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Supreme Court of Papua New Guinea |
PAPUA NEW GUINEA
[IN THE SUPREME COURT OF JUSTICE]
SCA 124 OF 2013
BETWEEN:
EREMAS WARTOTO
Appellant
AND:
THE STATE
Respondent
Waigani: Hartshorn, Yagi and Makail JJ
2013: 29th October,
: 7th, 15th November
SUPREME COURT – PRACTICE & PROCEDURE – Application for stay – Stay of criminal proceedings pending appeal – Appellant charged with two counts of misappropriation – Exercise of discretion – Grounds of – Prejudice – Grounds of appeal raise arguable case – Whether respondent has equitable interest in money – Supreme Court Act – ss. 5(1)(a)&(b) & 19 – Criminal Code, Ch 262 – s. 383A(1)(a).
SUPREME COURT –PRACTICE AND PROCEDURE – Application for Stay – Stay of criminal and related civil proceedings – important point of law on appeal – whether State has equitable or legal interest in money allegedly misappropriated – appeal as of right – right to appeal guaranteed by constitution - full protection of the law, Constitution, s. 37(1) – appeal to be rendered futile, nugatory and hypothetical if stay is not granted.
SUPREME COURT – PRACTICE & PROCEDURE – Application for stay – Stay of criminal proceedings pending appeal – Whether an abuse of process – Whether application should be raised by motion to quash the indictment or by way of a demur to the charges – Supreme Court Act – ss. 5(1)(a)&(b) & 19 – Criminal Code, Ch 262 – ss. 558 & 567
Cases cited:
Nai'u Limagwe & 3 Ors -v- The State [1976] PNGLR 832
Brian Kindi Lawi v The State [1987] PNGLR 183
Rimbink Pato -v- Anthony Manjin & Ors (1999) SC622
Robert Lak -v- Daisy [Dessie] Magaru & The State (1999) N1950
Gary McHardy v. Prosec Security [2000] PNGLR 279
Simon Ketan -v- Lawyers Statutory Committee & Papua New Guinea Law Society (2001) N2290
Bank of Papua New Guinea and Wilson Kamit -v- Marshall Cooke QC & Cyprian Warokra and Others (2003) N2369
Kalinoe v. Paraka (2010) SC1024
The State -v- Xue Zhufu Dickson and Chang Jiang Gao (2010) N4162
National Capital Limited v Port Moresby Stock Exchange (2010) SC1053
Royale Thompson -v- Sylvester Kalaut & The State (2011) N4265
The State -v- Jacob Amonea (2012) N4673
Eremas Wartoto -v- The State (2013) N5320
Counsel:
Mr. L. A. Jurth and Mr. T. Injia, for the Appellant
Mr. C. Sambua and Mr. R. Luman, for the Respondent
The Orders of this Court were delivered by Hartshorn J. on behalf of the Court on 7th November 2013.
15th November, 2013
1. HARTSHORN J: This is an application by Mr. Eremas Wartoto for a stay of two National Court proceedings pending the hearing and determination of this appeal (stay application).
Background
2. Mr. Wartoto has been charged with and committed to trial on two counts of alleged misappropriation of property in contravention of s. 383A (1) (a) Criminal Code (Principal Proceedings) The trial has been set down to commence on 11th November 2013 for 10 days.
Appeal
3. This appeal is against a National Court decision that dismissed an application for a permanent stay of the Principal Proceedings (dismissal decision).
Stay application
4. The two National Court proceedings sought to be stayed are:
a) the Principle Proceedings CR No. 780 of 2012; and
b) OS No. 512 of 2012 that have been adjourned to the first day of the trial of the Principal Proceedings (Proceeds of Crime Proceedings).
5. The stay application is brought pursuant to s. 5 (1)(a), or alternatively s. 5 (1)(b) or in the further alternative, s. 19 Supreme Court Act.
6. Mr. Wartoto makes his stay application as he contends that he has a right to appeal the dismissal decision and to have his appeal heard and determined. If the stay is not granted he contends, the appeal will not be heard and determined and his rights to appeal will be rendered futile, nugatory and hypothetical.
7. The State opposes the stay application. It contends that the stay application:
a) is merely an attempt to delay the Principal Proceedings;
b) is misconceived as to the stay sought of the Proceeds of Crime Proceedings pursuant to s. 5 (1)(a) Supreme Court Act, as this appeal is not from a decision in the Proceeds of Crime Proceedings;
c) is an abuse of process as to the Proceeds of Crime Proceedings as Mr. Wartoto has not pursued an exclusion application that has been filed in the Proceeds of Crime Proceedings;
d) should not apply to the Proceeds of Crime Proceedings as that is a civil proceeding that is independent from the Principal Proceedings;
e) should not be granted and this court should not intervene as Mr. Wartoto has not shown that he will suffer real and substantial prejudice if this application is not granted.
Abuse of process
8. I will consider the State's contention that this stay application is an abuse of process first as if it is this will be determinative.
9. The State submits that it is an abuse of process to seek a stay of the Proceeds of Crime Proceedings as Mr. Wartoto has an outstanding exclusion application under s.44 Proceeds of Crime Act 2005. There is however no evidence of this outstanding application before this court apart from the assertion of the Public Prosecutor. That in itself is not sufficient for this court to find that there has been an abuse of process.
10. It is further submitted by the State "that the conduct of Mr. Wartoto and or his legal representatives and this application to stay the criminal and civil proceedings amounts to an abuse of process." The State's submission continues as to the inherent power of this court to intervene to prevent an abuse of process, but it is not submitted how or why there is an abuse of process by the conduct referred to or by the making of this stay application.
11. In the affidavit of the Public Prosecutor, he deposes that he is of the view that the various applications to the Supreme Court is an abuse of the court processes aimed to achieve a far different outcome and relief than that sought. It is the case however, that the Chief Justice has held that Mr. Wartoto was entitled to file this appeal as of right.
12. Given the above, I am not satisfied that the stay application or indeed the conduct of Mr. Wartoto and or his legal representatives amounts to an abuse of process.
Law
13. As to the provisions of the Supreme Court Act pursuant to which this stay application is brought, the State did not take issue with them apart from contending that the application was misconceived in relation to the Proceeds of Crime Proceedings. I will now consider this issue.
14. Section 5 (1) (a) and (b) Supreme Court Act is as follows:
"5. Incidental directions and interim orders.
(1 Where an appeal is pending before the Supreme Court-
(a) a direction not involving the decision on the appeal; or
(b) an interim order to prevent prejudice to the claims of the parties;
.............
may be made by a Judge."
15. This appeal is against the whole of the Judgment of the National Court in proceedings CR APP No. 144 of 2013, the dismissal decision. It is not an appeal of a decision in proceedings OS 512 of 2012, the Proceeds of Crime Proceedings. The orders that were made in the dismissal decision do not concern and are not related to the Proceeds of Crime Proceedings.
16. The State contends that in essence this court is not able to order a stay of the Proceeds of Crime Proceedings in such circumstances. Counsel for Mr. Wartoto conceded that the Proceeds of Crime Proceedings were not the subject of the hearing that led to the dismissal decision, but submitted that the learned primary judge had been dealing with the Principle Proceedings and Proceeds of Crime Proceedings together and considered them to be related. Counsel for Mr. Wartoto however did not make submissions that specifically counted the submissions of the State in this regard.
17. From a perusal of s. 5 (1)(a) and (b) Supreme Court Act, I am satisfied that the wording is sufficiently broad to permit an interpretation that an order or direction may be made in respect of proceedings even though application for such an order or direction is made in an appeal that is not from a decision in those proceedings. As to whether such an order should be made is a matter of discretion for the Court or Judge in the particular circumstances.
18. As I am satisfied that this court is able to grant the relief that Mr. Wartoto seeks, I now consider the factors that a court will consider in determining whether to grant a stay.
19. In the leading case of Gary McHardy v. Prosec Security [2000] PNGLR 279, the Supreme Court found that it had unlimited jurisdiction to do justice and should exercise its discretionary power depending on the factors and circumstances of a particular case. Factors to consider when deciding whether to grant a stay include:
a) whether leave to appeal is required and whether it has been obtained;
b) whether there has been a delay in making the application;
c) possible hardship, inconvenience or prejudice to either party;
d) the nature of the judgment sought to be stayed;
e) the financial ability of the applicant;
f) a preliminary assessment about whether the applicant has an arguable case on the proposed appeal;
g) whether on the face of the record of the judgment there may be indicated apparent error of law or procedure;
h) the overall interests of justice;
i) the balance of convenience;
j) whether damages would be a sufficient remedy.
20. Then in Kalinoe v. Paraka (2010) SC1024 the Supreme Court said:
"An applicant does not even have to prove that there are special or exceptional circumstances to warrant the making of interim orders. There are no hard and fast pre-conditions that had to be satisfied. Provided that the court exercises its discretion justly and reasonably and in accordance with the principles of natural justice or procedural fairness, the discretion available to the Judge or the Court when deciding whether to grant the interim orders or a stay of proceedings, is very broad (Isaac Lupari v Sir Michael Somare MP (2008) SC951)."
21. As to the factors in McHardy (supra) a précis of the relevant submissions of the parties is set out.
Whether leave to appeal is required and whether it has been obtained
22. Although leave to appeal was applied for, the Chief Justice on the 5th September 2013 ordered that leave to appeal was not required and that Mr. Wartoto was entitled to appeal as of right.
Whether there has been any delay in making the stay application
23. The stay application was filed 18 days after the appeal was filed. This does not constitute delay.
Possible hardship, inconvenience or prejudice to either party; the nature of the judgment or proceedings sought to be stayed; the overall interests of justice and the balance of convenience
24. In regard to these four factors, Mr. Wartoto submits that if the stay application is not granted, and the trial of the Principal Proceedings is not deferred until after the appeal has been heard and determined, then:
a) the appeal will be rendered futile, nugatory and hypothetical as the trial will be heard and determined before the appeal;
b) the appeal will effectively have been determined against Mr. Wartoto without a hearing.
25. From the State's perspective however, little prejudice will be occasioned if the trial of the Principal Proceedings is deferred until after the appeal has been heard and determined because:
a) the State will have almost two weeks notice of the adjournment. This is in contrast to the time given to Mr. Wartoto by the State which was less than half that time when the State applied for the original trial dates to be adjourned by two months;
b) given the new fraud charges (in respect of which no particulars have yet been provided, it is unlikely that the trial of the Principal Proceedings will be ready to commence on 11th November 2013 in any event;
c) save for a few months delay, the State will not suffer any prejudice (and the State has not filed any affidavit material deposing to any prejudice); and
d) indeed, if the appeal is successful, then neither Mr. Wartoto nor the State will have been put to the expense of a trial that was hopelessly misconceived.
26. In such circumstances, Mr. Wartoto submits that the overall interest of justice and the balance of convenience favours that the stay application be granted.
27. The State submits that previously on 2nd September 2013, submissions had been made on behalf of Mr. Wartoto that he was ready for trial and wanted the matter to proceed. Those submissions were made even though an application for leave to appeal had been filed on 23rd August 2013 against the dismissal decision. There has not been a change of circumstances since then and so the current submissions made on behalf of Mr. Wartoto are questionable.
28. Mr. Wartoto still has the protection of the law and all rights will be given to him in a criminal trial and other civil applications. He will suffer no real or substantial prejudice. The only prejudice that Mr. Wartoto will suffer is the inconvenience faced by all persons who are subject to a criminal trial.
Preliminary assessment about whether the applicant has an arguable case on the proposed appeal and whether on the face of the record of the judgment there may be indicated apparent error of law or procedure
29. Mr. Wartoto contends that the misappropriation charges that he will face in the Principal Proceedings must ultimately fail as amongst others:
a) there is no "property of the State" to which the misappropriation could apply because the relevant "property" was at all material times the property of a certain company; and
b) therefore, the element of dishonesty in section 383A Criminal Code will not be made out because Mr. Wartoto cannot have dishonestly misappropriated the property of the State (and it is not, nor could it be, alleged by the State that Mr. Wartoto dishonestly misappropriated property of that company).
30. Accordingly, the learned primary judge erred in amongst others, finding that in the circumstances, the State was capable of retaining an equitable interest in the contract price paid and finding that the associated legal propositions need to go to trial. Consequently, it is submitted that Mr. Wartoto has an arguable case. Further, counsel for the State has not made a submission to the effect that Mr. Wartoto does not have an arguable case or that his case is weak, hopeless or cannot be argued and there was no attempt by counsel for the State to justify the learned primary judge's decision.
31. It is the case that the State did not specifically address the court as to whether Mr. Wartoto has an arguable case on the appeal. In his evidence, the Public Prosecutor acknowledges that there is a view that has been expressed that the appeal has good prospects of success. His response to that view though is as mentioned, that the various applications of Mr. Wartoto to the Supreme Court is an abuse of the court process aimed to achieve a far different outcome and relief than that sought.
32. As to the financial ability of Mr. Wartoto and whether damages would be a sufficient remedy, Mr. Wartoto submits that these factors are not relevant in this instance.
Consideration
33. It is the case that if the Principal Proceedings are not deferred and proceed on 11th November 2013, this appeal will be rendered futile and hypothetical. This will mean that Mr. Wartoto's right to have his appeal fairly heard and judicially determined will have been extinguished. That Mr. Wartoto's application before the National Court for a stay of the Principal Proceedings was properly before that Court was accepted by the learned primary judge and the Chief Justice has ordered that Mr. Wartoto was entitled to appeal the dismissal decision as of right.
34. I am satisfied that Mr. Wartoto has an arguable case on his proposed appeal when regard is had to the learned primary judge's reasoning concerning the State being capable of retaining an equitable interest when it is apparent that the contract price was paid to the subject company pursuant to a contract between the State and that company and was not paid by the State to Mr. Wartoto. As previously referred to, the State did not submit that Mr. Wartoto does not have an arguable case. Further, that the National Court has the inherent power to protect its process from abuse in circumstances such as the present was referred to by Davani J. in Thompson v. Kalaut (2011) N4265 after a detailed consideration of authority. I respectfully agree with Her Honour's reasoning and conclusion.
35. As to prejudice, I am not of the view that the State will suffer prejudice if a stay of the Principal Proceedings is granted, but Mr. Wartoto will suffer prejudice by effectively losing his right of appeal as it will be rendered futile, if a stay of the Principal Proceedings is not granted. In the circumstances I am satisfied that a stay of the Principal Proceedings is necessary to enable Mr. Wartoto to have his appeal heard and determined. I am not of the view though that it has been shown to the satisfaction of this court that the Proceeds of Crime Proceedings should be stayed to enable the appeal to be heard and determined.
Orders
36. The formal Orders of the Court are:
a) The National Court Criminal Proceedings Reference CR No. 780 of 2012 between the Independent State of Papua New Guinea v. Eremas Wartoto are stayed pending the hearing and determination of this appeal.
b) this appeal shall be heard in the December 2013 sittings of the Supreme Court and for that purpose the matter is to return before the Listings Judge at 9.30 am, 11th November 2013.
c) costs are in the cause.
37. YAGI J: Introduction: The appellant is appealing a decision of the National Court made in Waigani on 15th August 2013. The decision arose from a criminal proceedings brought by the State against the appellant after he was committed to stand trial in the National Court on charges of misappropriation. The State alleged that the appellant, on two separate occasions, misappropriated a total amount of K7,988,892.00, the money being the property of the State. The money was paid pursuant to a Project Agreement dated 28th November 2008 which relates to rehabilitation works for the Kerevat National High School Buildings, Water Supply and Sewerage Systems ("Contract"). The Contract was executed between the State and a company called Sarakolok West Transport Limited ("SWTL").
Background
38. The appellant is a director of SWTL, a duly incorporated company. He is the controller of the company and occupies the position of Managing Director. SWTL was awarded the Contract to rehabilitate, amongst other major works, the deplorable state of the building structures including student dormitories at the Kerevat National High School in the East New Britain Province. The company undertook the renovation and maintenance works under the Contract and was accordingly paid in two installments (contract money). The first installment of K6,791,408.20 was paid on 30th January 2009 and the second in sum of K1,197,483.80 was paid on 14th October 2009.
39. The State alleges that the works carried out by SWTL under the Contract was incomplete and substandard due to a number of defects mainly in the building structures. The State therefore alleges that the money paid under the Contract was diverted and used by the appellant for purposes other than intended or agreed under the Contract.
40. Consequently, the appellant is accused by the State to have misappropriated the contract money.
Facts
41. The appellant has been committed by the Committal (District) Court to stand trial in the National Court on two counts of misappropriation of property under s. 383A(1) of the Criminal Code. It appears the State is contemplating two additional fraud charges against the appellant. The trial of the charges is expected to run for 10 days and the trial Court has fixed 11th November 2013 as the commencement date of the trial.
42. On 3rd June 2013 the appellant filed an application in the National Court seeking orders to permanently stay the criminal proceedings against him on the ground that such proceedings is an abuse of process. The application was dismissed by the learned trial Judge on 15th August 2013. An appeal against that decision has been filed by the appellant in the Supreme Court.
Application for Stay
43. Pending the hearing and determination of the substantive appeal the appellant now seeks to stay two proceedings that are pending in the National Court. These proceedings are:
1. CR No. 780 of 2012 ("Principal Proceedings")
2. OS No. 512 of 2012 ("Proceeds of Crime Proceedings")
44. The Principal Proceedings and the Proceeds of Crime Proceedings are related. They arise from the similar facts and circumstances. The Principal Proceedings is a criminal proceeding relating to the misappropriation and possibly fraud charges. The Proceeds of Crime Proceedings, it appears, concerns assets, properties and bank accounts of the appellant and his associated companies including SWTL. This proceeding is also set for hearing on 11th November 2013 in relation to an application by the appellant for exclusion orders under s. 44 of the Proceeds of Crimes Act. It is not necessary to discuss their relationship in detail for the present purposes.
45. The application by the appellant is made by way of an Amended Application filed on 7th October 2013 and is made pursuant to s. 5(1)(a) of the Supreme Court Act. In the alternative, he relies on sections 5(1)(b) and 19 of the Act.
Leave to Appeal
46. The appellant sought leave to appeal the decision made on 15th August 2013 by filing an Application for Leave to Appeal on 23rd August 2013. The matter went before the Chief Justice for hearing on 5th September 2013 and the Chief Justice determined that leave was not required and that the appellant was entitled to appeal as of right. Consequently, the appellant filed a notice of appeal on 19th September 2013.
47. The respondent does not take issue with this position nor does it seeks to challenge the determination by the Chief Justice. The appeal is filed within the 40 days prescribed period under the Supreme Court Act.
Law
48. The appellant relies on s. 5(1)(a) or alternatively (b) and s. 19 of the Supreme Court Act in making the application. I set out these provisions:
"5. Incidental directions and interim orders.
(1) Where an appeal is pending before the Supreme Court—
(a) a direction not involving the decision on the appeal; or
(b) an interim order to prevent prejudice to the claims of the parties; or
(c) an order in any proceedings (other than criminal proceedings) for security for costs; or
(d) an order dismissing an appeal in any proceedings (other than criminal proceedings) for default in furnishing security; or
(e) an order admitting an appellant to bail,
may be made by a Judge."
"19. Stay of proceedings on appeal.
Unless otherwise ordered by the Supreme Court or a Judge, an appeal, or an application for leave to appeal, to the Supreme Court does not operate as a stay of proceedings."
49. I note at this juncture that s. 5(1)(a) and (b) of the Supreme Court Act do not expressly grant power to the Supreme Court to order "stay of proceedings". These powers are for incidental and interim orders other than a power to stay proceedings. These are enabling provisions intended to give the Supreme Court the power to make appropriate orders in the nature of interlocutory or incidental reliefs. The appellant's application by way of Amended Application is quite expressed and specific. It seeks "to stay" the two National Court Proceedings.
50. In my view, the correct jurisdictional basis for a stay order is s. 19 of the Supreme Court Act. In this regard I note the Chief Justice, sitting as a single Judge of the Supreme Court expressed a similar view in National Capital Limited v Port Moresby Stock Exchange (2010) SC1053 where his Honour at paragraph 19 of the judgment stated:
"19. I have no hesitation in finding as a matter of law that the application for stay in this matter is brought under s 19. Section 5 (1) of the Supreme Court Act and s 155 (2)(b) of the Constitution have no application to an application for stay in the light of the express provision on stay in s 19 of the Supreme Court Act. I am satisfied that the fate of present application can be determined purely on preliminary issue which I consider to be a threshold issue of fundamental importance. In the circumstances, it is not necessary to deal with counsels' submissions on the question of discretion."
(Emphasis added)
51. Be that as it may, the appellant has invoked s. 19 of the Supreme Court Act in the alternative and the State takes no issue on this score. I therefore find that the jurisdiction of the Court has been properly invoked and consequently this Court has power to consider the application.
Abuse of Process
52. A significant issue of abuse of process was strenuously argued by the State. The State contends that the application is an abuse of process to the extent that it seeks to stay both the Principal Proceedings and the Proceeds of Crime Proceedings. It argues that it is an abuse of process to have this proceedings stayed because firstly, the Proceeds of Crime Proceedings is a separate proceedings and secondly, there is a pending application by the appellant for an exclusion order under s. 44 of the Proceeds of Crimes Act 2005.
53. The appeal is against a decision arising from the Principal Proceeding, which is a criminal proceeding. The Proceeds of Crime Proceedings is a civil proceeding. Clearly, these two proceedings are distinct and separate. The present appeal does not arise from a decision in Proceeds of Crime Proceedings. I accept that both proceedings are separate and there is no appeal arising from the Proceeds of Crime Proceedings. I also note that restraining orders have been made which affected certain bank accounts and properties of the appellant and which the application have been filed by the appellant seeking exclusion orders. The application is pending hearing and determination. However, there is evidence that both are related in so far as the funds allegedly misappropriated are concerned. There is allegation that the funds allegedly misappropriated, the subject of the Principal Proceedings, has been channeled through various bank accounts or applied in respect to acquisition of certain properties and assets, the subject of restraining orders in Proceeds of Crime Proceedings.
54. The Proceeds of Crime Proceedings is also fixed for hearing before the same Court below on 11th November 2013. The outcome of the present appeal in my view will have some bearing on that proceeding. The powers of the Supreme Court under s. 5(1)(a) and (b) of the Supreme Court Act are sufficiently wide to prevent prejudice to the claims, including in my view, the rights of the parties.
55. Whilst I accept the established and entrenched principle that the Court has inherent power to protect its process from abuse by litigants, the power should be exercised only in clearest of cases so as not to deprive a party from the seat of justice. In this case, I am satisfied the application is neither frivolous, vexatious nor an abuse of process. I would dismiss this argument by the State.
56. The law pertaining to an application for stay is settled. I do not think there is any disagreement between the parties as to the applicable principles. I do not see any utility in re-stating the principles, as I consider this is adequately covered in the judgment of Justice Hartshorn. The leading authority is Gary McHardy v. Prosec Security [2000] PNGLR 279. The power is discretionary but must be exercised on proper principles and grounds. There is no hard and fast rule in terms of the application of the criteria to the facts and circumstances of the case.
Submissions by the Appellant/Applicant
57. Counsel for the appellant in addressing the relevant considerations in Gary McHardy (supra) submits that the stay be granted for 3 main reasons; firstly, the appeal will be rendered futile, nugatory and hypothetical if the stay is no granted; secondly, the appeal will effectively be determined against the appellant without a hearing; and thirdly, right to appeal is an actual and tangible right that ought to or should be fairly heard and determined. Moreover, counsel submits that a delay or deferral in the trial of the Principal Proceeding will cause minimum prejudice. In terms of the question of arguable case, counsel submits, the critical questions are firstly, whether the State retains an interest (whether legal or equitable) in the money alleged to be misappropriated based on the fact that the money was paid to a SWTL, a separate legal entity, under a lawful, efficacious and fully performed contract; and secondly, whether the Appellant as a director of SWTL, is criminally liable for misappropriating the property of the State within the meaning of s. 383A(1)(a) of the Criminal Code when the money, in fact, was paid to the company.
Submissions by the Respondent
58. The submission by the State focused heavily on the issue of abuse of process rather than merits of the application for stay. It is argued that the application is not only misconceived but also an abuse of process. The State argues that it is misconceived because firstly, the appeal is not from the Proceeds of Crime Proceedings, which is a civil proceeding independent of the Principal Proceeding and which an exclusion application is pending and consequently these constitute an abuse of process.
Reasons for Decision
59. I have earlier considered the argument by the State on abuse of process and have reached the conclusion that there is no abuse of process. I find it unnecessary to dwell further on this point.
60. The appeal before this Court is on an important point of law. The appellant is facing charges of misappropriation and possibly fraud charges. The facts giving rise to the misappropriation charges are peculiar. It is based on a commercial contract where payments were purportedly made pursuant to the terms of the contract. The allegation against the appellant is that the monies paid under the contract were misappropriated. The State relies on the principle in Brian Kindi Lawi v The State [1987] PNGLR 183 to argue that until the money is applied for the purposes intended the State retains equitable interest in the contract money. The appellant on the other hand says that the State does not retain any interest (legal or equitable) in the money once the payment is paid to the company and as a director of the company he is incapable in law to have committed misappropriation within the meaning of s. 383A(1)(a) of the Criminal Code. These contentions were argued during the hearing of the application for a permanent stay before the learned trial Judge. The learned trial Judge, however, dismissed the application. The appeal is against that decision of the National Court. The question of whether leave is required to appeal the decision has been resolved by virtue of the decision and order of the Chief Justice that the appellant has a right to appeal and leave is not required.
61. I consider that a right to appeal is statutory right which should be respected and protected. The Constitution, s. 37(1) stipulates that every person has a right to full protection of the law. This is one of the basic and fundamental rights guaranteed under the Constitution. The appellant in this case, has the right to have his appeal heard and determined. Whether an appeal has substantial merits should not be a serious consideration operating against the right. Of course this is not to say that where an appeal is hopeless unmeritorious or is clearly an abuse of process the Court has inherent power to intervene and have the appeal determined. This is not the case in the present appeal. The appellant is in contemplation of the law and in my view the grounds of appeal are arguable and therefore his right must be protected by virtue s. 37(1) of the Constitution. For this reason I accept the submission by the appellant that if the trial is not stayed, the appeal will be rendered futile, nugatory and hypothetical.
62. If the stay is granted it means that the trial will be delayed. The right and the interest of the State will not be seriously prejudiced. The State's right to prosecute will be temporarily suspended. Any prejudice would be in the form of costs and expense and inconvenience. If the appeal is unsuccessful the State's right to prosecute will be resurrected. On the other hand if the stay is not granted the appellant's right to be heard on the appeal will be seriously prejudiced, if not completely denied. In the circumstances the considerations as regards interest of justice, balance of convenience and prejudices favour the granting of the stay application.
63. As regards other considerations I agree with Hartshorn J in his discussion of these matters.
64. I would grant the application with a direction that the appeal be heard expeditiously. Costs shall be in the cause.
65. MAKAIL, J (Dissenting): Pursuant to an amended application filed on 07th October 2013 pursuant to s. 5(1)(a) or alternatively s. 5(1)(b) or in the further alternative, s. 19 of the Supreme Court Act, the appellant seeks to stay the following proceedings pending the determination of this appeal:
1.1. Criminal proceedings Reference CR No 780 of 2012: The State -v- Eremas Wartoto; and
1.2. OS No 512 of 2012: The Public Prosecutor -v- Eremas Wartoto.
Background Facts
66. The Public Prosecutor served a "draft" indictment on the appellant's lawyers as directed by the National Court presided by the Deputy Chief Justice. It contained two charges of misappropriation under s. 383A(1)(a) of the Criminal Code. The first charge relates to a sum of K6,791,408.20 and the second, K1,197,483.80. The appellant applied by notice of motion in a separate proceedings reference CR Application No 144 of 2013: Eremas Wartoto -v- The State to dismiss the charges in the criminal proceedings reference CR No 780 of 2012: The State -v- Eremas Wartoto. On 02nd July 2013, the application was heard and on 15th August 2013, the National Court dismissed it. A ten day trial is set to start on 11th November 2013.
67. The appellant filed an application for leave to appeal the decision in SC Rev No 51 of 2013. The decision was characterised as a final judgment by the Chief Justice on 05th September 2013 as finally determining the rights of the parties in relation to the issues raised in the application. For that reason, no leave was required.
68. But it is fundamentally important to note that these separate proceedings relate to one issue and that is the charges of misappropriation against the appellant. The appellant was arrested and charged with two counts of misappropriation under s. 383A(1)(a) of the Criminal Code. Subsequently, he was committed to stand trial in the National Court by the District Court on these charges. The respondent alleged that these monies were paid to a company called Sarakolok West Transport Limited ("SWTL") of which the appellant is a director for the purpose of rehabilitating the Kerevat National High School buildings, water supply and sewerage systems.
69. SWT undertook these works after the Central Supply and Tenders Board awarded a contract to it. It commenced works in December 2008 and a certificate of completion was issued on 05th March 2010. In return, on 30th January 2009, it received K6,791,408.20 and on 14th October 2009 received a further K1,197,483.80. The respondent alleged that the works were either not done for the water and sewerage systems and incomplete or unsatisfactory for the buildings because there were defects found in some of the buildings.
70. While the criminal proceeding CR No 780 of 2012 is pending trial, on 30th August 2012, the Public Prosecutor filed an originating summons proceedings OS No 512 of 2012 and made an ex parte application in the National Court under s. 39 of the Proceeds of Crimes Act 2005 to restrain certain properties in Papua New Guinea and Australia and funds in a bank account of SWTL. A restraining order was issued and subsequently set aside in relation to the properties. This proceeding is yet to be set down for trial.
Parties' Submissions
71. The appellant says that at no time within the defect liability period or any time thereafter was SWTL given notice of any defects under clause 33 or clause 35 of the contract. He says that the contract has never been terminated or rescinded by either party. He applied to permanently stay the criminal proceedings CR No 780 of 2012. The National Court dismissed it.
72. It was contended in the National Court and before this Court that the criminal proceedings CR No 780 of 2012 are an abuse of process. His counsel submitted that the respondent is only able to bring civil proceedings against SWTL as once the contract price was paid to SWTL, the money became the property of SWTL and no longer the property of the respondent.
73. I note in the National Court, the appellant relied on Royale Thompson -v- Sylvester Kalaut & The State (2011) N4265 for the proposition that it is not an abuse of process and it is open to the National Court to permanently stay criminal proceedings where it is plain and clear that the charges are incontestably bad such that the criminal proceedings is "utterly misconceived." The power to grant a stay is discretionary must be exercised sparingly and only in exceptional circumstances. In light of what was held in that case, counsel had further submitted that the criminal proceeding CR No 780 of 2012 was not an abuse of process. It was properly commenced and done in good faith to stop the respondent from abusing its prosecutorial powers.
74. Conversely, counsel for the respondent strongly submitted in the Court below and this Court that the application is misconceived and an abuse of process because the appellant and his lawyers have wrongly filed a separate proceeding, in this case, CR Application No 144 of 2013 to permanently stay the criminal proceedings CR No 780 of 2012. Since the application was dismissed in a criminal proceedings, he should have filed a review to the Supreme Court under s. 155(2)(b) of the Constitution. This will require leave.
75. In any case, relying on Brian Kindi Lawi -v- The State [1987] PNGLR 183, counsel submitted that the respondent has an equitable interest in the money and is entitled to bring criminal charges against the appellant where the work to which the money has been given has not been done, or incomplete or unsatisfactory. It will also be contended and established at trial that the money was used for other purposes than its original purpose.
76. Relying on Gary McHardy -v-Prosec Security Limited [2000] PNGLR 279 which sets out the relevant principles on exercise of discretion in an application for stay, the appellant's counsel further submitted that:
On the other hand, little prejudice will be occasioned if the trial is deferred until after the appeal is heard and determined because:
➢ the Public Prosecutor will have almost two weeks notice of the adjournment in circumstances where he favoured the appellant with less than half that time when it applied for the original trial dates to be adjourned by two months;
➢ given the new fraud charges (in respect of which no particulars whatsoever have yet been provided to the appellant), it is unlikely that the trial will be ready to commence on 11th November 20013 in any event;
➢ save for a few months delay, the Public Prosecutor will not suffer any prejudice (and the Public Prosecutor has not filed any affidavit deposing to any prejudice); and
➢ indeed, the appeal is successful, then neither parties will have been put to the expense of a trial that was hopelessly misconceived.
It will be contended and established at the substantive hearing of the appeal that the respondent does not retain an equitable interest in the money paid to SWTL in the discharge or consideration of a lawful contract between the parties and that the appellant as a director of SWTL is not liable for misappropriating the money when it has been paid to SWTL. For these reasons, the charges are incontestably bad such that it is impossible to secure a conviction against the appellant.
77. In his response, counsel for the appellant submitted that the respondent has not specifically addressed or responded to the appellant's submission on the relevant principles on stay in the Gary McHardy case (supra) and whether the appellant has satisfied them. The failure to address or respond to the submission means that the respondent does not take issue with the submission that the appellant has established a case for a stay of proceedings. Furthermore, it supports the appellant's case that not to grant a stay would adversely prejudice him in his defence of the charges in light of the pending appeal and that based on the questions raised, there is an arguable case. Counsel also submitted in response that this is not a case where the appellant has abused the Court's process and any suggestion that he and his lawyers have abused the Court's process is without merit and an apology is required from the respondent. Finally, if the Court were to grant a stay, the Court should also stay the related proceedings OS No 512 of 2012.
Consideration of Case
78. The general rule is that the Court should be slow in intervening and stopping police investigations and investigations by other disciplinary and investigatory bodies: Rimbink Pato -v- Anthony Manjin & Ors (1999) SC622; Simon Ketan -v- Lawyers Statutory Committee & Papua New Guinea Law Society (2001) N2290 and Bank of Papua New Guinea and Wilson Kamit -v- Marshall Cooke QC & Cyprian Warokra and Others (2003) N2369.
79. I accept the general proposition that the Court has inherent power to protect its own processes and protect its integrity from abuse by its users or litigants. The learned Deputy Chief Justice had also acknowledged and accepted this proposition as seen from paragraph 13 of his written judgment: Eremas Wartoto -v- The State (2013) N5320. I also accept the proposition advanced by the appellant that it is not an abuse of process and the National Court can permanently stay criminal proceedings where it is plain and clear that the charges are incontestably bad such that the criminal proceeding is utterly misconceived. The power to grant a stay is discretionary and must be exercised sparingly and only in exceptional circumstances: Royale Thompson (supra).
80. I also agree that the power to grant a stay is discretionary. In an application for stay pending an appeal under ss. 5(1)(a) or (b) or 19 of the Supreme Court Act, the power to stay proceedings in the National Court is also discretionary and the relevant principles are those set out in Gary McHardy (supra) which counsel for the appellant has succinctly canvassed in his submission. But the Supreme Court made it clear that these principles are by no means exhaustive as there may be other considerations that may be relevant and may be considered.
81. It is on this basis that I see the application from a different angle. Based on the competing arguments on the interest of the respondent in the money and the ability of the appellant as a director of a company to be liable for money paid to the company for services rendered by the company, it may well be that there is an arguable case. But it is the manner in which the appellant has brought these issues to Court that I am concerned with.
82. I consider that if there is an alternative avenue or process by which a party may seek redress from the Court concerning the same issues, it is a relevant consideration for the Supreme Court to consider in the exercise of discretion in an application for stay. The proposition that the Court has inherent power to protect its own processes and integrity from abuse by its users or by litigants is, in my view applicable to all parties and in this case to the appellant and the respondent. Thus in my view, it is an abuse of process if a party does not utilise an alternative avenue or process to raise the issues and seek redress from the Court.
83. In that respect, the essence of the proceedings CR Application No 144 of 2013: Eremas Wartoto -v- The State is to stop the criminal trial in the criminal proceedings CR No 780 of 2012 from starting. Put it the other way, it indirectly seeks to dismiss the charges in the draft indictment when the trial has yet to start.
84. Similarly, it must be appreciated that the criminal process with respect to the prosecution of the appellant has already started when firstly; he has been arrested and charged with two counts of misappropriation. He does not take issue with the manner in which he was arrested and charged. Secondly, he has been committed to stand trial in the National Court by the District Court. Again, he does not take issue with that and if he has, there are other avenues for him to seek redress such as filing an application for judicial review of that decision to the National Court under O 16 of the National Court Rules: see also Robert Lak -v- Daisy [Dessie] Magaru & The State (1999) N1950. Finally, as noted, a ten day trial is set to start on 11th November 2013.
85. In my view, since the criminal process has started and it is a matter of waiting for the date of trial to arrive, the Court should be slow in staying it. I say this because under s. 557 of the Criminal Code, it is "[a]t the time appointed for the trial of an accused person that he shall be informed in open court of the offence with which he is charged, as set out in the indictment, and shall be called upon to plead to the indictment and to say whether he is guilty or not guilty of the charge."
86. When this is done, the accused person has three options. He may enter a plea under s. 560 or apply by motion to quash the indictment under s. 558 or demur to the indictment under s. 567. For further discussions on these options, I refer parties to the decision of the Supreme Court in Nai'u Limagwe & 3 Ors -v- The State [1976] PNGLR 832, per Frost, CJ.
87. Given the background of this case, in my view a proper course for the appellant to take to challenge the "competency" of the indictment for want of a better word, is to either apply by motion to quash it or demur to it. The procedure to invoke to quash the indictment is set out in s. 558 which states:
"558. Motion to quash indictment.
(1) The accused person may, before pleading, apply to the court to quash the indictment on the ground that -
(a) it is calculated to prejudice or embarrass him in his defence to the charge; or
(b) it is formally defective.
(2) On a motion under Subsection (1), the court may -
(a) quash the indictment; or
(b) order it to be amended in such manner as the court thinks just; or
(c) refuse the motion."
88. This provision is very clear. The accused person has the opportunity before pleading, to apply to quash the indictment. Where the accused person applies to quash the indictment, this will be the first business of the Court. The Court must hear it and rule on it. If the Court quashes it, that is the end of the trial. The grounds for bringing the application are restricted to the charges being prejudicial or embarrassing to the accused person or formally defective. For further discussion on this subject, I refer parties to The State -v- Xue Zhufu Dickson and Chang Jiang Gao (2010) N4162 per Kariko, J and The State -v- Jacob Amonea (2012) N4673 per Makail, J.
89. Section 567 gives an accused person an opportunity at the commencement of trial to object to the charge(s) contained in the indictment. This is what is called a "demurrer". It states:
"567. Demurrer.
(1) When an accused person demurs only and does not plead any plea, the court shall hear and determine the matter immediately.
(2) If the demurrer is overruled, the accused person shall be called on to plead to the indictment.
(3) When an accused person pleads and demurs together, it is in the discretion of the court whether the plea or demurrer is first disposed of.
(4) No joinder in demurrer is necessary."
90. A demurrer is defined by A S Horny, Oxford Advanced Learner's Dictionary 08th ed, 2010 Oxford University Press, London, at 404 as "to say that you do not agree with something or that you refuse to do something." In the legal context, and specifically in the context of criminal proceedings concerning charge(s) in the indictment, I would define it as objecting to the charge(s) or refusing to participate in the trial because there is an issue with the charge(s).
91. In my view, these two avenues or processes are available to the appellant to utilise. In my view also, they are the most appropriate, convenient, time and cost effective means to resolving the issues surrounding the charges of misappropriation.
92. For the appellant to then commence CR Application No 144 of 2013: Eremas Wartoto -v- The State, not only has it resulted in multiplicity of proceedings but has also confused the Registry staff in relation to the mode of commencing proceedings in respect of a case of this nature. As I noted above, all these proceedings relate to the same issue, that is, the charges of misappropriation. As a result, instead of creating an originating summons file and pursuing the application as a civil matter as the appellant had initially intended, a criminal proceedings file was created. The application was made in the proceedings referenced "criminal application", something that is, in my view unprecedented.
93. This unprecedented application sufficiently explains the respondent's unperturbed position that it was an abuse of process. The confusion was eventually clarified by the Chief Justice when the appellant sought leave to appeal the decision of the Deputy Chief Justice where his Honour the Chief Justice held that the application for a permanent stay order in the criminal application was intended to be an application in a civil proceedings commenced by originating summons and leave was not required and further clarified that the decision was final and leave was also not required.
94. I have accepted the proposition in the Royale Thompson case (supra) that it is not an abuse of process and the National Court can permanently stay criminal proceedings where it is plain and clear that the charges are incontestably bad. But that case can be distinguished from this case on its facts because it was a case where the defendants had the plaintiff arrested and charged for spreading misleading reports and attempting to pervert the course of justice when they alleged that she had the newspaper company publish an article relating to the reasons for the departure of a vessel known as "UBT Fjords" in Rabaul. They alleged among others that the vessel was under arrest or detention. It turned out that the allegations were untrue. For this reason, the National Court issued a permanent stay of the charges.
95. The plaintiff was not committed to stand trial in the National Court although there was some reference to her lawyers attending the Waigani Committal Court on her behalf and finding that the matter was not listed on a number of occasions. In this case, the appellant has been committed to stand trial and a ten day trial has been fixed. Thus in the former case, there were no criminal proceedings in the National Court whereas in this case there is and a ten day trial has been fixed. For these reasons, I will not follow that decision to stop the criminal proceedings CR No 780 of 2012 from starting.
96. At the end of the day, the Court has to balance an individual's interest with the public interest. The Court must balance the interest of the appellant with the interest of the respondent. In my view, public interest demands that those accused of committing offences must be prosecuted. On the other hand, there is the interest of the accused. The nature of the appellant's complaint suggests that he will be denied a fair trial because the charges are incontestably bad. But the trial has yet to start. The indictment which was served on him was a "draft". Given the independence of the Public Prosecutor and the prosecutorial powers vested in him, he may at trial present an indictment in the same terms as the "draft", or with some variance or file a nollie prosequi. Thus the appropriate time to object to the indictment is at the date of trial; when the trial starts and not now.
97. I consider that the issues in relation to the interest of the respondent in the money and the appellant's liability for the money paid to SWTL in consideration for services rendered to the respondent are matters that can be appropriately raised under s. 558(1)(a) or s. 567 of the Criminal Code and only after the Public Prosecutor presents the indictment in open Court. I also consider that if the appellant took and takes this course, the question of prejudice in relation to being denied a fair trial will not arise because he will be given the opportunity to be heard on the same issues he raises in this appeal. It will also mean that the appeal is unnecessary.
98. In relation to the appellant's submission that it is likely that the respondent will not be ready to start the trial on 11th November 2013 and it is likely that it will seek an adjournment, hence a stay will not adversely prejudice the respondent, with respect, this submission ignores the wide discretion the Public Prosecutor has in the discharge of his constitutional mandated function of prosecution. The Public Prosecutor must be given that opportunity to perform his function without interference and if there is a delay in the prosecution of an accused person, the accused person has recourse to other remedies to avail of, the most obvious one being dismissal of the charge for want of prosecution and a discharge under s. 552 of the Criminal Code. No doubt, such recourse is available to the appellant in this case. For these reasons, I am not satisfied that a likelihood of an adjournment supports the appellant's contention that a stay of the National Court proceedings would be in order.
Conclusion
99. In the end, I find that the application is an abuse of process and would dismiss it. It follows that it is not necessary to consider the submissions in relation to the related proceedings OS No 512 of 2012.
Order
100. The order is, the application is dismissed with costs.
Orders
101. The Orders of this Court are:
a) National Court Criminal Proceedings Reference CR No. 780 of 2012 between the Independent State of Papua New Guinea v. Eremas Wartoto are stayed pending the hearing and determination of this appeal.
b) this appeal shall be heard in the December 2013 sittings of the Supreme Court and for that purpose the matter is to return before the Listings Judge at 9.30 am, 11th November 2013.
c) costs are in the cause.
Steeles Lawyers: Lawyers for the Appellant
Office of the Public Prosecutor: Lawyers for the Respondent
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