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Supreme Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]
SCM NO 05 OF 2011
BETWEEN
MOUNTAIN CATERING LTD
Appellant
AND
FREDERICK PUNANGI, Secretary,
Department of Defence
First Respondent
AND
BRYAN KIMMINS as Chairman of and the Members of the CENTRAL SUPPLY AND TENDERS BOARD
Second Respondent
AND
PATRICK PRUAITCH MP, Minister for Treasury and Finance
Third Respondent
AND
THE NATIONAL EXECUTIVE COUNCIL
Fourth Respondent
AND
THE INDEPENDENT STATE OF PAPUA NEW GUINEA
Fifth Respondent
AND
NCS HOLDINGS LTD
Sixth Respondent
Waigani: Davani, Makail & Kassman, JJ
2012: 02nd March
2013: 28th March
JUDICIAL REVIEW – Review of decision on awarding of catering services contract – Contract for provision of catering services to Defence Force – Decision of Central Supply & Tenders Board – Secretary for Department of Defence expressing a view on awarding of contract – Excess of jurisdiction – Breach of tender procedures – Decision tainted with illegality – Reasonableness of decision – Error of law apparent – Defence Act, Ch 74 – Section 9(1)(b) – Public Finances (Management) Act, 1995 – Section 42(2).
PRACTICE & PROCEDURE – Objection to competency – Grounds of – Lack of pleadings – Alleged failure to plead decision subject of review – Objection raised at hearing of appeal – Discretionary – Prejudice – No prejudice shown – Objection heard and dismissed – Supreme Court Rules – O 7, r 14 – National Court Rules – O 16, rr 3 & 6.
PRACTICE AND PROCEDURE − primary judge ruling on competency issue − no appeal from ruling – attempt to raise same issue as an objection to competency on appeal – abuse of process – Supreme Court Act s.4 (appeal), Supreme Court Rules O7 rr27 & 28 (cross appeal).
Facts
The appellant was one of four companies which applied through public tender to provide catering services to the Papua New Guinea Defence Force. The second respondent awarded the contract to the sixth respondent and based on that decision, the fifth respondent entered into the contract with the sixth respondent. Aggrieved by that decision, the appellant sought review in the National Court. It alleged the first respondent altered or doctored a submission which favoured the sixth respondent contrary to section 42(2) of the Public Finances (Management) Act, 1995. It sought to quash that decision and compel the first respondent to provide a Tender Valuation Report to the second respondent to consider before making a final decision. The Court dismissed the proceedings, holding that the first respondent had overriding power to express a view on the awarding of a contract for the Defence Force pursuant to section 9(1)(b) of the Defence Act, Ch 74 and in the exercise of this power, validly expressed a view in favour of the sixth respondent.
Held:
1. Where a respondent seeks to dismiss an appeal for being incompetent, O 7, r 14 of the Supreme Court Rules requires the respondent to file a notice of objection to competency within 14 days after service of the Review. However, the Court has discretion to hear an objection outside the time limit of 14 days.
2. In this case, the respondents did not file and serve a notice of objection to competency within 14 days of service of the Review. However, the appellant did not establish that it was prejudiced by the belated objection as the grounds were argued in the court below. The objection was heard together with the appeal.
3. Grounds ruled against by the primary judge cannot be raised again, except by appeal or cross appeal, and certainly not by Objection to Competency: section 4 (appeal) of the Supreme Court Act or O 7, rr 27 & 28 (cross-appeal) of the Supreme Court Rules.
4. The respondents did not appeal against the learned trial judge's decision not to dismiss the Review for being incompetent. Therefore, that ruling stands and it is not open to challenge in any manner or form. Accordingly, the objection was dismissed.
5. Consideration of tenders and awarding of a catering services contract for the Defence Force are the sole and exclusive function of the second respondent pursuant to section 42 of the Public Finances (Management) Act, 1995, except where the second respondent co-opts or seeks advice from persons with specialized knowledge. Section 9(1)(b) of the Defence Act, Ch 74 has no application, thus the first respondent had no power to express a view on the awarding of a contract for the Defence Force to the second respondent.
6. Pursuant to section 16(d) of the Supreme Court Act, the appeal was upheld, the decision of the National Court quashed and the application for judicial review was granted with costs to be taxed if not agreed.
Cases cited:
Rose Kekedo -v- Burns Philip (PNG) Limited [1988-89] PNGLR 122
Sir Arnold Amet v. Peter Charles Yama (2010) SC1064
Counsel:
Mr R Bradshaw, for Appellant
Ms J Nandape, for the First, Second, Third, Fourth & Fifth Respondents
Mr R Pato with Mr R Manase, for Sixth Respondent
28th March, 2013
DECISION
' DAVANI J & MAKAIL J: The appellant was one of four companies who applied through public tender to provide catering services to the Papua New Guinea Defence Force. The second respondent awarded the contract to the sixth respondent and based on that decision, the fifth respondent entered into the contract with the sixth respondent. Aggrieved by that decision, the appellant sought review in the National Court. It alleged the first respondent altered or 'doctored' a submission in favour of the sixth respondent and presented it to the second respondent contrary to section 42(2) of the Public Finances (Management) Act, 1995. The altered or 'doctored' submission formed the basis of the second respondent's decision to award the contract to the sixth respondent. The second respondent then recommended to the third respondent to award the contract to the sixth respondent. The third respondent then presented a submission to the fourth respondent for endorsement. The fourth respondent endorsed it and a contract was executed between the fifth respondent and the sixth respondent.
3. In this appeal, the appellant seeks amongst other orders, an order to quash that decision.
Grounds of Appeal
4. The appellant raises seven grounds of appeal. These seven grounds raise three main issues. The first is in relation to the legality of the process by which the second respondent's decision was made. The second is in relation to the reasonableness of the second respondent's decision. The final issue relates to the allegations of fraud against the first respondent in altering or 'doctoring' the submission to favour the sixth respondent.
Objection to Competency – Alleged failure to plead second respondent's decision
5. The respondents oppose the Review and ask that it be dismissed. A submission advanced by the respondents is that O 16, rr 3 & 6 of the National Court Rules requires an applicant to plead the relevant decision and grounds of review. In this case, the learned trial judge found that the relevant decision under review was the second respondent's decision to award the contract to the sixth respondent. That finding is not challenged in this appeal. The appellant is effectively appealing the trial judge's findings in relation to the first respondent and the Defence Council's actions, the latter not being a party to the proceedings.
6. Secondly, the respondents submit that the appellant failed to plead that it will be relying on the "tender valuation report" in its contentions that the second respondent failed or did not consider it, before making the decision to award the contract to the sixth respondent. They submit further that although the appellant pleaded that the second respondent relied on a submission that was 'doctored' by the first respondent to enable it to award the contract to the sixth respondent, it failed to plead the doctored submission as the basis of the application for judicial review. For these reasons, they submit that this Review is incompetent.
7. Where a respondent seeks to dismiss an appeal for being incompetent, O7, r14 of the Supreme Court Rules requires the respondent to file a Notice of Objection to Competency within 14 days after service of the appeal. In this case, there is no dispute that the respondents did not file and serve a Notice of Objection to Competency within 14 days of service of the appeal. However, it is the position at law that in the exercise of its discretion, a Court can hear an objection that is raised after the expiration of the 14 days period: Sir Arnold Amet v. Peter Charles Yama (2010) SC1064. The appellant's 'contentions in relation to the respondents' objection to competency are that it is raised on short notice and that this has greatly prejudiced its defence.
8. Although we accept that the respondents' objection is belated, Mr Bradshaw for the appellants has made submissions in response which we will consider. There is no dispute that the respondents did raise these objections together with additional grounds relating to the merits of the review in the National Court and invited the Court to dismiss the proceedings for being incompetent, which application the appellant opposed. Although the learned trial judge did not uphold the objection, he dismissed the proceedings, holding that the first respondent had the power to express a view on the awarding of the contract to the sixth respondent. We note that the respondents have not appealed his Honour's decision not to dismiss the review for being incompetent. This is a breach of the respondents obligations pursuant to section 4 of the Supreme Court Act or under O7, rr27 & 28 (cross-appeal) of the Supreme Court Rules.
9. A party appealing a decision of the National Court must state with clarity whether the appeal is against the whole or part of the decision and the grounds of appeal before the Court can exercise its appellate jurisdiction under section 4 of the Supreme Court Act. And this also applies to Reviews. This will then allow the opposing party to prepare itself for the hearing. In our view, because the respondents have not appealed that part of his Honour's decision which dealt with what is before us now as the objections to the competency of this review, that part of his honour's decision stands, and is not open to challenge in any manner or form. In our view, it is an abuse of process for the respondents to attempt to re-litigate the same grounds, that although were unsuccessfully argued in the Court below, were not appealed and are presently brought or raised under the guise of an objection to competency. For these reasons, the objection is dismissed.
Excess of power
10. The law is that in an application for judicial review, the Court is asked to look at the decision making process of a subordinate authority and not the decision itself: Rose Kekedo -v- Burns Philip (PNG) Limited [1988-89] PNGLR 122. In this case, the National Court was asked to review the second respondent's decision making process, which led to the awarding of the contract to the sixth respondent. In a case where the Central Supply & Tenders Board ("CSTB") is required to consider a recommendation report on tenders before it, all seeking to provide goods and services to a government or state entity or instrumentality, there is a process to follow for the awarding of contracts. The process is comprehensively set out in section 42 of the Public Finances (Management) Act, 1995 ('PFMA') which we set out in full below. It reads:
"42. CONSIDERATION OF TENDERS.
the Chairman of the Board shall refer that tender to the Small Contracts Award Board to be dealt with in accordance with Section 43.
(7) [Repealed.]
(8) Where, in the opinion of the Board, it is in the best interests of the State to do so, the Board may, subject to directions issued by the Minister under Section 39 –
(a) where the amount of the tender does not exceed the prescribed amount –
- (i) accept a tender and
- (ii) reject all other tenders,
and the reasons for the acceptance and rejection shall be detailed in the minutes of the meeting of the Board; and
(b) where the amount of the tender exceeds the prescribed amount recommend to the Minister responsible –
- (i) the acceptance of the tender and
- (ii) the rejection of all other tenders,
and the reasons for the recommendation shall be detailed in the minutes of the meeting of the Board.
(9) Where a Minister receives a recommendation from a Board under Subsection (8)(b), he shall submit to the National Executive Council the recommendation together with particulars of other tenders received and the National Executive Council shall decide which tender shall be accepted.
(10) Where, after consideration of the tenders –
(a) two or more tenders appear satisfactory; and
(b) in the opinion of the Board, there is no advantage to the State in preferring a particular satisfactory tender over the other satisfactory tenders, the Board –
(c) where the amount of a tender does not exceed the prescribed amount, may accept one or more tenders except that the Board may, in its discretion and to ensure as far as practicable a fair division of business within an area where it is satisfied that the action is warranted, divide the acceptance between two or more satisfactory tenders, and in any such case the reasons for the acceptance shall be detailed in the minutes of the Board; or
(d) where the amount of a tender exceeds the prescribed amount, shall recommend to the Minister responsible the acceptance of a satisfactory tender except that the Board may, in its discretion and to ensure as far as practicable a fair division of business within an area, where it is satisfied that the action is warranted, recommend to the Minister responsible the division of acceptance between two or more of the satisfactory tenders, and in any such case the reasons for the recommendation shall be detailed in the minutes of the meeting of the Board and in the recommendation.
(11) Where a Minister receives a recommendation under Subsection (10)(d), he shall submit to the National Executive Council the recommendation together with particulars of all tenders received and the National Executive Council shall decide which tender or tenders shall be accepted.
(12) Nothing in this section derogates from any other provisions of this Act or from any other law requiring a written contract or agreement to be entered into in respect of the subject of a tender." (Emphasis added).
11. Briefly, it begins with an invitation to the public to submit tenders. After close of tender, the Secretary to the CSTB, then prepares for the Chairman, in schedule form, details of the tenders received for presentation to the Board at the meeting at which the tenders are to be considered. Then a meeting is held by the Board where it makes a decision either accepting or rejecting each tender, with reasons. In cases where the value of the tender exceeds the prescribed amount, the Board recommends to the Minister for Finance to either accept or reject the tender. The Minister then recommends to the National Executive Council ("NEC") to either accept or reject the tender. Finally, if the NEC accepts the tender, it endorses it and a contract is signed between the State and the successful bidder/tenderer.
12. During this process, the Board shall co-opt, or seek advice of persons with specialised knowledge to assist the Board in its consideration of tenders received. This process occurs between the time of close of tender and the Board considering the tenders received. This is the process the appellant alleges was breached when the submission by the Defence Technical Evaluation Committee ("DTEC"), the only body that the second respondent co-opted or sought advice from, was altered or 'doctored' by the first respondent and presented to the second respondent for consideration. It further alleges that the second respondent did not co-opt or seek advice from the first respondent and the Defence Council. Furthermore, it alleged that the first respondent did not present the DTEC report to the second respondent and as a result, the second respondent did not consider it before making its decision. For these reasons, it alleges that the second respondent's decision is flawed because it was influenced by the amendments made by the first respondent to the DTEC's submission to the second respondent.
13. There is no dispute that the second respondent not only invited but also appointed the members of the DTEC on the recommendation of the first respondent, to evaluate the tenders and,prepare and submit a report to it. As the name suggests, the DTEC is the technical team that was tasked to carry out evaluation of the tenders received and,prepare and submit a report to the second respondent for its consideration. The team comprised of six officers from the Defence Force and Department of Defence. They were the Deputy Secretary for Defence Mr Billy Porykali, Support Commander Colonel Joe Fabila, FAS Corporate Affairs Mr Thomas Pupun, Senior Contracts Officer Mr Andrew Kadiesany, CPS Manager Lt Colonel Chris Kenewi and Director Supply Major Benoma Siria. There is also no dispute that these were persons with specialised knowledge on procurement of goods and services for the Defence Force. They were the experts and were called upon by the CSTB to give their advice.
14. The DSTC's report recommended the appellant as the preferred bidder. The evaluation and preparation of the report were done in accordance with section 42(2) of the PFMA. They then prepared a submission and presented it with the report to the first respondent as the Departmental Head of Defence to approve before forwarding to the second respondent for final decision. The submission also recommended the appellant as the preferred bidder. Instead, after receiving the submission and the report, the first respondent expressed a different view by presenting a separate, different submission to the second respondent. It favoured the sixth respondent. The undisputed evidence in the Court below is that the Defence Council approved the first respondent's "doctored" submission.
15. Effectively, the first respondent expressed a view on the awarding of the contract to the second respondent. The issue is whether he had the ' authority to express such a view. The learned trial judge held that section 9(1)(b) of the Defence Act, Ch 74 gave the first respondent the authority to express a view on the awarding of the contract and in the exercise of this power, he did express a view in favour of the sixth respondent. His Honour said this is because he is the Head of the Department of Defence and has overriding powers to control and administer the affairs of the Department of Defence. Section 9 of the Defence Force Act, the provision on which the first respondent relied and which the trial judge said empowers the first respondent to make such decisions, reads:
"9. FUNCTIONS OF THE SECRETARY
(1) In addition to his other powers, functions, duties and responsibilities under this or any other Act, the Secretary for Defence –
(a) is the principal civilian adviser to the Minister on matters relating to the Defence Force and
(b) is responsible for the efficient administration of, and the control and accounting for, all public moneys appropriated or otherwise legally available for the purposes of defence administration; and
(c) is responsible for the control of all civilian and military personnel employed in respect of his functions; and
(d) is the Secretary to the Defence Council.
(2) Except as provided in Subsection (1)(c), Subsection (1) does not give the Secretary for Defence any power of command in the Defence Force, except that, for the purpose of the exercise and performance of his powers, functions, duties and responsibilities, and in other cases when so directed by the Minister, he is entitled to full and free access to –
(a) all vehicles, vessels and aircraft of the Defence Force and all defence areas; and
(b) all books, accounts and records relating to public moneys appropriated or otherwise legally available for the purposes of defence administration; and
(c) such other places and things relating to or under the control of the Defence Force as are directed by the Minister."
17. It may well be that the awarding of the contract was for the Defence Force and that the first respondent as the Departmental Head of Defence had a legitimate interest in the outcome of the tender, such as to ensure that the contract benefited the Defence Force and had value for money. However, we find that section 9(1)(b) has no application. This is because the tender procedure provided for in section 42 of the PFMA is administered exclusively by the second respondent. Nowhere in section 42 does it authorise the first respondent to express a view on the awarding of a contract. The consideration of tenders and the awarding of a catering services contract for the Defence Force are the sole and exclusive functions of the second respondent. The only exception is where the second respondent co-opts or seeks advice of persons with specialised knowledge to assist it in its consideration of the tenders: (S. 42(2) of PFMA). So, with respect, the findings by the trial Judge on fraud are not only incorrect but are a misconstrued finding based on a misapprehension (by the trial Judge) that the plaintiff's claim was based on fraud.
18. The evidence is that the second respondent did not co-opt or seek neither the first respondent's advice nor that of the Defence Council on the awarding of the contract. Counsel for the respondents submit that consistent with the first respondent's powers under section 9(1)(b) of the Defence Force Act, the Good Procurement Manual, a copy of which was handed up to us at the hearing, states that the first respondent as the Agency Head, is authorised to express a view on the awarding of the contract. In our view, the Good Procurement Manual is a guideline for parties to follow when considering tenders and awarding of contracts. But it does not give to the first respondent the power to express a view on the awarding of a contract.
19. The second respondent's power to consider tenders and award contracts is found in section 42 of the PFMA. Section 9(1)(b) of the Defence Force Act is of a general application and may be applied in cases where there is no express power given to the administering authority to exercise. In this case, there is a specific power granted to the administering authority. Obviously, it is plain that section 9(1) (b) of the Defence Force Act has no application in this case.
20. Therefore, it follows that the only body that the second respondent co-opted or sought advice from in relation to the tenders received was the DTEC. This means, the only body that the second respondent can receive advice from is the DTEC. For these reasons, we are satisfied that the learned trial judge erred when he held that the first respondent had power to express a view on the awarding of the contract to the second respondent. Given this findings, we are also satisfied that the second respondent's decision is tainted with illegality and must be set aside forthwith. We uphold this ground of review. That being the case, it is therefore not necessary for us to consider the other grounds of appeal, although we did state above, our brief views on the trial judge's findings on fraud.
Conclusion
21. Pursuant to section 16(d) of the Supreme Court Act, the Supreme Court may in appropriate cases substitute the National Courts decision with its own in the event that the appeal is upheld. It is an exercise of discretion and may be exercised in cases where it would not be fair and just to remit the matter to the National Court for re-hearing. In this case, the appellant sought, among other orders, an order in the nature of certiorari to quash the second respondent's decision to award the contract to the sixth respondent. This was the primary relief. The National Court refused it and dismissed the entire proceedings.
22. In this Review, it is clear that the DTEC's report was presented together with the first respondent's submission to the second respondent for consideration. The appellant's main complaint in relation to the learned trial judge's decision in holding that the first respondent had overriding power to express a view on the awarding of contract for the Defence Force has been resolved. Thus, there is no need to order the first respondent to provide the report to the second respondent for consideration again. A reconsideration of its decision with particular reference to the report which is already in its possession, excluding the first respondent's views, will suffice.
23. Further, in our view, it would serve no purpose for the matter to be remitted for a re-hearing as it has been clearly established that an error of law is apparent, such that the second respondent's decision should not stand. Further, remitting it to the National Court for a re-hearing would further delay the resolution of the dispute, noting that the dispute goes back to 2009. Additionally, it will result in further costs to be borne by the parties. For these reasons, in the exercise of our discretion, we uphold the Review, quash the decision of the National Court and substitute it by granting the application for judicial review.
24.
KASSMAN, J: I have read the judgment of Davani and Makail .JJ which covers the basic background facts and issues which I agree with except to add the following.
Order
1. The objection to competency is dismissed.
2. The Review is upheld and the decision of the National Court is quashed.
3. The application for judicial review is upheld.
4. A Declaration that the second respondent's decision to award the contract to the sixth respondent is illegal, null and void.
5. An order in the nature of Certiorari to remove into this Honourable Court and to quash the second respondent's decision' to award the contract to the sixth respondent.
6. An order in the nature of Mandamus to compel the second respondent to convene another meeting and to consider the tenders, this time with particular reference to the Defence Technical Evaluation Committee's report and submission, excluding the views of the first respondent, before making a final decision.
7. All respondents shall pay the appellant's costs of this Review and the National Court proceedings, to be taxed if not agreed.
___________________________________________
Bradshaw Lawyers: Lawyers for appellant
Nandape & Associates: Lawyers for the first to fifth respondents
Steeles Lawyers: Lawyers for sixth respondent Steeles Lawyers: Lawyers for sixth respondent
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