be done under the RSA (ACO) Act, 2004.

26. Following on from the first point, secondly, a Board of a public hospital, in this case, the Kundiawa General Hospital, is a body corporate by virtue of section 6 of the PH Act, 1994 (supra). As it is a body corporate established by an Act of Parliament, namely the PH Act, 1994, it is a Regulatory Statutory Authority because a Regulatory Statutory Authority is defined by section 2 of the RSA (ACO) Act, 2004 inter-alia as, "(a) a body corporate established by an Act of Parliament to perform specific statutory functions; and……."

27. And a Board of a Regulatory Statutory Authority is defined by section 2 of the RSA (ACO) Act, 2004, as "………………. the Board of Directors or other controlling or governing body, by whatever name known, established to perform the functions, exercise the powers and manage and direct the affairs of that authority;" (Emphasis added).

28. In a case of a Board of a public hospital, the Board is the "governing body" of the public hospital. It is a body corporate established by an Act of Parliament, namely the PH Act, 1994 to perform specific statutory functions. 

29. Its functions are clearly set out in section 7 of the PH Act, 1994. They are as follows:

"7. Functions of Boards.

(1) Subject to the National Health Administration Act 1997, a Board has, in respect of the public hospital for which it is established, the following functions -

(a) to administer and maintain the public hospital and its facilities for the care and treatment of the local people; and

(b) to engage in and assist local authorities in the provision of community health education and public health information services to local communities; and

(c) to provide or assist in the provision of facilities for, or in connection with, education, instruction or practical training of its professional staff and other employees; and

(d) to disseminate information and knowledge in the field of public health for the benefit of the public; and

(e) to provide facilities for teaching, instruction, research or post-graduate studies in medicine, dentistry, obstetrics, pediatrics, surgery, opthalmology, pathology, psychiatry, radiology, oncology and other related fields as the Board may consider fit; and

(f) to encourage research and experimentation into any areas of health services, medical activities or paramedical activities; and

(g) to administer and expend money appropriated by the State for the purposes of the public hospital; and

(h) to consult and co-operate with appropriate authorities and with other organizations, associations and persons on matters related to its activities; and

(ha) to supervise, assist and monitor curative services provided by lower level health facilities and to support their operations; and

(i) generally to do such supplementary, incidental or consequential acts and things as are necessary and convenient for carrying out or giving effect to its functions.

(2) The Board of a public hospital may perform any of its functions in co-operation with the Provincial Government of the province in which the public hospital is situated or with any body established by that Provincial Government for the purpose of encouraging the provision of health services in the province."

30. In my view, the Board of a public hospital plays a vital role in the existence, management, operation and running of a public hospital. As Davani, J said in John Napi -v- Kundiawa General Hospital Board (2006) N3047; 

"A hospital board and the public hospital that it represents are two related bodies that exist for each other's benefit and enhance each other's existence. I say this because a board exists for the hospital and the hospital exists and is able to operate because of the decisions made by the board."

31. It is therefore, imperative the people that make up the Board must be persons of good standing in the community, experienced in management and financial knowledge and skills, honest and above reproach, so that, they can be able to make decisions that will be beneficial to the hospital and ultimately, the people or the patients. By the same breath, the process by which they are appointed must be stringent and fool proof. If the process is not stringent and fool proof, the chances are, fools, self centered and incompetent people will be appointed. 

32. Thirdly, the process of appointment of the members of the Board as outlined by the respondents in their evidence and submissions has no foundation in law. To my mind, the procedure suggested by the respondents appears to be a "practice" practised by the Department of Health over the years rather than a process laid down by law. They suggested the following as the appropriate procedure:

1. The Chief Executive Officer prepares a list of non-ex-officio Board members potential candidates;

2. The potential candidates are interviewed by an independent committee;

3. The list of the recommended candidates is sent to the Minister for Health;

4. The Minister scrutinizes the list of candidates and then forwards it to the National Executive Council for approval; and

5. The approved list of candidates is returned to the Minister and he signs and then swears in the appointed members of the Board. (Emphasis added).

33. If the Court were to follow this procedure, the first question I ask is, who is this independent committee and where did it come from? The respondents have not explained this in their evidence or submissions. Given this, I can only conclude it must be some kind of an "administrative body" established by a superior authority with no legal foundation to assess the nominees for appointment. As to the criteria for appointment, it is anyone's guess because there is neither evidence nor submissions in relation to this aspect of the suggested appointment process.

34. The second question is, if the respondents relied on section 10(3)(a) of the PH Act, 1994, and it stipulates that, the members of the Board shall be appointed, on nomination of the Minister, by the Head of State, acting on advice, how is it that the procedure suggested by the respondents did not mention the Head of State's involvement in the appointment process? 

35. To my mind, the omission of the Head of State's involvement is fatal to the respondents' submissions because not only does it run counter to the clear expressed term of section 10(3)(a) of the PH Act, 1994 where members of the Board are appointed, on nomination of the Minister, by the Head of State, acting on advice, but also contradictory. They said, the appointment must be done in accordance with section 10(3)(a) of the PH Act, 1994 and yet do not follow its dictates. How hypocritical!

36. To my mind, these are very serious flaws in the proposition put forward by the respondents. What this means is that, it makes the proposition put forward by the applicants strong and persuasive. That is to say, the correct procedure for appointment of the members of the Board is set out under section 10 of the RSA (ACO) Act, 2004. 

37. To better appreciate the applicants' proposition, one needs to understand the historical background of the Act itself; why it was enacted by Parliament and its existence today. Very briefly, in the recent past, senior public servants, especially departmental heads and heads of statutory bodies were terminated at the whim of the executive arm of the government. In most cases, nepotism played a major role in the termination of very senior public servants in the government's bureaucracy. The executive arm terminated them at its pleasure but it was at the expense of merit and experience.

38. In almost all the cases, the senior public servants signed contracts of employment with the State and sued the State for breach of contract or wrongful dismissal. The end result, in cases where the Courts had found the State liable, substantial monetary compensation were awarded against the State. The State had to fork out huge sums of money outside its annual budgetary allocation to settle these judgment debts. It realised its exposure and had to do something, and had to do it quickly to prevent or minimise itself from forking out more huge sums of money to settle its legal obligations. It came up with the RSA (ACO) Act, 2004. It was its answer to its own woes. 

39. The executive arm presented a proposal to the Parliament to amend the Constitution to make provision for the establishment of the RSA (ACO) Act, 2004. The proposal was gladly approved by Parliament and that saw the inclusion of additional provisions to the Constitution including sections 208A and 208B. That paved the way for the enactment of the RSA (ACO) Act, 2004.

40. The Act was certified on 13th April 2004 and immediately came into operation. Whether it achieved its intended goal, that remains to be seen, suffice to say, by reading the Act itself, it is very detailed. It provides inter-alia, a merit based appointment process and also a process for appointment for non ex-officio members of boards of regulatory statutory authorities: see sections 5 & 10. 

41. And so, when one reads section 10(3)(a) of the PH Act, 1994 where the members of the Board shall be appointed, on the nomination of the Minister, by the Head of State, acting on advice, in conjunction with section 10 of the RSA (ACO) Act, 2004, it makes a lot of sense. Indeed, they complement each other. The combine effect is, they set out in minute detail the steps the Minister has to take to appoint the members of the Board of a public hospital.

42. All these reasons have persuaded me to find that, the RSA (ACO) Act, 2004 applies in cases where there is a vacancy in the Board and a need to appoint members of the Board. I am, therefore, satisfied the RSA (ACO) Act, 2004 applies in this case. And so, taking the RSA (ACO) Act, 2004, as the governing legislation on appointment of members of the Boards of General Hospitals in the country, section 10 is the relevant provision and it states as follows: 

"10. Appointment of non ex officio members of Boards of Regulatory Statutory Authorities.

(1) Where, in relation to a Regulatory Statutory Authority, an appointment of a member of the Board, other than an ex officio member, is required to be made in accordance with the Act or other instrument of incorporation under which the Regulatory Statutory Authority is established, the appointment shall be made, notwithstanding any provisions to the contrary, by the Head of State, acting on advice.

(2) Where an appointment to which Subsection (1) applies is to be made, the Minister shall –

(a) prepare a list of candidates for the office; and

(b) submit the list to the Public Services Commission for its consideration.

(3) Where, under an Act or other instrument of incorporation, an appointment to an office to which Subsection (1) applies is to be made to represent a particular group, the Minister shall, prior to submitting a list to the Public Services Commission under Subsection (2)(b)-

(a) carry out genuine consultations with the particular group concerned on its proposed nominees for the office; and

(b) from the consultations made, compile a summary of the nominees made by the interest group, for submission to the Public Services Commission for its consideration.

(4) On the receipt of a list under Section 2(b), the Public Services Commission shall consider whether each applicant satisfies a "fit and proper person criteria" based on the following:-

(a) whether the person is a fit and proper person to hold the particular office; and

(b) whether the person is competent and of sound judgement to fulfill the responsibilities of that office; and

(c) whether he is a person whose previous conduct and activities in business or financial matters is not in question and, in particular, that he may not have -

(i) committed an offence involving fraud or other dishonesty or violence; or

(ii) been engaged in or been associated with any financial loss due to dishonesty, incompetence or malpractice; or

(iii) been engaged in any business practices appearing to be deceitful or oppressive or otherwise improper (whether unlawful or not) or which otherwise reflect discredit on his conduct; or

(iv) engaged in or been associated with any other business practices or otherwise conducted himself in such a way as to cast doubt on his competence and soundness of judgement, and shall make appropriate recommendations and advice on appointment to the Minister.

(6) On the receipt of the advice of the Public Services Commission under Subsection (5), the Minister shall make a submission on appointment to the National Executive Council for its consideration.

(7) In the event that the National Executive Council approves the recommendation of the Minister under Subsection (6), it shall advise the Head of State to make an appointment of a non ex officio member of the Board of the Statutory Regulatory Authority."

43. From my perusal of section 10 of the RSA (ACO) Act, 2004, it is clear the Head of State, acting on advice of the National Executive Council ("NEC"), appoints the members of the Board of public hospitals. But the process leading to the appointment of members of the Board by the Head of State, acting on advice of the NEC, begins with the Minister for Health ("Minister") preparing a list of nominees and submitting the list to the Public Services Commission for the Public Services Commission to apply the "fit and proper person test" under section 10(4) of that Act.

44. And before the Minister shall submit the list of nominees to the Public Services Commission for the Public Services Commission to apply the "fit and proper person test", the Minister must carry out genuine consultation with particular interest groups. The interest groups are set out under section 10(1) of the PH Act, 1994 and they are:

1. a representative from the Department of Health.
2. the local business sector.
3. the local religious denominations.
4. a representative of the staff of the public hospital.
5. the local community.
6. the local women's groups.

45. From my perusal of the affidavit of Francis Possy at p 127 of the review book and the affidavit of Dr Goa Tau at p 180 of the review book, there is no dispute that the Chief Executive Officer of a General Hospital is an agent of the second respondent and that, the Chief Executive Officer must be consulted in relation to the finalisation of the list of the endorsed candidates.

46. As the Minister has no time to run around to consult these various interest groups, the Chief Executive Officer as his agent on the ground carries out the consultation with the interest groups. Once the Chief Executive Officer completes the consultation and receives a list of nominees from the interest groups, he or she then submits the list of nominees to the Minister to then present to the Public Services Commission for the Public Services Commission to apply the "fit and proper person test".

47. In applying the "fit and proper person test", the Public Services Commission shall take into account the following matters:

1. whether the person is a fit and proper person to hold the particular office; and

2. whether the person is competent and of sound judgment to fulfill the responsibilities of that office; and

3. whether he is a person whose previous conduct and activities in business or financial matters is not in question and, in particular, that he may not have -

(a) committed an offence involving fraud or other dishonesty or violence; or

(b) been engaged in or been associated with any financial loss due to dishonesty, incompetence or malpractice; or

(c) been engaged in any business practices appearing to be deceitful or oppressive or otherwise improper (whether unlawful or not) or which otherwise reflect discredit on his conduct; or

(d) engaged in or been associated with any other business practices or otherwise conducted himself in such a way as to cast doubt on his competence and soundness of judgment.

48. Once the Public Services Commission completes its assessment based on the "fit and proper person test", it shall make appropriate recommendations and advice on appointment to the Minister. On receipt of the advice from the Public Services Commission, the Minister shall make a submission on the appointment to the NEC for its consideration and approval. Where the NEC approves the recommendation of the Minister, it shall advise the Head of State to make the appointment.

49. In my view, two important features are apparent from this process. The first is, it is a stringent process because there are various stakeholders that must be consulted before the appointment of members of the Board are made by the Head of State, acting on advice of the NEC. The second is, where various stakeholders are involved in the consultation, it implies the consultation must be meaningful or genuine. 

50. The phrase "consultation" has been a subject of judicial consideration in the past. Salika, J (as he then was) in The Public Services Commission -v- The Independent State of Papua New Guinea [National Executive Council] [1994] PNGLR 603 held that, section 193(3) of the Constitution imposed a duty on the NEC to consult the Public Services Commission on appointments of departmental heads. The necessity to consult is mandatory. 

51. In that case, his Honour found that to consult and not talk to anybody because the telephone was disconnected due to non-payment of rent or because the plaintiffs were moving offices was insufficient consultation under section 193(3) of the Constitution.

52. In a nutshell, the process of appointment of the members of the Board is no light matter and must not be set aside lightly. A failure to strictly observe this stringent process to ensure that it achieved its desired effect may result in questions being raised in relation to the validity of appointment of the members of the Board.

53. This is, I believe, what happened in the present case. Questions have been raised by the applicants in relation to the validity of the appointment of the fourth respondents as members of the Board of Kundiawa General Hospital. Their main complaint was that, there was no meaningful or genuine consultation amongst the various stakeholders by the second respondent before the fourth respondents were appointed as members of the Kundiawa General Hospital Board. Their other complaint was that, some of the fourth respondents were ineligible for appointment because they did not meet the criteria set out under section 10(1)(a) of the PH Act, 1994 and section 10 of the RSA (ACO) Act, 2004. 

54. In relation to the main complaint, I have perused the affidavit of Carol Salamita Jaran at pp 123-124 of the review book, affidavit of Francis Possy at pp 125-133 of the review book, affidavit of Margaret Asimbu at pp 277-279 of the review book and affidavit of Dr Goa Tau at pp 178-180 of the review book and I note they did not say if genuine consultation had been conducted. None of these witnesses really understood how the process of appointment works under section 10 of the RSA (ACO) Act, 2004. 

55. In a situation where the Minister is of the opinion that a conflict of interest situation arises, the Director of Curative Health becomes the agent of the Minister. Dr Tau further stated the second respondent's decision to appoint new members of the Kundiawa General Hospital Board was made in the best interest of the hospital. However, there is no evidence from the Director of Curative Health to verify if he or she conducted a genuine consultation with the various stakeholders as required by section 10 of the RSA (ACO) Act, 2004. 

56. In my view, all the respondents' witnesses misunderstood the application of the PH Act, 1994 and the RSA (ACO) Act, 2004. I consider that, where a vacancy exists in any public hospital, the Minister must conduct genuine consultation with the Chief Executive Officer. The consultation begins with the Chief Executive Officer submitting a list of names of candidates to the Minister who in turn must submit the same list to the Public Services Commission. 

57. The Public Services Commission conducts a "fit and proper person test" and makes appropriate recommendation and advice on the appointment to the Minister. On receipt of the advice from the Public Services Commission, the Minister shall make a submission to the NEC for its consideration and approval. The NEC shall then advise the Head of State to make the appointment of the members of the Kundiawa General Hospital Board.

58. Francis Possy and Dr Tau said nothing about this process. They said nothing about the second respondent submitting a list of names to the Public Services Commission for it to conduct a "fit and proper person test". At paragraph 10 of the affidavit of Dr Tau at p 180 of the review book, he said the second respondent had appointed new members of the Kundiawa General Hospital Board and at paragraph 17 of the affidavit of Mr Possy, he said the second respondent had exhausted all avenues to consult, consider and recommend all potential candidates before submitting a final recommendation to the NEC. 

59. Whom did he consult and when did he consult them? Where are the views of the interest groups, more particularly their views in relation to the different list of nominees that was submitted to him? There is absolutely no evidence to establish these matters. In my view, the second respondent has no power to unilaterally make the appointment. He must comply with the procedure prescribed by law under section 10(3)(a) of the PH Act, 1994 and section 10 of the RSA (ACO) Act, 2004. 

60. The evidence from the applicants is that, Mr William Paya is the Technical Advisor. He was the officer referred by the first respondent in his letter dated 05th September 2008 at p 272 of the review book. From this letter, it is evident that Sister Opha Tugo had been in contact with him. This goes to support the point that the point of contact for genuine consultation is the Chief Executive Officer.

61. Instead of taking on board her views and recommendations in relation to the list of nominees for appointment as she had conducted a genuine consultation with the various interest groups including the Governor of Simbu Province Fr John Garia and the Acting Provincial Administrator Mr Yakali, the second respondent relied on a different list which did not go through the consultation process as discussed above, and which need no repetition here. 

62. There is no provision in the PH Act, 1994 for old members of the Board to be dropped and new nominees recommended for appointment. The old members can be re-appointed provided there is genuine consultation. Indeed, section 10(3)(c) of the PH Act, 1994 allows for re-appointment of the old members of the Board. Therefore, there was no impediment against their re-appointment. The old members of the Board were Gerard Philip Waguo Goiye, Peter Pine, Solomon Minge, Betty Frank, Andy Siure, William Asue (deceased), Gigmai Getru and Dr Bonny Wau.

63. The new nominees included Gerard Philip, Waguo Goiye, Jeffrey Siki, Diana Ulka, Peter Pine, Andy Siure, Michael Robert, Tonzi Aure and Karo Kamu. Apart from Gerard Philip, Waguo Goiye, Peter Pine and Andy Siure, the others were new nominees. It is clear, although four old members were recommended for re-appointment, the others were new nominees. This was not a case where all the old members of the Board were recommended for re-appointment.

64. If there were allegations of Sister Orpha having a conflict of interest in their re-appointment, those were matters that could have been brought to the attention of the various interest groups including the Governor Fr John Garia and the Acting Provincial Administrator Mr Yakali at the initial consultation and also at the time of consultation with the Public Services Commission. I do not see any impediment against the second respondent raising these issues with the Public Services Commission when submitting his list of nominees for screening purposes by the Public Services Commission. 

65. The same can be said of the old Chairman of the Board, Mr Gerard Philip. If there were allegations of conflict of interest as he operates a business venture in Kundiawa town and at the same time holds the position of Chairman of the Board where the hospital obtains goods and services, there was no impediment against the second respondent raising these issues with various interest groups including the Governor Fr John Garia and the Acting Provincial Administrator Mr Yakali at the initial consultation and also at the time of consultation with the Public Services Commission. He could have done so at the time of submission of his list of nominees for screening purposes by the Public Services Commission. 

66. If there were allegations of impropriety against Mr Philip because of his committal to stand trial in the National Court on rape charges, again, the opportunity was there at the consultation process where he could have raised them with the various stakeholders but he chose not to do so. Instead, the respondents and their witnesses have turned around and accused Sister Opha Tugo of failing to respond to the first respondent's letter of 05th September 2008 and insubordination to "Ministerial Directives". Is this what you call meaningful or genuine consultation? Is this how a meaningful or genuine consultation should take place? I wonder?

67. All these matters have led me to conclude that the second respondent has not conducted a meaningful or genuine consultation with the various stakeholders before submitting the list of nominees to the NEC for approval and appointment by the Head of State, acting on advice.

68. In Ricky Mitio & Anor -v- William G Gardner & 6 Ors (2005) N2792, Davani, J was faced with a similar situation as in this case. In that case, the Board of Directors of Coffee Industry Corporation Limited ("CIC") by a resolution in writing signed by seven directors terminated the employment of the first applicant Ricky Mitio as Chief Executive Officer of CIC Limited. By the same resolution, the Board of Directors resolved to remove the second applicant Pugma Kopi as Chairman of the CIC Board and appointed the first respondent William Gardner as the new Chairman of CIC Limited.

Her Honour considered that under section 5 of the Coffee Industry Corporation (Statutory Functions and Powers) Act, 1991, the CIC's nominees to the Board of CIC Limited which numbers of nominees shall not exceed the number of vacancies and the CIC Board shall be appointed in accordance with the RSA (ACO) Act, 2004. 

69. Although it was noted the CIC Limited was a company and was governed by the Companies Act, 1997, her Honour held that the manner of appointment should have been conducted under the RSA (ACO) Act, 2004 and found that the actions of the respondents were ultra vires as the removal of the applicants and the subsequent replacement was not done in accordance with the provisions of the RSA (ACO) Act, 2004. 

70. While in Ricky Mitio's case (supra), the CIC Limited was a company and a challenge was made against the decision of the Board of Directors of the company to remove Mr Mitio as the company's Chief Executive Officer and Mr Kopi as its Chairman of Board of Directors and in the present case, the decision under consideration is the second respondent's decision to appoint the fourth respondents as members of the Board of a public hospital, I consider the process of revocation or appointment of Chief Executive Officers or members of Boards is done under the RSA (ACO) Act, 2004. That is, the revocation or appointment must be done, in the case of a Chief Executive Officer, in accordance with the procedure set out under sections 5, 6 and 7 of the RSA (ACO) Act, 2004 and in the case of members of the Board, under section 10 of the RSA (ACO) Act, 2004. 

71. Hence, applying the decision in Ricky Mitio's case (supra) to the present case, I find the decision of the second respondent to appoint the fourth respondents was not done in accordance with the procedure set out in section 10 of the RSA (ACO) Act, 2004. I find the second respondent acted ultra vires his powers under section 10 of the RSA (ACO) Act, 2004. It follows his decision is illegal, null and void.

72. Turning to the second complaint of the applicants, as noted above, section 10 of the PH Act, 1994 sets out the constitution of the Board. There are total of nine non ex-officio members. The Chief Executive Officer of the General Hospital is the tenth member and is an ex-officio member. Out of the nine non ex-officio members, one must be a representative from the Department of Health, three must be from the local business sector, one must be from the local religious denominations, one must be from the staff of the public hospital and three must be from the local community, one of whom must be a woman representing the women's group in the local community.

73. And so, the composition of the Board is pretty must straight forward and clear cut. There can be no uncertainty or confusion as to who should make up the Board. In my view, section 10 above prescribes the eligibility criteria for appointment of the members of the Board of a General Hospital and the second respondent as the Minister responsible for the appointment, must strictly observe the criteria set out in section 10.

74. In the present case, I find some of the fourth respondents were not eligible for appointment as members of the Board of Kundiawa General Hospital. First, pursuant to section 10(1)(c) of the PH Act, 1994, there must be one member representing the local religious denominations and in this case, there were two persons appointed. One was Pastor Barry Kupo and the other was Rev James Boyd. I find the decision of the second respondent to appoint two persons from the local religious denominations in breach of section 10(1)(c) above. As a result of the breach, I find the second respondent committed an error of law in his decision. The effect of such breach and error is that, the decision to appoint these two clergy men as representative of the local religious denominations on the Board is illegal, null and void.

75. In case I am wrong on that point, and that, Pastor Barry Kupo was appointed in his capacity as a representative from the local community pursuant to section 10(e) of the PH Act, 1994, he has signed an affidavit on 14th November 2008 filed at the Goroka National Court in OS No 704 of 2008 in an action commenced by his church group, the Help Ministry International Foundation Inc. against the Kundiawa General Hospital seeking a declaration in relation to a road built as an easement in allotment 2, section 30, Kundiawa in Simbu Province as being for public purpose and that, he has a right of way. 

76. A copy of the Originating Summons is marked annexure "I" to the affidavit of Mr Goiye which may also be found at pp 46-48 of the review book and his affidavit is marked as annexure "J" to the affidavit of Mr Goiye and may also be found at pp 50-52 of the review book. On 20th November 2008, the National Court at Goroka issued an injunction in his favour. It is not known what has become of the court action but what is relevant is that, here is a person who has been appointed at a time when he has taken the hospital to Court. It appears a conflict of interest is imminent. Applying the "fit and proper person test" under section 10(4) of the RSA (ACO) Act, 2004, surely, questions must be asked as to whether he was a fit and proper person to be a member of the Board in light of the court action. 

77. Secondly, applying the "fit and proper person test" under section 10(4) of the RSA (ACO) Act, 2004, serious questions must also be asked in relation to the appointment of Mr Tambagle. He is the principal plaintiff in the court action OS No 704 of 2008 filed at Goroka National Court. Again, as in Pastor Barry Kupo's case, it appears, a conflict of interest is imminent. 

78. Thirdly, Mr Tambagle and Lady Regina Kilage are blood brothers and sisters. Lady Regina Kilage is the widow of late Sir Ignatius Kilage, Former Governor General of Papua New Guinea. While I accept and respect them as two separate individuals and well respected persons in their own right and standing, one must not lose sight of the fact that, the Kundiawa General Hospital Board is not a "family business". It is a public entity, established to serve the hospital and ultimately, the people or very importantly, the patients. That is why I consider it important that a "fit and proper person test" must be conducted to determine their eligibility. As I have found, none had been done, and serious questions have been raised in relation to their eligibility and must not be brushed aside too quickly.

79. Finally, it has not been denied by the respondents, Mr Tonze Aure who is the Advisor of the Provincial Health Division in Simbu Province has been suspended for misappropriation. It is not known what has become of the suspension but what is relevant is that, while he was suspended, he was appointed as member of the Board and also Deputy Chairman of the Board. Again, applying the "fit and proper person test" under section 10(4)(a)&(c)of the RSA (ACO) Act, 2004, surely, questions must be asked as to whether he was a fit and proper person to be appointed a member of the Board and more importantly, Deputy Chairman of the Board. 

80. While four of the fourth respondents were eligible for appointment, five have serious questions raised in relation to their eligibility. They were Mr Aure, Mr Tambalge, Rev James, Lady Regina and Pastor Barry and it would be unfair to generalise and say that the entire decision of the second respondent to appoint them as new members of the Board was flawed, illegal null and void. 

81. However, as I have found in relation to the main complaint that the second respondent's decision was not made in accordance with the procedure set out under section 10 of the RSA (ACO) Act, 2004, it must follow that the entire appointment of the Board must be declared illegal, null and void. The question of appointment must be referred back to the second respondent and he must re-visit his decision, this time by following very carefully the procedure set out under section 10 of the RSA (ACO) Act, 2004. I consider it important a time frame must be set by the Court to ensure that he carries out the inquiry expeditiously so as to prevent unnecessary delays and inconvenience to the parties and interested stakeholders.

82. Finally, judicial review jurisdiction of the National Court is discretionary. The discretion vested in the National Court by section 155(3) of the Constitution and Order 16, rules 1 & 9 of the National Court Rules must be exercised judicially and on proper principles and proper grounds. An authoritative statement of this principle was made in the Supreme Court case of Mision Asiki -v- Manasupe Zurenuoc, Morobe Provincial Administration & The State (2005) SC797.

83. In the present case, I am satisfied the applicants have made out the application for judicial review on the grounds of ultra vires and error of law. It follows, the application for judicial review is granted. The orders are:

1. An order in the nature of certiorari quashing the decision of the second respondent to appoint the fourth respondents as members of the Kundiawa General Hospital Board. 

2. An order in the nature of a declaration that the appointment of the fourth respondents as members of the Kundiawa General Hospital Board is illegal, ultra vires, null and void pursuant to section 10 of the PH Act, 1994.

3. An order in the nature of a declaration that the appointment of the fourth respondents as members of the Kundiawa General Hospital Board is illegal, ultra vires, null and void pursuant to section 10 of the RSA (ACO) Act, 2004.

4. An order in the nature of a declaration that the appointments of Jerry Kakpa as Chairman and Tonzi Aure as Deputy Chairman of the Kundiawa General Hospital Board are illegal, ultra vires, null and void pursuant to section 10 of the PH Act, 1994 and section 10 of the RSA (ACO) Act, 2004.

5. An order compelling the second respondent to carry out a genuine inquiry with the Acting Chief Executive Officer of Kundiawa General Hospital within sixty (60) days from today and a new submission with a list of names of nominees be forwarded to the Public Services Commission thereafter, and for the Public Services Commission to recommend to the second respondent a list of names for appointment as members of the Kundiawa General Hospital Board.

6. Upon receipt of the list of names for appointment, the second respondent shall recommend to the National Executive Council the list of names for approval and upon the National Executive Council approving the list of names, shall advise the Head of State to appoint the members of the Kundiawa General Hospital Board.

7. Pending the respondents' compliance with orders 5 and 6 above, the applicants shall remain as members of the Board of the Kundiawa General Hospital and continue to perform the powers and functions of the Board of Kundiawa General Hospital.

8. The respondents shall pay the applicants' costs of the application for judicial review to be taxed if not agreed.

9. Time for entry of these orders shall be abridged to the date of settlement by the Registrar which shall take place forthwith.

Judgment and orders accordingly.
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Warner Shand Lawyers: Lawyers for Applicants 
Acting Solicitor-General: Lawyers for Respondents