Madang Cocoa Growers Export Co Ltd v Tautea [2012] PGNC 5; N4584 (23 March 2012)

N4584

PAPUA NEW GUINEA
[IN THE NATIONAL COURT OF JUSTICE]

OS (JR) NO 132 0F 2006

MADANG COCOA GROWERS EXPORT CO LIMITED
Plaintiff

V

LAUATU TEA'RIKI TAUTEA
First Defendant

COCOA BOARD OF PAPUA NEW GUINEA
Second Defendant

Madang: Cannings J
2011: 18 November,
2012: 23 March

JUDICIAL REVIEW – power of board of statutory authority to cancel registration of permit to export a commodity – whether power exercised by board or by its executive officer – whether executive officer delegated power to cancel registration – whether principles of natural justice apply to cancellation of registration – whether decision to cancel registration unreasonable.

The Cocoa Board registered the plaintiff under the Cocoa Act as a person permitted to export cocoa beans and issued a certificate of registration. The registration was due to expire ten months later but after only four months the Chief Executive Officer of the Board wrote to the plaintiff notifying it that its 'export licence is infinitely suspended' as another company had been using the plaintiff's export licence to purchase and export cocoa, which practice 'is illegal as all export licences are non-transferable'. The plaintiff was granted leave by the National Court to seek judicial review of the decision to suspend its licence and an order quashing that decision, on three grounds: (1) that the decision was made by the CEO, not by the Board as required by the Act; (2) that the plaintiff was denied natural justice as it was given no opportunity to explain itself before suspension of its licence; and (3) that the decision was unreasonable. This was the trial of the application for judicial review.

Held:

(1) Ground (1) was upheld as the decision was made by the CEO, not by the Board, as required by the Act; and the Board had not delegated the power to cancel registration to the CEO.

(2) Ground (2) was upheld as the principles of natural justice applied to a decision to cancel a registration. The decision-maker had a duty to act fairly and, in principle, to be seen to act fairly, and those principles were breached as the plaintiff was given no notice or right to be heard prior to the decision.

(3) Ground (3) was dismissed as the decision was made for reasons that were rational and comprehensible and could not be said to be so absurd or unreasonable that no reasonable decision-maker could have made it.

(4) As two grounds of review were upheld the decision was susceptible to judicial review. Despite the lapse of more than five years after the granting of leave for judicial review, the delay in prosecuting the matter was not a good reason to refuse the relief sought as the defendants had also dithered in their dealing with the matter. The decision to cancel the registration was quashed and a declaration (even though not sought by the plaintiff) was made under Section 155(4) of the Constitution that the cancellation was unlawful and a nullity, and costs of the proceedings were awarded against the defendants.

Cases cited

The following cases are cited in the judgment:

Air Niugini Ltd v Beverley Doiwa [2000] PNGLR 347
Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1947] EWCA Civ 1; [1948] 1 KB 223
Bougainville Copper Foundation v Minister for Trade and Industry and NIDA [1988-89] PNGLR 110
Chief Collector of Taxes v Blasius Dilon [1990] PNGLR 414
Dale Christopher Smith v Minister for Lands (2009) SC973
Dopsie v Tetaga & Apeng (2009) N3722
Fulleborn Plantations Ltd v Pepi Kimas (2007) N3209
Isaac Lupari v Sir Michael Somare (2008) N3476
Kely Kerua v Council Appeals Committee of the University of Papua New Guinea (2004) N2534
Paul Saboko v Commissioner of Police (2006) N2975
R v Barnsley Metropolitan Borough Council; Ex parte Hook [1976] 3 All ER 452
Re Pergamon Press Ltd [1970] 3 All ER 535
Southern Highlands Provincial Government v National Housing Corporation (2001) N2110

JUDICIAL REVIEW

This was an application for judicial review of a decision to cancel registration under the Cocoa Act of permission to export cocoa.

Counsel

S Asivo, for the plaintiff, with leave of the Court
D M Steven, for the defendants

23rd March, 2012

1. CANNINGS J: The plaintiff, Madang Cocoa Growers Export Co Ltd, has applied for judicial review of a decision to cancel its registration under the Cocoa Act as a person permitted to export cocoa beans. It was granted a certificate of registration on 27 July 2005, allowing it to export until 30 September 2006. But on 25 November 2005 its registration was cancelled. It was granted leave to argue three grounds of review.

GROUND (1): DECISION WAS MADE BY THE CHIEF EXECUTIVE OFFICER, NOT BY THE COCOA BOARD

2. The plaintiff argues that the decision to cancel its registration was not made by the Cocoa Board, as required by the Cocoa Act, but by the Board's Chief Executive Officer, Mr Lauatu Tautea. It says that after it was granted a certificate of registration on 27 July 2005 Mr Tautea (or someone writing for him) wrote in a letter dated 25 November 2005 in the following terms:

SUBJECT: NR GLOBAL PURCHASING & EXPORTING COCOA USING YOUR LICENCE

We refer to the above and wish to advise that the Board is in receipt of a complaint from our Regional Office in Madang regarding same.

This office is made aware that NR Global has reportedly been using your Export Licence to purchase and Export cocoa. This practice is illegal as all export licences are non-transferable.

Further the proposed MOA that was to be signed to allow both parties concerned (NR Global & Madang Cocoa Growers Export Company) to purchase and export cocoa using the same licence has never been eventuated to date as reported by our regional office.

This in itself is a breach of the Cocoa Act and thus all cocoa businesses must cease forthwith.

In view of the above the Board wishes to advise that your Export Licence is infinitely suspended. [sic]

Any business conducted as from the date of this notice will be treated as illegal and the Board will not hesitate to impose heavier penalties.

We hope that the foregoing is fully understood.

Thank you sincerely,

Cocoa Board of PNG

for Lauatu Tea'riki Tautea

Chief Executive Officer

3. Before addressing the merits of the argument there are a few pieces of terminology to rectify. The above letter and all documents filed by parties in these proceedings speak of the plaintiff's 'export licence' being 'suspended' and Mr Tautea being the 'Chief Executive Officer' of the Cocoa Board. That is not proper statutory language. The Cocoa Act does not speak of 'licences' but provides, in Section 26 (registration of cocoa dealers etc) that the Board may "register ... a person as a person permitted to export cocoa beans of cocoa products". The Act does not allow the Board to 'suspend' a registration, but under Section 26(6) it may "cancel a registration". The Act makes no reference to a 'Chief Executive Officer' but Section 15(1) (appointment of employees of board etc) provides that there shall be "an Executive Officer of the Board". These discrepancies have not affected determination of the merits of the case. However I remind parties and counsel that sloppy use of statutory language can easily lead to mistakes in decision-making and impair efficient disposition of applications for judicial review.

4. Returning now to the plaintiff's argument – that the decision to cancel its registration as a person permitted to export cocoa beans was not made by the Board, but by Mr Tautea, who had no decision-making power – the defendants' response was an oblique one. Rather than providing evidence of a Board decision to cancel the registration or evidence that Mr Tautea had, in fact, been delegated the power to make such a decision the defendants argued that the plaintiff had not proven that there was no Board decision and had not proven that Mr Tautea did not have delegated authority.

5. That is not an adequate response. I appreciate that the plaintiff bears the legal burden of proof of its case but here, where the letter has been signed "for" Mr Tautea, the reasonable inference is that the Board, which under Section 5(1) (constitution of the board) of the Act consists of nine members, did not actually meet and itself made a decision to cancel the registration. In these circumstances the evidentiary burden of proof shifts to the defendants to show that, in fact, the Board did make a decision to cancel the registration or that, in fact, the Board had delegated its power to cancel a registration to Mr Tautea and that he (not someone else) made the decision (Chief Collector of Taxes v Blasius Dilon [1990] PNGLR 414). These are matters that should be squarely within the defendants' knowledge. The evidence should be easily available. But it was not made available. The defendants have failed to discharge the evidentiary burden of proof and therefore I find as a fact that:

• the Cocoa Board did not make a decision to cancel the plaintiff's registration; and
  
• the decision to cancel the registration was made by Mr Tautea or some other employee of the Board;
  
• the Board had not delegated its power to cancel a registration to Mr Tautea or any other employee.
  

6. Those are significant facts as the Cocoa Act only empowers the Board or a person to whom the Board has by writing under its seal delegated its powers to register a person as being permitted to export cocoa products. That is the effect of Sections 26(1)(c), 26(6) and 13 (delegation) of the Act.

7. Section 26(1)(c) provides for registration by stating:

The Board may, on payment of the prescribed fee, register ... a person as a person permitted to export cocoa beans or cocoa products.

8. Section 26(6) confers the power of cancellation by stating:

The Board may cancel a registration under Subsection (1) if it is satisfied that—

(a) the registration was obtained—

(i) by means, or partly by means, of a false or misleading statement; or

(ii) by other improper means; or

(b) the registered person, or in the case of registered premises, the owner or occupier of those premises—

(i) has failed, in the Board's opinion, to comply with a condition or to observe a restriction noted on the Certificate of Registration issued to him under Subsection (3); or

(ii) has been convicted of an offence against this Act; or

(iii) has not, in the Board's opinion, adequate finance, facilities or organization for the storage, control of quality, handling or marketing of cacao beans, cocoa beans or cocoa products, as the case may be.

9. Section 13 allows the Board to delegate its powers or functions by stating:

The Board may, by writing under its seal, delegate its functions and powers (except this power of delegation).

10. I conclude that the decision that was made to 'suspend the plaintiff's 'export licence' was in effect a decision under Section 26(6) to cancel its registration as a person permitted to export cocoa beans. That decision was not made by the Board or a person to whom the Board had delegated its power of cancellation. The decision was made ultra vires (beyond power, in excess of jurisdiction). The first ground of review is therefore upheld.

GROUND (2): THE PLAINTIFF WAS DENIED NATURAL JUSTICE AS IT WAS GIVEN NO OPPORTUNITY TO EXPLAIN ITSELF

11. The plaintiff's argument is a simple one. It was granted a certificate of registration in July. It commenced exporting cocoa beans. Its certificate was cancelled in November without notice and without giving it an opportunity to answer any of the allegations made against it. It was thus denied natural justice.

12. Mr Steven, for the defendants, responded that in fact the plaintiff was given a right to be heard, both before and after the decision to cancel the registration, but the plaintiff refused to provide information in relation to its activities, and in any event the decision was made for good reason as the plaintiff had transferred its certificate to another person in breach of the conditions of its certificate.

13. I have found those submissions to be unimpressive. There is no worthwhile evidence that the Board or its Executive Officer or any other Board employee gave any notice to the plaintiff that consideration was being given to cancelling its certificate. The plaintiff was not given a right to be heard and had no opportunity before the decision was conveyed to it to explain why its certificate should not be cancelled. It is true that dialogue took place. A meeting took place in Madang on 17 January 2006, which addressed cancellation of the certificate. It was attended by three Cocoa Board employees, six plaintiff representatives and nine other national and provincial government officers. But that happened after the decision was made. It does not count as being a right to be heard which, to be meaningful, must be administered before a decision is made. As for the argument that there were good reasons for the registration being cancelled, that is also irrelevant to the question of whether a right to be heard was administered. So these are the court's findings of fact:

• the decision to cancel the plaintiff's certificate was made without prior notice to the plaintiff;
  
• the plaintiff was not given a right to be heard before the decision was made;
  
• the dialogue that took place between the plaintiff and the defendants as to the reasons for the decision and its merits did not take place until after the decision was made.
  

14. Was there anything wrong in the decision being made in that way? Yes, it was wrong as the plaintiff, which had only four months previously been granted a certificate of registration permitting it to export cocoa beans, was entitled to the protection of the principles of natural justice. It has long been recognised, due to leading English cases such as Re Pergamon Press Ltd [1970] 3 All ER 535 and R v Barnsley Metropolitan Borough Council; Ex parte Hook [1976] 3 All ER 452, that the holder of a statutory licence, permit or other authority that authorises it to conduct business must be given a right to be heard (as part of its right to natural justice) before its authority is cancelled, suspended or changed in a material way.

15. Any doubt about whether statutory permit holders in Papua New Guinea enjoy that sort of protection was resolved by Bredmeyer J's decision in the National Court in Bougainville Copper Foundation v Minister for Trade and Industry and NIDA [1988-89] PNGLR 110. The National Investment and Development Act empowered the Minister to exempt a foreign enterprise from operation of the Act after receiving a report from the National Investment and Development Authority. The Minister, acting on a report revoked an exemption previously given to the plaintiff. His Honour held that the decision to revoke an exemption directly affected personal property rights including the means of livelihood and ability to carry on business. The Minister was required to observe the rules of natural justice: he had to provide the exemption holder with prior notice of the nature of the case against him and a fair opportunity to be heard. Those duties were breached as the Minister failed to disclose the evidence or facts upon which the decision was to be made and failed to provide an opportunity to controvert those facts. Nothing said in any of the numerous natural justice cases decided in PNG since Bougainville Copper Foundation has cast any doubt on the correctness of Bredmeyer J's decision. It is thoroughly good law. There was a clear denial of natural justice in the present case. The second ground of review is therefore upheld.

GROUND (3): THE DECISION WAS UNREASONABLE

16. The plaintiff's argument on this ground of review has not been clearly articulated. It appears to be an argument based on the 'Wednesbury principles' laid down in the classic case of Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1947] EWCA Civ 1; [1948] 1 KB 223. The test to apply is:

• is the decision that has been made so unreasonable or absurd, having regard to all the circumstances, no reasonable decision-maker would have made the decision? (Paul Saboko v Commissioner of Police (2006) N2975, Dopsie v Tetaga & Apeng (2009) N3722.)
  

Or put another way:

• is the decision so outrageous in its defiance of logic or of accepted moral standards that no sensible person who had applied his mind to the question to be decided could have arrived at it? (Air Niugini Ltd v Beverley Doiwa [2000] PNGLR 347.)
  

17. If the answer is yes, the decision involves an error of law, the decision-maker will have exceeded jurisdiction and the decision is susceptible to judicial review. If the answer is no, there is no error of law, no excess of jurisdiction and this ground of review will fail. The decision will be lawful unless it is infected by some other error of law or procedure.

18. I answer the questions in the negative. The letter of 25 November 2005 states the reasons for the decision which were rational and comprehensible. They cannot be said to be so absurd or unreasonable that no reasonable decision-maker could have made the decision to cancel the plaintiff's permit. The third ground of review is therefore dismissed.

WHAT DECLARATIONS OR ORDERS SHOULD THE COURT MAKE?

19. To sum up, two of the three grounds of review have been upheld. The decision to cancel the plaintiff's certificate of registration was affected by two errors of law: ultra vires and denial of natural justice. The decision is thus susceptible to judicial review. It does not necessarily follow that the court will make the declarations and orders sought by the plaintiff. In any judicial review the court's determination of the review proceeds in two stages: (a) determining whether the plaintiff has proven one or more grounds of review, and if it has (b) deciding as a matter of discretion what remedies, if any, should be granted (Dale Christopher Smith v Minister for Lands (2009) SC973; Isaac Lupari v Sir Michael Somare (2008) N3476).

20. Mr Steven submitted that the plaintiff should be refused all relief because of the inordinate delay in prosecuting the application for judicial review. Leave was granted by Los J on 7 April 2006 and it took the plaintiff more than five years to get the matter ready for trial. Delay in prosecuting an application for judicial review is, under Order 16, Rule 4(1) of the National Court Rules, a proper ground for refusing relief (Kely Kerua v Council Appeals Committee of the University of Papua New Guinea (2004) N2534). 21. Certainly a delay of five years is considerable and will be a good reason for refusing relief if it is unexplained. But here there is an adequate explanation as the plaintiff has been engaged in other litigation and it is no longer fully operating and generating income, a situation that appears to have come about by the actions of the defendants or those acting on their behalf in cancelling the plaintiff's certificate of registration. The defendants must also shoulder some responsibility for the delay. They made an ill-fated attempt to have the proceedings dismissed for want of prosecution in 2010, so they have dithered in their dealing with the matter. I have decided that as a matter of discretion the plaintiff will be granted some relief.

22. Mr Asivo, the plaintiff's executive director, who appeared for the plaintiff with the leave of the court, asked for an award of damages. I reject that submission as damages were not sought in the plaintiff's statement of grounds of review and relief sought filed under Order 16, Rule 3(2)(a) of the National Court Rules. Damages is a very substantial remedy which generally should only be granted after full argument on the issue, and here there has been next to none.

23. The only relief sought in the Order 16, Rule 3(2)(a) statement is an order in the nature of certiorari (an order by which a superior court quashes the decision of an inferior court, tribunal or other decision-making body) regarding the decision of 25 November 2005. I have no difficulty in making such an order. It follows naturally from upholding two of the grounds of review.

24. Another remedy that I feel should be granted, even though it was not sought, is a declaration of unlawfulness. As a general principle it is expected that a plaintiff will only be granted a remedy that it seeks (Southern Highlands Provincial Government v National Housing Corporation (2001) N2110, Fulleborn Plantations Ltd v Pepi Kimas (2007) N3209). In judicial reviews that principle is given effect by Order 16, Rule 6(1) of the National Court Rules: "no grounds shall be relied upon or any relief sought at the hearing except the grounds and relief set out in the [Order 16, Rule 3(2)(a)] statement". However, it is a general principle that is subject to the overriding discretion conferred on the National Court by Section 155(4) of the Constitution:

Both the Supreme Court and the National Court have an inherent power to make, in such circumstances as seem to them proper, orders in the nature of prerogative writs and such other orders as are necessary to do justice in the circumstances of a particular case.

25. I see no prejudice to the defendants arising from a declaration. It will clarify that the decision of 25 November 2005 was unlawful. This should assist the defendants in the future avoidance of unlawful decision-making. Costs will follow the event.

ORDER

(1) The application for judicial review is granted.

(2) The decision of the first defendant to cancel the registration of the plaintiff as the person permitted to export cocoa beans dated 25 November 2005 is quashed and declared unlawful and a nullity.

(3) Costs of the proceedings shall be paid by the defendants to the plaintiff on a party-party basis, which shall, if not agreed, be taxed.

____________________________________

Lawyers for the plaintiff : Nil
Stevens Lawyers: Lawyers for the defendants